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Exhibit 10.1
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
PLAINWELL INC.,
as Borrower,
THE LENDERS NAMED HEREIN
as Lenders,
AND
SANWA BUSINESS CREDIT CORPORATION,
as Agent and Lender
March 6, 1998
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TABLE OF CONTENTS
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1. DEFINITIONS.................................................................1
1.1. General Terms.......................................................1
1.2. Accounting Terms...................................................26
1.3. Other Terms Defined in Illinois Uniform Commercial Code............26
1.4. Effective Date.....................................................26
1.5. References.........................................................26
2. CREDIT.....................................................................26
2.1. Revolving Credit Facility, Revolving Loan and Lender Guaranties....26
2.2. Maximum Principal Balance of Revolving Loan........................30
2.3. Evidence of Revolving Loan Indebtedness............................30
2.4. Eau Claire L/C Facility............................................30
2.5. Interest...........................................................33
2.6. Method of Borrowing; Manner and Method of Making Interest and
Other Payments......................................................37
2.7. Term of this Agreement and Prepayments.............................39
2.8. Audit Fee..........................................................41
2.9. Fee Letter.........................................................41
2.10. Prepayment Fee....................................................41
2.11. [Intentionally Omitted.]..........................................41
2.12. Unused Line Fee...................................................41
2.13. Other Fees, Costs and Expenses....................................42
2.14. Loan Account......................................................42
2.15. Statements........................................................43
2.16. Payment Dates.....................................................43
2.17. Lender Guaranty Fees..............................................43
2.18. Other Lender Guaranty and Eau Claire L/C Provisions...............44
2.19. Taxes; Changes in Law.............................................46
2.20. Notification of Advances, Interest Rates and Prepayment...........47
2.21. Special Provisions Governing LIBOR Rate Loans.....................47
2.22. Replacement of Certain Lenders....................................49
3. REPORTING AND ELIGIBILITY REQUIREMENTS.....................................50
3.1. Monthly Reports and Borrowing Base Certificates....................50
3.2. Eligible Accounts..................................................51
3.3. Account Warranties.................................................52
3.4. Verification of Accounts...........................................53
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3.5. Collection of Accounts and Payments................................53
3.6. Appointment of the Agent as Borrower's Attorney-in-Fact............54
3.7. Account Records....................................................55
3.8. Instruments and Chattel Paper......................................55
3.9. Notice to Account Debtors..........................................55
3.10. Eligible Inventory................................................56
3.11. Inventory Warranties..............................................56
3.12. Inventory Records.................................................56
3.13. Safekeeping of Inventory and Inventory Covenants..................57
3.14. Equipment Warranties..............................................57
3.15. Equipment Records.................................................57
3.16. Maintenance of Equipment..........................................57
3.17. Real Estate.......................................................58
3.18. Maintenance of Real Estate........................................58
3.19. Intellectual Property.............................................58
4. CONDITIONS TO ADVANCES.....................................................58
4.1. Conditions to All Advances.........................................58
4.2. Conditions to Initial Advance......................................59
5. COLLATERAL.................................................................63
5.1. Security Interest..................................................63
5.2. Preservation of Collateral and Perfection of Liens Thereon.........64
5.3. Consigned Inventory................................................64
6. REPRESENTATIONS AND WARRANTIES.............................................65
6.1. Existence..........................................................65
6.2. Authority..........................................................65
6.3. Binding Effect.....................................................66
6.4. Financial Data.....................................................66
6.5. Collateral.........................................................67
6.6. Solvency...........................................................68
6.7. Places of Business.................................................68
6.8. Other Names........................................................68
6.9. Tax Obligations....................................................68
6.10. Indebtedness and Liabilities......................................68
6.11. Use of Proceeds and Margin Security...............................69
6.12. Government Contracts..............................................69
6.13. Investments.......................................................69
6.14. Litigation and Proceedings........................................69
6.15. Other Agreements and Deliveries...................................69
6.16. Labor Matters.....................................................70
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6.17. Compliance with Laws and Regulations..............................71
6.18. Patents, Trademarks and Licenses..................................71
6.19. ERISA.............................................................71
6.20. Property..........................................................72
6.21. Adverse Contracts.................................................72
6.22. [Intentionally Omitted.]..........................................72
6.23. Investment Company Act; Public Utility Holding Company Act........72
6.24. Broker's Fees.....................................................72
6.25. Licenses and Permits..............................................73
6.26. Environmental Compliance..........................................73
6.27. Full Disclosure...................................................75
6.28. Insurance Policies................................................75
6.29. Customer and Trade Relations......................................75
6.30. Survival of Warranties............................................75
6.31. Subsidiaries......................................................76
6.32. Related Transactions Documents....................................76
6.33. H-S-R Notification................................................76
6.34. Deposit and Disbursement Accounts.................................76
7. AFFIRMATIVE COVENANTS......................................................76
7.1. Financial Statements...............................................77
7.2. Inspections and Audits.............................................79
7.3. Conduct of Business; Compliance With Laws..........................80
7.4. Claims and Taxes...................................................80
7.5. Borrower's Liability Insurance.....................................81
7.6. Borrower's Property Insurance......................................81
7.7. Pension Plans......................................................82
7.8. Notice of Certain Matters..........................................83
7.9. Landlord and Warehouseman Agreements...............................83
7.10. Indemnity.........................................................83
7.11. Leverage Ratio....................................................84
7.12. Leverage Ratio....................................................85
7.13. Capital Expenditures..............................................85
8. NEGATIVE COVENANTS.........................................................85
8.1. Encumbrances.......................................................85
8.2. Indebtedness and Liabilities.......................................86
8.3. Consolidations, Acquisitions.......................................86
8.4. Investments........................................................87
8.5. Guaranties.........................................................87
8.6. Collateral Locations...............................................87
8.7. Disposal of Property...............................................87
8.8. Employee Loans.....................................................88
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8.9. Plans..............................................................88
8.10. Restricted Payments...............................................88
8.11. Securities........................................................88
8.12. Changes in Charter, Bylaws or Fiscal Year.........................88
8.13. Changes in Subordinated Debt......................................89
8.14. Transactions with Affiliates......................................89
8.15. Capital Structure; Other Business.................................89
8.16. Sale and Leaseback................................................89
8.17. Impairment Agreements.............................................89
8.18. Corporate Accounts................................................89
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS..................89
9.1. Obligations........................................................89
9.2. Rights and Remedies Generally......................................90
9.3. Entry Upon Premises and Access to Information......................90
9.4. Sale or Other Disposition of Collateral by the Agent...............91
9.5. Grant of License...................................................91
9.6. Waiver of Demand...................................................91
9.7. Waiver of Notice...................................................91
10. OTHER RIGHTS AND OBLIGATIONS..............................................92
10.1. Waiver............................................................92
10.2. Costs and Attorneys' Fees.........................................92
10.3. Expenditures by the Agent and the Lenders.........................92
10.4. Custody and Preservation of Collateral............................93
10.5. Reliance by the Agent and Lenders.................................93
10.6. Parties and Assignment............................................93
10.7. Applicable Law; Severability......................................93
10.8. Submission to Jurisdiction; Waiver of Jury and Bond...............94
10.9. Marshalling.......................................................95
10.10. Section Titles...................................................95
10.11. Incorporation by Reference.......................................95
10.12. Notices..........................................................95
10.13. Waivers With Respect to Other Instruments........................96
10.14. Retention of the Borrower's Documents............................96
10.15. Entire Agreement.................................................96
10.16. Equitable Relief.................................................97
10.17. Counterparts.....................................................97
10.18. Several Obligations; Nature of Lenders' Rights...................97
10.19. Exceptions to Covenants..........................................97
10.20. Construction.....................................................97
10.21. Reinstatement....................................................97
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10.22. ACKNOWLEDGMENT...................................................98
10.23. Effect on Prior Credit Agreement; Continuing Loans...............98
11. ASSIGNMENT AND PARTICIPATION..............................................98
11.1. Assignments.......................................................98
11.2. Participations....................................................99
12. AGENT.....................................................................99
12.1. Appointment.......................................................99
12.2. Powers............................................................99
12.3. General Immunity..................................................99
12.4. No Responsibility for Loans, Recitals, etc........................99
12.5. Action on Instructions of Lenders.................................99
12.6. Employment of Agents and Counsel.................................100
12.7. Reliance on Documents; Counsel...................................100
12.8. Agent's Reimbursement and Indemnification........................100
12.9. Rights as a Lender...............................................100
12.10. Lender Credit Decision..........................................101
12.11. Successor Agent.................................................101
12.12. Notice of Default...............................................101
13. AMENDMENTS AND WAIVERS...................................................101
14. SET OFF AND SHARING OF PAYMENTS..........................................103
14.1. Setoff...........................................................103
14.2. Ratable Payments.................................................103
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.3 Form of Revolving Loan Note
Exhibit 2.4 Form of Eau Claire L/C Note
Exhibit 2.6-1 Form of Borrowing Notice
Exhibit 2.6-2 Form of Notice of Conversion/Continuation
Exhibit 3.1 Form of Monthly Report Certificate
Exhibit 3.14 Equipment Locations and Leased Equipment
Exhibit 3.17 Real Estate
Exhibit 6.1-1 Jurisdictions of Qualification
Exhibit 6.1-2 Capital Stock
Exhibit 6.4-1 Pro Forma Financial Statements
Exhibit 6.4-2 Fair Saleable Value Balance Sheet
Exhibit 6.4-3 Projections
Exhibit 6.7 Place of Business
Exhibit 6.8-1 Past Trade Names
Exhibit 6.8.2 Present and Future Trade Names
Exhibit 6.11 Sources and Uses
Exhibit 6.12 Government Contracts
Exhibit 6.14 Pending or Threatened Litigation
Exhibit 6.15 Defaults
Exhibit 6.16 Labor Matters
Exhibit 6.18 Patents, Trademarks and Licenses
Exhibit 6.19(a) Benefit and Multiemployer Plans
Exhibit 6.19(c) Unfunded Liabilities
Exhibit 6.19(f) Contingent ERISA Liability
Exhibit 6.20 Property
Exhibit 6.24 Brokerage Fees Payable
Exhibit 6.26 Environmental Matters Pending
Exhibit 6.31 Subsidiaries
Exhibit 6.34 Bank Accounts
Exhibit 7.5 Liability Insurance
Exhibit 7.6 Form of Insurance Endorsement
Exhibit 7.11 Pro Forma Financial Statements (Tissue Business)
Exhibit 8.1 Existing Liens
Exhibit 8.2 Indebtedness
Exhibit 8.4 Investments
Exhibit 8.5 Guaranties
Exhibit 8.6 Collateral Locations
Exhibit 8.14 Transactions with Affiliates
Exhibit 10.23 Continuing Loans
SCHEDULES
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Schedule 1 Commitments of Lenders
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of
this 6th day of March, 1998, by and between PLAINWELL INC., a Delaware
corporation, and SANWA BUSINESS CREDIT CORPORATION, as Agent for the Lenders.
W I T N E S S E T H:
WHEREAS, SBCC has outstanding Continuing Loans to Plainwell Paper on
the date hereof pursuant to the terms of the Prior Loan Agreement;
WHEREAS, on the Closing Date, pursuant to the Related Transactions,
(i) Holdings, through Borrower, shall purchase the Tissue Business from Xxxx &
Xxxxxx, Inc. and Xxxx & Talbot Wis., Inc. (collectively, "Seller") and (ii)
Plainwell Paper shall merge with and into the Borrower; and
WHEREAS, Plainwell Paper and Borrower desire that Lenders amend and
restate the Prior Loan Agreement so that it provides that (i) Borrower shall
replace Plainwell Paper as the "Borrower" hereunder and (ii) Lenders shall
extend revolving and letter of credit facilities to Borrower of up to Fifty-Four
Million Five Hundred Fifty-Two Thousand Dollars ($54,552,000), in the aggregate
(including the Continuing Loans), for the purpose of funding a portion of its
purchase of the Tissue Business and to provide (a) working capital financing for
Borrower and (b) funds for other general corporate purposes of Borrower; and for
these purposes, Lenders are willing to make certain loans and other extensions
of credit to Borrower of up to such amount upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extensions of credit heretofore, now or
hereafter made to or for the benefit of the Borrower by the Agent and the
Lenders, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1. General Terms When used herein, the following terms shall have
the following meanings:
"Account Debtor" shall mean any Person who is or may become
obligated on or under an Account.
"Accounting Changes" shall mean (a) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions) or (b) changes in accounting principles concurred in by the
Borrower's certified public accountants.
"Accounts" shall mean all of the Borrower's presently existing and
hereafter arising or acquired accounts, accounts receivable, margin accounts,
futures positions, book debts,
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contracts, notes, drafts, acceptances, and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) now or
hereafter owned or held by or payable to the Borrower relating in any way to
Inventory or arising from the sale of Inventory or the rendering of services by
the Borrower or howsoever otherwise arising, including the right to payment of
any interest or finance charges with respect thereto, together with all of
Borrower's rights to all merchandise represented by any of the Accounts; all
such merchandise that may be reclaimed or repossessed or returned to the
Borrower; all of the Borrower's rights as an unpaid vendor, including, without
limitation, stoppage in transit, reclamation, rescission, replevin, and
sequestration; all pledged assets and all letters of credit, guaranty claims,
Liens held by or granted to the Borrower to secure payment of any Accounts; all
proceeds and products of all of the foregoing described properties and interests
in properties; and all proceeds of insurance with respect thereto, including,
without limitation, the proceeds of any applicable casualty or credit insurance
or fidelity bond, whether payable in cash or in kind; and all customer lists,
ledgers, books of account, records, computer programs, computer disks or tape
files (including, without limitation, all microfilm), computer printouts,
computer runs, and other computer prepared information relating to any of the
foregoing.
"Accounts Trial Balance" shall have the meaning ascribed thereto in
subsection 7.1(iii)(b).
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated after the Closing Date by which the Borrower or any
Subsidiary (a) acquires, directly or indirectly, any business or all or
substantially all of the assets of any Person or portion thereof, whether
through purchase of assets, merger, licensing arrangement or otherwise or (b)
directly or indirectly acquires (i) securities (or warrants, options or other
rights to acquire such securities) of a Person which have, in the aggregate,
ordinary voting power for the election of a majority of directors or (ii) at
least a majority (by percentage of voting power) of the outstanding partnership
or other interests of a Person or (c) makes any Person a Subsidiary, or causes
any assets of such Person to be merged into the Borrower or such Subsidiary
pursuant to a merger, purchase of assets or other reorganization providing for
the delivery or issuance to the holders of such Person's then outstanding
securities or capital interests, in exchange for such securities, of cash or
securities of the Borrower or such Subsidiary, or any combination thereof.
"Affiliate" shall mean any Person (including any member of the
immediate family of any such natural person) (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with the Borrower or any Subsidiary, including, without
limitation, the officers and directors of the Borrower or such Subsidiary, (b)
that directly or beneficially owns or holds five percent (5%) or more of any
equity interest in the Borrower or any Subsidiary, or (c) five percent (5%) or
more of whose voting stock (or in the case of a Person which is not a
corporation, five percent (5%) or more of any equity interest) is owned directly
or beneficially or held by the Borrower or any Subsidiary. Affiliate shall not
be deemed to include the Agent or any Lender. As used herein, the term "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of the power to direct the management or policies of a Person, whether through
ownership of securities, by contract or otherwise.
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"Agent" shall mean Sanwa Business Credit Corporation, a Delaware
corporation, in its capacity as agent for the Lenders and not in its individual
capacity as a Lender, and any successor in such capacity appointed pursuant to
subsection 12.11.
"Agreement" shall mean this Amended and Restated Loan and Security
Agreement, as the same may hereafter be restated, amended, modified or
supplemented from time to time.
"Applicable Base Margin" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the Prime Rate
with respect to the Revolving Loan.
"Applicable LIBOR Margin" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the applicable
LIBOR Rate with respect to the Revolving Loan.
"Applicable Margins" shall mean, collectively, the Applicable Base
Margin and the Applicable LIBOR Margin.
"Authorized Officer" shall mean the President or Chief Financial
Officer of the Borrower or any other officer of the Borrower approved by the
Agent as an "Authorized Officer" for the purposes hereof.
"Base Rate" shall mean a fluctuating interest rate equal to the
Applicable Base Margin per annum plus the Prime Rate from time to time in
effect.
"Base Rate Loans" shall mean any Loan bearing interest at the Base
Rate.
"Blocked Account Agreements" shall have the meaning ascribed thereto
in subsection 3.5.
"Blocked Accounts" shall have the meaning ascribed thereto in
subsection 3.5.
"Borrower" shall mean PLAINWELL INC., a Delaware corporation, and a
wholly owned Subsidiary of Holdings and, upon the effective date of the Merger
Agreement, the successor to Plainwell Paper.
"Borrowing Availability" shall have the meaning ascribed thereto in
subsection 2.1(a).
"Borrowing Base Certificate" shall have the meaning ascribed thereto
in subsection 3.1.
"Borrowing Notice" shall have the meaning ascribed thereto in
subsection 2.5(e).
"Business Day" shall mean (i) for all purposes other than as
described in clause (ii) below, any day other than a Saturday, Sunday or other
day on which banks in Chicago,
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Illinois are authorized or required to be closed and (ii) with respect to all
notices, determinations, borrowings, rate selections and payments in connection
with LIBOR Rate Loans, any day that is a Business Day described in clause (i)
above and that is also a day on which dealings in U.S. dollar deposits are
carried on in the applicable interbank LIBOR market.
"Capital Expenditures" shall mean, for any fiscal period, without
duplication, all expenditures (whether made in the form of cash including,
without limitation, deposits or other Property) by the Borrower or any
Subsidiary during such period for, or contracts for expenditures with respect
to, any fixed assets or improvements, or for renewals, replacements,
substitutions or additions thereto, which have a useful life of more than one
(1) year including, without limitation, the direct or indirect acquisition of
such assets by way of increased product or service charges, offset items or
otherwise, and shall include the principal portion of capital lease payments
with respect to such expenditures when made.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Equivalents" shall mean (i) bank certificates of deposit,
bankers' acceptances, deposit accounts or time deposits (but only with banks
organized under the laws of the United States or of any State thereof or any
branch of a foreign bank so long as such branch is licensed under the laws of
the United States of any State thereof (x) which do not have set-off rights
against the foregoing, other than set-offs for nominal service charges and
similar fees incurred in the ordinary course, and (y) which have combined
capital and surplus in excess of Two Hundred Fifty Million Dollars
($250,000,000)), (ii) commercial paper maturing within one (1) year from the
date issued and rated at least A-1 or the equivalent thereof by Standard & Poors
Ratings Services, or P-1 or the equivalent thereof by Xxxxx'x Investors Service,
Inc., (iii) obligations maturing within one (1) year from the date of
acquisition issued or directly and fully guaranteed by the United States
government or any agency thereof and (iv) investments in money market funds
registered under the Investment Company Act of 1940, as amended, which have net
assets of at least $200,000,000 and at least 85% of whose assets consist of
securities and other obligations of the type described in clauses (i) through
(iii) above..
"Change of Control" shall mean (1) before an initial public offering
of voting common stock of Guarantor (or any securities convertible into such
common stock), (A) the management employees of the Borrower and 399 Venture
Partners, Inc. or other direct or indirect wholly-owned subsidiaries of Citicorp
(collectively, "399 Venture"), CCT Partners IV, L.P., a Delaware limited
partnership, or employees of 399 Venture (together with 399 Venture, the "399
Venture Group") cease to beneficially own and control, directly or indirectly,
shares of common stock of Guarantor representing (on an as if issued or
converted basis) at least fifty-one percent
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(51%) of the issued and outstanding voting common stock of the Guarantor, or (B)
the management employees of the Borrower or trusts for the benefit of their
families (so long as they remain employed by the Borrower) shall cease to
beneficially own and control, directly or indirectly, at least 80% the shares of
common stock of Guarantor which such management employees own as of the Closing
Date, or (2) after an initial public offering of voting common stock of
Guarantor (or any securities convertible into such common stock), the management
employees of the Borrower and the 399 Venture Group cease to beneficially own
and control, directly or indirectly, shares of common stock representing (on an
as if issued or converted basis) at least thirty-three percent (33%) of the
outstanding voting common stock of Guarantor, or (3) at any time, Guarantor
ceases to own 100% of the outstanding equity interests of the Borrower, or (4) a
"Change of Control" (as such term is defined in the Subordinated Debt Documents)
shall occur.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including, without limitation, taxes
owed to the PBGC at the time due and payable), duties, levies, assessments,
charges, liens, claims or encumbrances upon or relating to (i) the Collateral,
(ii) the Obligations, (iii) the employees, payroll, income or gross receipts of
the Borrower, (iv) the ownership or use of any Property of the Borrower, or (v)
any other aspect of the Borrower's business.
"Chattel Paper" shall mean any "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by the Borrower, wherever
located.
"Closing Date" shall mean the date on or before March 15, 1998, on
which all of the conditions precedent set forth in Section 4.2 and the closing
checklist delivered to Borrower prior to February 27, 1998, have been satisfied
or waived.
"Closing Fee" shall have the meaning ascribed thereto in subsection
2.9.
"Code" shall have the meaning ascribed thereto in subsection 1.3.
"Collateral" shall mean all property and interests in property now
owned or hereafter acquired by the Borrower in or upon which a Lien is granted
to the Agent, for the benefit of the Lenders, by the Borrower, whether under
this Agreement or the other Financing Agreements or under any other documents,
instruments or writings executed by the Borrower and delivered to the Agent,
including, without limitation, Accounts, Chattel Paper, Documents, General
Intangibles, Fixtures, Instruments, Inventory, Intellectual Property, Equipment,
Real Estate and leased real property. In no event shall the "Collateral" include
(i) the Borrower's real property located at 00xx Xxxxxx in Plainwell, Michigan
and commonly referred to as The 12th Street Landfill or (ii) the Excluded
Assets.
"Collateral Report" shall have the meaning ascribed thereto in
subsection 3.1.
"Collecting Banks" shall have the meaning ascribed thereto in
subsection 3.5.
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"Commitment" shall mean, with respect to each Lender, the commitment
of each Lender to make Revolving Loans to the Borrower and to purchase a
participation in the Lender Guaranties and the Eau Claire Lender Guaranty as of
the Closing Date in the amounts set forth on the signature page hereof or on
Schedule 1; Schedule 1 shall be amended and Lenders' Pro Rata Shares shall be
adjusted from time to time to give effect to the addition of any new Lenders
pursuant to subsection 11.1.
"Control Agreement" shall mean a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Borrower, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of Borrower, (iii) a futures commission merchant or clearing house with respect
to commodity accounts and commodity contracts held by Borrower, whereby, among
other things, the issuer, securities intermediary or futures commission merchant
disclaims any security interest in the applicable financial assets, acknowledges
the Lien of Agent, on behalf of itself and Lenders, on such financial assets,
and agrees to follow the instructions or entitlement orders of Agent without
further consent by the Borrower.
"Continuing Loans" shall mean the loans and letter of credit
obligations under the Prior Loan Agreement existing on the Closing Date and
listed on Exhibit 10.23.
"Conversion/Continuation Notice" shall have the meaning ascribed
thereto in subsection 2.5(f).
"Current Asset Base" shall have the meaning ascribed thereto in
subsection 2.1.
"Current Assets" shall mean, at any date of determination, all
Property which should, in accordance with Generally Accepted Accounting
Principles consistently applied, be classified as current assets on a balance
sheet at such date, excluding any Accounts owing to the Borrower from an
Affiliate.
"Current Liabilities" shall mean, at any date of determination, all
Liabilities which should, in accordance with Generally Accepted Accounting
Principles consistently applied, be classified as current liabilities on a
balance sheet at such date, and in any event shall include all Indebtedness
payable within one (1) year from the date of determination without any option on
the part of the obligor to extend or renew beyond such year, all accruals for
federal or other taxes based on or measured by income and payable within such
year, and the current portion of long-term debt required to be paid within one
(1) year from the date of determination, but expressly including for purposes of
this definition the principal amount of the Revolving Loan Obligations.
"Default" shall mean an event which through the passage of time or
the service of notice, or both, would mature into an Event of Default.
"Default Rate" shall mean, (i) with respect to Base Rate Loans, a
fluctuating interest rate per annum equal to the sum of the applicable Base
Rate, plus two percent (2%) per annum (each change in such interest rate shall
take effect simultaneously with the corresponding
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change in the Base Rate), (ii) with respect to LIBOR Rate Loans, a rate of
interest per annum equal to the applicable LIBOR Rate plus two percent (2.0%)
per annum, (iii) with respect to Lender Guaranty Fees, the Lender Guaranty Fee
Rate plus two percent (2%) per annum and (iv) with respect to Eau Claire L/C
Fees, the Eau Claire L/C Rate plus two percent (2%) per annum.
"Depository Account" shall have the meaning ascribed thereto in
subsection 3.5.
"Documents" shall mean any "documents" as such term is defined in
the Code, now owned or hereafter acquired by the Borrower, wherever located.
"Eau Claire L/C" shall mean that certain standby letter of credit in
the amount of Nineteen Million Five Hundred Fifty-Two Thousand Dollars
($19,552,000) issued in favor of the bond trustee for City of Eau Claire,
Wisconsin, as beneficiary, in support of Borrower's obligations under the City
of Eau Claire, Wisconsin Tax-Exempt Adjustable Mode Solid Waste Disposal Revenue
Bonds (Xxxx & Xxxxxx, Wis., Inc. Project) Series 1994.
"Eau Claire L/C Fees" shall have the meaning ascribed thereto in
subsection 2.4(d).
"Eau Claire L/C Liability" means, as to the Eau Claire Lender
Guaranty, all liabilities of the Lenders with respect thereto, whether
contingent or otherwise, including: (a) the amount available to be drawn or
which may become available to be drawn and (b) all amounts which have been paid
or made available by the Lenders to the extent not reimbursed by the Borrower;
and (c) all unpaid interest, fees and expenses with respect thereto.
"Eau Claire L/C Note" shall have the meaning ascribed thereto in
subsection 2.4(b).
"Eau Claire L/C Rate" shall mean one and one-half percent (1.5%) per
annum.
"Eau Claire L/C Reserve" means, at any date of determination, a
reserve in an amount equal to the aggregate amount of the Eau Claire L/C
Liability outstanding at such time.
"Eau Claire Lender Guaranty" shall mean a guaranty of payment of the
Eau Claire L/C issued by Agent on behalf of Lenders on the Closing Date.
"Eau Claire Term Loan" shall have the meaning ascribed thereto in
subsection 2.4(b).
"EBITDA" shall mean, for any applicable fiscal period, determined
for the Borrower and its Subsidiaries on a consolidated basis, Net Income for
such period, plus, without duplication, to the extent deducted in determining
Net Income for that period, interest expense and income and franchise taxes paid
or accrued, plus to the extent deducted in determining Net Income for that
period, amortization, depreciation and other similar non-cash charges, plus to
the extent deducted in determining Net Income, extraordinary losses, minus to
the extent added in
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determining Net Income, extraordinary gains, all as determined in accordance
with GAAP consistently applied.
"Eligible Accounts" shall have the meaning ascribed thereto in
subsection 3.2.
"Eligible Inventory" shall have the meaning ascribed thereto in
subsection 3.10.
"Environmental Laws" shall mean and includes the following as now in
effect or hereafter amended: the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, ("CERCLA"), 42 U.S.C. ss.9601 et seq.;
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. ss.6901 et seq.; the Toxic Substances Control
Act ("TSCA"), 15 U.S.C. ss.2601, et seq.; the Clean Air Act, 42 U.S.C. ss.7401
et seq.; the Federal Water Pollution Control Act ("Clean Water Act"), 33 U.S.C.
ss.1251 et seq.; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. ss.11001 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
ss.1801 et seq.; the Atomic Energy Act, 42 U.S.C. ss.2011 et seq.; the Safe
Drinking Water Act, 42 U.S.C. ss.300f et seq. and the state law equivalents; any
so-called "Superfund" or "Superlien" law; and any statute, ordinance, code,
rule, regulation, order, decree or requirement under international, federal,
state, regional, provincial or local law (including, without limitation,
administrative orders and consent decrees) in effect and as amended regulating,
relating to or imposing liability or standards of conduct concerning public
health and safety, protection of the environment, or any pollutant or
contaminant or hazardous, toxic or dangerous substance, waste, chemical or
material, as now or any time hereafter may be existing.
"Environmental Matters" shall have the meaning ascribed thereto in
subsection 6.26(b).
"Equipment" shall mean all of the Borrower's machinery and
equipment, including, without limitation, processing equipment, conveyors,
machine tools, data processing and computer equipment with software and
peripheral equipment (other than software constituting part of the Accounts),
and all engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, ships, vessels, airplanes, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and nature, trade fixtures and fixtures not forming a part of real
property, all whether now owned or hereafter acquired, and wherever situated,
together with all appurtenances, additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and all rules and regulations promulgated
thereunder.
"ERISA Affiliate" shall mean any Subsidiary that is, or was at any
time during the previous six (6) years, along with the Borrower or any
Subsidiary, in the same controlled group
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of corporations, under common control, or otherwise, treated as a single
employer for any purpose under Section 414 of the IRC.
"Event of Default" shall mean the occurrence or existence of any one
or more of the following conditions or events:
(a) the Borrower fails to pay any of its Obligations hereunder
when the Obligations are due or are declared due or fails to deliver any
Borrowing Base Certificate or Monthly Report as required by subsection
3.1;
(b) the Borrower fails or neglects to perform, keep or observe
any of the covenants, conditions or agreements contained in any of the
subsections of this Agreement or in any of the other Financing Agreements
(other than occurrences referred to or embodied in other provisions of
this definition constituting immediate Events of Default) for a period of
twenty (20) days after the earlier of (i) the Borrower's receipt of notice
from the Agent or (ii) actual knowledge of such breach by the Borrower;
(c) any warranty or representation now or hereafter made by
the Borrower or any Subsidiary in connection with this Agreement or any of
the other Financing Agreements is untrue or incorrect in any material
respect, or any schedule, certificate, statement, report, financial data,
notice or other writing furnished at any time by the Borrower or any
Subsidiary to the Agent or any Lender is untrue or incorrect in any
material respect, as of the date on which the warranty, representation or
the facts set forth therein are stated, certified or deemed made;
(d) other than Permitted Liens, any Lien, levy or assessment
is filed or recorded with respect to or otherwise imposed upon all or any
part of the Collateral or the Property of the Borrower or any Subsidiary
by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other governmental
agency and is in excess of Seven Hundred Fifty Thousand Dollars
($750,000);
(e) all or any part of the Collateral or the Property of the
Borrower or any Subsidiary with a value in excess of Two Hundred Fifty
Thousand Dollars ($250,000) is attached, seized, subjected to a writ or
distress warrant, or levied upon, or come within the possession or control
of any judgment creditor and on or before the thirtieth (30th) day
thereafter such Collateral or Property is not returned to the Borrower or
such Subsidiary or such writ, distress warrant or levy is not dismissed,
stayed or lifted;
(f) the Borrower or any Subsidiary makes an assignment for the
benefit of creditors; convenes a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts; applies for, seeks, consents to, or acquiesces
in the appointment of a receiver, trustee or custodian to take possession
of all or any substantial portion of the Property of the Borrower or any
Subsidiary; commences any bankruptcy, reorganization or insolvency case or
proceeding or other proceeding under any federal, state or other law for
relief of debtors; or the
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Borrower of such Subsidiary proposes, authorizes or consents to the taking
of any of the foregoing actions;
(g) the Borrower or any Subsidiary fails to obtain the
dismissal, within sixty (60) days after the commencement thereof, of any
bankruptcy, reorganization or insolvency proceeding, or other proceeding
under any law for the relief of debtors instituted against it; fails
actively to oppose any such proceeding; or in any such proceeding,
defaults or files an answer admitting the material allegations upon which
the proceeding was based or states in any filing in such proceeding its
willingness to have an order for relief entered or its desire to seek
liquidation, reorganization or adjustment of any of its debts;
(h) without the application, approval or consent of the
Borrower or any Subsidiary, any receiver, trustee, examiner, liquidator,
custodian or similar official is appointed to take possession of all or
any substantial portion of the Property of the Borrower or such
Subsidiary, or the filing of any motion, complaint or other pleading in
any bankruptcy, reorganization or insolvency case or proceeding of any
Person other than the Borrower or such Subsidiary that seeks the
consolidation the Borrower's or such Subsidiary's assets and liabilities
with the assets and liabilities of such Person;
(i) the Borrower or any Subsidiary voluntarily or
involuntarily dissolves or is dissolved, liquidates or is liquidated;
(j) the Borrower ceases to be Solvent or admits in writing
that it is not Solvent or fails to pay all or any material portion
(measured in numbers of debts or dollar amounts) of its debts as they
become due or admits in writing its present or prospective inability to
pay its debts as they become due;
(k) any default or breach under any agreement(s) evidencing
Indebtedness of the Borrower or any Subsidiary in an aggregate amount in
excess of Seven Hundred Fifty Thousand Dollars ($750,000) shall occur and
shall continue after any applicable grace period specified in any such
document if the effect of such default or breach is to accelerate, or to
permit the acceleration of, the maturity of all or any part of any such
Indebtedness, whether or not such default or breach shall be waived by the
holders or trustees (if any) for such Indebtedness, or any such
Indebtedness shall be declared to be due and payable, or be required to be
prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof;
(l) [Intentionally Omitted];
(m) any event or occurrence not covered by business
interruption insurance which results in or causes cessation or substantial
curtailment of production or other revenue producing activities at any
Facility or Facilities generating more than forty percent (40%) of the
Borrower's gross revenues for more than thirty (30) consecutive days;
provided that such occurrence shall not constitute an Event of Default if
such occurrence is covered by the Borrower's business interruption
insurance in an amount
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which, in the judgment of the Required Lenders, is reasonably expected to
cover the period during which such revenue-producing activities will be
halted or substantially curtailed;
(n) entry of a judgment or judgments in an aggregate amount in
excess of Seven Hundred Fifty Thousand Dollars ($750,000) against the
Borrower or any Subsidiary which are not (i) stayed, bonded, vacated, paid
or discharged within thirty (30) days after entry or (ii) fully covered by
insurance as to which the insurance carrier has acknowledged coverage to
the Borrower in writing within thirty (30) days after entry;
(o) the loss, suspension, revocation or failure to obtain or
renew any license or permit now held or hereafter acquired by the Borrower
or any of its Subsidiaries, which loss, suspension, revocation or failure
to renew would reasonably be expected to have a Material Adverse Effect;
(p) the Borrower fails to perform, keep or observe any of the
covenants contained in clause (vii) of subsection 7.1, in subsections 3.5,
7.5, 7.6, 7.11 - 7.13 or in Section 8;
(q) a Change of Control occurs;
(r) the Agent does not have or ceases to have a legal, valid
and perfected first priority Lien on the Collateral (subject to Permitted
Liens) for any reason other than the failure of the Agent to take any
action within its total control; or
(s) any of the Financing Agreements shall cease for any reason
to be in full force and effect or is declared null and void or the
Borrower, any Subsidiary or any other Person (other than the Agent or any
Lender) shall disavow its respective obligations thereunder or shall deny
that it has any further obligations thereunder or shall contest or
challenge the validity or enforceability of any thereof, the legality or
enforceability of any of the Obligations or the perfection or priority of
any Lien granted to the Agent, or gives notice to such effect.
