CREDIT AGREEMENT
Among
SPINNAKER COATING, INC.,
SPINNAKER COATING-MAINE, INC.
and
ENTOLETER, INC.,
as Borrowers,
SPINNAKER INDUSTRIES, INC.,
as Guarantor,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO, TOGETHER WITH
THOSE ASSIGNEES PURSUANT TO SECTION 11.8 HEREOF,
as Lenders,
and
TRANSAMERICA BUSINESS CREDIT CORPORATION,
as Agent
Dated as of August 9, 1999
1
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 General Definitions..................................................................1
SECTION 1.2 Accounting Terms and Determinations.................................................36
SECTION 1.3 Other Terms; Headings...............................................................37
SECTION 1.4 Computation of Time Periods.........................................................37
ARTICLE II
REVOLVING LOANS
SECTION 2.1 Revolving Credit Commitments........................................................37
SECTION 2.2 Borrowing of Revolving Loans........................................................39
SECTION 2.3 Disbursement of Revolving Loans.....................................................40
SECTION 2.4 Notices of Borrowing................................................................40
SECTION 2.5 Same Day Settlement of Lender Advances..............................................40
SECTION 2.6 Periodic Settlement of Agent Advances and Repayments................................41
SECTION 2.7 Sharing of Payments.................................................................42
SECTION 2.8 Defaulting Lenders..................................................................42
SECTION 2.9 Mandatory and Voluntary Payment; Mandatory and Voluntary Reduction
of Commitments......................................................................43
SECTION 2.10 Maintenance of Loan Account; Statements of Account..................................45
SECTION 2.11 Payment Procedures..................................................................45
SECTION 2.12 Collections.........................................................................45
SECTION 2.13 Application of Payments.............................................................46
ARTICLE III
LETTERS OF CREDIT
SECTION 3.1 Issuance of Letters of Credit.......................................................46
SECTION 3.2 Terms of Letters of Credit..........................................................48
SECTION 3.3 Lenders' Participation..............................................................48
SECTION 3.4 Notice of Issuance..................................................................49
SECTION 3.5 Payment of Amount Drawn Under Letters of Credit.....................................49
SECTION 3.6 Payment by Lenders..................................................................50
SECTION 3.7 Nature of Agent's Duties............................................................50
SECTION 3.8 Obligations Absolute................................................................51
ARTICLE IV
INTEREST, FEES AND EXPENSES
SECTION 4.1 Interest on Prime Rate Loans........................................................52
SECTION 4.2 Interest on Eurodollar Rate Loans...................................................52
SECTION 4.3 Interest and Letter of Credit Fees After Event of Default...........................52
SECTION 4.4 Letter of Credit Fees...............................................................52
SECTION 4.5 Unused Line Fee; Closing Fee; Agent Fee; Early Termination Fee......................53
SECTION 4.6 Other Fees and Expenses.............................................................54
SECTION 4.7 Calculations........................................................................54
SECTION 4.8 Special Provisions Relating to Eurodollar Rate Loans................................54
SECTION 4.9 Indemnification in Certain Events...................................................57
SECTION 4.10 Net Payments........................................................................58
SECTION 4.11 Affected Lenders....................................................................62
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions to Initial Loans and Letters of Credit...................................63
SECTION 5.2 Conditions Precedent to All Loans and Letters of Credit.............................66
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties of the Credit Parties................................66
ARTICLE VII
COVENANTS OF THE CREDIT PARTIES
SECTION 7.1 Affirmative Covenants...............................................................77
SECTION 7.2 Negative Covenants..................................................................91
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Events of Default..................................................................103
SECTION 8.2 Acceleration, Termination and Cash Collateralization...............................105
SECTION 8.3 Rescission of Acceleration.........................................................106
SECTION 8.4 Remedies...........................................................................106
SECTION 8.5 Right of Setoff....................................................................107
SECTION 8.6 License for Use of Software and Other Intellectual Property........................107
SECTION 8.7 No Marshaling; Deficiencies; Remedies Cumulative...................................107
-2-
ARTICLE IX
CROSS GUARANTIES
SECTION 9.1 Guarantee..........................................................................108
SECTION 9.2 Obligations Unconditional..........................................................108
SECTION 9.3 Reinstatement......................................................................110
ARTICLE X
THE AGENT
SECTION 10.1 Appointment of Agent...............................................................110
SECTION 10.2 Nature of Duties of Agent..........................................................110
SECTION 10.3 Lack of Reliance on Agent..........................................................110
SECTION 10.4 Certain Rights of the Agent........................................................111
SECTION 10.5 Reliance by Agent..................................................................111
SECTION 10.6 Indemnification of Agent...........................................................111
SECTION 10.7 The Agent in Its Individual Capacity...............................................112
SECTION 10.8 Holders of Revolving Notes.........................................................112
SECTION 10.9 Successor Agent....................................................................112
SECTION 10.10 Collateral Matters.................................................................113
SECTION 10.11 Actions with Respect to Defaults...................................................114
SECTION 10.12 Delivery of Information............................................................114
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Governing Law......................................................................114
SECTION 11.2 Submission to Jurisdiction.........................................................115
SECTION 11.3 Service of Process.................................................................115
SECTION 11.4 Jury Trial.........................................................................115
SECTION 11.5 Limitation of Liability............................................................115
SECTION 11.6 Delays; Partial Exercise of Remedies...............................................116
SECTION 11.7 Notices............................................................................116
SECTION 11.8 Assignments and Participations.....................................................116
SECTION 11.9 Confidentiality....................................................................119
SECTION 11.10 Indemnification; Reimbursement of Expenses of Collection...........................120
SECTION 11.11 Amendments and Waivers.............................................................121
SECTION 11.12 Nonliability of Agent and Lenders..................................................122
SECTION 11.13 Independent Nature of Lenders' Rights..............................................123
SECTION 11.14 Counterparts.......................................................................123
SECTION 11.15 Effectiveness......................................................................123
SECTION 11.16 Severability.......................................................................123
SECTION 11.17 Maximum Rate.......................................................................123
SECTION 11.18 Entire Agreement; Successors and Assigns...........................................124
SECTION 11.19 Release of Entoleter...............................................................124
Schedules
-3-
Schedule 1 - List of Lenders, Lending Offices and Commitments
Schedule 2 - Existing Indebtedness
Schedule 5.1(c) - List of Closing Documents
Schedule 6.1(a) - Jurisdictions in which the Credit Parties and the Subsidiaries are
Qualified to do Business
Schedule 6.1(k) - Location of Offices, Records and Collateral
Schedule 6.1(l) - List of Subsidiaries
Schedule 6.1(m) - Pending Litigation, etc.
Schedule 6.1(p) - Labor Contracts
Schedule 6.1(r) - Pension Plans
Schedule 6.1(u) - Environmental Actions
Schedule 6.1(w) - Real Property
Schedule 6.1(x) - Material Contracts
Schedule 6.1(y) - Intellectual Property
Schedule 6.1(ad) - Affiliate Transactions
Schedule 7.2(a) - Permitted Liens
Schedule 7.2(f) - Investments
Schedule 7.2(p) - Bank Accounts
Exhibits
Exhibit A - Revolving Note
Exhibit B - Borrowing Base Certificate
Exhibit C - Notice of Borrowing
Exhibit D - Notice of Continuation
Exhibit E - Notice of Conversion
Exhibit F - Letter of Credit Request
Exhibit G - Security Agreement
Exhibit H - Guaranty
Exhibit I - Lockbox Agreement
Exhibit J - Collateral Access Agreement
Exhibit K - Contribution Agreement
Exhibit L - Intercompany Subordinated Note
Exhibit M - Compliance Certificate
Exhibit N - Assignment and Assumption Agreement
Exhibit O - Indenture Borrowing Base Certificate
Exhibit P - Intellectual Property Security Agreement
THIS CREDIT AGREEMENT is entered into as of August 9, 1999,
among Spinnaker Coating, Inc., a Delaware corporation formerly known as
Xxxxx-Bridge Industries, Inc. with its chief executive office and principal
place of business at 000 Xxxx Xxxxx Xxxxxx, Xxxx, Xxxx 00000-0000
("COATING"), Entoleter, Inc., a Delaware corporation with its chief executive
office and principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxx 00000 ("ENTOLETER"), Spinnaker Coating-Maine, Inc., a Delaware
corporation with its chief executive office and principal place of business
at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx 00000 ("SCM" and, together with
Coating and Entoleter, the "BORROWERS"), Spinnaker Industries, Inc., a
Delaware corporation
-4-
with its chief executive office and principal place of business at 0000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the "GUARANTOR"), each of
the financial institutions identified as Lenders on Schedule 1 hereto
(together with each of their respective successors and assigns, each a
"LENDER", and collectively, the "LENDERS"), and Transamerica Business Credit
Corporation, acting in the manner and to the extent described in Article X
(in such capacity, the "AGENT").