The occurrence or existence of any of the foregoing events shall
constitute an immediate Event of Default unless notice by the Agent or a cure
period is specifically required by the description of such event before such
event matures into an Event of Default.
"Excess Interest" shall have the meaning ascribed thereto in
subsection 2.5(d).
"Excluded Assets" shall mean (i) the Borrower's real property and
Equipment installed at Main Street in Xxxxxx, Pennsylvania and (ii) the
Borrower's real property and Equipment installed at 000 Xxxxxxx Xxxxx in
Pittston, Pennsylvania.
"Facility" shall mean each of the Borrower's facilities located at
000 Xxxxxxx Xxxxxx, 000 Xxxxxxx Xxxxxxx in Plainwell, Michigan, 0000 Xxxxxx
Xxxxxx, Xxx Xxxxxx, Xxxxxxxxx, Main Street in Xxxxxx, Pennsylvania, and 000
Xxxxxxx Xxxxx in Pittston, Pennsylvania and any
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other facility established by the Borrower hereafter in accordance with the
terms of this Agreement.
"Fair Saleable Value Balance Sheet" shall mean the Fair Saleable
Value Balance Sheet of Borrower and each Subsidiary on a consolidated basis
delivered by the Borrower to the Agent and the Lenders in form substantially as
set forth in Exhibit 6.4-2.
"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 only arranged by Federal Funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if such rate is not so
published, the rate then used by first class banks in extending overnight loans
to other first class banks.
"Financial Statements" shall mean the financial statements delivered
by the Borrower pursuant to subsection 7.1.
"Financing Agreements" shall mean, collectively, this Agreement, the
Revolving Notes, any Eau Claire L/C Note, the Intellectual Property Security
Agreements, the Mortgages, and a Guaranty, Pledge Agreement and Stock Power
executed by Guarantor and all other agreements, instruments and documents,
including, without limitation, agreements, documents, instruments, pledges,
powers of attorney, consents, assignments, contracts, notices, leases, financing
statements and all other written matter whether heretofore, now, or hereafter
executed by or on behalf of the Borrower or any other Person and delivered to
the Agent or any Lender in connection with this Agreement, together with all
agreements and documents between the Borrower and the Agent or any Lender
referred to therein or contemplated thereby, as the same may hereafter be
amended, modified or supplemented from time to time.
"Fiscal Quarter" shall mean any of the quarterly fiscal periods of
the Borrower.
"Fiscal Year" shall mean the fiscal year of the Borrower ending on
December 31st each year.
"Fixed Charge Coverage Ratio" shall mean for any fiscal period
determined for the Borrower and its Subsidiaries on a consolidated basis, the
ratio of (x) EBITDA less the sum of Capital Expenditures to the extent not
financed by third parties during such period, income taxes paid in cash with
respect to such period and Restricted Payments paid in cash during such period
to (y) Fixed Charges.
"Fixed Charges" shall mean, for any fiscal period, determined for
the Borrower and its Subsidiaries on a consolidated basis, scheduled principal
payments on its Indebtedness plus interest expenses paid in cash, in each case,
during such period
"Fixtures" shall mean all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by the Borrower, wherever located.
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"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"Funding Date" shall mean the date of (i) the issuance of a Lender
Guaranty for the Eau Claire L/C or (ii) each funding under the Revolving Loan or
(iii) issuance of a Letter of Credit or a Lender Guaranty therefor, which date
in all cases shall be a Business Day or the date on which any portion of a
Revolving Loan is converted to, or continued as, a LIBOR Rate Loan or converted
to a Base Rate Loan.
"General Intangibles" shall mean all of the Borrower's presently
owned or hereafter acquired general intangibles, including, without limitation,
goodwill, choses in action, causes of action, franchises, methods, sales
literature, drawings, specifications, descriptions, name plates, catalogs,
dealer contracts, supplier contracts, distributor agreements, customer lists,
contract rights, confidential information, consulting agreements, employment
agreements, engineering contracts, leasehold interests in real and personal
property, insurance policies (including business interruption insurance),
licenses, permits, and such other Property which uniquely reflect the goodwill
of the business of the Borrower; deposit accounts, letters of credit, and
General Intangibles relating to other items of Collateral, including, without
limitation, rights to refunds or indemnification; reversionary or other rights
of the Borrower to excess Plan assets upon termination or amendment thereof; and
proceeds of all of the foregoing, including without limitation, insurance
proceeds, including proceeds of business interruption insurance, income tax
refunds, and claims for tax or other refunds against any city, county, state, or
federal government, or any agency or authority or other subdivision thereof.
"Generally Accepted Accounting Principles" or "GAAP" shall mean, as
of the date of any determination with respect thereto, generally accepted
accounting principles as used by the Financial Accounting Standards Board and/or
the American Institute of Certified Public Accountants, consistently applied and
maintained throughout the periods indicated.
"Governmental Authority" shall mean any nation or government or any
other political subdivision thereof, any state or other political subdivision
thereof, and any agency, authority, court, central bank, department or other
law, regulation or rule-making entity exercising executive, legislative,
judicial, taxing, regulatory or administrative functions of or pertaining to
government.
"Guaranteed Indebtedness" shall mean direct or indirect guaranties
of the Indebtedness of another Person, including "keepwell" or other similar
arrangements.
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"Guarantor" shall mean PLAINWELL HOLDING COMPANY, a Delaware
corporation.
"Guaranty" of a Person shall mean any agreement by which such Person
guarantees, endorses or otherwise in any way becomes or is legally responsible
for any obligations of any other Person, whether directly or indirectly, by
agreement to purchase the indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging
any indebtedness or obligation of such other Person or otherwise assures any
creditor of such other Person against loss.
"Hazardous Materials" shall mean the following: hazardous
substances; hazardous wastes; polychlorinated biphenyls ("PCB"'s") or any
substance or compound containing PCB's; asbestos or any asbestos-containing
materials in any form or condition; radon; any other radioactive materials
including any source, special nuclear or by-product material; petroleum, crude
oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute); and any other pollutant or contaminant or hazardous, toxic or
dangerous chemicals, materials or substances, as all such terms are used in
their broadest sense and defined by Environmental Laws.
"Holdings" shall mean PLAINWELL HOLDING COMPANY, a Delaware
corporation.
"Indebtedness" shall mean at a particular time (i) indebtedness for
borrowed money or for the deferred purchase price of property or services (other
than current accounts payable arising in the ordinary course of business on
terms customary in the trade) in respect of which the Borrower is liable,
contingently or otherwise, as guarantor, obligor or otherwise or any commitment
by which the Borrower assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit, (ii) indebtedness
guaranteed in any manner by the Borrower, including guaranties in the form of an
agreement to repurchase or reimburse; provided that the amount of indebtedness
represented by any guaranty of limited recourse shall be the lesser of the
amount of indebtedness so guaranteed or the value of the asset to which the
recourse of such indebtedness is limited, (iii) obligations under leases which
shall have been or should be, in accordance with Generally Accepted Accounting
Principles, recorded as Capital Leases in respect of which obligations the
Borrower is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations the Borrower assures a creditor
against loss, (iv) any unfunded obligation of, or withdrawal liability incurred
but not paid by, the Borrower with respect to a Multiemployer Plan, and (v) net
liabilities under Rate Hedging Obligations. Without limiting the generality of
the foregoing, Indebtedness shall include all of the Borrower's obligations with
respect to those certain Variable Rate Demand Notes (Plainwell Paper Co., Inc.
Project) issued by The Economic Development Corporation of the City of Plainwell
and the City of Eau Claire, Wisconsin Tax-Exempt Adjustable Mode Solid Waste
Disposal Revenue Bonds (Xxxx & Xxxxxx, Wis., Inc. Project) Series 1994.
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"Initial Term" shall have the meaning ascribed thereto in subsection
2.7.
"Instrument" shall mean any "instrument," as such term is defined in
the Code, now owned or hereafter acquired by the Borrower, wherever located,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"Intellectual Property" shall mean all of the Borrower's present and
future designs, patents, patent rights and applications therefor, technology,
trademarks and registrations or applications therefor, trade names, inventions,
copyrights and all applications and registrations therefor, advertising matter,
software or computer programs, license rights, trade secrets, methods,
processes, know-how, drawings, specifications, descriptions, and all memoranda,
notes, and records with respect to any research and development, whether now
owned or hereafter acquired by the Borrower, and proceeds of all of the
foregoing, including, without limitation, proceeds of insurance policies
thereon.
"Intellectual Property Security Agreements" shall mean the Trademark
Security Agreement and Copyright Security Agreement, dated as of the Closing
Date, duly executed and delivered by the Borrower in favor of the Agent, for the
benefit of the Lenders, with respect to Intellectual Property, as the same may
hereafter be amended, modified or supplemented from time to time.
"Interest Period" shall mean, with respect to a LIBOR Rate Loan, a
period of one, two, three or six months, as applicable, commencing on a Business
Day, selected by Borrower pursuant to subsection 2.6. Such Interest Period shall
end on the day in the relevant succeeding calendar month which corresponds
numerically to the beginning day of such Interest Period; provided that if there
is no such numerically corresponding day in such next, second, third or sixth
succeeding month, such Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day; provided that if such next succeeding
Business Day falls in a new month, such Interest Period shall end on the
immediately preceding Business Day. In the case of immediately succeeding
Interest Periods, each successive Interest Period shall commence on the day on
which the immediately preceding Interest Period expires. Notwithstanding any of
the foregoing, no Interest Period shall extend beyond the Revolving Loan
Maturity Date.
"Inventory" shall mean all of the inventory of the Borrower of every
kind and description, now or at any time hereafter owned by the Borrower,
wherever located, including, without limitation, all merchandise, raw materials,
parts, supplies, work-in-process and finished goods intended for sale, together
with all the containers, packing, packaging, shipping and similar materials
related thereto, and including such inventory as is temporarily out of the
Borrower's custody or possession, including inventory on the premises of other
Persons and items in transit, and including any goods reclaimed, returned or
repossessed upon any Accounts, Documents, Instruments or Chattel Paper relating
to or arising from the sale of inventory, and all substitutions and replacements
therefor, and all additions and accessions thereto, and all ledgers, books of
account, records, computer printouts, computer runs, microfilm, microfiche and
other
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computer-prepared information relating to any of the foregoing, and any and all
proceeds of any of the foregoing, including, without limitation, proceeds of
insurance policies thereon.
"Investment" of a Person shall mean any loan, advance, extension of
credit (other than accounts receivable arising in the ordinary course of
business), deposit account or contribution of capital by such Person to any
other Person or any investment in, or purchase or other acquisition of, the
stock, partnership interests, notes, debentures or other securities of any other
Person made by such Person. The amount of any Investment shall be the original
cost of such Investment plus the costs of all additions thereto.
"Investment Property" shall mean investment property as defined in
the Code.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and all rules and regulations promulgated thereunder.
"Issuing Bank" shall mean Xxxxx Fargo Bank, N.A., Wachovia Bank of
Georiga, National Association any Lender or any other bank or financial
institution which is approved by the Borrower and the Agent and which issues
Letters of Credit for the account of the Borrower pursuant to subsection 2.1 or
the Eau Claire L/C.
"Lender Guaranties" and "Lender Guaranty" shall have the respective
meanings ascribed thereto in subsection 2.1(c) and shall expressly exclude the
Eau Claire Lender Guaranty.
"Lender Guaranty Fee Rate" means a rate equal to two percent (2%)
per annum.
"Lender Guaranty Fees" shall have the meaning ascribed thereto in
subsection 2.17.
"Lender Guaranty Liability" means, as to each Lender Guaranty, all
liabilities of the Lenders with respect to the transaction for which such Lender
Guaranty was issued, whether contingent or otherwise, including with respect to
a letter of credit: (a) the amount available to be drawn or which may become
available to be drawn; (b) all amounts which have been paid or made available by
the Issuing Bank or the Lenders to the extent not reimbursed by the Borrower;
and (c) all unpaid interest, fees and expenses with respect thereto.
"Lender Guaranty Reserve" means, at any date of determination, a
reserve in an amount equal to the aggregate amount of Lender Guaranty Liability
with respect to Lender Guaranties outstanding at such time other than a Lender
Guaranty with respect to the Eau Claire L/C.
"Lenders" shall mean the financial institutions signatory hereto
and, subject to the terms and conditions hereof, their respective successors and
assigns.
"Letter of Credit" shall mean a standby letter of credit or bankers
acceptance issued by an Issuing Bank at the request and for the account of the
Borrower and for which the Lenders incur Lender Guaranties.
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"Letter of Credit Fees" shall mean, collectively, Lender Guaranty
Fees and Eau Claire L/C Fees.
"Leverage Ratio" shall mean, for Borrower on a consolidated basis,
as of the last day of any Fiscal Quarter, the ratio of Funded Debt less
Unrestricted Cash to EBITDA for the trailing twelve months (or shorter period if
specified) then ended.
"Liabilities" shall mean liabilities of the Borrower and each
Subsidiary which are or should be reflected on a consolidated balance sheet of
the Borrower and its Subsidiaries in accordance with Generally Accepted
Accounting Principles, and shall include, without duplication, Indebtedness.
"LIBOR Rate" shall mean, for each Interest Period, a rate of
interest equal to the sum of:
(a) the quotient of (i) the rate of interest determined by
Agent to be the rate at which deposits in U.S. Dollars for the relevant
Interest Period are offered based on information presented on the Telerate
Screen as of 11:00 a.m. (London time) on the applicable LIBOR Rate
Determination Date in the approximate amount of the LIBOR Rate Loan and
having a maturity approximately equal to such Interest Period; provided
that if at least two such offered rates appear on the Telerate Screen in
respect of such Interest Period, the arithmetic mean of all such rates (as
determined by Agent) will be the rate used; provided further, that if the
Telerate System ceases to provide LIBOR quotations, such rate shall be the
average rate of interest determined by Agent at which deposits in U.S.
Dollars are offered for the relevant Interest Period by The Sanwa Bank,
Limited (or its successor) to banks with combined capital and surplus in
excess of $500,000,000 in the London interbank market as of 11:00 a.m.
(London time) on the applicable LIBOR Rate Determination Date in the
approximate amount of the LIBOR Rate Loan and having a maturity
approximately equal to such Interest Period, divided by
(ii) one minus the rate (expressed as a decimal) of reserve
requirements in effect on the LIBOR Rate Determination Date (including,
without limitation, all basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation
D) which are required to be maintained by a member bank of the Federal
Reserve System;
plus,
(b) the Applicable LIBOR Margin per annum.
To the extent determined by reference to average rate offered (rather than the
Telerate Screen), the LIBOR Rate shall be adjusted to the nearest one-sixteenth
percent (1/16%) or, if there is no nearest one-sixteenth percent (1/16%), to the
next higher one-sixteenth percent (1/16%).
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"LIBOR Rate Determination Date" shall mean each date for calculating
the LIBOR Rate for purposes of determining the interest rate applicable to any
LIBOR Rate Loan made pursuant to subsection 2.6. The LIBOR Rate Determination
Date shall be the second Business Day prior to the first day of the related
Interest Period for a LIBOR Rate Loan.
"LIBOR Rate Loans" shall mean Revolving Loans bearing interest at
the LIBOR Rate plus the Applicable LIBOR Margin.
"Lien" shall mean, with respect to the Property of any Person, any
statutory or contractual lien, security interest, mortgage, pledge, claim,
encumbrance, charge, hypothecation, assignment, deposit arrangement, filing of,
or agreement to give, a financing statement, encumbrance or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever, whether voluntary or involuntary (including, without limitation, the
interest of a vendor or lessor under any conditional sale, capitalized lease or
other title retention agreement), in, of or on any of the Property of such
Person in favor of any other Person.
"Litigation" shall have the meaning ascribed thereto in subsection
6.14.
"Loan Account" shall have the meaning ascribed thereto in subsection
2.14.
"Loan Year" shall mean the period of twelve (12) consecutive months
commencing on the Closing Date and each succeeding period of twelve (12)
consecutive months commencing on each anniversary of the Closing Date during the
Initial Term and any Renewal Term.
"Loans" shall mean, collectively, the Revolving Loan and the Eau
Claire Term Loans.
"Material Adverse Effect" shall mean, as determined by the Required
Lenders in their reasonable business judgment, a material adverse effect upon
(a) the business, properties, operations or condition (financial or otherwise)
or business prospects of the Borrower or of the Borrower and its Subsidiaries
taken as a whole as a result of the occurrence or existence of any single event
or condition or series of events or conditions in the aggregate, or (b) the
ability of the Borrower or any Subsidiary to perform its obligations under any
of the Financing Agreements, or (c) the validity or enforceability of any of the
Financing Agreements or the rights, powers and remedies of the Agent or any
Lender to enforce or collect the Obligations. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding that
such event does not of itself have such effect, a Material Adverse Effect shall
be deemed to have occurred if the cumulative effect of such event and all other
then existing events would result in a Material Adverse Effect.
"Merger Agreement" shall mean that certain Agreement and Plan of
Merger, dated as of March 2, 1998, between Plainwell Paper and the Borrower,
pursuant to which Plainwell Paper has been merged with and into the Borrower.
"Monthly Report" shall have the meaning ascribed thereto in
subsection 3.1.
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"Mortgages" shall mean the first mortgages, deeds of trust,
leasehold mortgages, collateral assignment of leases or amendments to mortgages
(as applicable) with respect to the Borrower's owned Real Estate located at (i)
000 Xxxxxxx Xxxxxx and 000 Xxxxxxx Xxxxxxx in Plainwell, Michigan and (ii) 0000
Xxxxxx Xxxxxx in Eau Claire, Wisconsin, all in form and substance satisfactory
to the Agent, duly executed and delivered by the Borrower or any subsidiary in
favor of the Agent, for the benefit of the Lenders, as security for the
Obligations, as the same may hereafter be restated, amended, modified or
supplemented from time to time.
"Multiemployer Plan" shall mean any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate contributes, is obligated to contribute or was required to contribute
within the immediately preceding six (6) years.
"Net Income" shall mean, for any applicable fiscal period,
determined for the Borrower and its Subsidiaries on a consolidated basis, the
audited consolidated net income after income and franchise taxes and shall have
the meaning given such term by Generally Accepted Accounting Principles;
provided that there shall be specifically excluded therefrom tax-adjusted (i)
gains or losses from the sale of fixed assets, (ii) net income of any Person in
which the Borrower or any Subsidiary has an ownership interest, unless received
by the Borrower in a cash distribution and (iii) expenses incurred in connection
with the issuance or repurchase of capital stock to or from management employees
of the Borrower.
"Note" or "Notes" shall mean one or more of the Revolving Loan Notes
and/or Eau Claire L/C Notes.
"Obligations" shall mean all of the Borrower's obligations,
liabilities and indebtedness to the Agent and the Lenders and/or to any
affiliate of the Agent or the Lenders of any and every kind and nature, whether
heretofore, now or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired, or owing, whether primary, secondary,
direct, indirect, contingent, fixed or otherwise (including, without limitation,
obligations of performance, Lender Guaranty Liabilities and the Eau Claire L/C
Liability) and whether arising or existing under written agreement, oral
agreement or operation of law including, without limitation, all of the
Borrower's indebtedness, liabilities and obligations to the Agent and the
Lenders or any Participant under this Agreement and the other Financing
Agreements.
"Participant" shall mean any Person now or from time to time
hereafter participating with any Lender in the Revolving Loans made by such
Lender to the Borrower or in the Eau Claire L/C pursuant to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean any Plan that is or was a defined benefit
plan (other than a Multiemployer Plan) defined in Section 3(35) of ERISA.
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"Permitted Investments" shall have the meaning ascribed thereto in
subsection 8.4.
"Permitted Liens" shall have the meaning ascribed thereto in
subsection 8.1.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, limited liability company, limited liability
partnership, unincorporated organization, association, corporation, institution,
entity, party, or government (whether national, federal, state, provincial,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plainwell Paper" shall mean PLAINWELL PAPER COMPANY, a Michigan
corporation and, prior to the effective date of the Merger Agreement, a wholly
owned Subsidiary of Holdings.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA (other than any Multiemployer Plan) under which the
Borrower or any ERISA Affiliate is, or was at any time within the previous six
(6) years, an "employer" within the meaning of Section 3(5) of ERISA.
"Prime Rate" shall mean the highest "prime rate" of interest
reported, from time to time, by The Wall Street Journal; provided, however, that
in the event that The Wall Street Journal ceases reporting a "prime rate",
"Prime Rate", "Prime Rate" shall mean the per annum rate of interest reported as
the "Bank Prime Loan" rate for the most recent weekday for which such rate is
reported in Statistical Release H.15 (519) published from time to time by the
Board of Governors of the Federal Reserve System; provided further that in the
event that both of the aforesaid indices cease to be published or to report
rates of the aforesaid types, the "Prime Rate" shall be determined from a
comparable index chosen by the Agent in good faith. The "Prime Rate" shall
change effective on the date of the publication of any change in the applicable
index by which such "Prime Rate" is determined.
"Prior Loan Agreement" shall mean the Loan and Security Agreement,
dated as of June 12, 1997 as amended, between SBCC, as Agent and Lender, the
other Lenders party thereto and Plainwell Paper.
"Prior Loan Documents" shall mean the Prior Loan Agreement and the
loan documents entered into in connection therewith.
"Pro Forma" shall have the meaning ascribed thereto in subsection
6.4(a).
"Projections" shall mean the projected balance sheets, profit and
loss statements, and cash flow statements of the Borrower and its Subsidiaries
on a consolidated basis, prepared in accordance with Generally Accepted
Accounting Principles, together with appropriate supporting details and a
statement of underlying assumptions, which have been and will be delivered to
the Agent and the Lenders in accordance with the terms hereof by the Borrower, a
copy of the first of which is attached as Exhibit 6.4-3 (except that the
Projections set forth as
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Exhibit 6.4-3 present the Borrower's consumer products division and specialty
paper divisions separately).
"Property" of a Person shall mean any and all assets or property,
whether real, personal, tangible, intangible, or mixed, of such Person, or other
assets or property leased or operated by such Person.
"Pro Rata Share" shall mean the percentage obtained by dividing (a)
the Commitments of a Lender by (b) the aggregate Commitments of all Lenders, as
such percentage may be adjusted by assignments permitted pursuant to subsection
11.1. The Commitments of each Lender with respect to the Revolving Loan and the
Eau Claire L/C as of the Closing Date are set forth on Schedule 1; Schedule 1
shall be amended and the Lenders' Pro Rata Shares shall be adjusted from time to
time to give effect to the addition of any new Lenders pursuant to subsection
11.1. The sum of the Pro Rata Shares of all Lenders at any date of determination
shall equal one hundred percent (100%).
"Purchase Agreement" means the Agreement of Purchase and Sale, dated
as of January 22, 1998, between Xxxx & Xxxxxx, Inc., Xxxx & Talbot, Wis., Inc.,
Holdings and Borrower, pursuant to which Holdings, through Borrower, will
acquire the Tissue Business from Xxxx & Xxxxxx, Inc. and Xxxx & Talbot, Wis.,
Inc.
"Rate Hedging Obligations" of a Person shall mean any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefore), under (i) any
and all agreements, devices or arrangements designed to protect at least one of
the parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's Property, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Rate Option" shall mean the Base Rate or the LIBOR Rate, as
applicable.
"Real Estate" shall mean the real property, mineral rights,
leasehold or other interests in real property together with any purchase options
and other rights related to such leaseholds or other interests owned, leased,
used or operated now or hereafter by the Borrower, all Fixtures and personal
property used in conjunction therewith and the Borrower's rights to leases,
rents and profits with respect thereto, but excluding the Borrower's real
property located at 12 Street in Plainwell, Michigan and commonly referred to as
the 00xx Xxxxxx Landfill.
"Related Transactions" shall mean, collectively, all of the
transactions contemplated by the Related Transactions Documents.
"Related Transactions Documents" shall mean, collectively, the
Financing Agreements, the Purchase Agreement, the Merger Agreement, the
Subordinated Debt Documents
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and all documents, agreements, instrument and certificates executed, delivered
or filed in connection therewith.
"Renewal Term" shall have the meaning ascribed thereto in subsection
2.7.
"Required Lenders" shall mean (i) Lenders having pro rata shares in
the aggregate equal to at least sixty-six and two thirds percent (66 2/3%) of
the Total Loan Facility or (ii) if the Revolving Credit Facility has been
terminated, Lenders having in the aggregate at least sixty-six and two thirds
percent (66 2/3%) of the aggregate outstanding amount of the Revolving Loans and
the Eau Claire Lender Guaranty.
"Restricted Payment" shall mean: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of Stock
of the Borrower now or hereafter outstanding, except a dividend payable solely
in shares of that class of Stock to the holders of that class; (b) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value direct or indirect of any shares of any
class of Stock of the Borrower now or hereafter outstanding; (c) any payment or
prepayment of principal or premium, if any, or interest on, fees with respect
to, redemption, conversion, exchange, purchase, retirement, defeasance, sinking
fund or similar payment with respect to Subordinated Debt of the Borrower; (d)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Stock of the
Borrower now or hereafter outstanding; or (e) any payment by the Borrower of any
management fees, advisor fees or similar fees whether pursuant to a management
agreement or otherwise to any Affiliate of the Borrower.
"Revolving Loan" shall have the meaning ascribed thereto in
subsection 2.1.
"Revolving Loan Maturity Date" shall mean March 6, 2003, subject to
subsection 2.7.
"Revolving Loan Notes" shall have the meaning ascribed thereto in
subsection 2.3.
"SBCC" shall mean Sanwa Business Credit Corporation, a Delaware
corporation, in its individual capacity, and its successors.
"SBCC Fee Letter" shall mean that certain letter dated as of January
21, 1998 between SBCC and Borrower with respect to certain fees to be paid from
time to time by Borrower to SBCC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall mean have the meaning ascribed thereto in the
recitals to the Agreement.
"Service" shall mean the Internal Revenue Service and any successor
thereof.
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"Solvency Affidavit" shall mean the Affidavit of Solvency of even
date herewith executed and delivered by the chief financial officer of the
Borrower in favor of the Agent, for the benefit of the Lenders.
"Solvent" shall mean, when used with respect to any Person, that (i)
the fair saleable value of its Property is in excess of the total amount of its
Liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with Generally
Accepted Accounting Principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, disputed or undisputed), (ii) it is able to
pay its debts or obligations in the ordinary course as they mature, and (iii)
that Person has capital sufficient to carry on its business and all businesses
in which it is about to engage. "Solvency" shall have a correlative meaning.
"Stock" shall mean all shares, options, general or limited
partnership interests or other equivalents (regardless of how designated),
participation or other equivalents (however designated) of or in a corporation,
partnership or equivalent entity, whether voting or non-voting, including,
without limitation, common stock, warrants, preferred stock, convertible
debentures or any other equity security, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more of all of the
foregoing.
"Stock Pledge Agreement" shall mean the Stock Pledge Agreement,
dated as of June 12, 1997, executed by the Guarantor in favor of the Agent, on
behalf of itself and the Lenders, as the same may be restated, amended, modified
or supplemented from time to time.
"Subordinated Debt" shall mean any Indebtedness (a) the payment of
which is subordinated to the payment of the Obligations and (b) which is
incurred pursuant to terms, conditions and documentation in form and substance
satisfactory to the Required Lenders. Without limiting the generality of the
foregoing, the term "Subordinated Debt" shall include the Subordinated Notes.
"Subordinated Debt Documents" shall mean the Subordinated Notes and
the Indenture dated as of March 6, 1998 governing the Subordinated Notes between
the Borrower and the Trustee designated therein.
"Subordinated Notes" shall mean $125,000,000 principal amount of 11%
Senior Subordinated Notes due 2008.
"Subsidiary" of a Person shall mean (i) any corporation of which
more than fifty percent (50%) of the outstanding securities having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions is at any time of determination, directly or
indirectly, owned or controlled by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, trust, grantor trust, joint venture or similar
business organization more than 50% of the equity or partnership interests
having ordinary voting power or power of direction of which shall at any time of
determination be so owned or controlled. Unless otherwise expressly
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provided or the context requires otherwise, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Tangible Assets" shall mean, at any date of determination, the
Borrower's total Property (less applicable reserves and other properly
deductible items) which under Generally Accepted Accounting Principles would be
reflected on a balance sheet of the Borrower, after deducting therefrom all
values attributable to organizational expenses, patents, copyrights, trademarks,
licenses and other intangibles, goodwill, covenants not to compete, research and
development costs, training costs, and all unamortized debt discount, pre-paid
expenses and deferred charges, which in each case under Generally Accepted
Accounting Principles, would be included on such balance sheet.
"Tangible Net Worth" shall mean, at any date of determination,
Tangible Assets less total Liabilities.
"Taxes" shall mean taxes, liens, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto imposed by any
Governmental Authority (together with any fines, interests, penalties or other
additions thereto), excluding (a) taxes imposed on or measured by the net income
of any Lender by the jurisdictions (i) under the laws of which such Lender is
organized or (ii) where the principal office of such Lender is located or (b)
any transfer taxes imposed as a result of the transfer of any Notes or any Eau
Claire L/C Notes.
"Telerate Screen" shall mean the display designated as Screen 3750
on the Telerate System or such other screen on the Telerate System as shall
display the London interbank offered rates for deposits in U.S. dollars quoted
by selected banks.
"Termination Date" shall mean the earlier of (i) the Revolving Loan
Maturity Date then in effect and (ii) the date of termination of the Lenders'
obligation to make advances under the Revolving Loan pursuant to subsection 9.1.
"Termination Event" shall mean: (a) the tax disqualification of a
Plan under Section 401(a) of the IRC; (b) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder unless the thirty
(30) day notice to the PBGC has been waived for the event; (c) the withdrawal of
the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or was deemed such under Section 4062(e) of ERISA; (d) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041(e)
of ERISA; (e) the institution of proceedings to terminate a Pension Plan by the
PBGC; (f) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; (g) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; (h) the imposition of
a Lien pursuant to Section 412 of the IRC or Section 302 of ERISA; (i) any event
or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or
(j) any event or condition which results in the termination of a
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Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"399 Group" shall have the meaning set forth in the definition of
"Change of Control."
"Tissue Business" shall mean the business which manufactures and
markets private label consumer tissue products, as conducted by Seller and sold
to Borrower on the Closing Date pursuant to the Purchase Agreement.
"Total Loan Facility" shall mean Fifty Four Million Five Hundred
Fifty Two Thousand Dollars ($54,552,000).
"Total Revolving Loan Facility" shall mean Thirty Five Million
Dollars ($35,000,000), as such amount may be reduced, if at all, from time to
time in accordance with the terms of this Agreement.
"Unrestricted Cash" shall mean cash on hand or on deposit and Cash
Equivalents owned by Borrower that is not pledged to any Person other than Agent
and is not subject to any statutory, regulatory, contractual or other
restriction which would prohibit or restrict the application thereof to the
Obligations.
"Unused Line Fee" shall have the meaning ascribed thereto in
subsection 2.12.
1.2. Accounting Terms. Any accounting terms used in this Agreement
which are not specifically defined herein shall have the meanings customarily
given them in accordance with Generally Accepted Accounting Principles. All
determinations of the book value of Inventory contemplated hereby shall be at
the lower of cost (on a first-in, first-out basis) or market.
1.3. Other Terms Defined in Illinois Uniform Commercial Code. All
other terms contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings provided in the Uniform
Commercial Code of the State of Illinois or the laws of any other state which
are required to be applied in connection with the issue of perfection or
non-perfection of Liens on the Collateral (the "Code") to the extent the same
are used or defined therein.
1.4. Effective Date. All references to "the date hereof," "the date
of this Agreement," "the effective date hereof," "effective as of the date
hereof" or "of even date herewith" contained herein or in the other Financing
Agreements shall be deemed to refer to the Closing Date of this Agreement.
1.5. References. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the defined terms. Unless
otherwise expressly provided or unless the context requires otherwise, all
references in this Agreement to Sections, subsections, Schedules and Exhibits
shall mean and refer to Sections, subsections, Schedules and Exhibits of
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this Agreement. References to Persons include their respective permitted
successors and assigns or, in the case of a governmental authority, Persons
succeeding to the relevant functions of such Persons. All references to statutes
shall include all related rules and regulations and shall include all amendments
of same and any successor or replacement statutes and regulations.
2. CREDIT.
2.1. Revolving Credit Facility, Revolving Loan and Lender
Guaranties.
(a) Revolving Loan. Subject to the terms and conditions herein set
forth, each Lender agrees severally (and not jointly) to make its Pro Rata Share
of advances to the Borrower, on a revolving credit basis (the "Revolving Loan"),
in an aggregate amount not in excess of the lesser of (i) the Total Revolving
Loan Facility less the Lender Guaranty Reserve, or (ii) the Current Asset Base
(such lesser amount, "Borrowing Availability"). As used herein, the "Current
Asset Base" shall mean an amount equal to:
(1) up to eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to
Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts, less such reserves as the Agent in its reasonable
credit judgment elects to establish, plus
(2) up to sixty percent (60%) of the book value of the Borrower's
then existing Eligible Inventory; provided that with respect to that
portion of the Current Asset Base consisting of such Eligible Inventory as
derived from the foregoing formula, the principal balance of the Revolving
Loan plus the outstanding Lender Guaranty Reserve attributable thereto
("the Inventory Advances") at any one time shall not exceed Twenty One
Million Dollars ($21,000,000). The book value of Eligible Inventory shall
be determined at the lower of cost (determined on a first-in-first-out
("FIFO") basis) or market, less such reserves as the Agent in its
reasonable discretion elects to establish, and minus
(3) the Lender Guaranty Reserve.
(b) Advances. Until all amounts outstanding in respect of the
Revolving Loan shall become due and payable on the Termination Date, within the
foregoing limits and subject to the terms, provisions and limitations set forth
herein, the Borrower may from time to time borrow, repay and reborrow under this
subsection 2.1. Each advance of the Revolving Loan shall be made on notice by an
Authorized Officer. The Agent shall be entitled to rely upon, and shall be fully
protected under this Agreement from any liability to any Person in relying upon,
any such notice believed by the Agent to be genuine and to assume that each
Person executing and delivering the same was duly authorized by the Borrower.
Each advance to the Borrower shall, on the day of such advance, be deposited, in
immediately available funds, in such account as the Borrower may, from time to
time, designate, unless otherwise requested by the Borrower in writing. On the
Closing Date, the Continuing Loans shall be converted into and shall constitute
outstanding advances under the Revolving Loan without further action by Agent,
Lenders or Borrower.
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(c) Lender Guaranty. Subject to the terms and conditions of this
Agreement, as part of the Total Revolving Loan Facility and in addition to
advances under the Revolving Loan, upon the request of the Borrower, SBCC, on
behalf of each Lender according to such Lender's Pro Rata Share, may issue or
arrange for the issuance of Letters of Credit for the account of the Borrower
and/or guaranty payment to the Issuing Banks which issue Letters of Credit for
the account of the Borrower or to guaranty other obligations of the Borrower
under written contracts (all such guaranties and Letters of Credit issued by
SBCC are collectively referred to herein as "Lender Guaranties" and individually
as a "Lender Guaranty"); provided that SBCC shall not be under any obligation to
issue any Lender Guaranty if any order, judgment or decree of any government
authority or other regulatory body shall purport by its terms to enjoin or
restrain SBCC or any Lender from issuing such Lender Guaranty, or any law or
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) from any governmental authority or other regulatory
body with jurisdiction over SBCC or any Lender shall prohibit, or request that
SBCC or such Lender refrain from, the issuance of Lender Guaranties in
particular or shall impose upon SBCC or any Lender with respect to such Lender
Guaranties any restriction or reserve or capital requirement (for which SBCC or
such Lender is not otherwise compensated) or any unreimbursed loss, cost or
expense which SBCC or any Lender in good xxxxx xxxxx material to it. In no event
shall SBCC issue or otherwise become obligated with respect to a Letter of
Credit (including, without limitation, Letters of Credit issued with an
automatic "evergreen" provision) having an expiration date, or a date for
payment of any draft presented thereunder, later than the earlier of (i) twelve
(12) months from the date of issuance or (ii) thirty (30) days prior to the
Revolving Loan Maturity Date. Such issuance and obligations with respect to a
Letter of Credit pursuant to this subsection 2.1(c) shall be deemed to be a
Revolving Loan for purposes of requiring the satisfaction of the applicable
conditions set forth in Section 4. Additions to the Lender Guaranty Reserve
shall be established concurrently with the issuance of each Lender Guaranty.
Immediately upon the issuance of any Lender Guaranty in accordance with this
subsection 2.1(c), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from SBCC, without recourse,
representation or warranty, an individual participation interest equal to its
Pro Rata Share of the principal amount of such Lender Guaranty and each draw
paid by the Issuing Bank under the Letter of Credit issued in connection
therewith. Each Lender's obligation to pay its Pro Rata Share of all draws under
the Letters of Credit issued in connection with such Lender Guaranties shall be
absolute, unconditional and irrevocable and in each case shall be made without
counterclaim or set-off by such Lender.
(i) Maximum Amount. The aggregate amount of Lender Guaranty
Liability with respect to Lender Guaranties outstanding at any one time
shall not exceed $6,000,000.
(ii) Reimbursement. The Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest
or other formalities of any kind, to reimburse the Agent, on behalf of the
Lenders, for any amounts paid by the Lenders with respect to each Lender
Guaranty, including, without limitation, all amounts paid by the Lenders
upon any draw with respect to a Letter of Credit, any guaranty or
reimbursement obligation paid by the Lenders to any Person upon any draw
upon a Letter
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of Credit and all fees, costs and expenses paid by the Lenders to any
Issuing Bank. All such reimbursement obligations shall be due and payable
on demand. If not paid within one (1) Business Day following demand, or,
if an Event of Default shall have occurred and be continuing, on the date
such reimbursement obligations arise, the Borrower hereby authorizes and
directs the Agent, at the Agent's option, to debit the Loan Account (by
increasing the principal balance of the Revolving Loan), in the amount of
any payment made by the Lenders with respect to any Lender Guaranty and,
in connection therewith, the Lender Guaranty Reserve then in effect shall
be reduced by the amount of such debit. All amounts paid by the Lenders
with respect to any Lender Guaranty that are not immediately repaid by the
Borrower with the proceeds of the Revolving Loan or otherwise shall bear
interest at the interest rate applicable to Base Rate Loans. If SBCC makes
a payment on account of any Lender Guaranty and is not concurrently
reimbursed therefor by the Borrower and if for any reason an advance under
the Revolving Loan may not be made as stated in this subsection 2.1(c),
then as promptly as practical during normal banking hours on the date of
its receipt of notice thereof or, if not practicable on such date, not
later than 12:00 noon (Chicago time) on the Business Day immediately
succeeding such date of notification, each Lender shall deliver to the
Agent for the account of the Issuing Bank, in immediately available funds,
the purchase price for such Lender's interest in such unreimbursed Lender
Guaranty, which shall be an amount equal to such Lender's Pro Rata Share
of such payment. Each Lender acknowledges and agrees that its obligation
to reimburse the Agent pursuant to this subsection 2.1(c)(ii) with respect
to Lender Guaranty Liabilities is absolute and unconditional and shall not
be affected by any circumstance whatsoever including, without limitation,
the occurrence or continuance of a Default or an Event of Default, and
further acknowledges and agrees that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.
(iii) In addition to all other terms and conditions set forth in
this Agreement, the issuance by the Lenders of any Lender Guaranty shall
be subject to the conditions precedent that the Issuing Bank be
satisfactory to the Agent and that the Letter of Credit or written
contract for which the Borrower requests a Lender Guaranty be in such
form, be in such amount, contain such terms and support such transactions
as are reasonably satisfactory to the Agent. The Borrower shall comply
with all such terms and conditions imposed on the Borrower by any Issuing
Bank or by the Agent with respect to the issuance of any Letter of Credit,
whether such terms and conditions are imposed in the application for such
Letter of Credit, the Lenders' guaranty of such letter of credit or
otherwise. Each Lender Guaranty shall be in form and substance
satisfactory to the Agent and shall provide that the guaranty terminates
and all demands or claims for payment must be presented by a date certain,
which date will be at least thirty (30) days before the Revolving Loan
Maturity Date. Notwithstanding the recitation in this Agreement of terms
and conditions with respect to the issuance of Lender Guaranties, the
Borrower hereby acknowledges and agrees that the issuance of any Lender
Guaranty shall be in the Agent's reasonable discretion.
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(iv) Prior to the issuance of a Lender Guaranty and as a condition
to such issuance, the Borrower shall give the Agent prior written notice
specifying the date a Lender Guaranty is to be issued, identifying the
beneficiary of the guaranty and describing the nature of the transactions
proposed to be supported thereby and specifying whether the Borrower is
requesting a Lender Guaranty in the form of a Letter of Credit issued by
one of the Lenders that is a bank or a guaranty of a Letter of Credit
issued by another Issuing Bank. The notice shall be accompanied by the
form of the Letter of Credit or other written contract to be guarantied
and the letter of credit application and reimbursement agreements. Subject
to the terms hereof, the Agent shall issue the requested Lender Guaranty
as soon as practicable and not more than fifteen (15) Business Days
following the date of the applicable notice; provided that the Lender
Guaranty shall not be issued until the Agent and the Issuing Bank have
mutually agreed upon the form of such Lender Guaranty.
(v) The Borrower hereby agrees to indemnify, pay and hold the Agent
and each Lender harmless from and against any and all pending or
threatened claims, litigation, damages, losses and liabilities incurred by
the Agent or any Lender (or which may be claimed against the Agent or any
Lender by any Person whatsoever) and costs and expenses incurred in
defending or responding to pending or threatened claims or litigation by
reason of or in connection with the execution, delivery or transfer of, or
payment or failure to pay under, any Lender Guaranty including, without
limitation, any action taken or omitted by any Issuing Bank in accordance
with the provisions of subsection 7.10. The Borrower's unconditional
obligations to the Agent and the Lenders hereunder shall not be modified
or diminished for any reason or in any manner whatsoever. The Borrower
agrees that any charges made to the Agent or the Lenders for the
Borrower's account by any Issuing Bank shall be conclusive as between such
Persons, absent manifest error, and the Borrower and may be charged to the
Borrower's Loan Account hereunder.
2.2. Maximum Principal Balance of Revolving Loan. The aggregate
outstanding principal balance of the Revolving Loan shall at no time exceed the
Borrowing Availability. If at any time the principal balance of the Revolving
Loan exceeds Borrowing Availability, the Borrower shall immediately and without
notice or demand of any kind (a) repay the Revolving Loan to the extent
necessary to reduce the principal balance to an amount that is equal to or less
than the Borrowing Availability and (b) if any excess remains after payment of
the outstanding Revolving Loan, cash collateralize the Lender Guaranty
Liabilities to the extent necessary to eliminate such remaining excess.
2.3. Evidence of Revolving Loan Indebtedness. The advances by each
Lender constituting the Revolving Loan shall be evidenced by a promissory note
in favor of each respective Lender (collectively, the "Revolving Loan Notes") in
the amount of its Revolving Loan Commitment dated the Closing Date in the form
attached as Exhibit 2.3. All of the Borrower's Revolving Loan Obligations to the
Lenders hereunder shall be payable by the Borrower in cash or by application of
the proceeds of all Accounts and other Collateral in accordance with subsection
3.5, and shall be payable in full upon the Termination Date, and the
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principal amount of such Revolving Loan Obligations shall bear interest as
hereinafter provided. Each advance by the Lenders and each repayment of
principal applicable to such advance shall be reflected in the Borrower's Loan
Account.
2.4. Eau Claire L/C Facility.
(a) Eau Claire L/C. Subject to the terms and conditions herein set
forth and in addition to the Total Revolving Facility and advances made pursuant
to subsection 2.1, SBCC, on behalf of each Lender according to such Lender's Pro
Rata Share, agrees to issue on the Closing Date the Eau Claire Lender Guaranty
for the account of Borrower. Each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from SBCC, without recourse,
representation or warranty, an individual participation interest equal to its
Pro Rata Share of the principal amount of the Eau Claire Lender Guaranty and
each draw paid by SBCC in connection therewith. Each Lender's obligation to pay
its Pro Rata Share of all draws under the Eau Claire L/C shall be absolute,
unconditional and irrevocable and in each case shall be made without
counterclaim or set-off by such Lender.
(b) Reimbursement. (i) The Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind to reimburse the Agent, on behalf of the Lenders,
with respect to all amounts paid by the Lenders upon any draw upon the Eau
Claire L/C and all fees, costs and expenses paid by the Lenders in connection
therewith. All such reimbursement obligations shall be due and payable within
one (1) Business Day following demand and shall accrue interest, payable to the
Agent on demand, at the Default Rate applicable to Base Rate Loans from the date
of such draw until the date of reimbursement to the Agent and if not paid within
one (1) Business Day following demand, the Borrower hereby authorizes and
directs the Agent, at the Agent's option to debit the Loan Account (by
increasing the principal balance of the Revolving Loan);
(ii) Nothwithstanding the foregoing, if the Eau Claire L/C is drawn
prior to the fifth anniversary of the Closing Date and no Event of Default shall
have occurred and be continuing as of the date of any drawing and Borrower shall
have executed and delivered to Lenders the Eau Claire L/C Notes (as defined
below): (i) each Lender shall, as promptly as practical during normal banking
hours on the date of its receipt of notice thereof, but not later than 12:00
noon (Chicago time) on the Business Day immediately succeeding such date of
notification, deliver to Agent its Pro Rata share of the amount of such drawing
in immediately available funds and (ii) the amount of such drawing shall be
converted into a term loan (an "Eau Claire Term Loan"), and (iii) the Borrower
shall pay to the Agent, for the ratable benefit of the Lenders, an amount equal
to the principal balance of such drawing (together with all fees, costs and
expenses paid by the Lenders in connection therewith) in consecutive monthly
installments, each equal to 1/84th of such amount and due on the first day of
each calendar month, commencing on the first day of the first calendar month
following such drawing, with the final installment equal to the entire remaining
principal balance of such amount due and payable on the Termination Date. In
such cases where the Borrower is entitled to repay a drawing under the Eau
Claire L/C in installments, each such drawing shall be evidenced by a promissory
note, dated the date of such drawing (each, a "Eau Claire L/C Note"), in favor
of the Agent, for the
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ratable benefit of the Lenders, each in the amount of the principal balance of
such drawing (together with all fees, costs and expenses paid by the Lenders in
connection therewith) in the form attached as Exhibit 2.3. Amounts outstanding
under any Eau Claire L/C Note shall accrue interest at the interest rate
applicable to Base Rate Loans.
(iii) Each Lender acknowledges and agrees that its obligation to
reimburse the Agent pursuant to this subsection 2.4(a) with respect to Eau
Claire L/C Liabilities is absolute and unconditional and shall not be affected
by any circumstance whatsoever including, without limitation, the occurrence or
continuance of a Default or an Event of Default, and further acknowledges and
agrees that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. On the Closing Date, at Borrower's request,
Agent and Lenders will make a special advance in the amount of $19,552,000 (the
"L/C Guaranty Deposit") on behalf of Borrower to Seller or a trustee bank to
secure Borrower's reimbursement obligations to Seller as the obligor with
respect to the Eau Claire L/C. Such funds shall be held pursuant to a letter of
credit trust agreement among Seller, Borrower, Agent, Wachovia Bank of Georgia,
National Association ("Wachovia"), the trustee bank (if any) and the bond
trustee for the Eau Xxxxxx xxxxx and/or such other agreements as the parties
require to effectuate the purposes of this subsection 2.4(b)(iii). That L/C
Guaranty Deposit will not bear interest hereunder, except (a) to the extent that
Seller or Wachovia or the trustee bank (if any), at Seller's direction, applies
any or all of such funds to the Seller's reimbursement obligations with respect
to the Eau Claire L/C or (b) if such funds are not paid to Agent and Lenders
when such funds are to be paid in accordance with the terms of the applicable
trust agreement (provided that Agent and Lenders use reasonable efforts to
obtain payment thereof), or (c) upon the Termination Date, in which cases the
Borrower's reimbursement obligations set forth in clause (b)(i) above shall
become effective. In addition to the Eau Claire L/C Fee, Agent and Lenders shall
be entitled to all interest income earned on the L/C Guaranty Deposit while the
same is held by Seller or a trustee bank, if any.
(c) Termination. Upon the earlier to occur of (i) the fifth
anniversary of the Closing Date and (ii) a termination during the Initial Term
for any reason of the Commitment to make Revolving Loans, Borrower shall be
obligated to immediately (i) cause to be issued to and for the benefit of the
Lenders a letter of credit as substitution for the Eau Claire L/C in form and
substance acceptable to the Required Lenders issued by a bank or other financial
institution acceptable to the Required Lenders, and cause SBCC and the Lenders
to be released with respect to liability under the Eau Claire L/C or (ii)
deposit cash collateral with the Agent, for the benefit of the Lenders, in
either case, in an amount equal to the aggregate Eau Claire L/C Liability that
will remain outstanding after such termination of the Commitment to make
Revolving Loans plus $30,000 to cover costs that may be incurred in connection
with a draw under the Eau Claire L/C.
(d) Eau Claire L/C Fees. The Borrower shall pay to the Agent, for
the benefit of the Lenders, fees for the Eau Claire Lender Guaranty (the "Eau
Claire L/C Fees") for the period from and including the date of issuance of the
Eau Claire Lender Guaranty or the date on which the L/C Guaranty Deposit is
advanced to and excluding the date of termination of the Eau Claire Lender
Guaranty (and the date, if any, on which the Eau Claire L/C is converted into
the Eau Claire Term Loan) or the cash collateralization thereof under subsection
2.4(c), equal to the
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daily average amount of the Eau Claire L/C Liability multiplied by the Eau
Claire L/C Rate, such fees to be calculated on the basis of a 360-day year for
the actual number of days elapsed and to be payable monthly in arrears on the
first day of the month following the date of issuance of the Eau Claire L/C and
the first day of each month thereafter. The Borrower shall also reimburse the
Agent and each Lender for any and all reasonable fees and expenses paid by SBCC
in connection therewith.
2.5. Interest.
(a) Subject to the terms and conditions of this Agreement, the
Revolving Loan may be divided into Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, selected by the Borrower in accordance with subsections
2.5(e) and 2.5(f); provided that the Revolving Loan shall not have more than six
(6) Interest Periods outstanding with respect to such Revolving Loans in the
aggregate at any one time. So long as no Event of Default has occurred and is
continuing, the Borrower shall pay to the Agent, for the benefit of the Lenders,
interest on the outstanding principal balance of the Revolving Loans at the Base
Rate or the LIBOR Rate, as applicable, in accordance with subsection 2.16.
(b) Interest and all fees calculated on a per diem basis shall be
computed (on a daily basis) on the basis of a 360-day year for the actual number
of days elapsed. In computing interest on any Loan, the date of funding of the
Loan or the first day of an Interest Period applicable to each Revolving Loan
or, with respect to a Base Rate Loan being converted from a LIBOR Rate Loan, the
date of conversion of such LIBOR Rate Loan to such Base Rate Loan, shall be
included and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Revolving Loan or, with respect to a Base
Rate Loan being converted to a LIBOR Rate Loan, the date of conversion of such
Base Rate Loan to such LIBOR Rate Loan, shall be excluded; provided that if a
Revolving Loan is repaid on the same day on which it is made, one day's interest
shall be paid on that Revolving Loan. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(c) So long as an Event of Default with respect to payment of the
Obligations shall have occurred and be continuing, and so long as any other
Event of Default shall have occurred and be continuing for more than forty-five
(45) consecutive days, the Borrower shall pay to the Lenders interest, Lender
Guaranty Fees and Eau Claire L/C Fees from the date of such Event of Default to
and including the date of cure of such Event of Default on the outstanding
principal balance of the Loans, the Lender Guaranty Liability and the Eau Claire
L/C Liability, respectively, at the Default Rate; provided that in the case of
LIBOR Rate Loans, upon the expiration of the Interest Period in effect at the
time any Event of Default shall have occurred and be continuing, such LIBOR Rate
Loans shall automatically become Base Rate Loans and thereafter bear interest at
the Default Rate applicable to Base Rate Loans.
(d) (i) Interest shall be due at the Base Rate, the LIBOR Rate or
the Default Rate, as provided herein, after as well as before demand, default
and judgment notwithstanding any judgment rate of interest provided for in any
statute. If any interest payment
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or other charge or fee payable hereunder exceeds the maximum amount then
permitted by applicable law, then to the extent permitted by law and subject to
the provisions of subparagraph (ii) of this subsection 2.5(d), the Borrower
shall be obligated to pay the maximum amount then permitted by applicable law
and the Borrower shall continue to pay the maximum amount from time to time
permitted by applicable law until all such interest payments and other charges
and fees otherwise due hereunder (in the absence of such restraint imposed by
applicable law) have been paid in full.
(ii) It is the intention of the Agent, the Lenders and the
Borrower to comply with the laws of the State of Illinois, and
notwithstanding any provision to the contrary contained herein or in the
other Financing Agreements, the Borrower shall not be required to pay and
the Lenders shall not be permitted to collect any amount in excess of the
maximum amount of interest permitted by law ("Excess Interest"). If any
Excess Interest is provided for or determined to have been provided for by
a court of competent jurisdiction in this Agreement or in any of the other
Financing Agreements, then in such event: (A) the provisions of this
subsection 2.5(d)(ii) shall govern and control; (B) neither the Borrower
nor any guarantor or endorser shall be obligated to pay any Excess
Interest; (C) any Excess Interest that any Lender may have received
hereunder shall be, at such Lender's option (1) applied as a credit
against the outstanding principal balance of the Obligations or accrued
and unpaid interest (not to exceed the maximum amount permitted by law),
(2) refunded to the payor thereof, or (3) any combination of the
foregoing; (D) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed under applicable
law, and this Agreement and the other Financing Agreements shall be deemed
to have been, and shall be, reformed and modified to reflect such
reduction; and (E) neither the Borrower nor any guarantor or endorser
shall have any action against any Lender for any damages arising out of
the payment or collection of any Excess Interest.
(e) Subject to the terms of this Agreement, and except as otherwise
provided in subsection (f) below, Borrower shall select the Rate Option and, in
the case of LIBOR Rate Loans, the Interest Period applicable to each LIBOR Rate
Loan from time to time by giving the Agent irrevocable notice in the form of
Exhibit 2.6-1 hereto (a "Borrowing Notice") not later than 12:00 noon (Chicago
time) (i) on the Funding Date of any Base Rate Loan, and (ii) three (3) Business
Days before the Funding Date for each LIBOR Rate Loan, specifying:
(i) the Funding Date of each Revolving Loan;
(ii) the aggregate amount of such Revolving Loan (and, if such
Borrowing Notice refers to more than one Rate Option, the amount of each
Base Rate Loan and LIBOR Rate Loan which will become part of the Revolving
Loan);
(iii) the Rate Option(s) selected for such Revolving Loan; and
(iv) in the case of each LIBOR Rate Loan, the Interest Period
applicable thereto;
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provided that no Revolving Loan may be made as a LIBOR Rate Loan if any Default
or Event of Default has occurred and is continuing.
The Borrower shall use its best efforts to select Interest Periods
so that it is not necessary to repay any portion of a LIBOR Rate Loan prior to
the last day of the applicable Interest Period in order to make a payment or
prepayment of principal on the Revolving Loan required by the terms hereof
including, without limitation, prepayments pursuant to subsection 2.7.
(f) Base Rate Loans shall continue as Base Rate Loans unless and
until such Base Rate Loans are converted by the Borrower into LIBOR Rate Loans
in accordance with this subsection 2.5(f). Each LIBOR Rate Loan shall continue
as a LIBOR Rate Loan until the end of the then applicable Interest Period, at
which time such LIBOR Rate Loan shall be automatically converted into a Base
Rate Loan unless the Borrower has given the Agent an irrevocable notice in the
form of Exhibit 2.6-2 (a "Conversion/Continuation Notice") requesting that, at
the end of such Interest Period, such LIBOR Rate Loan continue as a LIBOR Rate
Loan for the same or another Interest Period; provided that no outstanding
Revolving Loan may be continued as, or be converted into, a LIBOR Rate Loan if
any Default or Event of Default has occurred and is continuing. Subject to the
terms of this Agreement, the Borrower may elect from time to time to convert all
or any part of the Revolving Loan of any Rate Option into any other Rate Option;
provided that any conversion of a LIBOR Rate Loan shall be made on, and only on,
the last day of the Interest Period applicable thereto. The Borrower shall give
the Agent a Conversion/Continuation Notice of each conversion or continuation of
a Base Rate Loan or LIBOR Rate Loan, as the case may be, not later than 12:00
noon (Chicago time) (i) on the Funding Date, in the case of a conversion into a
Base Rate Loan, and (ii) at least three (3) Business Days before the Funding
Date of the requested conversion or continuation of a LIBOR Rate Loan,
specifying:
(i) the Funding Date of such conversion or continuation;
(ii) the aggregate amount and Rate Option(s) of the Revolving
Loan which is to be converted or continued; and
(iii) the amount and Rate Option(s) of the Base Rate Loans or
LIBOR Rate Loans into which such Revolving Loan is to be converted
or continued and, in the case of a conversion into or continuation
of a LIBOR Rate Loan, the duration of the Interest Period applicable
thereto.
(g) In lieu of delivering a Borrowing Notice or a
Conversion/Continuation Notice, the Borrower may give the Agent notice by
telephone or telecopy by the required time of any proposed borrowing or
conversion/continuation under this subsection 2.5; provided that such notice
shall be promptly confirmed in writing by delivery of a Borrowing Notice or a
Conversion/Continuation Notice, as the case may be, to the Agent on or before
the proposed Funding Date. Neither the Agent nor any Lender shall incur any
liability to the Borrower in acting upon any such notice by telephone that the
Agent believes in good faith to have been given by an Authorized Officer or for
otherwise acting in good faith under this subsection 2.5
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and, upon the funding or conversion/continuation, as the case may be, by the
Agent in accordance with this Agreement pursuant to any such notice, the
Borrower shall have effected such funding, conversion or continuation, as the
case may be, hereunder. A Borrowing Notice or a Conversion/Continuation Notice
for the funding of, or conversion to, or continuation of, a LIBOR Rate Loan (or
notice by telephone or telecopy in lieu thereof) shall be irrevocable once
given, and the Borrower shall be bound to convert or continue in accordance
therewith.
(h) The Agent will notify each Lender of the contents of each
Borrowing Notice, Conversion/Continuation Notice and prepayment notice received
by it hereunder. The Agent will notify each Lender of the interest rate
applicable to each LIBOR Rate Loan promptly upon determination of such interest
rate and will give each Lender prompt notice of each change in the Base Rate.
(i) Each LIBOR Rate Loan (whether resulting from a Borrowing Notice
or a Conversion/Continuation Notice) shall be in the minimum amount of Nine
Hundred Thousand Dollars ($900,000) and in integral multiples of Three Hundred
Thousand Dollars ($300,000) if in excess thereof.
(j) The Borrower shall pay interest to Agent, for the ratable
benefit of Lenders in arrears on each interest payment date, at the Base Rate
plus the Applicable Base Margin per annum or, at the election of Borrower, at
the applicable LIBOR Rate plus the Applicable LIBOR Margin per annum.
The Applicable Base Margin and the Applicable LIBOR Margin will be
.25% and 2.75% per annum, respectively, as of the Closing Date. The Applicable
Margins will be adjusted (up or down) prospectively on a quarterly basis as
determined by the Borrower's Leverage Ratio for the trailing twelve months,
commencing with the first day of the first calendar month that occurs more than
five (5) days after delivery of Borrower's quarterly Financial Statements to
Lenders for the Fiscal Quarter ending March 31, 1999 pursuant to subsection 7.1.
Adjustments in Applicable Margins will be determined by reference to the
following grids:
------------------------------------------------------------
Level of
If Leverage Ratio is: Applicable Margins:
--------------------- -------------------
------------------------------------------------------------
> 5.0 Level I
------------------------------------------------------------
< 5.0, but > = 4.5 Level II
------------------------------------------------------------
< 4.5, but > = 4.0 Level III
------------------------------------------------------------
< 4.0 Level IV
------------------------------------------------------------
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---------------------------------------------------------------------
Level I Level II Level III Level IV
---------------------------------------------------------------------
Applicable LIBOR Margin 2.75% 2.50% 2.25% 2.0%
---------------------------------------------------------------------
Applicable Base Margin 0.25% 0.00% 0.00% 0.00%
---------------------------------------------------------------------
All adjustments in the Applicable Margins after March 31, 1999 will
be implemented quarterly on a prospective basis, on the first day of the first
calendar month commencing at least five (5) days after the date of delivery to
Lenders of the quarterly unaudited or annual audited (as applicable) Financial
Statements of the Borrower pursuant to subsection 7.1 evidencing the need for an
adjustment. Concurrently with the delivery of those Financial Statements, the
Borrower shall deliver to Agent and Lenders a certificate, signed by its chief
financial officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margins. Failure to timely
deliver such Financial Statements shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the Applicable Margins
to the highest level set forth in the foregoing grid, until the first day of the
first calendar month following the delivery of those Financial Statements
demonstrating that such an increase is not required. If a Default or an Event of
Default shall have occurred or be continuing at the time any reduction in the
Applicable Margins is to be implemented, that reduction shall be deferred until
the first day of the first calendar month following the date on which such
Default or Event of Default is waived or cured.
2.6. Method of Borrowing; Manner and Method of Making Interest and
Other Payments. (a) Not later than 11:00 A.M. (Chicago time) on each Funding
Date, each Lender shall make available its Pro Rata Share of the Revolving Loan
(except for Revolving Loans made pursuant to a Conversion/Continuation Notice,
in which case each Lender shall be deemed to have made its Revolving Loan) in
funds immediately available in Chicago, Illinois to the Agent at its address
specified pursuant to subsection 10.13. The Agent will make the funds so
received from the Lenders available to the Borrower in accordance with
subsection 2.1(b). Notwithstanding the foregoing provisions of this subsection
2.6(a), to the extent that a Revolving Loan or portion thereof made by a Lender
matures or is to be repaid on the Funding Date of a requested Revolving Loan,
such Lender shall first apply the proceeds of the Revolving Loan it is then
making to the repayment of the maturing Revolving Loan or portion thereof.
(b) All payments by the Borrower of the Obligations shall be made
without deduction, defense, setoff or counterclaim and in same day funds. In
their sole discretion, the Required Lenders may deem interest and other amounts
payable hereunder (other than the principal balance of the Revolving Loan) to be
paid by causing such amounts to be added to the principal balance of the
Revolving Loan, all as set forth on the Agent's books and records. The Borrower
hereby authorizes and directs the Lenders, at the option of the Required
Lenders, to make advances in the Revolving Loan by appropriate debits to the
Loan Account for all payments which the Borrower is required to make to the
Lenders under this Agreement and the other Financing Agreements. Unless
otherwise directed by the Agent, all payments to the Lenders hereunder shall be
made by delivery thereof to the Agent at its address set forth in subsection
10.13 or by delivery to the Agent for deposit in the Blocked Accounts of all
proceeds of Accounts or other Collateral in accordance with subsection 3.5. If
the Agent elects to xxxx the
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Borrower for any reimbursable expenses due hereunder, such amount shall be due
and payable twenty-five (25) days after the date of the applicable invoice
therefor and if not paid when due shall bear interest as provided herein. Solely
for the purpose of calculating interest earned by each Lender with respect to
the Revolving Loan, any check, draft or similar item of payment by or for the
account of the Borrower delivered to the Agent or deposited in a Blocked Account
in accordance with subsection 3.5 shall be applied by the Agent on account of
the Borrower's Revolving Loan Obligations on the same Business Day that the
Agent has received immediately available funds as a result of the deposit
thereof in accordance with subsection 3.5. Immediately available funds received
by the Agent after 2:00 p.m., (Chicago time), shall be deemed to have been
received on the following Business Day.