W I T N E S S E T H :
WHEREAS, the Borrowers wish to obtain a revolving credit
facility to refinance existing indebtedness and for general working capital
purposes; and
WHEREAS, the Lenders are willing to make loans and other
extensions of credit in an aggregate outstanding amount not to exceed
$40,000,000 on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the Borrowers, the Guarantor, the Lenders
and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1 GENERAL DEFINITIONS. As used herein, the following
terms shall have the meanings herein specified (to be equally applicable to both
the singular and plural forms of the terms defined):
"ACCEPTANCE DATE" is defined in Section 11.8(b).
"ACCOUNTS" is defined in the Security Agreement.
"ACQUISITION" means the acquisition of stock, all or
substantially all of the assets of a Person or any business or
line of business of a Person.
"ACQUISITION NOTIFICATION LAWS" means the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Acts of 1976, as
amended, and the Exon-Xxxxxx Amendment to the Omnibus Trade
and Competitiveness Act of 1988.
"ADJUSTED EBITDA" means, in any fiscal period,
Specified Net Income plus the amount of all Interest Expense
on all Indebtedness, income tax expense, depreciation and
amortization, including amortization of any goodwill or other
intangibles, in all cases as
-5-
may have been subtracted or added, as the case may be, in
calculating Specified Net Income of the Guarantor and its
Restricted Subsidiaries, on a consolidated basis, for such
period all determined in accordance with GAAP.
"ADJUSTED EURODOLLAR RATE" means, with respect to
each Interest Period for any Eurodollar Rate Loan, the rate
obtained by dividing (i) the Eurodollar Rate for such Interest
Period by (ii) a percentage equal to 1 minus the stated
maximum rate (stated as a decimal) of all reserves, if any,
required to be maintained against "Eurocurrency liabilities"
as specified in Regulation D of the Board of Governors Federal
Reserve System (or against any other category of liabilities
which includes deposits by reference to which the interest
rate on Eurodollar Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a
non-United States office of any Lender to United States
residents).
"ADJUSTED NET INCOME" means, in any fiscal period,
Net Income of a Person plus or minus (as the case may be)
losses or gains from extraordinary items and from sales of
assets, other than the Central Sale, the Electrical Tape Sale,
other than asset sales resulting in a loss or a gain of less
than $100,000 and sales of Inventory in the ordinary course of
business, in each case to the extent added or subtracted in
determining such Person's Net Income.
"AFFILIATE" of a Person means another Person who
directly or indirectly controls, is controlled by, is under
common control with or is a director or officer of such
Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the Voting Stock of such Person or
the direct or indirect power to direct the management and
policies of a business.
"AGENT" means TBCC as provided in the Preamble to
this Credit Agreement or any successor to TBCC.
"AGENT ADVANCES" is defined in Section 2.2.
"AGENT FEE" is defined in Section 4.5(c).
"APPLICABLE LENDING OFFICE" means, with respect to
each Lender, such Lender's Eurodollar Lending Office in the
case of a Eurodollar Rate Loan, and such Lender's Domestic
Lending Office in the case of a Prime Rate Loan.