(c) (i) Unless the Borrower or a Lender, as the case may be,
notifies the Agent prior to the date on which it is scheduled to make payment to
the Agent of (A) in the case of a Lender, such Lender's Pro Rata Share of a
Revolving Loan or (B) in the case of the Borrower, a payment of principal,
interest, fees or other Obligations to the Agent for the account of the Lenders,
that it does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to, make the
amount of such payment available to the intended recipient in reliance upon such
assumption. If the Borrower or such Lender, as the case may be, has not in fact
made such payment to the Agent, the recipient of such payment shall, on demand
by the Agent, repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (x) in the case of payment by a Lender,
the Federal Funds Rate for such day (as determined by the Agent) or (y) in the
case of payment by the Borrower, the interest rate applicable to the relevant
Revolving Loan.
(ii) Nothing contained in this subsection 2.7(c) will be
deemed to relieve a Lender of its obligation to fulfill its
Commitments or to prejudice any rights the Agent or the Borrower may
have against such Lender as a result of any default by such Lender
under this Agreement.
(iii) If the Agent determines at any time that any amount
received by the Agent under this Agreement must be returned to the
Borrower or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of
this Agreement, the Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay
to the Agent on demand any portion of such amount that the Agent has
distributed to such Lender.
(iv) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any
Revolving Loan made with respect to any draw on a Letter of Credit
or the Eau Claire L/C or a Lender Guaranty or Eau Claire Lender
Guaranty therefor.
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(d) On the second Business Day of each week and on the Business Day
following receipt of all payments of interests and Fees payable under this
agreement for the benefit of Lenders, Agent shall distribute to each Lender, its
Pro Rata Share of the net amount of all payments received from or on behalf of
Borrower; provided that if any Lender has failed to fund its Pro Rata Share of
any advance or purchase its Pro Rate Share of any participation to be funded by
it hereunder, Agent may set off against such obligation all amounts received by
Agent and otherwise payable to that Lender hereunder until such funding
short-full has been eliminated.
2.7. Term of this Agreement and Prepayments.
(a) Term. This Agreement shall be effective from the Closing Date
until the Revolving Loan Maturity Date (the "Initial Term"), subject to annual
renewals thereafter of the Revolving Loan Maturity Date as hereinafter provided
(each such renewal being referred to as a "Renewal Term"); provided that all of
the Agent's and each Lender's rights and remedies under this Agreement shall
survive such termination until all of the Obligations have been finally paid in
full in cash. Not less than ninety (90) days prior to the end of the Initial
Term or any Renewal Term, the Borrower shall notify the Agent in writing if it
elects to renew this Agreement for a Renewal Term, and not less than sixty (60)
days prior to the end of the Initial Term or such Renewal Term, as applicable,
the Agent shall notify the Borrower in writing if the Lenders elect to accept
such renewal. Notwithstanding the foregoing, unless the Borrower and each Lender
shall agree in writing to extend this Agreement in accordance with the preceding
sentence, this Agreement shall terminate upon the earlier to occur of the
expiration of the Initial Term or any Renewal Term, as applicable, or the final
payment in full of all of the Obligations (not including unasserted contingent
indemnification obligations). In addition, this Agreement may be terminated as
set forth in Section 9. Upon the effective date of termination, all of the
Obligations shall become immediately due and payable without notice or demand
notwithstanding any terms contained herein or in any Note to the contrary.
Notwithstanding any termination, until all of the Obligations shall have been
paid in full in cash and the Eau Claire Lender Guaranty and Lender Guaranties
shall have been terminated or payment thereof shall have been secured in
accordance with subsections 2.4(b) and 2.7(b), respectively, on terms
satisfactory to the Lenders all of the Agent's and the Lenders' rights and
remedies under the Financing Agreements shall survive such termination and,
notwithstanding such payment, for so long as any pending or threatened action
which could reasonably be expected to result in a claim by the Agent or any
Lender under subsection 6.26 or subsection 7.10 exists hereunder, the Agent, on
behalf of the Lenders, shall be entitled to retain Liens upon all existing and
future Collateral, and the Borrower shall continue to remit collections of
Accounts and proceeds as provided herein.
(b) Subject to the prepayment fee as set forth in subsection 2.10
and the provisions of subsection 2.22, upon not less than thirty (30) days prior
written notice to the Agent specifying the date of prepayment (which date shall
be the first day of a calendar month), the Borrower may prepay in full all of
the Obligations arising hereunder and terminate the Commitments. Except for
mandatory prepayments and prepayments of the Revolving Loan Obligations other
than in connection with a termination of the Commitments, all prepayments of the
Obligations (and the termination of the Commitments to make Revolving Loans)
shall be subject to a prepayment fee as set forth in subsection 2.10. Upon
prepayment in full, the
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Borrower shall cause the Agent and each Lender to be released from all liability
under any Lender Guaranties and the Eau Claire Lender Guaranty or the Borrower
shall (i) cause to be issued to and for the benefit of the Lenders a letter of
credit in form and substance acceptable to the Required Lenders issued by a bank
or other financial institution acceptable to the Required Lenders, and cause
SBCC and the Lenders to be released from liability under their Lender Guaranties
and the Eau Claire Lender Guaranty, or (ii) deposit cash collateral with the
Agent, for the benefit of the Lenders, in either case, in an amount equal to the
aggregate Lender Guaranty Liability with respect to the Lender Guaranties and
the Eau Claire Lender Guaranty with respect to the Eau Claire L/C Liability that
will remain outstanding after prepayment in full of all other Obligations plus
$30,000 to cover costs that may be incurred in connection with a draw under the
Eau Claire L/C.
(c) The Borrower shall make the following mandatory prepayments:
(i) subject to subsection 8.7, 100% of the proceeds of all
asset dispositions in excess of Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate in any period of three hundred sixty
(360) days to the extent not reinvested in Equipment or Fixtures
within three hundred sixty (360) days following the date of such
disposition, excluding sales of Inventory in the ordinary course of
business and net of brokerage commissions, sales taxes, if any,
capital gains taxes and similar out-of-pocket costs of sale and any
other Indebtedness secured by the Property being disposed of to the
extent such Indebtedness is required to be repaid in connection
therewith; provided that, proceeds of all dispositions of assets
constituting Collateral (other than sales of Inventory in the
ordinary course) shall, to the extent reinvested, be reinvested in
Equipment or Fixtures that are Collateral; and
(ii) within three (3) Business Day after the receipt thereof,
all proceeds of casualty insurance not used for reinvestment in
accordance within subsection 7.6 (other than such casualty proceeds
which are required to repay Indebtedness of the Borrower secured by
Liens permitted by this Agreement on the asset with respect to which
such proceeds are paid which are prior to the Liens granted to the
Agent in such assets).
(d) All mandatory prepayments in accordance with clause (c) above
shall be paid without premium or penalty and shall be applied, first, to
scheduled installments of Eau Claire Terms Loans, in inverse order of maturity
and, second, following payment in full thereof, to the outstanding balance of
the Revolving Loans with a reserve against Borrowing Availability in a
corresponding amount until such proceeds are reinvested; provided that, if no
outstanding balance of Revolving Loans exist on the date of such prepayments,
such prepayments shall be applied, at Agent's discretion, as cash collateral for
outstanding Lender Guaranty Liabilities; provided further, that if an Event of
Default shall have occurred and be continuing at the time any Collateral asset
disposition proceeds are received, Agent may, at its election, use such proceeds
to cash collateralize the Eau Claire Lender Guaranty.
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(e) Upon the repayment of all Obligations (other than unasserted
indemnification obligations) and the termination of the Commitments, so long as
there are no pending or threatened indemnity claims for which the Borrower would
be obligated to indemnify the Agent of any Lender, the Agent shall, and is
hereby authorized to, provide to the Borrower at the Borrower's expense such
releases, termination statements and other documents which the Borrower may
reasonably request to release the Liens of the Agent in the Collateral.
2.8. Audit Fee. The Borrower shall pay to SBCC, individually in its
capacity as the Agent, a collateral audit fee (the "Audit Fee") in an amount
equal to (i) the Agent's reasonable out-of-pocket costs, plus (ii) Six Hundred
Dollars ($600) per auditor per day for each field audit conducted by the Agent
pursuant to subsection 7.2; provided that so long as no Default or Event of
Default shall have occurred and be continuing, Borrower shall not be liable for
reimbursing the Agent for the costs and expenses of more than three (3) field
audits in any Fiscal Year.
2.9. Fee Letter. Borrower shall pay to SBCC, individually, the fees
specified in that certain fee letter, dated as of January 21, 1998, among
Borrower and SBCC (the "SBCC Fee Letter") at the times specified for payment
therein.
2.10. Prepayment Fee. If the Borrower shall voluntarily prepay all
of the Revolving Loan Obligations and terminate the Commitments hereunder prior
to the end of the Initial Term, the Borrower shall cash collateralize the Eau
Claire Lender Guaranty Liability and all Lender Guaranty Liabilities (in the
event of a termination of the Commitments) and the Borrower shall pay to the
Agent, for the ratable benefit of the Lenders, as liquidated damages and
compensation for the costs of being prepared to make funds available to the
Borrower hereunder an amount determined as follows: three percent (3.0%) of the
Total Revolving Loan Facility (in the case of a prepayment in full and
termination of the Commitments), for a prepayment during the first Loan Year;
two percent (2.0%) of the Total Revolving Loan Facility (in the case of a
prepayment in full and termination of the Commitments), for a prepayment during
the second Loan Year; and one percent (1.0%) of the Total Revolving Loan
Facility (in the case of a prepayment in full and termination of the
Commitments), for a prepayment during the third Loan Year.
2.11. [Intentionally Omitted.]
2.12. Unused Line Fee. From and after the Closing Date, the Borrower
shall pay to Agent, for the ratable benefit of the Lenders, a fee (the "Unused
Line Fee") in an amount equal to the Total Revolving Loan Facility less the
average daily closing balance of the Revolving Loan plus the Lender Guaranty
Reserve outstanding during the preceding month (or shorter period with respect
to the period commencing with the Closing Date or the period ending with the
Termination Date) multiplied by three-eighths of one percent (.375%) per annum
(calculated on the basis of a 360-day year and actual days elapsed). The Unused
Line Fee shall be payable in arrears on the first day of each calendar month
following the Closing Date and at maturity, whether on the termination of this
Agreement or earlier.
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2.13. Other Fees, Costs and Expenses. The Borrower shall pay to the
Agent on demand all reasonable fees, costs and expenses incurred by the Agent in
connection with any matters contemplated by or arising out of this Agreement or
any other Financing Agreement (which fees, costs and expenses shall be part of
the Obligations and secured by the Collateral) including, without limitation:
(i) following the occurrence of an Event of Default in verifying or inspecting
the Accounts or the Inventory or the Borrower's records with respect thereto;
(ii) in connection with opening and maintaining the Blocked Accounts and
depositing for collection any check or item of payment received by and/or
delivered to any Collecting Bank or the Agent or any Lender on account of the
Obligations; (iii) arising out of the Agent's indemnification of any Collecting
Bank against damages incurred by such Collecting Bank in the operation of a
Blocked Account; (iv) in connection with the Agent's forwarding to the Borrower
the proceeds of loans or advances hereunder including, without limitation,
transfer fees; (v) in connection with the negotiation, preparation, review,
execution and delivery of the Financing Agreements and all amendments,
modifications and waivers with respect hereto or with respect to the other
Financing Agreements including, without limitation, search fees, appraisal fees
and expenses, title insurance policy fees, costs and expenses; filing and
recording fees; reasonable fees, costs and expenses of the Agent's attorneys and
paralegals, whether such fees, costs and expenses are incurred prior to, on or
after the Closing Date; (vi) in connection with any documentation, negotiation,
review or closing with respect to any subordinated indebtedness, including,
without limitation, the fees, costs and expenses of the Agent's attorneys and
paralegals (including, without limitation, the usual and customary charges of
the Agent's internal counsel); and (vii) arising from the Agent's employment of
counsel or otherwise in connection with protecting, perfecting or preserving the
Agent's Liens in the Collateral in accordance with subsection 10.2 or in
connection with any refinancing or restructuring of the credit arrangements
provided under the Financing Agreements, whether in the nature of a "workout" or
in connection with any insolvency or bankruptcy proceedings, or in connection
with any other matters contemplated by or arising out of this Agreement or the
other Financing Agreements. Any portion of the foregoing fees, costs and
expenses which remains unpaid ten (10) days following the Agent's statement and
request for payment thereof shall bear interest from the date of such statement
and request for payment at the Base Rate.
2.14. Loan Account. The Agent shall maintain a loan account ("Loan
Account") on its books in which shall be recorded (i) all Revolving Loans and
advances made to the Borrower pursuant to this Agreement, (ii) the issuance of
all Lender Guaranties and the Eau Claire Lender Guaranty, (iii) all payments
made by the Borrower on all such Revolving Loans and advances and (iv) all other
appropriate debits and credits as provided in this Agreement including, without
limitation, all fees, charges, expenses and interest. All entries in the Loan
Account shall be made in accordance with the Agent's customary accounting
practices as in effect from time to time. The Borrower shall pay the Obligations
reflected as owing by it under the Loan Account and all other Obligations
hereunder as such amounts become due or are declared due pursuant to the terms
of this Agreement. So long as a Default or an Event of Default shall have
occurred and be continuing, the Borrower irrevocably waives the right to direct
the application of any and all payments at any time or times thereafter received
by the Agent or any Lender from or on behalf of the Borrower, and the Borrower
does hereby irrevocably agree that each Lender shall have the continuing
exclusive right to apply and to
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reapply any and all payments received at any time or times hereafter against the
Obligations in such manner as such Lender may deem advisable notwithstanding any
previous entry by the Agent upon the Loan Account or by the Agent or such Lender
on any other books and records.
2.15. Statements. All advances to the Borrower, and all other debits
and credits provided for in this Agreement, shall be evidenced by entries made
by the Agent in the Loan Account and in the Agent's books and records showing
the date, amount and reason for each such debit or credit. Until such time as
the Agent shall have rendered to the Borrower written statements of account as
provided herein, the balance in the Borrower's Loan Account, as set forth on the
Agent's most recent printout or other written statement, shall be refutably
presumptive evidence of the amounts due and owing to each Lender by the
Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect the Borrower's obligations to pay the
Obligations. Not more than twenty (20) days after the last day of each calendar
month, the Agent shall render to the Borrower a statement setting forth the
principal balance of the Borrower's Loan Account and the calculation of interest
due thereon. Each such statement shall be subject to subsequent adjustment by
the Agent but shall, absent manifest errors or omissions, be presumed correct
and binding upon the Borrower, and shall constitute an account stated unless,
within thirty (30) days after receipt of any statement from the Agent, the
Borrower shall deliver to the Agent by registered or certified mail written
objection thereto specifying the error or errors, if any, contained in such
statement. In the absence of a written objection delivered to the Agent as set
forth in this subsection 2.15, the Agent's statement of the Borrower's Loan
Account shall be conclusive evidence of the amount of the Obligations.
2.16. Payment Dates. Interest shall be payable on Base Rate Loans in
arrears on the first day of each calendar month for all periods ending prior to
such month for which such Loans were outstanding and at the maturity of such
Loan (whether by acceleration or otherwise) commencing with the first of such
dates to occur after the date of such Loan. Interest shall be payable on LIBOR
Rate Loans on the first day of each calendar month and on the last day of each
Interest Period relating to such Loan, and at the maturity of such Revolving
Loan (whether by acceleration or otherwise) commencing with the first of such
dates to occur after the date of such Revolving Loan. After maturity, accrued
interest on all Loans shall be payable on demand. Any payment due hereunder on
any day other than a Business Day shall be due on the next succeeding Business
Day, and if such payment shall bear interest in accordance herewith, interest
shall accrue to the date of payment.
2.17. Lender Guaranty Fees. The Borrower shall pay to the Agent, for
the benefit of the Lenders, fees for any Lender Guaranty (the "Lender Guaranty
Fees") for the period from and including the date of issuance of such Lender
Guaranty to and excluding the date of expiration or termination of such Lender
Guaranty, equal to the daily average amount of the Lender Guaranty Reserve
multiplied by the Lender Guaranty Fee Rate, such fees to be calculated on the
basis of a 360-day year for the actual number of days elapsed and to be payable
monthly in arrears on the first day of the month following the date of issuance
of any such Lender Guaranty and the first day of each month thereafter. The
Borrower shall also reimburse the Agent and each Lender for any and all fees and
expenses paid to the Issuing Bank.
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2.18. Other Lender Guaranty and Eau Claire L/C Provisions.
(a) The obligation of the Borrower to reimburse the Agent and each
Lender for payments made under the Eau Claire Lender Guaranty or any Lender
Guaranty shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances including
the following circumstances:
(i) any lack of validity or enforceability of the Eau Claire
L/C or any Lender Guaranty or any other agreement;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower, any of its Affiliates or the Agent or any
Lender may have at any time against a beneficiary or any transferee
of the Eau Claire L/C, the Eau Claire Lender Guaranty, any Letter of
Credit or any Lender Guaranty (or any Persons for whom any such
transferee may be acting), the Agent, any Lender or any other
Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including, without
limitation, any underlying transaction between the Borrower or any
of their Affiliates and the beneficiary for which the Eau Claire
Lender Guaranty or any other Lender Guaranty was procured);
(iii) any draft, demand, certificate or any other document
presented under the Eau Claire L/C or any other Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the Agent or any Lender under the Eau Claire
Lender Guaranty or any other Lender Guaranty against presentation of
a demand, draft or certificate or other document which does not
comply with the terms of the Eau Claire Lender Guaranty or such
Lender Guaranty; provided that, in the case of any payment by the
Agent or any Lender under the Eau Claire L/C or such Lender
Guaranty, such Person has not acted with gross negligence or willful
misconduct as determined by a final judgment, not subject to review
on appeal, of a court of competent jurisdiction in determining that
the demand for payment under the Eau Claire Lender Guaranty or any
Lender Guaranty complies on its face with any applicable
requirements for a demand for payment under the Eau Claire Lender
Guaranty or such Lender Guaranty;
(v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(b) In addition to amounts payable as elsewhere provided in this
Agreement, the Borrower hereby agrees to protect, indemnify, pay and hold the
Agent and each Lender
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harmless from and against any and all claims, suits, demands, liabilities,
damages, losses, costs, charges and expenses(including, without limitation,
reasonable attorneys' fees) which the Agent or any Lender may incur or be
subject to as a consequence, direct or indirect, of (1) the issuance of the Eau
Claire Lender Guaranty or any other Lender Guaranty other than as a result of
the gross negligence or willful misconduct of such Person as determined by a
final order, not subject to review on appeal, of a court of competent
jurisdiction, or (2) the failure of the Agent or any Lender to honor a demand
for payment under the Eau Claire Lender Guaranty or any other Lender Guaranty as
a result of any act or omission, whether rightful or wrongful, of any
Governmental Authority.
As among the Agent, the Lenders and the Borrower, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Eau Claire
Lender Guaranty or any Lender Guaranty by, beneficiaries thereof. In furtherance
and not in limitation of the foregoing, neither the Agent nor any Lender shall
be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document by any Person in connection with the application
for and issuance of the Eau Claire Lender Guaranty or any other Lender Guaranty,
even if it should in fact prove to be in any and all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign the Eau Claire Lender Guaranty or any other Lender Guaranty
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (iii) for failure
of the beneficiary of the Eau Claire Lender Guaranty or any other Lender
Guaranty to comply fully with conditions required in order to demand payment
under such Eau Claire Lender Guaranty or other Lender Guaranty; provided that,
in the case of any payment by the Agent or any Lender under the Eau Claire
Lender Guaranty or any other Lender Guaranty, such Person has not acted with
gross negligence or willful misconduct, as determined by a final judgment, not
subject to review on appeal, of a court of competent jurisdiction, in
determining that the demand for payment under the Eau Claire Lender Guaranty or
any other Lender Guaranty complies on its face with any applicable requirements
for a demand for payment under such Eau Claire Lender Guaranty or other Lender
Guaranty; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph or otherwise; (v) for errors
in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under the Eau Claire Lender Guaranty or any other Lender Guaranty or of the
proceeds thereof; (vii) for the credit of the proceeds of any drawing under the
Eau Claire Lender Guaranty or any other Lender Guaranty; and (viii) for any
consequences arising from causes beyond the control of the Agent or the Lenders,
including, without limitation, any act or omission, whether rightful or
wrongful, of any Governmental Authority. None of the above shall affect, impair,
or prevent the vesting of any of the Agent's or any Lender's rights or powers
hereunder.
In furtherance and extension of, and not in limitation of, the
specific provisions hereinabove set forth, the Borrower hereby agrees that any
action taken or omitted by the Agent or any Lender under or in connection with
the Eau Claire Lender Guaranty or any other Lender Guaranty, or the Collateral
relating thereto, if taken or omitted in good faith, or any action taken by any
Issuing Bank, shall be binding on the Borrower and shall not impose any
resulting liability on the Agent or any Lender.
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2.19. Taxes; Changes in Law.
(a) Any and all payments or reimbursements made hereunder, under the
Notes shall be made free and clear of and without deduction for any and all
present and future Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Agent or any
Lender, then (i) the sum payable hereunder shall be increased as may be
necessary so that, after making all required deductions, the Agent or such
Lender receives an amount equal to the sum it would have received had no such
deductions been made and (ii) the Borrower shall pay the full amount deducted to
the relevant taxing or other authority in accordance with applicable law. The
Borrower hereby indemnifies and agrees to hold the Agent and each Lender
harmless from and against all Taxes imposed upon the Agent or any Lender as a
result of or arising in connection with the transactions contemplated hereby.
(b) On the date of any assignment pursuant to which any Person
becomes a Lender, and on the first Business Day of each calendar year
thereafter, each Lender organized under the laws of a jurisdiction outside the
United States shall provide the Agent and the Borrower with an IRS Form 4224 or
Form 1001 or other applicable form, certificate or document prescribed by the
U.S. Internal Revenue Service (including, in the case of any Lender that is not
a "bank" within the meaning of Section 881(c)(3)(A) of the IRC, a properly
completed Form W-8 or successor form) certifying as to such Lender's entitlement
to an exemption from withholding with respect to all payments to be made to such
Lender hereunder and under the Notes.
(c) In the event that, subsequent to the date of this Agreement, or,
in the case of a Participant assigned an interest in or sold a participation in
the Revolving Loan or the Eau Claire Lender Guaranty pursuant to subsection
11.1, subsequent to the date of such assignment or sale, (a) any change in any
existing law, regulation, rule, policy, guideline, treaty or directive or in the
interpretation or application thereof (whether or not having the force of law)
including, without limitation, any change resulting from the implementation of
risk-based capital guidelines, (b) any new law, regulation, rule, guideline,
treaty or directive enacted or any interpretation or application thereof or (c)
compliance by any Lender with any request or directive (whether or not having
the force of law and including by way of withdrawal or termination of any
previously available exemption) from any central bank, governmental authority,
agency or instrumentality (including, without limitation, any request or
directive regarding capital adequacy)
(i) does or shall impose on any Lender or such Participant any
other condition or increased cost in connection with the
transactions contemplated hereby or participation herein; or
(ii) affects the amount of any reserve, special deposit,
capital adequacy, assessment or similar charge (other than reserves
and assessments taken into account in determining the LIBOR Rate)
required or expected to be maintained by any Lender or such
Participant or any corporation controlling such Lender or such
Participant and such Lender or such Participant determines that such
amount required or expected is increased by or based upon the
existence of
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this Agreement or its Revolving Loans hereunder or its participation
in the Eau Claire L/C or the Lender Guaranties issued pursuant
hereto,
and the result of any of the foregoing is to increase the cost to such Lender or
such Participant of making, funding, maintaining or continuing any Revolving
Loan hereunder, of issuing or purchasing interests in the Eau Claire Lender
Guaranty or issuing Lender Guaranties or selling any participation therein or
assigning any of its Commitments to make Revolving Loans or to purchase
interests in the Eau Claire Lender Guaranty hereunder, as the case may be, or to
reduce any amount receivable by such Lender or such Participant in connection
with any Revolving Loans, the Eau Claire Lender Guaranty or other Lender
Guaranties, or to require any Lender or Participant to make any payment
calculated by reference to the amount of the Revolving Loans held, the Eau
Claire Lender Guaranty issued or participated in or the other Lender Guaranties
issued or participated in or interest received by it, then, in any such case,
the Borrower shall within fifteen (15) days after written demand pay to such
Lender or such Participant any additional amounts which are necessary to
compensate such Lender or such Participant for such additional cost or reduced
amount receivable which such Lender or such Participant reasonably deems to be
material as determined by such Lender or such Participant with respect to this
Agreement, the other Financing Agreements or the Revolving Loan and Eau Claire
Lender Guaranty made hereunder. If such Lender or Participant becomes entitled
to claim any additional amounts pursuant to this subsection 2.18, it shall
promptly notify the Borrower in writing of the event by reason of which such
Lender or Participant has become so entitled. A certificate as to any additional
amounts payable pursuant to this subsection 2.18 submitted by such Lender or
Participant to the Borrower shall be presumed correct in the absence of manifest
error.
2.20. Notification of Advances, Interest Rates and Prepayment. The
Agent will notify each Lender of the contents of each Borrowing Notice and
prepayment notice received by it hereunder. The Agent will notify each Lender of
the interest rate applicable to each LIBOR Rate Loan promptly upon determination
of such interest rate and will give each Lender prompt notice of each change in
the Base Rate.
2.21. Special Provisions Governing LIBOR Rate Loans. Notwithstanding
any other provision of this Agreement to the contrary, the following provisions
shall govern with respect to LIBOR Rate Loans as to the matters covered:
(a) As soon as practicable after 11:00 a.m. (Chicago time) on each
LIBOR Rate Determination Date, the Agent shall determine (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties)
the interest rate that shall apply to the LIBOR Rate Loans for which an interest
rate is then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower and each Lender.
(b) If the Required Lenders determine (which determination shall be
final and conclusive and binding upon all parties) that:
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(i) adequate and fair means do not exist for ascertaining the
applicable interest rate by reference to the LIBOR Rate with respect
to the LIBOR Rate Loans as to which an interest rate determination
is then being made; or
(ii) the LIBOR Rate does not accurately or fairly reflect the
cost of making or maintaining LIBOR Rate Loans; or
(iii) deposits of a type and maturity appropriate to match
fund LIBOR Rate Loans are not available; or
(iv) maintenance of LIBOR Rate Loans would violate any
applicable law, rule, regulation or directive, whether or not having
the force of law;
then, and in any such event, promptly after being notified of a borrowing,
conversion or continuation, such Lender shall give notice (in writing or by
telephone confirmed in writing) to the Borrower and the Agent (which notice the
Agent shall promptly transmit to each other Lender) of such determination, and
the Agent shall suspend the availability of LIBOR Rate Loans until such
circumstance no longer exists and require any LIBOR Rate Loans to be repaid and
Borrower shall repay or prepay the LIBOR Rate Loans, together with all interest
accrued thereon.
Prior to giving any such notice under this subsection 2.21(b), the
affected Lenders shall designate a different lending office with respect to its
LIBOR Loans if such designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.
(c) The Borrower shall indemnify the Agent and each Lender, upon
written request (which request shall set forth in reasonable detail the basis
for requesting such amounts and which shall, absent manifest error, be presumed
correct and binding upon all parties hereto), for losses, expenses and
liabilities (including, without limitation, any loss (including interest paid
and lost opportunity costs in re-employment of funds by such Lender regardless
of whether such Lender has obtained matched rate funding) sustained by it in
connection with the liquidation or re-employment of funds acquired to fund or
maintain LIBOR Rate Loans), that such Person may sustain: (i) if for any reason
(other than a default by the Lenders) a borrowing of any LIBOR Rate Loan does
not occur on a date specified therefor in a Borrowing Notice, a
Conversion/Continuation Notice or a request by telephone or telecopy for
borrowing or conversion/continuation or a successive Interest Period does not
commence after notice therefor is given pursuant to subsection 2.5(e) or 2.5(f);
(ii) if any prepayment of any of its LIBOR Rate Loans occurs on a date that is
not the last day of the Interest Period applicable to that Revolving Loan
whether because of acceleration, prepayment or otherwise (unless such prepayment
is required pursuant to the provisions of subsection 2.21(b)); (iii) if any of
its LIBOR Rate Loans are not paid on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of any other default
by the Borrower to repay its LIBOR Rate Loans when required by the terms of this
Agreement; provided that during the period while any such amounts have not been
paid, the Lenders shall reserve an equal amount from amounts otherwise available
to be borrowed under the Revolving Loan. Unless otherwise provided herein, the
amount specified in
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the written statement of any Lender shall be payable on demand after receipt by
the Borrower thereof. So long as no Default or Event of Default shall have
occurred and be continuing, if any prepayment with respect to any LIBOR Rate
Loan shall occur on a day which is not the last day of the applicable Interest
Period, upon the request of the Borrower, the Agent shall hold such amounts in
escrow (subject to the security interest granted in such amounts pursuant to
this Agreement) and apply such amounts on the last day of the applicable
Interest Period rather than on the date of receipt.
(d) Any Lender may make, carry or transfer LIBOR Rate Loans at, to,
or for the account of, any of its domestic or foreign branch offices or the
office of an affiliate of such Lender.
(e) Calculation of all amounts payable to a Lender under subsection
2.21(b) or 2.21(c) shall be made as though each Lender had actually funded its
relevant LIBOR Rate Loan through the purchase of a LIBOR deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of such LIBOR Rate
Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore office to a domestic
office in the United States of America; provided that each Lender may fund each
of its LIBOR Rate Loans in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
subsection 2.21.
2.22. Replacement of Certain Lenders.
(a) Notwithstanding any other provision of this Agreement, the
Borrower at any time after any Lender or any Lender's participant has requested
any payments under the provisions of subsection 2.19 (a "Requesting Lender"),
shall have the right to replace such Requesting Lender in accordance with the
provisions of this subsection 2.22. Notwithstanding the foregoing, in no event
may the Borrower replace the Requesting Lender pursuant to this subsection 2.22
if (i) the Agent shall have received notice from the Required Lenders specifying
that a Default or Event of Default shall have occurred and be continuing and
(ii) such Default or Event of Default shall not have been subsequently cured or
waived.
(b) The Borrower, in exercising its right to replace the Requesting
Lender shall (i) reduce the Commitment of such Lender to zero and (ii) (A) agree
with one or more Lenders to concurrently increase the respective commitments of
such Lenders by an aggregate amount not in excess of the amount of the
Commitment of the Requesting Lender prior to the exercise of this subsection
2.22, in full substitution of the Requesting Lender, (B) add one or more
additional financial institutions (reasonably acceptable to the Agent) as
signatories to this Agreement for Commitments equal to the amount of the
Commitments of the Requesting Lender prior to the Borrower's exercise of this
subsection 2.22, in full substitution of the Requesting Lender or (C) any
combination of substitutions or additions pursuant to (A) and (B) above. All
transfers pursuant to this subsection 2.22 shall be made in accordance with the
provisions of subsection 11.1 and pursuant to documentation reasonably
satisfactory to the assignor and assignee(s).
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(c) The Borrower shall give the Agent and any Requesting Lender
being replaced not less than ten (10) Business Days' notice of the date (which
shall be a Business Day) on which such Requesting Bank shall be replaced.
(d) Each Lender which replaces a Requesting Lender pursuant to this
Section 2.22 shall acquire all (or if more than one Lender or lender is
replacing a Requesting Lender the aggregate shall severally acquire all) of the
then outstanding Revolving Loans and participations in the Eau Claire L/C and
Lender Guaranties of the Requesting Lender.
(e) At the time of replacement, the Requesting Lender shall have
been paid in full the principal of, and interest accrued and unpaid to the date
of replacement on, all outstanding Revolving Loans and other unpaid Obligations
of the Requesting Lender and all accrued and unpaid fees owing to the Requesting
Lender up to but excluding the date of replacement.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
The Borrower covenants and agrees that, so long as any Obligations
(other than unasserted contingent indemnification obligations) remain
outstanding or any Lender shall have any Commitment hereunder:
3.1. Monthly Reports and Borrowing Base Certificates. The Borrower
shall submit to each Lender, not later than the twentieth (20th) day of each
month, a monthly report ("Monthly Report"), accompanied by a certificate in the
form attached as Exhibit 3.1, which shall be signed by the chief executive or
chief financial executive of the Borrower. The Monthly Report shall be in form
and substance satisfactory to the Required Lenders and shall include, as of the
last Business Day of the preceding month: (i) an aged trial balance of Accounts
("Accounts Trial Balance") as described in subsection 7.1(iv)(a) and a payables
report as described in subsection 7.1(iv)(b); and (ii) an aged schedule of
Inventory owned by the Borrower and in the Borrower's possession valued at the
lower of cost or market on a FIFO basis. The Borrower shall provide in all
Monthly Reports, and more frequently if requested by the Agent, in form
satisfactory to the Agent, information on each of the following occurrences
arising subsequent to the immediately preceding Monthly Report: all sales or
other reductions of and all additions to Inventory, all returns of Inventory,
and all credits issued by the Borrower, all complaints and claims against the
Borrower in connection with Inventory. In addition, the Borrower shall provide
the Agent and each Lender with a borrowing base certificate ("Borrowing Base
Certificate") summarizing Eligible Accounts and Eligible Inventory, in form and
substance satisfactory to the Agent, each such Borrowing Base Certificate to be
delivered to the Agent not later than the second Business Day of each week for
the preceding week (or such shorter period as the Required Lenders may require);
provided that so long as (i) no Event of Default has occurred and is continuing,
and (ii) Borrowing Availability equals or exceeds $10,000,000 as reflected on
the last Borrowing Base Certificate delivered hereunder, Borrower shall deliver
such Borrowing Base Certificates on the fifth Business Day of each month as of
the last day of the preceding month. The Borrower shall furnish copies of any
other reports or information, in a form and with such specificity as is
satisfactory to the Agent, concerning Accounts included,
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described or referred to in the Borrowing Base Certificates and any other
documents in connection therewith requested by the Agent including, without
limitation, but only if specifically requested by the Agent, copies of all
invoices prepared in connection with such Accounts and all credit memoranda
issued by the Borrower (the Borrower shall issue such credit memoranda in
accordance with its current practice and without delay, but in any event within
five (5) Business Days of receipt of notice of a dispute with respect to an
Account).
3.2. Eligible Accounts. "Eligible Accounts" shall mean all Accounts
other than the following: (i) Accounts which remain unpaid more than ninety (90)
days after the date of the original invoice with respect thereto or more than
sixty (60) days past the due date specified in the original invoice with respect
thereto; (ii) all Accounts owing by a single Account Debtor, including a
currently scheduled Account, if twenty-five percent (25%) or more of the balance
owing by such Account Debtor is ineligible by reason of either of the criteria
set forth in clause (i) of this subsection 3.2; (iii) Accounts with respect to
which the Account Debtor is an Affiliate of the Borrower or a director, officer
or employee of the Borrower or its Affiliates; provided that any Account owing
from the Xxxxxxx Paper Company which but for the operation of this clause (iii)
would constitute an Eligible Account, shall nevertheless constitute an "Eligible
Account" to the extent, and only to the extent, the amount of such Eligible
Account plus all other Eligible Accounts owing by Xxxxxxx Paper Company exceeds
all amounts owing from the Borrower or Guarantor to the Xxxxxxx Paper Company
(other than long-term obligations with respect to the preferred stock owned by
the Seller); (iv) Accounts with respect to which the Account Debtor is a
Governmental Authority or prime contractor thereof unless the Borrower has
complied in a manner satisfactory to the Agent with the Federal Assignment of
Claims Act of 1940, as amended, or similar law or statute of the relevant state,
province, municipality or other jurisdiction and any amendments thereto,
relative to the assignment of such Accounts; (v) Accounts with respect to which
the Account Debtor is not a resident of the United States unless (A) the Account
Debtor has supplied the Borrower with an irrevocable letter of credit, issued by
a financial institution satisfactory to the Required Lenders (with financial
institutions meeting the criteria set forth in clause (i) of the definition of
"Cash Equivalents" contained herein being deemed acceptable for purposes of
providing such a letter of credit), sufficient to cover such Account in form and
substance satisfactory to the Required Lenders and without right of setoff and
the Account is payable in full in United States dollars or (B) deemed acceptable
by the Agent in its sole discretion; (vi) Accounts arising with respect to goods
which have not been shipped and delivered to and accepted as satisfactory by the
Account Debtor or arising with respect to services which have not been fully
performed and accepted as satisfactory by the Account Debtor; (vii) Accounts for
which the prospect of payment in full or performance in a timely manner by the
Account Debtor is or is likely to become impaired in the reasonable credit
judgment of the Agent; (viii) Accounts which are not invoiced (and dated as of
the date of such invoice) and sent to the Account Debtor within five (5) days
after delivery of the underlying goods to or performance of the underlying
services for the Account Debtor; (ix) Accounts with respect to which the Agent,
on behalf of the Lenders, does not have a first and valid fully perfected Lien
free and clear of any other Lien whatsoever; (x) Accounts with respect to which
the Account Debtor is the subject of bankruptcy or a similar insolvency
proceeding or has made an assignment for the benefit of creditors or whose
assets have been conveyed to a receiver or trustee; (xi) Accounts with respect
to which the Account Debtor's obligation to pay the Account
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is conditional upon the Account Debtor's approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a guaranteed sale,
xxxx-and-hold, sale-or-return, sale on approval or other terms by reason of
which the payment by the Account Debtor is or may be conditional (except with
respect to Accounts in connection with which Account Debtors are entitled to
return Inventory solely on the basis of the quality of such Inventory) or
consignment basis; (xii) Accounts to the extent that the Account Debtor's
indebtedness to the Borrower exceeds a credit limit determined by the Agent in
the reasonable credit judgment of the Agent following prior written notice of
such credit limit from the Agent to the Borrower; (xiii) Accounts with respect
to which any disclosure is required in accordance with subsection 3.3; (xv)
contra Accounts to the extent of the amount of the accounts payable owed by the
Borrower to the Account Debtor; (xvi) Accounts with respect to which the Account
Debtor is located in any state denying creditors access to its courts in the
absence of a Notice of Business Activities Report or other similar filing unless
the Borrower has either qualified as a foreign corporation authorized to
transact business in such state or has filed a Notice of Business Activities
Report or similar filing with the applicable state agency in such state for the
then current year; (xvii) Accounts evidenced by Chattel Paper or any Instrument
of any kind, to the extent possession of such Chattel Paper or Instrument is not
delivered to the Agent, for the benefit of the Lenders; and (xviii) Accounts
which the Agent determines in good faith to be unacceptable. In the event that a
previously scheduled Eligible Account ceases to be an Eligible Account under the
above described criteria, the Borrower shall notify the Agent thereof.
3.3. Account Warranties. With respect to Accounts scheduled, listed
or referred to on the initial Accounts Trial Balance or on any subsequent
Accounts Trial Balance or Borrowing Base Certificate, the Borrower represents
and warrants to the Agent and each Lender that, except as disclosed in the
applicable Accounts Trial Balance or Borrowing Base Certificate: (i) the
Accounts represent bona fide sales of Inventory and services to customers in the
ordinary course of business completed in accordance with the terms and
provisions contained in the documents available to the Agent and each Lender
with respect thereto and are not evidenced by a judgment or by an Instrument or
Chattel Paper; (ii) the amounts shown on the applicable Accounts Trial Balance
and on the Borrower's books and records and all invoices and statements which
may be delivered to the Agent or any Lender with respect thereto are actually
and absolutely owing to the Borrower and are not in any way contingent; (iii) no
payments have been or shall be made thereon except payments immediately
delivered to a Blocked Account pursuant to this Agreement; (iv) there are no
setoffs, claims or disputes existing or asserted with respect thereto and the
Borrower has not made any agreement with any Account Debtor for any deduction
therefrom except a discount or allowance allowed by the Borrower in the ordinary
course of its business for prompt payment or volume discounts and which discount
and allowance is reflected in the calculation of the face amount of each invoice
related to such Account; (v) to the best of the Borrower's knowledge, there are
no facts, events or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable thereunder as shown on
the respective Accounts Trial Balances or Borrowing Base Certificates, the
Borrower's books and records and all invoices and statements delivered to the
Agent or any Lender with respect thereto; (vi) to the best of the Borrower's
knowledge, all Account Debtors have the capacity to contract and are solvent;
(vii) the Borrower has no knowledge that any Account Debtor is unable generally
to pay its debts as they become due;
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(viii) the Accounts do not arise from the sale of Inventory produced in
violation of the Fair Labor Standards Act so as to be subject to the so-called
"hot goods" provision contained in Title 29 U.S.C., Section 215(a)(1); (ix) the
services furnished and/or Inventory sold giving rise to the Account are not, and
will not be at the time of sale thereof, subject to any Lien except that of the
Agent, for the benefit of the Lenders; (x) the Accounts have not been pledged or
sold to any Person or otherwise encumbered and the Borrower is the owner of the
Accounts free and clear of any Lien except that of the Agent, for the benefit of
the Lenders; and (xi) with respect to Accounts for which the Account Debtor is
located in any state denying creditors access to its courts in the absence of a
Notice of Business Activities Report or other similar filing, the Borrower has
either qualified as a foreign corporation authorized to transact business in
such state or has filed all required Notice of Business Activities Reports or
comparable filings with the applicable governmental agency or authority.
3.4. Verification of Accounts. The Agent shall have the right, at
any time or times hereafter, in the name of the Borrower or a nominee of the
Agent, or during the pendency of an Event of Default, in the Agent's name, to
verify with Account Debtors the validity, amount or any other matter relating to
any Account, by mail, telephone, or in person.
3.5. Collection of Accounts and Payments. On or prior to the Closing
Date, the Borrower shall establish lock box accounts (the "Blocked Accounts") in
the Borrower's name with such banks as are acceptable to the Agent ("Collecting
Banks") and enter into blocked account agreements among the Borrower, the Agent
and each Collecting Bank (the "Blocked Account Agreements"). All Account Debtors
shall directly remit all payments on Accounts into a Blocked Account and the
Borrower will immediately deposit all cash payments made for Inventory or other
cash payments constituting proceeds of Collateral into a Blocked Account in the
identical form in which such payment was made, whether by cash or check. Within
five days after the Closing Date, the Borrower shall notify in writing each of
the existing Account Debtors of the name and address of the Blocked Account to
which each such Account Debtor shall be directed to remit all payments on its
Accounts. In addition, the Agent shall, on or prior to the Closing Date,
establish a depository account at each Collecting Bank or at a centrally located
bank (the "Collection Account"). Each Blocked Account Agreement shall provide,
among other things, that (i) all items of payment deposited in each Blocked
Account are held by such Collecting Bank as agent and bailee-in-possession for
the Agent, (ii) the Collecting Bank has no rights of setoff or recoupment or any
other claim against such Blocked Account, other than for payment of its service
fees or other charges directly related to the administration of such Blocked
Account and for returned checks or other items of payment, and (iii) such
Collecting Bank agrees to immediately forward all amounts received in such
Blocked Account to the Collection Account through daily sweeps from the Blocked
Account into the Collection Account in accordance with the terms of the
applicable Blocked Account Agreement. The Borrower hereby agrees that all
payments received by the Agent, whether by cash, check, wire transfer or any
other instrument, made to such Blocked Accounts or otherwise received by the
Agent and whether on the Accounts or as proceeds of other Collateral or
otherwise will be the sole and exclusive property of the Agent, for the benefit
of the Lenders. Such payments shall be applied to the outstanding balance of
Revolving Loans upon the same day as Agent's receipt of immediately available
funds. The Borrower shall irrevocably instruct each Collecting Bank that each
Collecting Bank shall
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promptly transfer all payments or deposits to the Blocked Accounts into the
Agent's Collection Account in accordance with the terms of the applicable
Blocked Account Agreement. The Borrower, and any of its Affiliates, employees,
agents or other Persons acting for or in concert with the Borrower, shall,
acting as trustee for the Agent, receive, as the sole and exclusive property of
the Agent, for the benefit of the Lenders, any monies, checks, notes, drafts or
any other payments relating to and/or proceeds of Accounts or other Collateral
which come into the possession or under the control of the Borrower or any
Affiliates, employees, agents or other Persons acting for or in concert with the
Borrower, and immediately upon receipt thereof, the Borrower or such Persons
shall remit the same or cause the same to be deposited, in kind, into a Blocked
Account or, at the direction of the Agent, shall remit the same, or cause the
same to be remitted, in kind, to the Agent at the Agent's address set forth in
subsection 10.13.
3.6. Appointment of the Agent as Borrower's Attorney-in-Fact. The
Borrower hereby irrevocably designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent) the Borrower's true and lawful
agent and attorney-in-fact (which appointment shall for all purposes be deemed
to be coupled with an interest and shall be irrevocable for so long as any
Obligations are outstanding), and authorizes the Agent, in the Borrower's or the
Agent's name, without notice to the Borrower, to: (A) following the occurrence
and during the continuance of an Event of Default (i) demand payment of
Accounts, (ii) enforce payment of Accounts by legal proceedings or otherwise,
(iii) exercise all of the Borrower's rights and remedies with respect to the
collection of the Collateral or any legal proceedings brought to collect an
Account, (iv) sell or assign any Collateral upon such terms, for such amount and
at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew any Collateral, (vi) discharge and release any
Account, (vii) prepare, file and sign the Borrower's name on any proof of claim
in bankruptcy or other similar document against an Account Debtor or on any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with any of the Collateral, (viii) notify the postal authorities of
any change of the address for delivery of the Borrower's mail to an address
designated by the Agent, and receive, open and dispose of all mail addressed to
the Borrower, and (ix) do all acts and things which are necessary, in the
Agent's sole discretion, to fulfill the Borrower's Obligations under the
Financing Agreements; and (B) at any time, to (i) take control in any manner of
any item of payment or proceeds of any Account, (ii) have access to any lockbox
or postal box into which the Borrower's mail is deposited, (iii) endorse the
Borrower's name upon any items of payment or proceeds thereof and deposit the
same in the Agent's account on account of the Borrower's Obligations, (iv)
endorse the Borrower's name upon any Chattel Paper, Document, Instrument,
invoice, freight xxxx, xxxx of lading or similar document or agreement relating
to any Account or any goods pertaining thereto, (v) execute in the Borrower's
name and on the Borrower's behalf any financing statements or amendments
thereto, (vi) endorse the Borrower's name on any verification of Accounts and
notices thereof to Account Debtors, (vii) use the information recorded or
contained in any data processing equipment and computer hardware and software
relating to the Accounts and any other Collateral, and (viii) communicate with
the Borrower's independent certified public accountants.
3.7. Account Records. The Borrower shall at all times hereafter
maintain a record of Accounts, keeping correct and accurate records itemizing
and describing the names and
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addresses of Account Debtors, relevant invoice numbers, shipping dates and due
dates, collection histories, and Accounts agings, all of which records shall be
available during the Borrower's usual business hours at the request of any of
the Agent's officers, employees or agents. The Borrower shall cooperate fully
with the Agent and its agents who shall have the right at any time or times to
inspect the Accounts and the records with respect thereto. The Borrower shall
conduct a review of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent with a
report in a form and with such specificity as may be satisfactory to the Agent
concerning such review of the Accounts.
3.8. Instruments and Chattel Paper. All Chattel Paper shall be
marked with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of Sanwa Business Credit
Corporation, as agent." Upon the request of the Agent and at all times after the
occurrence and during the continuance of a Default or Event of Default,
immediately upon the Borrower's receipt thereof, the Borrower shall deliver or
cause to be delivered to the Agent, with appropriate endorsement and assignment
to vest title, with full recourse to the Borrower, and possession in the Agent,
on behalf of the Lenders, all Instruments and Chattel Paper which the Borrower
now owns or may at any time or times hereafter acquire.
3.9. Notice to Account Debtors. The Agent may, in its sole
discretion, at any time or times, after the occurrence and during the
continuance of an Event of Default and without prior notice to the Borrower,
notify any or all Account Debtors that the Accounts have been assigned to the
Agent, for the benefit of the Lenders, and that the Agent has a Lien therein.
After the occurrence of an Event of Default, the Agent may direct or, at the
request of the Agent, the Borrower shall direct, any or all Account Debtors to
make all payments upon the Accounts directly to the Agent. The Agent shall
furnish the Borrower with a copy of any such notice.
3.10. Eligible Inventory. "Eligible Inventory" shall consist of all
of the Inventory, except the following: (i) Inventory which is damaged,
obsolete, not in good condition, or not currently usable or currently saleable
in the ordinary course of the Borrower's business as determined by the Agent;
(ii) Inventory which the Agent determines, or which in accordance with the
Borrower's customary business practices, is unacceptable due to age, type,
category and/or quantity, including, without limitation, any Inventory which is
in excess of a one (1) year's supply or is otherwise slow-moving; (iii)
Inventory with respect to which the Agent does not have a first and valid, fully
perfected Lien; (iv) Inventory consisting of packaging or supplies; (v)
Inventory in the possession of the Borrower but not owned by the Borrower; (vi)
Inventory produced in violation of the Fair Labor Standards Act and subject to
the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1);
(vii) Inventory with respect to which any disclosure is required in the
applicable Monthly Report or Borrowing Base Certificate in accordance with
subsection 3.11; (viii) Inventory which is on consignment or is located at a
place other than the places of business and collateral locations of the Borrower
listed on Exhibit 8.6; provided that, subject to subsection 7.9, in the case of
leased or bailment locations listed on Exhibit 8.6, no Inventory located at any
such location shall be "Eligible Inventory" until the applicable landlord or
bailee has executed a lien waiver in form and substance satisfactory to the
Agent) including, without limitation, Inventory in transit; (ix) Inventory
consisting of finished goods which do not meet the specifications of the
purchase order for which such Inventory was
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produced; and (x) Inventory which fails to meet the standards imposed by any
governmental agency, or department or division thereof, having regulatory
authority over such goods, or their use and/or sale. In the event that the
Borrower becomes aware that Inventory with a material value previously scheduled
in a Monthly Report or Borrowing Base Certificate ceases to be Eligible
Inventory, the Borrower shall notify the Agent thereof immediately.
3.11. Inventory Warranties. With respect to Inventory scheduled,
listed or referred to in any Monthly Report or Borrowing Base Certificate, the
Borrower represents and warrants that, except as disclosed in such Monthly
Report or Borrowing Base Certificate (i) such Inventory is located at one of the
Facilities or locations set forth on Exhibit 8.6, (ii) the Borrower has good,
indefeasible and merchantable title to such Inventory and such Inventory is not
subject to any Lien or document whatsoever except for Permitted Liens or the
prior, first perfected Lien granted to the Agent hereunder, (iii) such Inventory
is of good and merchantable quality, free from any defects and has not been
taken in trade, (iv) such Inventory is not subject to any licensing, patent,
royalty, trademark, tradename or copyright agreements with any third parties,
(v) the completion of manufacture, sale or other disposition of such Inventory
by the Agent following an Event of Default shall not require the consent of any
Person and shall not constitute a breach or default under any contract or
agreement to which the Borrower is a party or to which the Inventory is subject,
and (vi) no Inventory has been produced in violation of the Fair Labor Standards
Act so as to be subject to the so-called "hot goods" provision contained in
Title 29 U.S.C., Section 215(a)(1).
3.12. Inventory Records. The Borrower shall at all times hereafter
maintain a perpetual inventory, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory and of Eligible
Inventory, the Borrower's cost therefor and daily withdrawals therefrom and
additions thereto, and the locations of all Inventory in the possession of
bailees, all of which records shall be available during the Borrower's usual
business hours at the request of any of the Agent's officers, employees or
agents. The Borrower shall cooperate fully with the Agent and its agents who
shall have the right at any time or times to inspect the Inventory and the
records with respect thereto. The Borrower shall conduct a physical count of the
Inventory at least once each year and promptly following such physical inventory
shall supply the Agent with a report in form and substance satisfactory to the
Agent concerning such physical count of the Inventory, and shall furnish to the
Agent, at the Agent's request, such other documents and reports with respect to
the Inventory.
3.13. Safekeeping of Inventory and Inventory Covenants. Neither the
Agent nor any Lender shall be responsible for: (i) the safekeeping of the
Inventory; (ii) any loss, spoilage or damage to the Inventory; (iii) any
diminution in the value of the Inventory; or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency or any other Person. Subject to
subsection 10.4, as between the Borrower and the Agent and each Lender,
responsibility for the safekeeping of the Inventory and all risk of loss,
spoilage, damage, destruction or diminution in value of the Inventory shall be
borne by the Borrower. Without prior written notice to the Agent, the Borrower
shall not sell any Inventory to any customer on approval or on any other basis
which entitles the customer to return, or which may obligate the Borrower to
repurchase, such Inventory.
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3.14. Equipment Warranties. With respect to the Equipment, the
Borrower represents and warrants to the Agent and the Lenders that: (i) the
Borrower has good, indefeasible and merchantable title to the Equipment; (ii)
the Equipment is located only on the premises listed on Exhibit 3.14; (iii) the
Equipment is not subject to any Lien whatsoever except for Permitted Liens; (iv)
the Equipment is in good condition and repair (ordinary wear and tear excepted)
and is currently used or usable in the Borrower's business; and (v) except as
described in Exhibit 3.14, none of the Equipment used in the conduct of the
Borrower's business is leased.
3.15. Equipment Records. The Borrower shall at all times hereafter
keep complete and accurate records itemizing and describing the kind, type, age
and condition of Equipment, and the Borrower's cost therefor and accumulated
depreciation thereon and acquisitions, retirements, sales, or other dispositions
thereof, all of which records shall be available during the Borrower's usual
business hours on demand to any of the Agent's officers, employees or agents.
3.16. Maintenance of Equipment. The Borrower shall keep and maintain
the Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof and renewals
thereto, to the extent permitted hereunder, so that the value and operating
efficiency thereof shall at all times be maintained and preserved. The Borrower
shall not permit the Equipment to be operated or maintained in violation of any
applicable law, statute, rule or regulation.
3.17. Real Estate. Exhibit 3.17 describes all Real Estate or
interests in Real Estate owned or leased by the Borrower. The Borrower
represents and warrants to the Agent and the Lenders that the Borrower has good,
indefeasible and merchantable title to and ownership of, or a valid leasehold
interest in, each parcel of Real Estate described in Exhibit 3.17, free and
clear of all Liens, except Liens in favor of the Agent, for the benefit of the
Lenders, and the Permitted Liens. The Borrower further represents and warrants
to the Agent and the Lenders that no parcel of Real Estate is subject to any
boundary or encroachment dispute, special assessment, condemnation or eminent
domain proceeding, restrictive covenant, zoning or building code violation or
any other dispute, assessment, claim or violation of law which might restrict or
interfere with the Borrower's use of such parcel of Real Estate in the ordinary
course of the Borrower's business and which might reasonably be expected to have
a Material Adverse Effect. Except as disclosed on Exhibit 3.17, the Borrower
does not own any other real property or use or occupy any real property that it
leases from any other Person.
3.18. Maintenance of Real Estate. The Borrower shall keep and
maintain the Real Estate and all improvements thereon in good operating
condition (ordinary wear and tear excepted) and shall maintain the value and
utility thereof and shall maintain such Real Estate in conformity with all
applicable building and zoning codes and other applicable laws, statutes, rules
and regulations, except for such nonconformity as would not reasonably be
expected to have a Material Adverse Effect.
3.19. Intellectual Property. The Borrower is the owner of all the
Intellectual Property consisting of registered patents and trademarks free and
clear of all Liens other than
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Liens in favor of the Agent, for the benefit of the Lenders. The Borrower shall
maintain complete and accurate records with respect to such Intellectual
Property and, unless Borrower has a valid business purpose for doing otherwise,
shall defend such Intellectual Property against infringement, interference,
opposition or similar actions or challenges and shall maintain and preserve all
of its material rights with respect thereto.
4. CONDITIONS TO ADVANCES.
4.1. Conditions to All Advances. In addition to those conditions set
forth in subsection 4.2 regarding the initial advance of funds, the issuance of
a Lender Guaranty under the Revolving Loan and the funding of the other
Revolving Loans shall be conditioned upon the matters set forth in this
subsection 4.1:
(a) Representations and Warranties. All of the representations and
warranties of the Borrower contained herein or in any other Financing Agreement
shall be true and correct in all material respects on and as of the date of such
advance as if made on such date, except to the extent that any such
representation or warranty expressly relates to an earlier date.
(b) Borrower's Request. The Agent shall receive (i) Borrowing Notice
or a Conversion/Continuation Notice on or prior to the date required by the
terms of the Agreement with respect to any Loan, (ii) at least fifteen (15)
Business Days' prior notice of the issuance of a Lender Guaranty, (iii) a
Monthly Report from the Borrower dated no more than thirty-one (31) days prior
to the date of such advance and (iv) a current Borrowing Base Certificate in
accordance with the terms hereof and all other documents required to have been
delivered to the Agent hereunder prior to such date.
(c) Financial Condition. As determined by the Required Lenders in
their reasonable discretion, no event(s) or occurrence(s) which have a Material
Adverse Effect shall have occurred at any time or times since the Closing Date.
(d) No Default. As determined by the Required Lenders, neither a
Default nor an Event of Default shall have occurred and be continuing or will
result from such advance.
(e) No Litigation. (i) No Litigation shall be pending or threatened
against the Borrower or any officer, director, or executive of the Borrower (A)
in connection with this Agreement or the other Financing Agreements or (B) other
than as disclosed on Exhibit 6.14, which, if adversely determined, would have a
Material Adverse Effect; and (ii) no injunction, writ, restraining order or
other order of any nature materially adverse to the Borrower shall have been
issued or threatened by any Governmental Authority.
(f) Other Requirements. The Agent shall have received, in form and
substance satisfactory to the Agent, all certificates, orders, authorizations,
consents, affidavits, schedules, instruments, security agreements, financing
statements, mortgages and other documents which are provided for hereunder, or
which the Agent may at any time reasonably request.
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Each request and acceptance by the Borrower of the proceeds of any
advance under the Revolving Loan and the request by the Borrower for the
incurrence by the Lenders of any Lender Guaranty Liability shall constitute a
representation and warranty by the Borrower that the conditions contained in
subsections 4.1(a), 4.1(d), and 4.1(e) have been satisfied. All legal matters
incident to the making of the advance of funds or the issuance of the Lender
Guaranty shall be satisfactory to the Agent and its counsel.
4.2. Conditions to Initial Advance. In addition to those conditions
set forth in subsection 4.1 with respect to all advances or issuances of Lender
Guaranties and other Revolving Loans hereunder, the issuance of the Eau Claire
Lender Guaranty and the making of the initial advance of funds under the
Revolving Loan shall be conditioned upon the satisfaction on or before the
Closing Date, unless otherwise stated, of the conditions set forth in this
subsection 4.2 and the delivery on or before the Closing Date, unless otherwise
stated, of the following documents to each Lender, in form and substance
satisfactory to each Lender, and consummation of all of the transactions or the
satisfaction of each condition contemplated by each such document in a manner
satisfactory to each Lender and its counsel.
(a) Financing Agreements; Notes. Duly executed copies of this
Agreement, the other Financing Agreements (including a Guaranty, Pledge
Agreement, stock power and Assignment of Representations, Warranties, Covenants
and Indemnities executed by Guarantor) and one (1) duly executed copy of each of
the Revolving Loan Note conforming to the requirements hereof, together with all
Schedules, Exhibits, certificates, instruments, documents and financial
statements required to be delivered pursuant hereto and thereto.
(b) Legal Opinion. The legal opinion of the Borrower's counsel and
Wisconsin counsel in form and substance satisfactory to the Lenders and their
counsel.
(c) UCC. Evidence of the proper filing of UCC financing statements
(or amendments to UCC financing statements) perfecting Liens in favor of the
Agent in the Collateral and copies of searches of financing statements filed
under the Code, together with tax lien and judgment searches with respect to the
Property of the Borrower, in Michigan, Wisconsin and Pennsylvania.
(d) Officer's Certificate. A certificate executed by the chief
executive officer or chief financial officer of the Borrower, stating that (i)
no Default or Event of Default has occurred and is continuing, (ii) since
September 30, 1997, no Material Adverse Effect has occurred , (iii) no
litigation, investigation or proceeding, or injunction, writ or restraining
order of the type described in subsection 4.1(e) is pending or threatened, (iv)
each of the conditions precedent to the consummation of the Financing Agreements
contemplated hereby has been met or satisfied, and (v) the representations and
warranties of the Borrower contained in the Financing Agreements are correct and
complete in all material respects on and as of the Closing Date.
(e) Insurance Policies and Endorsements. Copies of policies of
insurance required hereby together with loss payable endorsements on the Agent's
standard form, duly executed, and evidence of the payment of the first year's
premium therefor.
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(f) Initial Monthly Report and Other Exhibits. Copies of the initial
Monthly Report, a Fair Saleable Value Balance Sheet, initial Borrowing Base
Certificate, the Solvency Affidavit, the initial Projections, and all financial
statements and other Exhibits and Schedules required hereby.
(g) Fees. The fees payable pursuant to the SBCC Fee Letter shall
have been paid.
(h) Charter and Bylaws. A copy of the Borrower's Certificate of
Incorporation, certified by the Secretary of State of Delaware and a copy of the
Guarantor's Certificate of Incorporation certified by the Secretary of State of
Delaware as of a date not more than twenty (20) days prior to the Closing Date
and copies of the Borrower's and Guarantor's bylaws and any amendments thereto
certified by the Secretary or Assistant Secretary of the Borrower and Guarantor,
respectively.
(i) Good Standing Certificates. Good Standing Certificates for the
Borrower from the State of Delaware and for the Guarantor from the State of
Delaware, respectively, and from each other state in which the Guarantor or the
Borrower is required to be qualified to transact business as a foreign
corporation.
(j) Board Resolutions. Certified copies of resolutions of the boards
of directors of the Borrower and the Guarantor authorizing the execution and
delivery of and the consummation of the transactions contemplated by this
Agreement, the other Financing Agreements, the Related Transactions Documents,
as applicable, and all other documents or instruments to be executed and
delivered in conjunction herewith and therewith. Such resolutions shall also
designate which Authorized Officers of the Borrower shall be authorized to make
a request for an advance of the Revolving Loan hereunder.
(k) Incumbency Certificates. Incumbency certificates with respect to
the officers of the Borrower and the Guarantor executing the documents referred
to in item (j) above, certified as of the Closing Date by the Borrower's or the
Guarantor's, as applicable, Secretary or Assistant Secretary as being true and
correct.
(l) Waivers. Landlord waivers, bailee letters and mortgagee
agreements in form and substance satisfactory to Agent, in each case as required
pursuant to subsection 7.9. In the event the Borrower is unable to obtain a
landlord waiver, bailee letter and/or mortgage agreement acceptable to Agent as
to any such location on or before the Closing Date, the eligibility of such
Inventory at that location shall be determined in accordance with subsection
7.9.
(m) Accountants' Letter. A letter authorizing Borrower's independent
certified public accountants to communicate with the Agent and the Lenders in
accordance with subsection 7.1 and acknowledging the Agent's and each Lender's
reliance on future financial statements.
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(n) Power of Attorney. A power of attorney in favor of the Agent
with respect to the matters set forth in subsections 3.6, 5.2 and 7.6 in form
and substance satisfactory to the Agent.
(o) Agent for Service. An acknowledgment by CT Corporation System
that it has been appointed as the Borrower's agent to accept service of process
in Illinois.
(p) Letter of Direction. A letter of direction from the Borrower
with respect to the disbursement of the proceeds of the initial advance of funds
hereunder.
(q) Transition Services Agreement. A copy of the Transition Services
Agreement entered into in connection with the Purchase Agreement.
(r) [Intentionally Omitted]
(s) No Material Transactions. Other than the Related Transactions
and the other transactions described herein, the Borrower shall not have entered
into any material commitment or material transaction since September 30, 1997
including, without limitation, transactions for borrowings and capital
expenditures, which are not in the ordinary course of the Borrower's business.
(t) Blocked Account Agreements. Executed copies of each of the
Blocked Account Agreements.
(u) Mortgages. Duly executed copies of the Mortgages and amendments
to Mortgages.
(v) Mortgagee's Title Insurance. An ALTA Loan Policy for Borrower's
Real Estate in Eau Claire Wisconsin, and a mortgage modification and date down
endorsement to the existing ALTA Loan Policy for Borrower's Real Estate in
Plainwell, Michigan from a title insurance company acceptable to the Agent, each
dated the date of the initial advance under the Revolving Loan, in the fair
market value of the applicable property, subject only to such exceptions and
exclusions as are acceptable to the Agent, and containing such information and
endorsements as may be required by the Agent, including, without limitation,
usury, zoning, comprehensive, last dollar and revolving credit endorsements and
a special endorsement with respect to the Eau Claire Lender Guaranty.
(w) Surveys. A survey for Borrower's Real Estate in Eau Claire,
Wisconsin prepared in accordance with the minimum standard detail requirement
for land title surveys as adopted by the American Title Association and by the
American Congress on Surveying and Mapping, dated (i) with respect to parcels
1-13 of such Real Estate, as of or prior to the Closing Date and (ii) with
respect to parcels 14-19 of such Real Estate, within thirty (30) days of the
Closing Date, in each case certified by a licensed surveyor.
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(x) Real Estate Taxes and Fees. Evidence of payment of all taxes on
each parcel of Real Estate due prior to the Closing Date and all recording and
mortgage filing fees or taxes.
(y) Payoff Letter; Termination Statements; Releases. All releases
and other instruments necessary to terminate all Liens on the Borrower's and its
Subsidiaries' Intellectual Property except the Lien of the Agent, for the
benefit of the Lenders, and the Permitted Liens.
(z) [Intentionally Omitted]
(aa) Environmental Matters. The Agent shall have received such
certified environmental review and audit reports with respect to the properties
acquired as part of the Tissue Business addressed to the Agent, in form and
substance reasonably satisfactory to the Agent.
(bb) Related Transactions Documents and Consummation of Related
Transactions. Fully executed copies of the Related Transactions Documents, each
of which shall be in form and substance satisfactory to each Lender and its
counsel. The Related Transactions shall have been consummated in accordance with
the terms of the Related Transactions Documents.