-6-
"APPLICABLE MARGIN" means (a) from the date hereof
until the first anniversary of the Closing Date, 1.00% per
annum for Prime Rate Loans and 2.50% per annum for Eurodollar
Rate Loans and Letters of Credit and (b) thereafter, a
percentage per annum determined by reference to the Debt to
EBITDA Ratio as set forth below:
Prime Eurodollar Letters
Debt to EBITDA Ratio Rate Loans Rate Loans of Credit
-------------------- ---------- ---------- ---------
Level I .50% 2.00% 2.00%
-------
less than 3.25 to 1.0
Level II .75% 2.25% 2.25%
--------
3.25 to 1.0 or greater, but
less than 3.75 to 1.0
Level III 1.00% 2.50% 2.50%
---------
3.75 to 1.0 or greater
The Applicable Margin for each Prime Rate Loan shall be
determined by reference to the Debt to EBITDA Ratio in effect
from time to time and the Applicable Margin for each
Eurodollar Rate Loan shall be determined by reference to the
ratio in effect on the first day of each Interest Period for
such Loan; PROVIDED, HOWEVER, that (i) no change in the
Applicable Margin shall be effective until three (3) Business
Days after the date on which the Agent receives the relevant
Financial Statements pursuant to Section 7.1(a)(i) or (iii),
as the case may be, and a duly executed Compliance Certificate
demonstrating such ratio, (ii) the Applicable Margin shall not
change more than once during any fiscal quarter and (iii) the
Applicable Margin shall be at Level III for so long as the
Agent has not received the information described in clause (i)
of this proviso as and when required under Section 7.1(a)(i)
or (iii), as the case may be.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase
Agreement dated as of April 9, 1999 among Electrical Tape, the
Guarantor and the Buyer, as amended, supplemented or otherwise
modified from time to time.
"ASSET SALE" means, for any Person, any sale, lease,
transfer or other disposition or series of sales, transfers,
leases or other dispositions of any
-7-
assets of such Person (including, without limitation, by
merger or consolidation or by exchange of assets and whether
by casualty, loss, operation of law or otherwise) or the grant
of any option or other right to purchase, lease or otherwise
acquire any assets made by such Person or any of its
Restricted Subsidiaries to any Person, in each case other than
the sale of inventory in the ordinary course of business of
such Person.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" is defined in
Section 11.8(b).
"AUDITORS" means a nationally recognized firm of
independent public accountants selected by a Borrower or
Guarantor satisfactory to the Agent in its sole discretion.
For purposes of this Credit Agreement, the Guarantor's and
Borrowers' current firm of independent public accountants,
Ernst & Young L.L.P. shall be deemed to be satisfactory to the
Agent.
"AUTHORIZED OFFICERS" means the Chief Executive
Officer, the President, the Chief Financial Officer, the Vice
President-Treasurer, the Vice President-Finance, Controller or
the Assistant Treasurer of a Credit Party.
"BASE AMOUNT" is defined in Section 7.2(r).
"BENEFIT PLAN" means a "defined benefit plan" as
defined in Section 3(35) of ERISA for which any Credit Party,
any Subsidiary of a Credit Party or any ERISA Affiliate has
been an "employer" as defined in Section 3(5) of ERISA within
the past six years.
"BORROWERS" is defined in the Preamble to this
Agreement.
"BORROWING" means a borrowing consisting of a
Revolving Loan of the same Type made on the same day by the
Lenders.
"BORROWING BASE" means, on any day, the lesser of (a)
the sum of the Coating Borrowing Base, the Entoleter Borrowing
Base and the SCM Borrowing Base on such day and (b) the
Indenture Borrowing Base on any such day.
"BORROWING BASE CERTIFICATE" is defined in Section
7.1(b)(i).
"XXXXX/XXXXXXX" means Xxxxx, Xxxxxxx & Co. Inc., a
Delaware corporation.
-8-
"BUSINESS DAY" means any day other than a Saturday,
Sunday or a day on which commercial banks in New York, New
York are required or permitted by law to close. When used in
connection with Eurodollar Rate Loans, this definition will
also exclude any day on which commercial banks are not open
for dealing in Dollar deposits in the London (England, U.K.)
interbank market.
"BUYER" means Intertape Polymer Group, Inc., a
corporation organized under the Canada Business Corporations
Act.
"CAPITAL EXPENDITURES" means, for any period, the sum
of all expenditures capitalized for financial statement
purposes in accordance with GAAP (whether payable in cash or
other property or accrued as liability), including the
capitalized portion of capital leases. Capital Expenditures
shall exclude (i) proceeds of a Casualty Loss applied to the
repair or replacement of the property affected by the Casualty
Loss, and (ii) an amount equal to the proceeds (including the
value received in any exchange or trade) of a sale or other
disposition of an asset permitted under the terms of this
Credit Agreement and applied to the replacement or purchase of
property, plant or equipment.
"CAPITAL STOCK" of any Person means any and all
shares, interests, rights to purchase, warrants, options,
participations, or other equivalent of or interests in
(however designated) the common or preferred equity of such
Person, including, without limitation, partnership interests.
"CASH EQUIVALENTS" means (i) securities issued,
guaranteed or insured by the United States or any of its
agencies with maturities of not more than one year from the
date acquired; (ii) certificates of deposit with maturities of
not more than one year from the date acquired, issued by a
U.S. federal or state chartered commercial bank of recognized
standing, which has capital and unimpaired surplus in excess
of $200,000,000 and which bank or its holding company has a
short-term commercial paper rating of at least A-1 or the
equivalent by Standard & Poor's Corporation or at least P-1 or
the equivalent by Xxxxx'x Investors Service, Inc.; (iii)
repurchase agreements and reverse repurchase agreements with
terms of not more than seven days from the date acquired, for
securities of the type described in (i) above and entered into
only with commercial banks having the qualifications described
in
-9-
(ii) above; (iv) commercial paper, other than commercial
paper issued by the Guarantor or a Borrower or any of their
Affiliates, issued by any Person incorporated under the laws
of the United States or any state thereof and rated at least
A-1 or the equivalent thereof by Standard & Poor's Corporation
or at least P-1 or the equivalent thereof by Xxxxx'x Investors
Service, Inc., in each case with maturities of not more than
one year from the date acquired; (v) investments in money
market funds registered under the Investment Company Act of
1940, which have net assets of at least $200,000,000 and at
least eighty-five percent (85%) of whose assets consist of
securities and other obligations of the type described in
clauses (i) through (iv) above; and (vi) other instruments,
commercial paper or investments acceptable to the Agent in its
sole discretion.
"CASUALTY LOSS" is defined in Section 7.1(g).
"CENTRAL PROCEEDS" means the gross proceeds received
by the Guarantor in respect of the Central Sale on the closing
date of the Central Sale.
"CENTRAL SALE" means the sale of all of the
outstanding capital stock of Central Products Company pursuant
to the Stock Purchase Agreement.
"CHANGE OF CONTROL" means one or more of the
following events:
(a) less than a majority of the members of the
Guarantor's or (if Xxxxx Corporation owns, directly or
indirectly, more than a 50% interest in the Voting Stock of
the Guarantor) Xxxxx Corporation's Board of Directors shall be
persons who either (i) were serving as directors on the
Closing Date or (ii) were nominated as directors and approved
by the vote of the majority of the directors who are directors
referred to in clause (i) above or this clause (ii); or
(b) the sale, lease or transfer, in one or a series
of transactions, of all or substantially all of the assets of
a Credit Party or of the Guarantor and its Subsidiaries taken
as a whole, to any Person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) other than to any one or more of the Permitted
Holders or their Related Parties; or
(c) the stockholders of a Credit Party shall approve
any plan or proposal for the liquidation or dissolution of
such Credit Party; or
-10-
(d) the Guarantor shall fail to own, beneficially and
of record, one hundred percent (100%) of the capital stock of
any Borrower; or
(e) So long as Xxxxxxx X. Xxxxx and Xxx X. Xxxxxxx,
III are employees of the Guarantor, Xxxxx/Xxxxxxx shall cease
to beneficially own and control or have the right to own and
control at least fifty percent (50%) of the aggregate number
of shares of common stock of the Guarantor which Xxxxx/Xxxxxxx
either owned or had the right to purchase on the Closing Date
or if either Xxxxxxx X. Xxxxx or Xxx X. Xxxxxxx, III is no
longer employed by the Guarantor then the one which is still
employed by the Guarantor shall cease to beneficially own or
control or have the right to own and control at least fifty
percent (50%) of the aggregate number of shares of common
stock of the Guarantor that he owned or had the right to
purchase on the Closing Date; or
(f) any Person or group of Persons (other than one or
more of the Permitted Holders is or becomes, as a result of a
tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, the direct or indirect
beneficial owner (as defined below of securities of the
Guarantor representing more than fifty percent (50%) of the
combined Voting Stock of the Guarantor, PROVIDED, HOWEVER,
that the Permitted Holders "beneficially own" (as so defined),
a direct or indirect interest in a lesser percentage of the
total voting power of all the Voting Stock of the Guarantor
than such other Person or group and do not have the right or
ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors
(for purposes of this clause, any Person shall be deemed to
beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the
"parent corporation"), if such Person or group "beneficially
owns" (as so defined), a direct or indirect interest in more
than fifty percent (50%) of the voting power of the Voting
Stock of such parent corporation and the Permitted Holders and
their Related Parties "beneficially own" (as so defined), a
direct or indirect interest in a lesser percentage of the
voting power of the Voting Stock of such parent corporation
and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of
the board of directors of such parent corporation). For
purposes of this clause (f), "beneficial owner" shall have the
meaning given to it by Rules 13(d)-(3) and 13(d)-(5) of the
Securities
-11-
Exchange Act of 1934, as amended from time to time except that
(x) a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after
the passage of time and (y) in the case of a group which is
not a Permitted Holder but includes as members thereof one or
more Permitted Holders, such group (except to the extent
provided in preceding clause (x) shall not be considered to be
the "beneficial owner" of any capital stock of the Company
beneficially owned (other than as a result of attribution to
Permitted Holders by reason of their being members of such
group).