(cc) Capital Structure. The stockholders of Holdings shall have
contributed at least $25,000,000 in cash to the capital of Holdings and Holdings
shall, in turn, have contributed such amount to the capital of Borrower.
(dd) Borrowing Availability. The Borrower shall have Borrowing
Availability of at least $10,000,000 as of the Closing Date after giving effect
to the Related Transactions (without deterioration of Working Capital).
(ee) Form W-9. A copy of IRS Form W-9, Taxpayer Identification
Number and Certification.
(ff) Approvals. Agent shall have received (i) satisfactory evidence
that the Borrower has obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities including H-S-R, to the
execution, delivery and performance of the Related Transactions Documents or
(ii) officers' certificates in form and substance satisfactory to Agent
affirming that no such consents or approvals are required.
(gg) Subordinated Debt. Borrower shall have received no less than
$120,000,000 in cash proceeds from the issuance of Subordinated Debt pursuant to
the Subordinated Debt Documents.
(hh) Tissue Business. The Tissue Business shall have been acquired
by Borrower in accordance with the terms of the Purchase Agreement. The purchase
price for the Tissue Business under the Purchase Agreement shall not have
exceeded $160,000,000 including aggregate fees and closing costs (including
those payable to Agent and Lenders).
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(ii) Assignment of Representations and Warranties, Etc. An executed
copy of an Assignment of Representations, Warranties, Covenants, Indemnities and
Rights by Borrower in favor of the Agent, for the benefit of the Lenders, with
respect to Seller's representations, warranties, covenants, indemnities under
the Purchase Agreement.
(jj) Other Documents. All corporate and legal proceedings and all
agreements in connection with the transactions contemplated by this Agreement
and the other Financing Agreements shall be reasonably satisfactory to the
Agent, and the Agent shall have received all information and copies of all
documents including, without limitation, records of corporate existence,
authority and proceedings and governmental approvals, if any, which the Agent
reasonably may have requested in connection therewith, and such documents, where
appropriate, shall be certified by proper corporate or governmental authorities.
5. COLLATERAL.
5.1. Security Interest. All of the Borrower's Obligations constitute
one (1) loan secured by the Agent's Liens on the Collateral now or from time to
time hereafter granted by the Borrower to the Agent. To secure timely payment
and performance in full of the Obligations, the Borrower hereby mortgages,
pledges, hypothecates and grants to the Agent, for the benefit of the Lenders, a
right of setoff against and a continuing security interest in all of the
Borrower's right, title and interest in and to the following property and
interests in property, whether now owned or hereafter acquired by the Borrower
and wheresoever located: (i) Accounts; (ii) General Intangibles; (iii) Fixtures;
(iv) Inventory; (v) Equipment; (vi) Intellectual Property; (vii) all of the
Borrower's deposit accounts (general or special) with any financial institution
with which the Borrower maintains deposits; (viii) all of the Borrower's now
owned or hereafter acquired monies, and any and all other property and interests
in property of the Borrower now or hereafter coming into the actual possession,
custody or control of the Agent or any Lender or any agent or affiliate of the
Agent or any Lender in any way or for any purpose (whether for safekeeping,
deposit, custody, pledge, transmission, collection or otherwise); (ix)
Investment Property; (x) Documents, Instruments and Chattel Paper; (xi) all
insurance policies relating to any of the foregoing, including without
limitation business interruption insurance; (xii) all of the Borrower's books
and records relating to any of the foregoing; (xiii) all accessions and
additions to, substitutions for, and replacements of any of the foregoing; and
(xiv) all cash collections from, and all other cash and non-cash proceeds of,
any of the foregoing including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the Collateral and
claims against any Person for loss of, damage to, or destruction of, any or all
of the Collateral. In addition, concurrently with the execution and delivery
hereof the Borrower shall deliver the Mortgages, and concurrently with the
acquisition of any real property after the Closing Date, the Borrower shall
grant and convey to the Agent, for the benefit of the Lenders, as security for
the Obligations, first mortgage Liens on all such real property. Notwithstanding
the foregoing, the Collateral shall not include the Excluded Assets.
5.2. Preservation of Collateral and Perfection of Liens Thereon.
Prior to the execution of this Agreement, the Borrower shall have executed and
delivered to the Agent, and at any time or times hereafter at the request of the
Agent, the Borrower shall promptly and duly
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execute and deliver any and all such further instruments and documents and take
such further action as the Agent may reasonably deem desirable to obtain the
full benefits of this Agreement and of the rights and powers herein granted
including, without limitation, all financing statements, security agreements,
pledge agreements, mortgages, leasehold mortgages, bailee letters, amendments
thereto, or other documents (and pay the cost of filing or recording the same in
all public offices deemed necessary by the Agent), as the Agent may request, in
a form satisfactory to the Agent, to perfect and maintain the Liens on the
Collateral granted by the Borrower to the Agent or to otherwise protect and
preserve the Collateral and the Liens thereon or to enforce the Agent's Liens on
the Collateral. Should the Borrower fail to do so, the Agent is authorized to
sign any such financing statements or other documents as the Borrower's agent.
The Borrower further agrees that a carbon, photocopy or other reproduction of
this Agreement or of a financing statement is sufficient as a financing
statement.
5.3. Consigned Inventory. With respect to consigned Inventory, the
Borrower shall perfect its interest in such Inventory by filing and delivering
notice to the creditors of record of the consignee, all as provided in Section
9-114 of the Code, and in form and substance satisfactory to the Agent, and the
Borrower shall execute and deliver all financing statements, security
agreements, amendments thereto, or other documents (and pay the cost of filing
or recording the same in all public offices deemed necessary by the Agent), as
the Agent may request, in a form satisfactory to the Agent, to perfect and
maintain the Liens on such Collateral granted by the Borrower to the Agent
hereunder. With respect to goods in the hands of bailees, the Borrower shall
deliver notice to such bailees of Agent's interest in such goods and
instructions with respect to the disposition thereof, all in form and substance
satisfactory to the Agent, and Borrower shall execute and deliver all financing
statements, security agreements, amendments thereto, or other documents (and pay
the cost of filing or recording the same in all public offices deemed necessary
by the Agent), as the Agent may request, in a form satisfactory to the Agent, to
perfect and maintain the Liens on such Collateral granted by the Borrower to the
Agent hereunder.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants and covenants and agrees that
as of the Closing Date and after giving effect to the Related Transactions and
continuing so long as any Obligations (other than unasserted contingent
indemnification obligations) remain outstanding or any Lender shall have any
Commitment hereunder:
6.1. Existence. (a) Each of the Borrower and the Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation and is qualified to transact
business as a foreign corporation in, and is in good standing under the laws of,
all states in which such Person is required by applicable law to maintain such
qualification and good standing except where the failure to so qualify would not
have a Material Adverse Effect. All such jurisdictions are listed on Exhibit
6.1-1.
(b) All shares of capital stock of the Guarantor and the Borrower
have been duly authorized and validly issued and are fully paid and
non-assessable. Except as disclosed on
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Exhibit 6.1-2 and as otherwise permitted by this Agreement (i) no authorized but
unissued or treasury share of capital stock of the Borrower is subject to any
option, warrant, right to call or commitment of any kind or character, (ii) the
Borrower has no any outstanding stock or securities convertible into or
exchangeable for any shares of its capital stock, or any rights issued to any
Person (either preemptive or other) to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to any of its capital stock or any stock or securities
convertible into or exchangeable for any of its capital stock, and (iii) the
Borrower is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or any
convertible securities, rights, warrants or options of the type described in the
clause (ii) above.
6.2. Authority. The Borrower and the Guarantor have full power,
authority and legal right to enter into this Agreement, the other Financing
Agreements and the Related Transactions Documents to which such Person is a
party. The execution and delivery by the Borrower and the Guarantor of the
Financing Agreements and the Related Transactions Documents to which it is a
party: (i) have been duly authorized by all necessary action on its part; (ii)
are not in contravention of the terms of its charter or Bylaws or of any
indenture, agreement or undertaking to which it is a party or by which it or any
of its Property is bound; (iii) do not and will not require any registration
with, or approval or the consent or approval of, any Governmental Authority or
of any other Person that has not been obtained; (iv) do not and will not
contravene any contractual or governmental restriction to which it or any of its
Property may be subject; and (v) do not and will not, except as contemplated
herein, result in the imposition of any Lien upon any Property of it under any
existing indenture, mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which it is a party or by which it or any of
its Property may be bound or affected. Each of the Borrower and the Guarantor
has the full corporate power and authority and legal right to own, operate,
pledge, mortgage or otherwise encumber its Property, to lease the Property it
now operates under lease and conduct its business as now, heretofore and
proposed to be conducted, and has all material licenses, permits, consents and
approvals from or by, and has made all material filings with, and has given all
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct.
6.3. Binding Effect. This Agreement and the other Financing
Agreements and the Related Transactions Documents have been duly executed and
delivered by the Borrower and the Guarantor, as applicable, are the legal, valid
and binding obligations of the Borrower and the Guarantor, as applicable, and
are enforceable against the Borrower and the Guarantor, as applicable, in
accordance with their terms.
6.4. Financial Data. (a) The Borrower has furnished to the Agent and
each Lender the pro forma balance sheet and related profit and loss statement
(the "Pro Forma") of the Borrower on a consolidated basis based on financial
data as of September 30, 1997 and attached as Exhibit 6.4-1. As of the Closing
Date, the Pro Forma fairly represents in all material respects the assets,
liabilities, financial condition and results of operations of the Borrower in
accordance with Generally Accepted Accounting Principles, consistently applied,
as of September 30, 1997
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(subject to normal year-end audit adjustments), but taking into account the
transactions contemplated by this Agreement and the Related Transactions
Documents. To the best knowledge of the Borrower, there are no omissions from
the Pro Forma which are or may be material. Except as contemplated hereby, since
the date of the Pro Forma, the Borrower has not: (i) incurred any debts,
obligations, or liabilities (absolute, accrued, or contingent and whether due or
to become due) except current liabilities incurred in the ordinary course of
business which (individually or in the aggregate) will not have a Material
Adverse Effect; (ii) paid any obligation or liability other than current
liabilities in the ordinary course of business, or discharged or satisfied any
Liens other than those securing current liabilities, in each case in the
ordinary course of business; (iii) declared or made any Restricted Payment or
obligated itself to do so; (iv) mortgaged, pledged, or subjected to any Lien on
any of its Property except Permitted Liens; (v) sold, transferred, or leased any
of its Property except in the usual and ordinary course of business; (vi)
suffered any physical damage, destruction, or loss (whether or not covered by
insurance) which might have a Material Adverse Effect; (vii) entered into any
transaction other than in the usual and ordinary course of business; (viii)
encountered any labor difficulties or labor union organizing activities; (ix)
issued or sold any shares of capital stock or other securities or granted any
options or similar rights with respect thereto other than pursuant hereto; or
(x) agreed to do any of the foregoing other than pursuant hereto. There has been
no Material Adverse Effect since September 30, 1997.
(b) The Borrower has furnished to the Agent and each Lender the Fair
Saleable Value Balance Sheet in the form attached as Exhibit 6.4-2 which has
been prepared based on the following assumptions: (i) Accounts have been valued
at face value less reserves for uncollectible Accounts and expenses of
collection based on previous history assuming a collection period not exceeding
ninety (90) days; (ii) Inventory has been valued at the lower of cost or market
on a FIFO basis and in accordance with the Appraisal (Inventory); (iii) fixed
assets including Real Estate have been valued in accordance with the Appraisals;
and (iv) the liabilities stated therein represent a complete statement of the
Borrower's Liabilities including, for purposes of the Fair Saleable Value
Balance Sheet only, all liabilities of the Borrower, whether fixed or
contingent, direct or indirect, disputed or undisputed, and whether or not
required to be reflected on a balance sheet prepared in accordance with
Generally Accepted Accounting Principles.
(c) The Borrower has also furnished to the Agent and each Lender
initial Projections for the Borrower attached as Exhibit 6.4-3, containing the
information required by clause (vi) of subsection 7.1. The initial Projections
have been prepared, and all Projections hereafter delivered in accordance with
clause (vi) of subsection 7.1 shall be reviewed, by the chief financial officer
of the Borrower on the basis of the assumptions set forth therein and do
represent, and in the future will represent, the good faith estimate of the
Borrower's management regarding the course of business of the Borrower and each
Subsidiary for the periods covered thereby. The assumptions set forth in the
initial Projections are, and the assumptions set forth in the future Projections
delivered hereafter shall be, reasonable and realistic based on then current
economic conditions.
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(d) The Borrower has also provided to the Agent and each Lender (i)
audited statements of income and cash flow and balance sheets for Plainwell
Paper Company for the Fiscal Year ending December 31, 1996 and the nine months
ended September 30, 1997 and for the Tissue Business for the Fiscal Years ending
December 31, 1995 and December 31, 1996 and the nine months ended September 30,
1997 and (ii) unaudited statements of income and cash flow and balance sheets
for Plainwell Paper Company and the Tissue Business as of December 31, 1997 and
for the three (3) months then ended and such financial statements fairly present
the financial condition and results of operations of the Borrower for the
periods indicated therein, in accordance with Generally Accepted Accounting
Principles, consistently applied (subject to normal year-end adjustment and
excluding, in the case of the unaudited financial statements, footnotes).
6.5. Collateral. Except for the Permitted Liens, all of the
Collateral and the Excluded Assets are and will continue to be owned by the
Borrower free and clear of all Liens. From and after the making of the first
advance under the Revolving Loans and after the making of all necessary filings,
the provisions of Article 5 of this Agreement will be effective to create and
will give the Agent, for the benefit of the Lenders, as security for the
repayment of the Obligations, a legal, valid, perfected and enforceable Lien
(which priority is subject only to Permitted Liens) upon all right, title and
interest of the Borrower in any and all of the Collateral (including, without
limitation, the Lien in the items and amounts deposited in the Blocked
Accounts).
6.6. Solvency. The Borrower and each Subsidiary is Solvent and will
continue to be Solvent following the consummation of the transactions
contemplated by this Agreement and the Related Transactions and the payment of
all fees, costs and expenses payable by the Borrower with respect thereto.
6.7. Places of Business. As of the Closing Date, the principal place
of business and chief executive office of the Borrower is set forth on Exhibit
6.7 and, except as disclosed on Exhibit 6.7, none of such locations have changed
within the past six (6) months. The books and records of the Borrower and all
Chattel Paper, Instruments and all records of account are located and hereafter
shall continue to be located at the principal place of business and chief
executive office of the Borrower.
6.8. Other Names. The business conducted by the Borrower has not
been conducted under any corporate, trade or fictitious name other than those
names disclosed on Exhibit 6.8-1.
6.9. Tax Obligations. The Borrower and each Subsidiary has filed
complete and correct federal, state and local tax reports and returns required
to be filed by it, prepared in accordance with applicable laws or regulations,
and, except for extensions duly obtained, has either duly paid all Charges owed
by it, or made adequate provision for the payment thereof. There are no material
unresolved questions or claims concerning any tax liability of the Borrower. No
tax Liens have been filed and no claims are being asserted with respect to any
such Charges which might have a Material Adverse Effect. The charges, accruals
and reserves
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on the books of the Borrower are adequate for all open years and for the current
Fiscal Year. The Borrower has not consented to any extension of, or otherwise
waived, any statute of limitation with respect to any such Charges. The Borrower
is not a party to any tax indemnity, tax sharing or tax allocation agreement
with any other Person. Proper and accurate amounts have been withheld by the
Borrower from its employees for all periods in full and complete compliance with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities.
6.10. Indebtedness and Liabilities. The Borrower has no Indebtedness
other than Indebtedness reflected on the Pro Forma. Except for the Indebtedness
referred to above, and Liabilities reflected on the Pro Forma attached as
Exhibit 6.4-1, neither the Borrower nor any Subsidiary has any Liabilities
required to be reflected on a balance sheet prepared in accordance with GAAP
(subject to year-end adjustments).
6.11. Use of Proceeds and Margin Security. The Borrower shall use
the proceeds of the initial advance under the Revolving Loan and the proceeds of
the Subordinated Debt issued pursuant to the Subordinated Debt Documents for the
purposes disclosed on Exhibit 6.11 and shall use the proceeds of subsequent
advances under the Revolving Loan solely for the ordinary working capital
requirements of the Borrower and shall use all advances and loans hereunder for
proper business purposes, consistent with all applicable laws, statutes, rules
and regulations. The Borrower does not own any margin security and none of the
Revolving Loans advanced or funded hereunder will be used for the purpose of
purchasing or carrying any margin securities or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase any margin
securities or for any other purpose not permitted by Regulation G or U of the
Board of Governors of the Federal Reserve System.
6.12. Government Contracts. Except as disclosed on Exhibit 6.12, the
Borrower is not a party to or bound by any supply agreements with the federal
government or any state or local government or any agency thereof. Except as
disclosed on Exhibit 6.12, after giving effect to the consummation of the
transactions contemplated by the Related Transactions Documents, all such
government contracts will be valid, legally binding and in full force and
effect.
6.13. Investments. Except as disclosed on Exhibit 8.4, as of the
Closing Date, the Borrower has no Investment in any Person other than Permitted
Investments and is not engaged in any joint venture or partnership with any
other Person.
6.14. Litigation and Proceedings. As of the Closing Date, no
judgments are outstanding against the Borrower or binding upon any of its
Property, nor, except as disclosed on Exhibit 6.14, is there now pending or, to
the Borrower's knowledge, threatened, any litigation, claim, arbitration,
investigation, administrative proceeding or other governmental proceeding
("Litigation") by or against the Borrower which, if adversely determined, would
have a Material Adverse Effect, and to the best of the Borrower's knowledge
after diligent inquiry, there are no presently existing facts or circumstances
likely to give rise to any such Litigation which would have a Material Adverse
Effect. From and after the Closing Date, there is no Litigation pending
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or, to the Borrower's knowledge, threatened against the Borrower, which, if
adversely determined, might have a Material Adverse Effect. None of the
Litigation will prevent, enjoin or delay the consummation of the Related
Transactions contemplated by the Related Transactions Documents.
6.15. Other Agreements and Deliveries. (a) Except as disclosed on
Exhibit 6.15, the Borrower is not in default under any material indenture, loan
agreement, mortgage, deed of trust or similar document relating to the borrowing
of monies or any other material contract, lease, or commitment to which it is a
party or by which it is bound. There is no dispute regarding any contract,
lease, or commitment which would have a Material Adverse Effect.
(b) The Borrower has provided or made available to the Agent or its
counsel accurate and complete copies of all of the following agreements or
documents to which the Borrower or any Subsidiary is subject:
(i) each Plan and other compensation or nonqualified benefit
plan arrangement which the Borrower or any ERISA Affiliate sponsors
or is committed to contribute to as of the Closing Date and, where
applicable, each Plan's most recent summary plan description,
actuarial report, determination letter from the Service and Forms
5500 for the previous five (5) years filed in respect of each such
Plan;
(ii) Collective bargaining agreements or other labor
contracts;
(iii) supply agreements delivered under the Purchase
Agreement;
(iv) purchase agreements delivered under the Purchase
Agreement;
(v) leases of real property;
(vi) leases of Equipment delivered under the Purchase
Agreement;
(vii) licenses and permits with respect to Environmental
Matters;
(viii) all management and employment agreements between the
Borrower and any other Person;
(ix) instruments and agreements governing the issuance of any
Stock of the Borrower or the Guarantor.
6.16. Labor Matters. Except as disclosed on Exhibit 6.16, there are
no strikes, work stoppages, labor disputes, decertification petitions, union
organizing efforts, grievances or other controversies pending or, to the best of
the Borrower's knowledge after diligent inquiry, threatened, between the
Borrower and any of its employees, other than employee grievances arising in the
ordinary course of business which, in the aggregate, would not have a Material
Adverse Effect. All collective bargaining agreements, labor agreements or other
contracts with
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or affecting any employee of the Borrower necessary to continue to conduct the
business operations of the Borrower are in full force and effect. Except as
disclosed on Exhibit 6.16, the Borrower has no obligation under any collective
bargaining agreement or any employment agreement. To the best of the Borrower's
knowledge, there is no organizing activity pending or threatened by any labor
union or group of employees. Except as disclosed on Exhibit 6.16, there are no
representation proceedings pending or threatened with the National Labor
Relations Board or other applicable Governmental Authority, and no labor
organization or group of employees has made a pending demand for recognition.
There are no material complaints or charges pending or threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by the Borrower of any individual.
6.17. Compliance with Laws and Regulations. The execution and
delivery by the Borrower of this Agreement, the other Financing Agreements and
the Related Transactions Documents and the performance of the Borrower's
obligations hereunder and thereunder are not in contravention of any order
applicable to the Borrower or, to the Borrower's best knowledge, any federal,
foreign, state or local laws, regulations or ordinances where such contravention
would have a Material Adverse Effect. The Borrower is in compliance with all
laws, orders, regulations and ordinances of all federal, foreign, state and
local governmental authorities relating to the business operations and the
Property of the Borrower except for laws, orders, regulations and ordinances the
non-compliance or violation of which would not, in the aggregate, have a
Material Adverse Effect.
6.18. Patents, Trademarks and Licenses. Except as disclosed on
Exhibit 6.18, the Borrower owns or possesses rights to use all material
licenses, patents, patent applications, copyrights, service marks, logos, names,
trademarks and tradenames required to continue to conduct its business as
heretofore conducted; all such licenses, patents, patent applications, copyright
registrations, copyright applications, service marks and trademarks are
disclosed on Exhibit 6.18; and no such license, patent or trademark has been
declared invalid, been limited by order of any court, or is the subject of any
infringement, interference or similar formal proceeding or challenge.
6.19. ERISA. (a) Neither the Borrower nor any ERISA Affiliate has
sponsored or contributed to, or has had any obligation (contingent or otherwise)
under, any Plan or Multiemployer Plan other than those disclosed on Exhibit
6.19(a).
(b) With respect to all Plans, the Borrower and each ERISA Affiliate
is in compliance with the applicable provisions of ERISA and the IRC in all
material respects. Each Plan that is intended to be qualified under Section
401(a) of the IRC is so qualified, and each trust related to each such Plan is
exempt from federal income tax under Section 501(a) of the IRC. No liability has
been incurred by the Borrower or any ERISA Affiliate which remains unsatisfied
for any taxes or penalties with respect to any Plan or any Multiemployer Plan.
(c) Except as disclosed on Exhibit 6.19(c), the present value of all
benefit liabilities under each Pension Plan does not exceed the present value of
the assets of such Plan.
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No Pension Plan has been terminated, nor has any accumulated funding deficiency
(as defined in Section 412 of the IRC) been incurred (without regard to any
waiver granted under Section 412 of the IRC), nor has any funding waiver from
the Internal Revenue Service been received or requested with respect to any
Pension Plan, nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by Section 412 of
the IRC, Section 302 of ERISA or the terms of any Pension Plan by the applicable
due dates, nor has there been any event requiring any disclosure under Section
4041(c)(3)(C), or 4062(e) or 4063(a) of ERISA with respect to any Pension Plan.
(d) Neither the Borrower nor any ERISA Affiliate has: (i) engaged in
a nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the IRC; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid; (iii) failed to make a required contribution or
payment to a Multiemployer Plan; or (iv) engaged in any transaction which could
subject it to liability under Section 4069 or 4212(c) of ERISA.
(e) No Termination Event has occurred and no Termination Event is
reasonably expected to occur which could result in a liability to the Borrower
or any ERISA Affiliate.
(f) Except as disclosed on Exhibit 6.19(f), neither the Borrower nor
any ERISA Affiliate has any contingent liability with respect to any
post-retirement benefit under any Plan which is a welfare plan (as defined in
Section 3(1) of ERISA), other than liability for health plan continuation
coverage described in Part 6 of Title I of ERISA.
6.20. Property. The Borrower and each Subsidiary owns, possesses, or
has unrestricted rights to use or exercise all Property and rights to the extent
necessary for the conduct of the Borrower's business as heretofore conducted.
Except as disclosed on Exhibit 6.20, there are no actual, threatened, or alleged
material defaults with respect to any material agreements relating to, or
evidencing, any Property. Except as disclosed on Exhibit 6.20, no material
consent, approval, license, authorization or other action in respect of any
Person is required, except as have been obtained, in connection with the right
to use any Property. None of the items disclosed on Exhibit 6.20 might have a
Material Adverse Effect.
6.21. Adverse Contracts. The Borrower is not a party to, nor is the
Borrower or any of its Property subject to or bound by, any long term lease,
forward purchase contract or futures contract, covenant not to compete, or
similar agreement which would have a Material Adverse Effect.
6.22. [Intentionally Omitted.]
6.23. Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended. Neither the Borrower nor any Subsidiary is a
"holding company" or a "subsidiary company" or a
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"holding company" or an "affiliate" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
6.24. Broker's Fees. Except as set forth on Exhibit 6.24, neither
the Agent or any Lender nor the Borrower or any Subsidiary is or will become
obligated to any Person with respect to any finder's or brokerage or similar fee
or commission in connection with the transactions contemplated hereby.
6.25. Licenses and Permits. The Borrower and each Subsidiary has
been and is current and in good standing in all material respects with respect
to all material governmental approvals, permits, certificates, licenses,
inspections, consents and franchises (collectively, the "Licenses") necessary to
continue to conduct its business and to own or lease and operate, its properties
as heretofore conducted, owned, leased or operated including any and all
Licenses with respect to Environmental Laws.
6.26. Environmental Compliance.
(a) Except as disclosed on Exhibit 6.26, the operations of the
Borrower and each Subsidiary comply in all material respects with all applicable
Environmental Laws.
(b) Except as disclosed on Exhibit 6.26, there are no material
claims, investigations, litigation, administrative proceedings, whether pending
or, to the knowledge of the Borrower after diligent inquiry, threatened, or
material judgments or orders, relating to any Hazardous Materials or alleging
the violation of any Environmental Laws (collectively "Environmental Matters")
relating in any way to any real property leased or otherwise used by the
Borrower or any Subsidiary or to the operations of the Borrower or any
Subsidiary.
(c) Except as disclosed on Exhibit 6.26, no Hazardous Materials are
presently stored or otherwise located on, in or under any real property leased,
owned, operated or otherwise used by the Borrower or any Subsidiary except in
compliance in all material respects with all applicable Environmental Laws, and,
no part of any real property leased, owned, operated or otherwise used by the
Borrower or any Subsidiary or to the Borrower's best knowledge, adjacent
parcels, including the groundwater located thereon, is presently contaminated in
any material respect by any such Hazardous Material.
(d) Except as disclosed on Exhibit 6.26, neither the Borrower nor
any Subsidiary has filed any notice with respect to a material matter under any
international, federal, state, regional, provincial or local law indicating past
or present treatment, storage or disposal of a Hazardous Material or reporting a
spill or release of a Hazardous Material into the environment.
(e) Except as disclosed on Exhibit 6.26, neither the Borrower nor
any Subsidiary has any known material liability, contingent or otherwise, in
connection with any release of any Hazardous Material into the environment.
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(f) So long as any Obligations are outstanding, no Hazardous
Materials may be used, generated, treated, stored or disposed of by any Person
for any purpose upon any real property leased, owned, operated, or otherwise
used by the Borrower or any Subsidiary except in compliance in all material
respects with all applicable Environmental Laws.
(g) The Borrower hereby indemnifies the Agent and each Lender and
agrees to hold the Agent and each Lender harmless from and against any and all
losses, liabilities, damages, injuries, costs, expenses and claims of any and
every kind whatsoever (including, without limitation, court costs and reasonable
attorneys' fees and legal expenses) which at any time or from time to time may
be paid, incurred or suffered by, or asserted against, the Agent or any Lender
arising directly or indirectly from the violation of any Environmental Law by
the Borrower or any Subsidiary with respect to the assets or business of the
Borrower or any Subsidiary or the imposition of liability on the Borrower or any
Subsidiary under any Environmental Law or any laws or regulations relating to
Hazardous Material, treatment, storage, disposal, generation and transportation,
air, water and noise pollution, soil or ground or water contamination, the
handling, storage or release into the environment of Hazardous Materials, and
the transportation of Hazardous Materials; or with respect to, or as a direct or
indirect result of the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, properties utilized, owned or
operated by the Borrower or any Subsidiary in the conduct of its business into
or upon any land, the atmosphere, or any watercourse, body of water or wetland,
of any Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under the Environmental Laws); provided that to the extent that the Borrower or
any Subsidiary is strictly liable under any Environmental Laws, the Borrower's
obligations to indemnify the Agent and each Lender under this subsection 6.26(g)
shall likewise be without regard to fault on the part of the Borrower or any
Subsidiary and with respect to the violation of law which results in liability
to the Borrower or any Subsidiary. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this subsection 6.26(g) may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all indemnifications set
forth in this subsection 6.26(g).
(h) So long as any Obligations are outstanding, if the Agent or any
Lender, at any time, has a reasonable basis to believe that any real property
leased or otherwise used by the Borrower or any Subsidiary, or real property
adjacent to such real property, has or may become contaminated or subject to a
clean up order or decree by an agency having jurisdiction over the Borrower or
such Subsidiary (except to the extent such contamination or cleanup obligation
is described on Exhibit 6.26); then the Borrower agrees, upon request from the
Agent, to provide the Agent and each Lender with such reports, certificates,
engineering studies or other written material or data as the Agent or such
Lender, in its reasonable discretion, may require from it with respect to such
contamination or cleanup obligation; provided that with respect to any
contamination or cleanup obligation relating to real property adjacent to real
property owned by or leased to the Borrower or any Subsidiary, such reports,
certificates, studies and other material or data shall not be required to be
provided by the Borrower if (i) they are not otherwise required to be created or
provided pursuant to statute, regulation, order or otherwise, and (ii) such
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contamination is not attributable to the acts or omissions of the Borrower or
any Subsidiary or any Affiliate or predecessor of any of them or any previous
owner, lessee, lessor or other user of such real property.
(i) The materiality standard used in this subsection 6.26 shall be
exceeded if the facts giving rise to the events described in the representations
or warranties contained herein might result in liability or potential liability
in excess of Three Hundred Seventy-Five Thousand Dollars ($375,000) in the
aggregate.
(j) None of the items disclosed on Exhibit 6.26 might reasonably be
expected to have a Material Adverse Effect.
6.27. Full Disclosure. This Agreement, the other Financing
Agreements, the financial statements delivered in connection herewith, the
representations and warranties of the Borrower contained in this Agreement, the
other Financing Agreements or in any other document, certificate or written
statement by or on behalf of the Borrower delivered or to be delivered to the
Agent or any Lender, do not contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein, in light of the circumstances under which they were made, not
misleading. There is no material fact which the Borrower has not disclosed to
the Agent in writing which has had or, so far as the Borrower can now foresee,
might have a Material Adverse Effect.
6.28. Insurance Policies. Exhibit 7.5 lists all insurance of any
nature maintained for current occurrences by the Borrower, as well as a summary
of the terms of such insurance.
6.29. Customer and Trade Relations. Except as contemplated by the
Requirements Contract, dated as of June 12, 1997, by and between Holdings and
Xxxxxxx Paper Company, there exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in (a) the business
relationship of the Borrower or any Subsidiary with any customer or group of
customers (other than the Xxxxxxx Paper Company) of the Borrower or the Xxxxxxx
Paper Company whose purchases individually or in the aggregate are material to
the operations of the Borrower or such Subsidiary, or (b) the business
relationship of the Borrower or any Subsidiary with any material supplier to the
Borrower or the Xxxxxxx Paper Company and, to the best knowledge of Borrower,
all such customers and suppliers will continue a business relationship with the
Borrower and each Subsidiary on a basis no less favorable to the Borrower than
that conducted prior to the Closing Date.
6.30. Survival of Warranties. All representations and warranties of
the Borrower contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and the
other Financing Agreements and the making of the Revolving Loans.
Notwithstanding anything contained in this Agreement to the contrary, the
provisions of, and the undertakings, indemnifications and agreements of the
Borrower set forth in subsections 2.1(c)(v), 2.13, 2.18(b), the last sentence of
2.19(a), 2.21(c), 6.26(g), the first sentence of 7.4(a), 7.10, 10.2 and 10.21
and the agreements of the Lenders set forth in subsections 12.8 and 14.2 shall
survive payment of the Obligations and termination of this Agreement. The
Borrower shall supplement in writing and deliver to the Agent all Exhibits
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required in accordance with this Agreement so that the representations and
warranties subject to such supplemental disclosure shall continue to be true and
accurate in all material respects; provided that the furnishing of such
supplemental disclosure shall not constitute a cure or waiver of any Default or
Event of Default resulting from the matters disclosed therein or otherwise then
existing.
6.31. Subsidiaries. Except as set forth on Exhibit 6.31, the
Borrower has no Subsidiaries. Exhibit 6.31 contains an accurate list of all
Subsidiaries of the Borrower, setting forth their respective jurisdictions of
incorporation and the percentages of their capital stock owned by the Borrower
or other Subsidiaries.
6.32. Related Transactions Documents. Each Related Transactions
Document is in full force and effect as of the Closing Date, have not been
terminated, rescinded or withdrawn, no material portion thereof has been amended
or waived by any Person, and no default exists thereunder. All requisite
approvals by governmental authorities and regulatory bodies having jurisdiction
over the Guarantor or the Borrower, and other Persons referenced therein,
material to the transactions contemplated by each Related Transactions Document
have been obtained, and no such approvals impose any material conditions to the
consummation of the transactions contemplated by the Related Transactions
Documents or to the conduct by the Borrower of its business thereafter. To the
best of the Borrower's knowledge, none of the representations or warranties of
any Person in the applicable Related Transactions Documents contain any untrue
statement of a material fact or omit any fact necessary to make the facts
therein not misleading. The subordination provisions of the Subordinated Debt
Documents are enforceable against the holders of the Subordinated Notes by Agent
and Lenders. All of the Borrower's Obligations hereunder and under the Notes
constitute "senior debt" entitled to the benefits of the Subordination
provisions contained in the Subordinated Debt Documents.
6.33. H-S-R Notification. Each consent, authorization or approval
of, or declaration, notification, filing or registration with, any state or
federal governmental or regulatory authority or any other Person, including,
without limitation, any applicable state or federal antitrust law or regulation
or the filing of any "Premerger Notification Report" with the Federal Trade
Commission and the Antitrust Division of the Department of Justice pursuant to
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
regulations issued pursuant thereto in connection with the consummation of the
transactions contemplated by the Related Transactions Documents has been
obtained at or prior to the Closing Date.
6.34. Deposit and Disbursement Accounts. As of the Closing Date,
Exhibit 6.34 lists all banks and other financial institutions at which the
Borrower maintains deposits and/or other accounts, including any disbursement
accounts, and such Exhibit correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number.
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7. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that so long as any Obligations
(other than unasserted contingent indemnification obligations) remain
outstanding or any Lender shall have any Commitment hereunder:
7.1. Financial Statements. The Borrower shall keep proper books of
record and account in which full and true entries will be made of all dealings
or transactions in respect of or in relation to the business and affairs of the
Borrower, in accordance with Generally Accepted Accounting Principles
consistently applied, and the Borrower shall furnish or cause to be furnished to
the Agent and each Lender: (i) as soon as practicable and in any event within
thirty (30) days after the end of each month (other than a Fiscal Quarter end),
statements of net income and cash flow of the Borrower and its Subsidiaries on a
consolidated basis for such month and for the period from the beginning of the
then current Fiscal Year to the end of such month and a balance sheet of the
Borrower and its Subsidiaries on a consolidated basis as of the end of such
month, setting forth in each case, in comparative form, (a) figures for the
corresponding periods in the preceding Fiscal Year and as of a date one (1) year
earlier, (b) figures for the corresponding periods based on Borrower's budgeted
forecast and (c) compliance with the financial covenants set forth in
subsections 7.11-7.13, all in reasonable detail and certified as accurate by the
chief financial officer or treasurer of the Borrower (subject to normal year-end
adjustments and excluding footnotes); (ii) as soon as practicable and in any
event within forty-five (45) days after the end of each Fiscal Quarter (other
than a Fiscal Year end), statements of net income and cash flow of the Borrower
and its Subsidiaries on a consolidated basis for such quarterly period and for
the period from the beginning of the then current Fiscal Year to the end of such
quarterly period and a balance sheet of the Borrower and its Subsidiaries on a
consolidated basis as of the end of such period, setting forth in each case, in
comparative form, figures for the corresponding periods in the preceding Fiscal
Year and as of a date one (1) year earlier, all in reasonable detail and
certified as accurate by the chief financial officer or treasurer of the
Borrower (subject to normal year-end adjustments and excluding footnotes); (iii)
as soon as practicable and in any event within one hundred twenty (120) days
after the end of each Fiscal Year, statements of net income and cash flow of the
Borrower and its Subsidiaries on a consolidated basis for such year, and a
balance sheet of the Borrower and its Subsidiaries on a consolidated basis as of
the end of such year, setting forth in each case, in comparative form,
corresponding figures for the period covered by the preceding annual audit and
as of the end of the preceding Fiscal Year, all in reasonable detail and
satisfactory in scope to the Required Lenders and examined and certified by
Ernst & Young (or any other independent public accountants of recognized
national standing selected by the Borrower and acceptable to the Required
Lenders), whose opinion shall be unqualified and shall be in scope and substance
satisfactory to the Required Lenders; (iv) as part of the Monthly Report, as
soon as practicable and in any event within twenty (20) days after the end of
each month (a) an Accounts Trial Balance indicating which Accounts are current,
up to 30, 30 to 60, 60 to 90 and 90 days or more past the original invoice date
and, if requested by the Agent, listing the names and addresses of all
applicable Account Debtors, and (b) a summary of accounts payable showing which
accounts payable are current, up to 30, 30 to 60, 60 to 90 and 90 days or more
past due and listing the names and addresses of applicable creditors and (c) an
aged schedule of Inventory owned by the
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Borrower valued at the lower of cost or market; (v) concurrently with the
preparation of the financial statements, the Borrower shall send a letter to
such accountants with a copy to the Agent and each Lender, notifying such
accountants that one of the primary purposes for retaining such accountants'
services and having audited financial statements prepared by them is for use by
the Agent and the Lenders and such accountants shall deliver a letter addressed
to the Agent and the Lenders acknowledging the Agent's and the Lenders' reliance
thereon in form and substance satisfactory to the Required Lenders; (vi) within
thirty (30) days prior to the end of each Fiscal Year Projections approved by
the Borrower's Board of Directors and prepared in the same manner as the
Projections attached as Exhibit 6.4-3, including projected balance sheets, cash
flow statements (including proposed Capital Expenditures) and profit and loss
statements for the forthcoming Fiscal Year, in each case, month-by-month,
together with appropriate supporting details as requested by the Required
Lenders, all for the Borrower and its Subsidiaries on a consolidated basis;
(vii) as soon as practicable and in any event within ten (10) days of delivery
to the Borrower, a copy of any letter issued by the Borrower's independent
public accountants or other management consultants with respect to the
Borrower's financial or accounting systems or controls, including all so-called
"management letters"; (viii) not later than the twentieth (20th) day of each
month, a Monthly Report for the Borrower computed as of the last Business Day of
the preceding month, signed by the chief executive officer or chief financial
officer of the Borrower; (ix) in conjunction with the delivery of the quarterly
unaudited and annual audited financial statements referred to in clauses (ii)
and (iii) above, the Borrower shall deliver to the Agent and each Lender a
written report which shall describe and analyze, in detail, all material trends,
changes and developments reflected in such financial statements; and (x) with
reasonable promptness, such other business or financial data as the Required
Lenders may reasonably request.
All financial statements delivered to the Agent or any Lender
pursuant to the requirements of this subsection (except where otherwise
expressly indicated) shall be prepared in accordance with Generally Accepted
Accounting Principles consistently applied on a consolidated basis for the
Borrower and its Subsidiaries. All financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. In the event that any Accounting Changes occur and such changes
result in a change in the calculation of the financial covenants, standards,
advance rates or terms used in this Agreement or any other Financing Agreement,
then the Borrower, the Agent and the Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided that the agreement of the Required Lenders to any required amendments
of such provisions shall be sufficient to bind all Lenders. In the event that
the Agent, the Borrower and the Required Lenders shall have agreed upon the
required amendments, then after such agreement has been evidenced in writing and
the underlying Accounting Changes with respect thereto has been implemented, any
reference to GAAP contained in this Agreement or in any other Financing
Agreement shall, only to the extent of such Accounting Changes, refer to GAAP,
consistently applied after giving effect to the
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implementation of such Accounting Changes. If the Agent, the Borrower and the
Required Lenders cannot agree upon the required amendments within thirty (30)
days following the date of implementation of any Accounting Change, then all
financial statements delivered and all calculations of financial covenants and
other standards, advance rates and terms in accordance with this Agreement and
the other Financing Agreements shall be prepared, delivered and made without
regard to any underlying Accounting Change. Together with each delivery of
financial statements required by subsections 7.1(i), 7.1(ii) and 7.1(iii), the
Borrower shall deliver to the Agent and the Lenders a certificate of an
Authorized Officer (i) certifying that no Default or Event of Default exists,
or, if any Default or Event of Default exists, specifying the nature thereof,
the period of existence thereof and what action the Borrower proposes to take
with respect thereto and (ii) for each Fiscal Quarter, setting forth
computations in reasonable detail satisfactory to the Agent demonstrating
compliance with the covenants contained in subsections 7.11, 7.12 and 7.13.
Together with each delivery of financial statements required by subsection
7.1(iii), the Borrower shall deliver to the Agent and the Lenders a certificate
of the accountants who performed the audit in connection with such statements
stating that in making the audit necessary to the issuance of a report on such
financial statements, they have obtained no knowledge of any Default or Event of
Default, or, if such accountants have obtained knowledge of a Default or Event
of Default, specifying the nature and period of existence thereof. Such
accountants shall not be liable by reason of any failure to obtain knowledge of
any Default or Event of Default which would not be disclosed in the ordinary
course of an audit. The Agent and each Lender shall exercise reasonable efforts
to keep such information, and all information acquired as a result of any
inspection conducted in accordance with subsection 7.2, confidential; provided
that the Agent or any Lender may communicate such information (a) to any other
Person in accordance with the customary practices of commercial lenders relating
to routine trade inquiries, (b) to any regulatory authority having jurisdiction
over the Agent or such Lender, (c) to any other Person in connection with the
Agent's or such Lender's sale of any participations in the Obligations, or (d)
to any other Person in connection with the exercise of the Agent's or such
Lender's rights hereunder or under any of the other Financing Agreements. The
Borrower authorizes the Agent to discuss the financial condition of the Borrower
with the Borrower's independent public accountants and agrees that such
discussion or communication shall be without liability to either the Agent or
the Borrower's independent public accountants. The Borrower shall deliver a
letter addressed to such accountants authorizing them to comply with the
provisions of this subsection 7.1.
7.2. Inspections and Audits. The Agent, or any Person designated by
the Agent in writing, shall have the right, from time to time hereafter, to call
at the Borrower's place or places of business (or any other place where the
Collateral or any information relating thereto is kept or located) during normal
business hours, and, without hindrance or delay (i) to inspect, audit, check and
make copies of and extracts from the Borrower's books, records, journals,
orders, receipts and any correspondence and other data relating to the
Borrower's or any Subsidiary's business or to any transactions between the
parties hereto, (ii) to make such verification concerning the Collateral as the
Agent may consider reasonable under the circumstances, and (iii) to discuss the
affairs, finances and business of the Borrower with any officers, employees or
directors of the Borrower. All out-of-pocket costs and expenses incurred
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by the Agent in connection with the Agent's field audits permitted under this
subsection 7.2 shall be reimbursed by the Borrower in accordance with subsection
2.8.
7.3. Conduct of Business; Compliance With Laws. The Borrower shall,
and shall cause each Subsidiary to (i) maintain its corporate existence and good
standing in its respective state of incorporation and qualify and remain
qualified as a foreign corporation in each jurisdiction where the failure to be
so qualified could reasonably be expected to have a Material Adverse Effect,
(ii) maintain in full force and effect all material licenses, bonds, franchises,
leases, patents, contracts and other rights necessary to the conduct of its
business and (iii) comply with all applicable federal, state, local and foreign
laws, rules, regulations and orders of any federal, state or local governmental
authority, except for such laws, rules and regulations the violation of which
would not, in the aggregate, have a Material Adverse Effect. Following the
Closing Date the Borrower will not conduct its business under any trade or
fictitious name other than the duly registered names disclosed on Exhibit 6.8-2.
7.4. Claims and Taxes. (a) The Borrower agrees to indemnify and hold
the Agent and each Lender harmless from and against any and all claims, demands,
obligations, losses, damages, penalties, costs, and expenses (including
reasonable attorneys' fees) asserted by any Person (other than the Borrower) in
connection with this Agreement or the other Financing Agreements or asserted by
any Person and relating to or in any way arising out of the possession, use,
operation or control of any of the Borrower's or any Subsidiary's Property by
any Person. The Borrower shall, and shall cause each Subsidiary to, file all tax
and information returns and reports required by and prepared in accordance with
applicable law and shall pay or cause to be paid all license fees, bonding
premiums and related taxes and charges, and shall pay or cause to be paid all
real and personal property taxes, assessments and charges and franchise, income,
unemployment, use, excise, old age benefit, withholding, sales and other taxes
and other governmental charges assessed against or payable by, the Borrower or
any Subsidiary, at such times and in such manner as to prevent any penalty from
accruing or any Lien from attaching to Property of the Borrower or any
Subsidiary, provided that the Borrower and each Subsidiary shall have the right
to contest in good faith, by an appropriate lawful proceeding promptly initiated
and diligently conducted, the validity, amount or imposition of any such tax,
assessment or charge, and upon such good faith contest to delay or refuse
payment thereof so long as (i) no Lien which will have priority over the Agent's
Lien granted hereunder with respect to any Collateral is filed or recorded with
respect thereto, (ii) the execution or other enforcement of such subordinate
Lien is and continues to be effectively stayed, (iii) such proceeding will
prevent the forfeiture or sale of any Property of the Borrower or such
Subsidiary, (iv) adequate reserves have been provided therefor in accordance
with GAAP, (v) such contest does not have a Material Adverse Effect and (vi) if
such contest is abandoned or determined adversely to the Borrower or such
Subsidiary, the Borrower pays, or causes to be paid, all such taxes and other
charges and any penalties and interest payable in connection therewith.
(b) The Borrower shall notify the Agent and each Lender promptly
(and in no event later than ten (10) days) after becoming aware of the intent of
the Service to assert a deficiency with respect to the Borrower or any
Subsidiary, and shall promptly (and in no event
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later than five (5) days after receipt) send the Agent and each Lender copies of
any notices of proposed deficiency and any notices of deficiency received from
the Service.
7.5. Borrower's Liability Insurance. The Borrower shall maintain, at
its expense, such product liability insurance, general public liability and
third party property damage insurance with financially sound and reputable
insurance companies rated "A" or better by the Best Insurance Guide in such
amounts and covering such risks and with such deductibles as are customary in
the industry in which the Borrower operates naming the Agent as an additional
insured. The policy or policies shall further provide for thirty (30) days'
written notice to the Agent prior to cancellation or any material change in
coverage. The Borrower's current liability insurance policies are summarized on
Exhibit 7.5.
7.6. Borrower's Property Insurance. The Borrower shall, and shall
cause each Subsidiary to, at its expense, keep and maintain its assets insured
against loss or damage by fire, theft, explosion, spoilage and all other hazards
and risks ordinarily insured against by other owners or users of such properties
in similar businesses including flood insurance consistent with the requirements
of FIRREA at least equal to the full insurable value thereof and business
interruption insurance in an amount reasonably acceptable to the Agent. All such
policies of insurance shall contain a breach or violation of warranties,
declarations or conditions endorsement in favor of the Agent, shall provide that
the Agent shall receive 30 days' written notice prior to cancellation or any
material change in coverage and shall otherwise be in form and substance
satisfactory to the Required Lenders. The Borrower shall deliver to the Agent a
certificate of insurance and, upon the renewal thereof, a binder evidencing such
renewal, and evidence of payment of all premiums therefor. Such policies of
insurance shall contain an endorsement, substantially in the form of Exhibit
7.6, naming the Agent, on behalf of the Lenders, as the lender loss payee and
additional insured. The Borrower irrevocably makes, constitutes and appoints the
Agent (and all officers, employees or agents designated by the Agent) as the
Borrower's true and lawful attorney-in-fact for the purpose of making, settling
and adjusting claims under all such policies of insurance, endorsing the name of
the Borrower on any check, draft, instrument or other item of payment received
by the Borrower or the Agent pursuant to any such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance. If the Borrower or any Subsidiary, at any time or times hereafter,
shall fail to obtain or maintain any of the policies of insurance required above
or to pay any premium in whole or in part relating thereto, then the Agent,
without waiving or releasing any Obligation, Default or Event of Default by the
Borrower hereunder, may at any time or times thereafter (but shall be under no
obligation to do so) obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the Agent deems
advisable. All proceeds of casualty insurance will be applied to the outstanding
balance of the Revolving Loan or held in a cash escrow account under the control
of the Agent. So long as no Event of Default shall have occurred and be
continuing and the insurance proceeds are less than $4,500,000, the Agent shall
release such funds (less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of the related
casualty loss) to the Borrower to repair or replace the assets subject to a
casualty loss or to the purchase of other Equipment useable in the Borrower's
business, all on the terms set forth in the applicable Mortgage and otherwise on
terms acceptable to the Agent. Such proceeds shall be released to the
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Borrower only if such repair or replacement is made within 180 days after the
payment of such insurance proceeds and only if at or prior to the time of the
payment of such proceeds by the insurance company the Borrower has provided the
Agent with written notice of its intent to use such proceeds for such purpose.
Otherwise, at the Agent's election, such proceeds shall be applied to the
Obligations in accordance with Section 2.7.
7.7. Pension Plans. (a) The Borrower shall (i) maintain all Plans
which are presently in existence or may, from time to time, come into existence,
in compliance with ERISA, the IRC and all other applicable laws in all material
respects and (ii) make or cause to be made contributions to all of the Pension
Plans in a timely manner and in a sufficient amount to comply with the
requirements of Section 302 of ERISA and Section 412 of the IRC.
(b) The Borrower shall promptly deliver written notice of any of the
following to the Agent and each Lender, but in no event later than thirty (30)
days after such event or occurrence:
(1) the Borrower or any ERISA Affiliate knows or has reason to
know that a Termination Event has occurred, with such notice
setting forth the details of such event;
(2) the filing of a request for a funding waiver by the Borrower
or any ERISA Affiliate with respect to any Pension Plan, a
copy of such request and all correspondence received by
Borrower or any ERISA Affiliate with respect to such request;
(3) the Borrower or any ERISA Affiliate fails to make a required
installment or payment under Section 302 of ERISA or Section
412 of the IRC by the applicable due date;
(4) the Borrower or any ERISA Affiliate knows or has reason to
know that a prohibited transaction (as defined in Section 406
of ERISA or Section 4975 of the IRC) has occurred with respect
to any Plan with a statement describing such transaction and
the action or response taken with respect thereto;
(5) any increase in the benefits of any existing Plan or
contribution rate to a Multiemployer Plan or the establishment
of any new Plan or the commencement of contributions to any
Plan or Multiemployer Plan to which the Borrower or any ERISA
Affiliate had not been contributing;
(6) receipt by the Borrower or any ERISA Affiliate of any adverse
ruling from the Service regarding the qualification of a Plan
under Section 401(a) of the IRC, with a copy of such ruling;
and
(7) any other report such as an annual report on Form 5500 or
actuarial report in which any Lender may request from time to
time.
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7.8. Notice of Certain Matters. The Borrower shall, as soon as
possible, and in any event within five (5) days after the Borrower learns of the
following, give written notice to the Agent and each Lender of (i) any material
Litigation being instituted or threatened to be instituted by or against the
Borrower or any Subsidiary in any federal, state, local or foreign court or
before any commission or other regulatory body (federal, state, local or
foreign) including, without limitation, any and all pending or threatened
proceedings with respect to Environmental Matters, (ii) any labor dispute to
which the Borrower or any Subsidiary may become a party and which has had or
might have a Material Adverse Effect, any strikes or walkouts relating to any of
its plants or Facilities, and the expiration of any labor contract to which it
is a party or by which it is bound, (iii) any Default or Event of Default, (iv)
any judgment rendered against the Borrower or any Subsidiary, and (v) any other
event or occurrence which could have a Material Adverse Effect.
7.9. Landlord and Warehouseman Agreements. The Borrower shall
provide the Agent and each Lender with copies of all agreements between the
Borrower and any landlord or warehouseman which owns any premises at which
Inventory or any other Collateral may, from time to time, be located. The
Borrower shall deliver to the Agent on or before the Closing Date a landlord's
waiver in form and substance acceptable to the Agent from the lessor of each
leased property currently being used by the Borrower or any Subsidiary where
Collateral is located. The Borrower shall deliver to the Agent a bailee letter
in form and substance acceptable to the Agent with respect to any warehouse or
other location where Collateral is located. With respect to leased locations or
warehouse space leased on the Closing Date, if the Borrower is unable to deliver
such a landlord waiver or bailee letter the Inventory at that location shall
automatically be deemed ineligible without further action by the Agent or any
Lender. In the event that the Borrower delivers to the Agent such landlord
waiver or bailee letter, as applicable, after such date, subject to the terms
and conditions of this Agreement including, without limitation, subsection 3.10,
Inventory located at such leased location or warehouse location, as applicable,
may be considered Eligible Inventory. The Borrower shall timely and fully pay
and perform its obligations under all leases and other agreements with respect
to each leased location or warehouse where any Collateral is or may be located.
The Borrower shall promptly deliver to the Agent copies of (i) any and all
default notices received under or with respect to any such leased location or
warehouse, and (ii) such other notices or documents as the Agent may request in
its reasonable discretion.
7.10. Indemnity. (a) The Borrower agrees to indemnify, pay and hold
harmless the Agent and each Lender and the officers, directors, employees,
agents, affiliates, representatives and attorneys of the Agent and such Lender
(collectively called the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, proceedings,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, all reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or instituted or asserted against any Indemnitee in any
manner in connection with or relating to or arising out of this Agreement or the
other Financing Agreements, the Related Transactions Documents, or any other
transaction
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contemplated hereby or thereby, the statements contained in the commitment
letters delivered by the Agent, the Agent and the Lenders' agreement to make the
Loans hereunder, the direct or indirect application or proposed application of
the proceeds of the Loans or the exercise of any right, power or remedy
hereunder or under any other Financing Agreement (the "Indemnified
Liabilities"); provided that the Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities if a court of
competent jurisdiction shall render a judgment, final and not subject to review
on appeal, that such Indemnified Liabilities arise solely from the gross
negligence or willful misconduct of that Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them. The
provisions of and undertakings and indemnifications set forth in this subsection
7.10 shall survive the satisfaction and payment of the Obligations and the
termination of this Agreement, and shall continue to be the liability,
obligation and indemnification of the Borrower.
(b) In any suit, proceeding or action brought by the Agent relating
to any Account, Chattel Paper, contract, General Intangible, Instrument or
Document for any sum owing thereunder, or to enforce any provision of any
Account, Chattel Paper, Instrument or Document, the Borrower shall save,
indemnify and keep the Agent and the Lenders harmless from and against all
expense, loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability by the Borrower of any obligation
thereunder arising out of a breach by the Borrower of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from the Borrower, all
such obligations of the Borrower shall be and remain enforceable against, and
only against, the Borrower and shall not be enforceable against the Agent or any
Lender.
7.11. Fixed Charge Coverage Ratio. The Borrower shall maintain a
Fixed Charge Coverage Ratio measured as of the last day of each Fiscal Quarter
for the trailing twelve months then ended equal to or greater than the
respective Fixed Charge Coverage Ratios set forth below:
-------------------------------------------------------------------------------
Measurement Period Ending: Fixed Charge Coverage Ratio:
-------------------------- ----------------------------
-------------------------------------------------------------------------------
June 30, 1998 1.25 to 1.0
-------------------------------------------------------------------------------
September 30, 1998 1.25 to 1.0
-------------------------------------------------------------------------------
December 31, 1998 1.25 to 1.0
-------------------------------------------------------------------------------
March 31, 1999 and the last day of
each Fiscal Quarter thereafter 1.25 to 1.0
-------------------------------------------------------------------------------
; provided that for the measuring periods ending June 30, 1998, September 30,
1998 and December 31, 1998, the components of the Fixed Charge Coverage Ratio
relating to the Tissue Business for periods prior to the Closing Date shall be
based on the pro forma financial statements pertaining to the Tissue Business
attached hereto as Exhibit 7.11.
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7.12. Leverage Ratio. The Borrower shall maintain a Leverage Ratio
of not more than the following respective ratios measured as of the last day of
each Fiscal Quarter, and for the trailing twelve months then ended:
-------------------------------------------------------------------------------
Measurement Period Ending: Ratio:
-------------------------- ------
-------------------------------------------------------------------------------
the last day of the Fiscal Quarters ending June 6.0 to 1.0
30, 1998, September 30, 1998 and December
31, 1998 and the last day of each Fiscal
Quarter of 1999
-------------------------------------------------------------------------------
the last day of each Fiscal Quarter of 2000 5.50 to 1.0
-------------------------------------------------------------------------------
the last day of each Fiscal Quarter of 2001 5.25 to 1.0
-------------------------------------------------------------------------------
the last day of each Fiscal Quarter thereafter 5.0 to 1.0
-------------------------------------------------------------------------------
; provided that for the measuring periods ending June 30, 1998, September 30,
1998 and December 31, 1998, the components of the Leverage Ratio relating to the
Tissue Business for periods prior to the Closing Date shall be based on the pro
forma financial statements pertaining to the Tissue Business attached hereto as
Exhibit 7.11.
7.13. Capital Expenditures. The Borrower shall not make Capital
Expenditures in any Fiscal Year in excess of the following respective amounts:
-------------------------------------------------------------------------------
Fiscal Year: Amount:
------------ -------
-------------------------------------------------------------------------------
1998 $9,200,000
-------------------------------------------------------------------------------
1999 $10,500,000
-------------------------------------------------------------------------------
2000 $6,900,000
-------------------------------------------------------------------------------
2001 $5,000,000
-------------------------------------------------------------------------------
2002 and each Fiscal Year thereafter $5,000,000
-------------------------------------------------------------------------------
8. NEGATIVE COVENANTS.
The Borrower covenants and agrees that so long as any Obligations
(other than unasserted contingent indemnification obligations) remain
outstanding or any Lender shall have any Commitment hereunder:
8.1. Encumbrances. The Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien of any nature
whatsoever on any of its Property, including, without limitation, the Collateral
and the Excluded Assets, other than the following "Permitted Liens": (i) Liens
(other than Liens relating to Environmental Laws or ERISA) securing the payment
of Charges not yet due and payable or contested in good faith by appropriate
proceedings(so long as no notice of lien shall have been filed with respect
thereto); (ii) cash pledges or cash deposits under workmen's compensation,
unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds in the ordinary course
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of business; (iii) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen or other similar Liens imposed by law, which are incurred
in the ordinary course of business for sums not more than 60 days delinquent;
(iv) the Liens in favor of the Agent, for the benefit of the Lenders; (v)
purchase money Liens (including capitalized leases and other forms of
installment purchase financing) granted to the Person financing a purchase of
Equipment so long as the Lien granted is limited to the specific Equipment so
acquired, the debt secured by the Lien is not more than the acquisition cost of
the specific item of Equipment on which the Lien is granted, the aggregate
amount of Indebtedness secured by such Liens as a result of purchases shall not
exceed One Million Five Hundred Thousand Dollars ($1,500,000) in each Fiscal
Year, and not to exceed Three Million Seven Hundred Fifty Thousand Dollars
($3,750,000) in the aggregate outstanding at any time, and the transaction does
not violate any other provision of this Agreement; (vi) Liens permitted in
accordance with subsection 7.4(a); (vii) other easements with respect to Real
Estate, which do not, in the Agent's sole determination, (a) materially impair
the use of such property as Collateral, or (b) materially lessen the value of
such property for the purposes for which the same is held by the Borrower or
such Subsidiary; (vii) Liens with respect to judgments which do not give rise to
an Event of Default; (viii) Liens existing on the Closing Date and disclosed on
Exhibit 8.1; and (ix) Liens in addition to those set forth in clauses (i)
through (ix) above which secure Indebtedness or other obligations not to exceed
$100,000 in the aggregate.
8.2. Indebtedness and Liabilities. The Borrower shall not, and shall
not permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or suffer to exist, any Indebtedness, except for (i) the
Obligations, (ii) Indebtedness existing on the Closing Date and disclosed on
Exhibit 8.2, (iii) Indebtedness secured by purchase money Liens permitted by
subsection 8.1(iv), (iv) Rate Hedging Obligations of the Borrower and (v) other
Indebtedness of the Borrower in an aggregate amount not to exceed $750,000
outstanding at any time. The Borrower shall not, and shall not permit any
Subsidiary to, voluntarily prepay, defease, purchase, redeem, retire or
otherwise acquire any Indebtedness other than the Obligations.
8.3. Consolidations, Acquisitions. Except with respect to the
Related Transactions, the Borrower shall not, and shall not permit any
Subsidiary to, merge or consolidate with, purchase, lease or otherwise acquire
all or substantially all of the assets or properties of, or acquire any capital
stock, equity interests, debt or other securities of, any other Person provided
that any Subsidiary may merge or consolidate with or into any other Subsidiary
or with or into the Borrower (provided that the Borrower is the surviving
entity). The Borrower shall not, and shall not permit any Subsidiary to,
dissolve, terminate, enter into any joint venture or become a partner in any
partnership. The Borrower shall not sell, assign, encumber, pledge, transfer or
otherwise dispose of any interest in any Subsidiary or transfer any Property to
any Affiliate except as otherwise expressly permitted hereby.
8.4. Investments. The Borrower shall not, and shall not permit any
Subsidiary to, make or permit to exist Investments in, or commitments therefor,
or create any Subsidiary other than the following "Permitted Investments": (i)
loans made in accordance with subsection 8.8; (ii) Investments existing on the
Closing Date and disclosed on Exhibit 8.4; and (iii) demand deposit accounts
maintained in the ordinary course of business, (iv) cash in the process of
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transmittal from lockboxes to the Agent's collection account, (v) so long as no
Event of Default shall have occurred and be continuing, Cash Equivalents subject
to a Control Agreement; provided that, in the event any Revolving Loans shall be
outstanding, at no time (regardless of whether any Event of Default shall then
exist) shall the amount of Cash Equivalents permitted as Investments hereunder
exceed $500,000, (vi) Investments arising as a result of the Borrower's entering
into contracts of the type described in the definition of "Rate Hedging
Obligations", (vii) Investments received in connection with the bankruptcy or
reorganization of customers.
8.5. Guaranties. The Borrower shall not, and shall not permit any
Subsidiary to, make or suffer to exist any Guaranty, except (i) endorsements of
negotiable Instruments or items of payment for deposit or collection in the
ordinary course of business and (ii) Guaranties existing on the Closing Date and
disclosed on Exhibit 8.5.
8.6. Collateral Locations. Neither the location of the principal
place of business and chief executive office of the Borrower as set forth on
Exhibit 6.7, the locations of Collateral as set forth on Exhibit 8.6 nor the
corporate name or mailing address of the Borrower shall be changed, nor shall
there be established additional places of business or additional locations at
which Collateral is stored, kept or processed unless (i) the Borrower shall have
given the Agent not less than 30 days prior written notice thereof, (ii) the
Agent shall have determined that, after giving effect to any such change of
name, address or location, the Agent shall have a first perfected Lien in the
Collateral except for Permitted Liens, (iii) in the case of Collateral
locations, the Borrower shall have delivered a landlord waiver or bailee letter,
as applicable, in form and substance satisfactory to the Agent with respect to
such location, and (iv) all negotiable documents and receipts in respect of any
Collateral maintained at such premises are promptly delivered to the Agent.
Prior to making any such change or establishing such new location, the Borrower
shall execute any additional financing statements or other documents or notices
required by the Agent.
8.7. Disposal of Property. The Borrower shall not, and shall not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of
any of its Property, assets and rights to any Person except for (i) sales of
Inventory to customers in the ordinary course of business, (ii) sales of
Equipment which is obsolete, worn-out or otherwise not useable or used in the
Borrower's business (up to One Million Five Hundred Thousand Dollars
($1,500,000) in sales proceeds in the aggregate in any Fiscal Year), (iii)
trade-ins of Equipment or sales of Equipment in connection with the acquisition
of other similar Equipment substantially concurrently with such trade-in or sale
and (iv) licensing of the Borrower's Intellectual Property in the ordinary
course of business. In the event any Equipment of the Borrower is sold,
transferred or otherwise disposed of as permitted by this subsection 8.7 or with
the Required Lenders' consent, and such sale, transfer or disposition is
effected without using the proceeds thereof within 180 days of such sale,
transfer or other disposition, to purchase Equipment useable in the Borrower's
business or such Equipment is replaced by Equipment leased by the Borrower, the
Borrower shall promptly pay the proceeds thereof to the Agent for application to
the Loans in accordance with subsections 2.7(c) and (d). The Borrower shall
deliver to the Agent written evidence of the use of the proceeds for any such
purchase. Except as permitted by subsection
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8.1, all such Equipment purchased by the Borrower shall be free and clear of all
Liens, except for Liens in favor the Agent, for the benefit of the Lenders.
8.8. Employee Loans. Except for advances for travel and related
expenses by the Borrower or any Subsidiary to its employees in the ordinary
course of business and commission advances by the Borrower or any Subsidiary to
its employees in an aggregate amount for all such advances not to exceed from
time to time $100,000, the Borrower shall not, and shall not permit any
Subsidiary to, make any loans or other advances to any Person.
8.9. Plans. The Borrower shall not, nor will it permit any ERISA
Affiliate to take any action or fail to take any action which results in a Lien
being imposed upon any of its assets under ERISA or the IRC. If the Borrower
adopts any Plans after the Closing Date, it shall comply with ERISA and deliver
copies thereof to the Agent.