"CLOSING DATE" means the date of execution and
delivery of this Credit Agreement.
"CLOSING FEE" is defined in Section 4.5(b).
"COATING" is defined in the Preamble to this Credit
Agreement.
"COATING ACCOUNTS BORROWING BASE" means, on any day,
an amount up to 85% of the outstanding Eligible Accounts
Receivable of Coating on such day.
"COATING BORROWING BASE" means, on any day, an amount
equal to the sum of (a) the Coating Accounts Borrowing Base on
such day, (b) the Coating Inventory Borrowing Base on such day
and (c) commencing on the date the Credit Parties have
complied with Section 7.1(r), $3,000,000.
"COATING INVENTORY BORROWING BASE" means, on any day,
an amount up to 65% of the Eligible Inventory of Coating on
such day.
"COATING LETTER OF CREDIT OBLIGATIONS" means the sum
of the aggregate undrawn amount of all Letters of Credit
outstanding for Coating's account, plus the aggregate amount
of all drawings under Letters of Credit issued for Coating's
account for which the Borrowers have not reimbursed the Agent,
plus the aggregate amount of all payments made by the Lenders
to the Agent for participations in Letters of Credit issued
for Coating's account for which the Borrowers have not
reimbursed the Lenders.
"COATING LINE OF CREDIT" means the aggregate
revolving line of credit extended by the Lenders to Coating
for Revolving Loans and Letters of Credit pursuant to and in
accordance with the terms of this Credit Agreement, in the
amount of $24,000,000 as such
-12-
revolving line of credit may be reduced from time to time in
accordance with this Credit Agreement.
"CODE" is defined in Section 1.3.
"COLLATERAL" means the Accounts, Inventory,
Equipment, Mortgaged Properties and other property identified
as security for the Obligations under the Collateral
Documents.
"COLLATERAL ACCESS AGREEMENTS" means any landlord
waiver, mortgagee waiver, bailee letter or any similar
acknowledgment agreement of any warehouseman or processor in
possession of Inventory, in each case substantially in the
form of Exhibit J.
"COLLATERAL DOCUMENTS" means all contracts,
instruments and other documents now or hereafter executed and
delivered in connection with this Credit Agreement, pursuant
to which liens and security interests are granted to the Agent
in the Collateral for the benefit of the Lenders, including
without limitation, the Security Agreement, the Intellectual
Property Security Agreement, the Mortgages, each Control
Agreement and any amendments, supplements or modifications
thereto.
"COLLECTION ACCOUNT" is defined in Section 2.12.
"COLLECTIONS" means all cash, funds, checks, notes,
instruments and any other form of remittance tendered by
account debtors in payment of Accounts.
"COMMITMENT" means, with respect to a Lender, its
commitment to make Revolving Loans and to participate in
Letters of Credit up to the amount set forth opposite its name
on Schedule 1, as such amount may be reduced from time to time
in accordance with the terms of this Credit Agreement.
"COMPLIANCE CERTIFICATE" is defined in Section
7.1(a)(i).