8.10. Restricted Payments. The Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly declare, pay, order, make or
set apart any Restricted Payment; provided that (i) any Subsidiary may declare
and pay dividends to any Subsidiary owning its capital stock or to Borrower,
(ii) so long as no Default or Event of Default shall have occurred and be
continuing (or will result therefrom any of the following), the Borrower may
make the following Restricted Payments to Guarantor or in an amount not to
exceed $500,000 per year to pay for the maintenance of Guarantor's corporate
existence, auditors' fees, outside directors' fees, directors' and officers'
insurance and similar out-of-pocket costs and expenses, (iii) the Borrower may
declare dividends to enable the Guarantor to pay federal and state income taxes
attributable to the net income of the Borrower and its Subsidiaries, (iv) so
long as no Default or Event of Default shall have occurred and be continuing or
result therefrom, the Borrower may make Restricted Payments in an aggregate
amount not to exceed $400,000 in any twelve month period to enable the Guarantor
to redeem or repurchase shares of the Guarantor's stock issued to Persons who at
the time of such issuance were management employees of the Borrower and who
have, for any reason, ceased to be employed by the Borrower and (v) so long as
payment thereof has not been blocked under the subordination provisions
contained in the Subordinated Debt Documents, Borrower may make semi-annual
payments of interest on the Subordinated Notes when due.
8.11. Securities. Except as permitted by subsection 8.11, the
Borrower shall not, and shall not permit any Subsidiary to, issue or distribute
or redeem, prepay, repurchase or acquire any capital Stock of the Borrower of
any description for consideration or otherwise.
8.12. Changes in Charter, Bylaws or Fiscal Year. Borrower shall not,
and shall not permit any Subsidiary to, (i) amend its charter or Bylaws or (ii)
change its Fiscal Year.
8.13. Changes in Subordinated Debt. Borrower shall not change or
amend any of the terms of the Subordinated Debt Documents if the effect thereof
is to: (a) increase the rate of interest on the Subordinated Notes; (b) change
the dates upon which payments of principal or interest are due on such
Subordinated Debt; (c) change any default or event of default other than to make
less restrictive any default provision therein, or add any covenant with respect
to such Subordinate Debt; (d) change the redemption or prepayment provisions of
such Subordinated
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Debt other than to extend the dates therefor or to reduce the premiums payable
in connection therewith; (e) grant any Liens to secure payment of the
Subordinated Debt; or (f) materially increases the obligations of the Borrower
or confer material rights on the holders of the Subordinated Debt adverse to
Holdings, the Borrower, Agent or any Lender.
8.14. Transactions with Affiliates. Except as set forth on Exhibit
8.15 and as permitted by subsections 8.8, 8.9, 8.10 and 8.19, the Borrower shall
not, and shall not permit any Subsidiary to, enter into any transaction
including, without limitation, the purchase, sale, lease or exchange of property
or the rendering or purchase of any service to or from any Affiliate (other than
management of the Borrower, solely in their capacity as employees) except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
or such Subsidiary's business and upon fair and reasonable terms that are fully
disclosed to the Agent and the Lenders in advance and are no less favorable to
the Borrower than the Borrower would obtain in a comparable arm's length
transaction with an unaffiliated Person.
8.15. Capital Structure; Other Business. The Borrower shall not, and
shall not permit any Subsidiary to, change its capital structure or engage in
any business unrelated to its current businesses or businesses incidental
thereto.
8.16. Sale and Leaseback. The Borrower shall not, and shall not
permit any Subsidiary to, sell or transfer any of its Property in order to
concurrently or subsequently lease as lessee such or similar Property.
8.17. Impairment Agreements. The Borrower shall not, and shall not
permit any Subsidiary to, enter into or assume any agreement, instrument,
indenture or other obligation (other than the Financing Agreements) which (i)
prohibits or limits the creation or assumption of any Lien upon its Property,
whether now owned or hereafter acquired, or (ii) restricts, prohibits or
requires the consent of any Person with respect to the payment of Restricted
Payments.
8.18. Corporate Accounts. The Borrower shall not maintain corporate
deposit accounts jointly with any Affiliate or commingle any of its funds with
funds of any Affiliate.
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS.
9.1. Obligations. If a Default or an Event of Default shall exist or
occur, the Agent may, and at the direction of the Required Lenders, shall do one
or more of the following at any time or times and in any order: (i) reduce the
Total Revolving Loan Facility, (ii) restrict the amount of, or suspend its
obligations to make, Revolving Loans, (iii) restrict or suspend the issuance of
Lender Guaranties or (iv) demand that the Borrower immediately deposit with the
Agent an amount equal to the Lender Guaranty Liabilities and the Eau Claire
Lender Guaranty Liability to enable the Agent to make payments under the Lender
Guaranties and the Eau Claire Lender Guaranty when required and such amount
shall become immediately due and payable. If an Event of Default shall exist or
occur, in addition to the actions described in the preceding sentence, the Agent
may, and at the direction of the Required Lenders, shall do one or more of the
following at any time or times: (a) terminate the Commitments to make Revolving
Loans and
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this Agreement, (b) declare any or all Obligations to be immediately due and
payable; provided that upon the occurrence of any Event of Default referred to
in clauses (f), (g) or (h) within the definition of "Event of Default," the
Commitments shall automatically and immediately terminate and all Obligations
shall automatically become immediately due and payable without notice, demand or
other actions of any kind by any Person, or (c) pursue its other rights and
remedies under the Financing Agreements and applicable law. In the case of any
Event of Default occurring by reason of any willful action or inaction by or on
behalf of the Borrower in order to avoid payment of the prepayment fee pursuant
to subsection 2.10 which the Borrower would have to pay if the Obligations were
paid in full, an equivalent fee shall also be immediately due and payable to the
extent permitted by law.
9.2. Rights and Remedies Generally. Upon acceleration of the
Obligations, the Agent, on behalf of the Lenders, shall have, in addition to any
other rights and remedies contained in this Agreement or in any of the other
Financing Agreements, all of the rights and remedies of a secured party under
the Code or other applicable laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law. In addition to all
such rights and remedies, the Agent shall have the right to sell, lease or
otherwise dispose of all or any part of the Collateral and the sale, lease or
other disposition of the Collateral, or any part thereof, by the Agent after an
Event of Default may be for cash, credit or any combination thereof, and the
Agent or any Lender may purchase all or any part of the Collateral at public or,
if permitted by law, private sale, and in lieu of actual payment of such
purchase price, may set-off the amount of such purchase price against the
Obligations then owing. Any sales of the Collateral may be adjourned from time
to time with or without notice. The Agent shall have the right to conduct such
sales on the Borrower's premises, at the Borrower's expense, or elsewhere, on
such occasion or occasions as the Agent may see fit.
9.3. Entry Upon Premises and Access to Information. Upon
acceleration of the Obligations, the Agent shall have the right (i) to cause the
Collateral to remain on the Borrower's premises, without any obligation to pay
rent, (ii) to enter upon the premises of the Borrower where the Collateral is
located or any other place or places where the Collateral is believed to be
located and kept, without any obligation to pay rent, to render the Collateral
useable or saleable, or to remove the Collateral therefrom to the premises of
the Agent or any agent of the Agent, at the Borrower's expense, for such time as
the Agent may desire in order effectively to collect or liquidate the
Collateral, and (iii) to require the Borrower to assemble the Collateral and
make it available to the Agent at a place or places to be designated by the
Agent. Upon acceleration of the Obligations, the Agent shall have the right to
take possession of the Borrower's original books and records, to obtain access
to Borrower's data processing equipment, computer hardware and software relating
to the Collateral and to use all of the foregoing and the information contained
therein in any manner the Agent deems appropriate; and the Agent shall have the
right to notify postal authorities to change the address for delivery of the
Borrower's mail to an address designated by the Agent and to receive, open and
dispose of all mail addressed to the Borrower and to take possession of all
checks or other original remittances contained in such mail.
9.4. Sale or Other Disposition of Collateral by the Agent. Any
notice required to be given by the Agent of a sale, lease or other disposition
or other intended action by the
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Agent with respect to any of the Collateral which is deposited in the United
States mails, postage prepaid and duly addressed to the Borrower at the address
specified in subsection 10.13, at least ten (10) days prior to such proposed
action, shall constitute fair and reasonable notice to the Borrower of any such
action. The net proceeds realized by the Agent upon any such sale or other
disposition, after deduction for the expenses of retaking, holding, storing,
transporting, preparing for sale, selling or otherwise disposing of the
Collateral incurred by the Agent in connection therewith, shall be applied as
provided herein toward satisfaction of the Obligations. The Agent shall account
to the Borrower for any surplus realized upon such sale or other disposition,
and the Borrower shall remain liable for any deficiency. The commencement of any
action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's Liens on the Collateral until the
Obligations are fully paid (other than unasserted contingent indemnification
obligations).
9.5. Grant of License. For the purpose of enabling, and only to the
extent necessary to enable, the Agent to exercise its rights, powers and
remedies under this Section 9 (including, without limitation, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of the Collateral) at such time as the Agent
shall be entitled to exercise such rights and remedies, the Borrower hereby
grants to the Agent a license, lease and right to use (exercisable without
payment of royalty or other compensation) the Borrower's General Intangibles,
Intellectual Property, Equipment, Fixtures, Real Estate, whether part of the
Collateral or not including, without limitation, any patents, copyrights, rights
of use of any name, trade secrets, trade names, trademarks, service marks and
advertising matter, or any other Property of a similar nature and all goodwill
associated therewith, as it pertains to the Collateral, in completing production
of, advertising for sale or lease and selling or leasing any Inventory or other
Collateral and the Borrower's rights under all licenses, leases and franchise
agreements shall inure to the Agent's benefit until all Obligations are paid in
full (other than unasserted contingent indemnification obligations).
9.6. Waiver of Demand. DEMAND, PRESENTMENT, PROTEST AND NOTICE OF
DEMAND, PRESENTMENT, PROTEST, NONPAYMENT, INTENT TO ACCELERATE AND ACCELERATION
ARE HEREBY WAIVED BY THE BORROWER. THE BORROWER ALSO WAIVES THE BENEFIT OF ALL
VALUATION, APPRAISAL AND EXEMPTION LAWS.
9.7. Waiver of Notice. UPON THE OCCURRENCE OF A DEFAULT OR AN EVENT
OF DEFAULT, THE BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE AGENT OF ITS RIGHTS TO REPOSSESS THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE BORROWER ACKNOWLEDGES THAT IT
HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND
THIS AGREEMENT.
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10. OTHER RIGHTS AND OBLIGATIONS.
10.1. Waiver. The failure of the Agent or any Lender, at any time or
times hereafter, to require strict performance by the Borrower of any provision
of this Agreement shall not waive, affect or diminish any right of any such
Person thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by the Lenders or Required Lenders, as applicable, of a
Default or an Event of Default under this Agreement or any of the other
Financing Agreements shall not suspend, waive or affect any other Default or
Event of Default under this Agreement or any of the other Financing Agreements,
whether the same is prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements, warranties,
covenants and representations of the Borrower contained in this Agreement or any
of the other Financing Agreements and no Default or Event of Default by the
Borrower under this Agreement or any of the other Financing Agreements shall be
deemed to have been suspended or waived by the Lenders or Required Lenders, as
applicable, unless such suspension or waiver is in writing and signed by an
officer of each of the Lenders or Required Lenders, as applicable, and directed
to the Borrower specifying such suspension or waiver. Neither this Agreement nor
the other Financing Agreements may be modified or amended except in a written
agreement signed by the Borrower, the Agent and the Lenders.
10.2. Costs and Attorneys' Fees. All fees, costs and expenses
incurred by the Agent or any Lender in connection with protecting, perfecting or
preserving the Agent's Lien in the Collateral or in connection with any matters
contemplated by or arising out of this Agreement or the other Financing
Agreements, whether (a) to commence, defend, or intervene in any litigation or
to file a petition, complaint, answer, motion or other pleadings, (b) to take
any other action in or with respect to any suit or proceedings (bankruptcy or
otherwise), (c) to consult with officers of the Agent or any Lender or to advise
the Agent or any Lender, (d) to protect, collect, lease, sell, take possession
of, or liquidate any of the Collateral, or (e) to attempt to enforce or to
enforce any Lien on any of the Collateral, or to enforce any rights of the Agent
or any Lender to collect any of the Obligations, including, without limitation,
reasonable fees, costs and expenses of the attorneys and paralegals of the Agent
or any Lender, and the out-of-pocket costs and the per diem charges for the
examiners of such Persons at their then applicable rates, together with interest
thereon at the Default Rate then applicable to the Revolving Loan, shall be part
of the Obligations, payable on demand and secured by the Collateral.
10.3. Expenditures by the Agent and the Lenders. In the event the
Borrower shall fail to pay Charges, insurance, assessments, costs or expenses
which the Borrower is, under any of the terms hereof, required to pay, or fails
to keep the Collateral free from Liens, except Permitted Liens, or fails to
maintain, replace or repair the Collateral as required hereby, the Agent or any
Lender may, in its sole discretion, make expenditures for any or all of such
purposes and acquire or accept an assignment of any Lien against the Collateral,
and the amount so expended (including, without limitation, reasonable attorneys'
fees and expenses, court costs, filing fees and other charges), together with
interest thereon at the Base Rate or the Default Rate then applicable to the
Revolving Loan shall be part of the Obligations, payable on demand and secured
by the Collateral.
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10.4. Custody and Preservation of Collateral. Except as expressly
provided in the Code, the Agent shall have no duty with respect to any
Collateral in its possession or control (or in the possession or control of any
agent or bailee) or with respect to any income thereon. The Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral in its possession if it takes such action for that purpose as
the Borrower shall request in writing, but failure by the Agent to comply with
any such request shall not of itself be deemed a failure to exercise reasonable
care, and no failure by the Agent to comply with any such request shall of
itself be deemed a failure to exercise reasonable care, and no failure by the
Agent to preserve or protect any right with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by the Borrower, shall of itself be deemed a failure
to exercise reasonable care in the custody or preservation of such Collateral.
The Agent shall not be liable or responsible for any loss or damage to any of
the Collateral, or for any diminution in the value thereof, by reason of the act
or omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Agent in good faith.
10.5. Reliance by the Agent and Lenders. All covenants, agreements,
representations and warranties made herein or in any of the other Financing
Agreements by the Borrower shall, notwithstanding any investigation by the Agent
or any Lender, be deemed to be material to and to have been relied upon by the
Agent and each Lender.
10.6. Parties and Assignment. This Agreement and the other Financing
Agreements shall be binding upon and inure to the benefit of the Agent, the
Lenders, the Borrower and their respective successors and assigns. The
Borrower's successors and assigns shall include, without limitation, any
trustee, receiver or debtor in possession of or for the Borrower.
Notwithstanding the foregoing, the Borrower may not sell, assign or transfer
this Agreement, or the other Financing Agreements or any portion thereof
including, without limitation, its rights, titles, interests, remedies, powers
and/or duties hereunder or thereunder. Subject to subsection 11.1, The Borrower
hereby consents to each Lender's sale, assignment, transfer or other disposition
pursuant hereto, at any time and from time to time hereafter, of this Agreement,
or the other Financing Agreements or any portion thereof, including without
limitation all or any part of each Lender's rights, titles, interests, remedies,
powers and/or duties hereunder or thereunder.
10.7. Applicable Law; Severability. This Agreement and the other
Financing Agreements have been submitted to the Agent and each Lender at its
office in Illinois, and this Agreement and the other Financing Agreements, shall
not be binding upon the Agent or any Lender or effective until accepted by the
Agent and each Lender and shall be construed in all respects, except as
otherwise provided in any such Financing Agreement, in accordance with, and
governed by, all of the provisions of the Code and by the other internal laws
(as opposed to conflicts of law provisions) of the State of Illinois, except for
the perfection and enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the
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extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
10.8. Submission to Jurisdiction; Waiver of Jury and Bond. THE
BORROWER, THE AGENT AND EACH LENDER HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF
ILLINOIS, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE OTHER FINANCING AGREEMENTS SHALL BE LITIGATED IN SUCH COURTS,
AND THE BORROWER, THE AGENT AND EACH LENDER EACH WAIVE ANY OBJECTION WHICH IT
MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL
OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH IN SUBSECTION 10.13 AND
THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THE BORROWER'S
ADDRESS. THE BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 000 XXXXX
XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX 00000 AND SUCH OTHER PERSON AS MAY HEREAFTER
BE SELECTED BY THE BORROWER WHICH IRREVOCABLY AGREES IN WRITING TO SO SERVE AS
ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE BORROWER TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE BORROWER AT ITS ADDRESS
PROVIDED IN SUBSECTION 10.13, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICES OF PROCESS. IF ANY AGENT APPOINTED BY THE BORROWER REFUSES TO ACCEPT
SERVICE, THE BORROWER HEREBY AGREES THAT SERVICE UPON IT BY MAIL OR OTHERWISE IN
ACCORDANCE WITH SUBSECTION 10.13 SHALL CONSTITUTE SUFFICIENT NOTICE. THE AGENT,
EACH LENDER AND THE BORROWER ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR
TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY
WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF THE AGENT OR ANY LENDER. NOTHING CONTAINED IN THIS SUBSECTION 10.8 SHALL
AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST
PROPERTY LOCATED IN SUCH JURISDICTIONS. THE BORROWER WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL,
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EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES.
10.9. Marshalling. The Agent shall be under no obligation to
xxxxxxxx any assets in favor of the Borrower or any other Person or against or
in payment of any or all of the Obligations.
10.10. Section Titles. The section titles contained in this
Agreement shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties.
10.11. Incorporation by Reference. The provisions of the other
Financing Agreements are incorporated in this Agreement by this reference.
Except as otherwise provided in this Agreement and except as otherwise provided
in the other Financing Agreements by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provisions in the other Financing
Agreements, the provision contained in this Agreement shall govern and control.
10.12. Notices. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
(a) if delivered in person, when delivered, (b) if delivered by telecopy or
telex, on the date of confirmed transmission, (c) if delivered by overnight
courier, two days after delivery to such courier properly addressed or (d) if by
U.S. Mail, three (3) days after deposit in the United States mails (by certified
mail, return receipt requested), with proper postage prepaid, or upon delivery
by courier or upon transmission by telex, telecopy or similar electronic medium
to the following addresses:
(i) If to the Agent, at:
SANWA BUSINESS CREDIT CORPORATION
Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Commercial Finance Division Executive Vice President
Telecopy No.: (000) 000-0000
With a copy to:
XXXXXX & XXXXXXX
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
(ii) If to a Lender, at the address set forth opposite its name on
Schedule 1 hereto
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(iii) to the Borrower, at:
PLAINWELL INC.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy to:
XXXXXXXX & XXXXX
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
or to such other address as each Person designates to the other in the manner
herein prescribed.
10.13. Waivers With Respect to Other Instruments. The Borrower
waives presentment, demand and protest and notice of presentment, demand
protest, default, nonpayment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, Accounts, contract rights,
documents, Instruments, Chattel Paper and guaranties at any time held by the
Agent on which the Borrower may in any way be liable and hereby ratifies and
confirms whatever the Agent may do regarding the enforcement, collection,
compromise, or release thereof.
10.14. Retention of the Borrower's Documents. The Agent or any
Lender may destroy or otherwise dispose of all documents, schedules, invoices or
other papers delivered to such Person in accordance with its customary practices
unless the Borrower requests in writing that same be returned. Upon the
Borrower's request and at the Borrower's expense, such Person shall return such
papers when such Person's actual or anticipated need for same has terminated.
10.15. Entire Agreement. This Agreement, including all Exhibits,
Schedules and other documents attached hereto or incorporated by reference
herein, together with the other Financing Agreements constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all other negotiations, understandings and representations, oral or
written, with respect to the subject matter hereof, including, without
limitation, that certain Commitment Letter dated as of January 21, 1998 between
the Borrower and the Agent.
10.16. Equitable Relief. The Borrower recognizes that, in the event
the Borrower fails to perform, observe or discharge any of its Obligations under
this Agreement, any remedy at law may prove to be inadequate relief to the Agent
or any Lender; therefore, the Borrower agrees that the Agent or any Lender, if
such Person so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
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10.17. Counterparts. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one and the same agreement.
10.18. Several Obligations; Nature of Lenders' Rights. The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other Lender (except to the extent
to which the Agent is authorized to act as such). No provision contained herein
or in any other Financing Agreement or Related Transactions Document and no
course of dealing between the parties shall be deemed to create any fiduciary
relationship between the Agent or any Lender and the Borrower. The Indebtedness
of the Borrower incurred under each of the Notes and any Eau Claire L/C Notes
shall be a separate obligation owing to the holder or interest holder thereof;
provided that each Lender hereby agrees that it shall have no individual right
to seek to enforce its rights under its Note or any Eau Claire L/C Note, or to
realize upon the Collateral, it being understood and agreed that such rights and
remedies may be exercised solely by the Agent for the benefit of the Lenders at
the direction of the Required Lenders in accordance with the terms of this
Agreement.
10.19. Exceptions to Covenants. The Borrower shall not be deemed to
be permitted to take any action or omit to take any action which is permitted as
an exception to any of the terms, provisions or covenants contained in any of
the Financing Agreements if such action or omission would result in a Default or
Event of Default or the breach of any term, provision or covenant contained in
any Financing Agreement.
10.20. Construction. The Borrower acknowledges that it and its
counsel have approved the Financing Agreements and that the usual rule of
construction to the effect that any ambiguities or inconsistencies are to be
resolved against the drafting Person shall not be applicable in the
interpretation of any of the Financing Agreements.
10.21. Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective or to be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
10.22. ACKNOWLEDGMENT. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN
ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS LOAN AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND THE BORROWER ACKNOWLEDGES AND AGREES THAT
(i) EACH OF THE WAIVERS SET FORTH HEREIN, INCLUDING, WITHOUT LIMITATION, THOSE
WAIVERS SET FORTH IN SUBSECTIONS 9.5, 9.6 AND 10.8 WERE KNOWINGLY AND
VOLUNTARILY MADE, (ii) THE OBLIGATIONS OF THE AGENT AND EACH LENDER HEREUNDER,
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INCLUDING THE OBLIGATION TO ADVANCE AND LEND FUNDS TO THE BORROWER IN ACCORDANCE
HEREWITH, SHALL BE STRICTLY CONSTRUED AND SHALL BE EXPRESSLY SUBJECT TO THE
BORROWER'S COMPLIANCE IN ALL RESPECTS WITH THE TERMS AND CONDITIONS HEREIN SET
FORTH, AND (iii) NO REPRESENTATIVE OF THE AGENT OR ANY LENDER HAS WAIVED OR
MODIFIED ANY OF THE PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF AND NO
SUCH WAIVER OR MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE EFFECTIVE UNLESS
MADE IN ACCORDANCE WITH SUBSECTION 10.1
10.23. Effect on Prior Credit Agreement; Continuing Loans. Effective
as of the Closing Date, this Agreement amends and restates the Prior Loan
Agreement in its entirety and supersedes the terms and provisions thereof.
Nevertheless, the Borrower acknowledges that the Continuing Loans in the
respective amounts set forth on Exhibit 10.23 remain outstanding, and the
parties agree that (i) such Continuing Loans are continuing Obligations
hereunder governed by the terms and provisions hereof; (ii) the Liens securing
payment thereof are continuing in all respects, and (iii) this Agreement shall
not be deemed to evidence a novation, or repayment and refunding, of the
Continuing Loans. Effective as of the Closing Date, all references in the Prior
Loan Documents to the "Loan Agreement", the "Agreement" or the "Credit
Agreement" shall be deemed to refer to this Agreement, without further amendment
of those Loan Documents. The Borrower, as the successor by merger to Plainwell
Paper Company, hereby expressly assumes Plainwell Paper Company's liabilities
with respect to the Continuing Loans. Until the Closing Date, this Agreement
shall not affect the rights and duties of the parties under the Prior Loan
Documents.
11. ASSIGNMENT AND PARTICIPATION.
11.1. Assignments. Each Lender may, in the ordinary course of its
business and in accordance with applicable law, assign all or any part of its
rights and obligations under the Financing Agreements to any Person; provided
that such Lender shall first obtain the written consent of the Agent and the
written consent of the Borrower, which shall not be unreasonably withheld prior
to any such assignment becoming effective; provided that no consent of the
Borrower shall be required so long as an Event of Default has occurred and is
continuing and no consent of the Borrower shall be required for an assignment by
SBCC to its affiliates. The assigning Lender shall be relieved of its Commitment
or assigned portion thereof. The Borrower hereby acknowledges and agrees that
any assignment will give rise to a direct obligation of the Borrower to the
assignee and that the assignee shall be considered to be a "Lender".
11.2. Participations. Each Lender shall have the right to sell or
assign to a Participant or Participants participating interests in the
Borrower's Obligations hereunder in such amounts and on such terms and
conditions as such Lender shall determine.
12. AGENT.
12.1. Appointment. SBCC is hereby appointed Agent hereunder and
under each other Financing Agreements, and each of the Lenders authorizes the
Agent to act as the Agent of such Lender. The Agent agrees to act as such upon
the express conditions contained in this
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Section 12. The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
12.2. Powers. The Agent shall have and may exercise such powers
under the Financing Agreements as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder, except any action
specifically provided by the Financing Agreements to be taken by the Agent.
12.3. General Immunity. Neither the Agent nor any of its directors,
officers, Agents or employees shall be liable to the Borrower or any Lender for
any action taken or omitted to be taken by it or them hereunder or under any
other Financing Agreements or in connection herewith or therewith except for its
or their own gross negligence or willful misconduct as determined by a final
order, not subject to review, of a court of competent jurisdiction.
12.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, Agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (a) any statement,
warranty or representation made in connection with any Financing Agreements or
any borrowing hereunder, (b) the performance or observance of any of the
covenants or agreements of any obligor under any Financing Agreements, (c) the
satisfaction of any condition specified in Section 4, except receipt of items
required to be delivered to the Agent and not waived at closing, or (d) the
validity, effectiveness or genuineness of any Financing Agreements or any other
instrument or writing furnished in connection therewith.
12.5. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Financing Agreements in accordance with written instructions
signed by the Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders, all
holders of Notes and all interest holders of Eau Claire L/C Notes. The Agent
shall be fully justified in failing or refusing to take any action hereunder and
under any other Financing Agreements unless it shall first be indemnified to its
satisfaction by the Lenders pro-rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
12.6. Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Financing Agreements by or
through employees, agents and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Financing Agreements.
12.7. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, Eau Claire L/C Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the
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proper Person or Persons, and, in respect to legal matters, upon the opinion of
counsel selected by the Agent, which counsel may be employees of the Agent.
12.8. Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Pro Rata Shares (a) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Financing
Agreements, (b) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Financing Agreements, and (c) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Financing Agreements or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents; provided that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent as determined by a final order,
not subject to appeal, of a court of competent jurisdiction. The obligations of
the Lenders under this subsection 12.8 shall survive payment of the Obligations
and termination of this Agreement.
12.9. Rights as a Lender. In its capacity as a Lender hereunder, the
Agent shall have the same rights and powers hereunder and under any other
Financing Agreements as any Lender and may exercise the same as though it were
not the Agent, and the term "Lender" or "Lenders" shall, at any time when the
Agent is a Lender, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Financing
Agreements, with the Borrower or any of its Subsidiaries in which the Borrower
or such Subsidiary is not restricted hereby from engaging with any other Person.
12.10. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Financing Agreements. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Financing
Agreements.
12.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. The Agent may be removed
at any time for cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within thirty days after the retiring Agent's giving notice of
resignation or within thirty days after the removal of such Agent, then the
retiring Agent shall
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use reasonable efforts to appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Such successor Agent shall be a financial institution having
capital and retained earnings of at least Two Hundred Fifty Million Dollars
($250,000,000). Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Financing Agreements. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Section 12
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and under
the other Financing Agreements.
12.12. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. Subject to the provisions of subsection 12.5, the Agent shall take any
action of the type specified in this Agreement with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so required by Section 13, by all Lenders); provided that unless and until the
Agent shall have received such directions, the 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 the Agent shall determine is in the best
interests of the Lenders.
13. AMENDMENTS AND WAIVERS.
Subject to the provisions of this Section 13, the Required Lenders
(or the Agent with the consent in writing of the Required Lenders) and the
Borrower may enter into agreements supplemental hereto for the purpose of
adding, terminating or modifying any provisions to the Financing Agreements or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Event of Default hereunder; provided that no such supplemental
agreement shall, without the consent of each Lender:
(a) extend the final maturity of any Revolving Loan, Note or Eau
Claire L/C Note or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon;
(b) reduce the percentage specified in the definition of Required
Lenders;
(c) reduce the amount or extend the payment date for the mandatory
payments required hereunder, or increase the amount of the Commitments of any
Lender hereunder (other than an increase in the Commitment to make Revolving
Loans of any Lender as a result of an assignment consummated between such Lender
and another Lender pursuant to subsection 11.1);
(d) extend the Initial Term or any Renewal Term, as applicable
(except as contemplated by subsection 2.8), or permit any Letter of Credit or
Lender Guaranty to have an
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expiry date beyond the Revolving Loan Maturity Date, or permit the Eau Claire
L/C or any Eau Claire L/C Note to have an expiry date beyond the fifth
anniversary of the Closing Date;
(e) amend this Section 13;
(f) change the definition of "Current Asset Base", "Eligible
Accounts" or "Eligible Inventory", except as provided by subsections 3.3 and
3.10;
(g) release all or any substantial portion of the Collateral or the
real property subject to the Mortgages;
(h) permit any assignment by the Borrower of its Obligations or its
rights hereunder; or
(i) amend the definition of the term "Commitment".
No amendment, modification, termination or waiver affecting the
rights or duties of the Agent under any Financing Agreement shall be effective
without the written consent of the Agent.
Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for the Agent to take additional Collateral pursuant to any Financing
Agreement. No notice to or demand on the Borrower not required by the terms
hereof in any case shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 13 shall
be binding upon each holder of the Notes and each interest holder in the Eau
Claire L/C and any Eau Claire L/C Notes at the time outstanding, each future
holder of such Notes and each future interest holder in the Eau Claire L/C and
any Eau Claire L/C Notes and the Borrower. Notwithstanding anything to the
contrary contained herein, the Agent may, at its sole discretion, release or
compromise Collateral and the proceeds thereof to the extent of asset
dispositions permitted by the terms hereof.
14. SET OFF AND SHARING OF PAYMENTS.
14.1. Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized by the Borrower at any time or from time to time, with
reasonably prompt subsequent notice to the Borrower or to any other Person (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances (including, without
limitation, all account balances, whether provisional or final and whether or
not collected or available) held or owing by such Lender at any of its offices
to or for the credit or account of the Borrower (regardless of whether such
balances are then due to the Borrower) and (b) other property held or owing by
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such Lender to or for the credit or the account of the Borrower, toward the
payment of the Obligations owing to such Lender, whether or not the Obligations,
or any part hereof, shall then be due.
14.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment of interest or principal made to it upon its Revolving
Loans, its participation in the Eau Claire Lender Guaranty or its participation
in any other Lender Guaranty (other than payments received pursuant to
subsections 2.19 and 2.21) or receives any fees payable pursuant to subsections
2.10, 2.12, 2.4 or 2.17 in a greater proportion than its Pro Rata Share of such
Revolving Loans or Pro Rata Share of such Eau Claire Lender Guaranty and other
Lender Guaranties, such Lender agrees, promptly upon demand, to purchase a
portion of the Revolving Loans or the interest in the Eau Claire Lender Guaranty
and other Lender Guaranties held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Revolving Loans and
interests in the Eau Claire Lender Guaranty and other Lender Guaranties. If any
Lender, whether in connection with setoff or otherwise, receives collateral or
other protection for its Obligations, such Lender agrees, promptly upon demand,
to take such action necessary such that all Lenders share in the benefits of
such collateral ratably in proportion to their Commitments. In case any such
payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made. If an amount to be setoff is to be applied to
Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced by
any of the Notes or any Eau Claire L/C Notes held by such Lender, such amount
shall be applied ratably to such other Indebtedness and to the Indebtedness
evidenced by such Notes and Eau Claire L/C Notes, respectively. The Borrower
agrees, to the fullest extent permitted by law, that (x) any Lender may exercise
its right to set off with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participation in such excess to other Lenders, and
(y) any Lender so purchasing a participation in the Revolving Loans made or an
interest in the Eau Claire Lender Guaranty, other Lender Guaranties or other
Obligations held by other Lenders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Revolving Loans or holder of interests
in the Eau Claire Lender Guaranty, other Lender Guaranties and other Obligations
in the amount of such participation. In addition to the foregoing, the Borrower
agrees to the fullest extent permitted by law that any Person acquiring a
participation pursuant to the provisions of subsection 11.2 may exercise the
same rights of setoff which it would have (and shall have the same sharing
obligations which it would have) if such participant were a Lender.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
PLAINWELL INC.
By:
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Title:
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COMMITMENTS: SANWA BUSINESS CREDIT
Revolving Loan: $35,000,000 CORPORATION, as Agent and
Eau Claire L/C: $19,552,000 as a Lender
By:
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Title:
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S-1