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means with
respect to the Guarantor and its Restricted Subsidiaries for
any period, the ratio of (X) Adjusted EBITDA for such period
to (Y) (i) scheduled principal amounts of all Indebtedness
paid or payable by such Person in such period, whether or not
such payments are actually made (other than payments on the
Line of Credit which do not permanently reduce the
Commitments), PLUS (ii) all interest and fees for the use of
money or the availability of money, including
-13-
commitment, facility and like fees and charges upon
Indebtedness (excluding the Senior Notes but including
Indebtedness to the Lenders) payable by such Persons during
such period whether or not such interest or fees are actually
paid, PLUS (iii) all interest and fees for the use of money or
the availability of money, including commitment facility and
like fees and charges upon Net Senior Note Indebtedness
payable by such Persons during such period whether or not such
interest or fees are actually paid, (iv) all loans and
Investments made by such Persons in or to any other Person
made during such period (other than Investments made with
shares of common stock of the Guarantor), PLUS (v) all cash
dividends paid or declared by the Guarantor during such
period, regardless of whether or when such dividends are
actually paid, PLUS (vi) all cash taxes paid or payable by
such Persons during such period, PLUS (vii) all Capital
Expenditures paid or payable by such Persons during such
period (other than Capital Expenditures financed with (A) the
proceeds of Indebtedness permitted hereunder, (B) the Equity
Proceeds Amount and (C) the Central Proceeds).
"CONSOLIDATED INTEREST COVERAGE RATIO" means, with
respect to the Guarantor and its Restricted Subsidiaries, as
of the date of determination thereof for any applicable
period, the ratio of (a) Adjusted EBITDA for such period to
(b) Interest Expense on Net Senior Note Indebtedness and
Interest Expense on all Indebtedness (other than the Senior
Notes) for such period.
"CONSOLIDATED NET WORTH" means the consolidated
assets of the Guarantor and its Restricted Subsidiaries minus
their consolidated liabilities, all as reflected on the
Financial Statements.
"CONTINGENT OBLIGATION" means any direct, indirect,
contingent or non-contingent guaranty or obligation for the
Indebtedness of another, except endorsements in the ordinary
course of business.
"CONTINGENT RIGHTS" means the rights of certain
former minority stockholders of Coating to receive payment for
their shares of capital stock of Coating which were converted
to common stock of Spinnaker, cash and the right to a
contingent payment.
"CONTRIBUTION AGREEMENT" means the Contribution
Agreement, substantially in the form of Exhibit K, among the
Borrowers and the Agent, as amended, supplemented or otherwise
modified from time to time.
-14-
"CONTROL AGREEMENT" means a control agreement, in
form and substance satisfactory to the Agent, among the
Guarantor or one of its Restricted Subsidiaries, the Agent and
the applicable securities intermediary with respect to the
applicable Securities Account and related Investment Property
(as defined in the Security Agreement).
"COVERED TAXES" is defined in Section 4.10(a).
"CREDIT AGREEMENT" means this Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"CREDIT DOCUMENTS" means this Credit Agreement, the
Revolving Notes, the Guaranty, the Security Agreement, the
Intercompany Subordinated Notes, the SDW Subordinated Note,
the SDW Subordinated Guaranty, the Contribution Agreement, the
Lockbox Agreements, the Letter of Credit Related Documents,
each Borrowing Base Certificate, each Indenture Borrowing Base
Certificate, each Control Agreement, the Intellectual Property
Security Agreement, each Mortgage, the Environmental Indemnity
Agreement and each other document, agreement and instrument
from time to time executed by any Credit Party and delivered
to the Agent or a Lender in connection herewith or in
connection with any amendment hereto, as each may be amended,
supplemented or otherwise modified from time to time.
"CREDIT PARTIES" means the Borrowers and the
Guarantor and any other Person which becomes a guarantor of
the Obligations.
"DEBT" means, as of the date of determination, the
sum of the Indebtedness described in subsection (a) and (b) of
the definition of Indebtedness of the Guarantor and its
Restricted Subsidiaries at such date, as would appear on a
balance sheet determined in accordance with GAAP.
"DEFAULT" means an event, condition or default which
with the giving of notice, the passage of time or both would
be an Event of Default.
"DEFAULTING LENDER" is defined in Section 2.8(a).
"DESIGNATED ACCOUNTS" means bank accounts in the name
of the Guarantor maintained with The Chase Manhattan Bank or
Bankers Trust Company.
"DOLLARS" and the sign "$" mean freely transferable
lawful money of the United States.
-15-
"DOMESTIC LENDING OFFICE" means, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name on Schedule 1, as such
Schedule may be amended from time to time.
"EBITDA" means, in any fiscal period, Adjusted Net
Income plus the amount of all Interest Expense, income tax
expense, depreciation and amortization, including amortization
of any goodwill or other intangibles, in all cases as may have
been subtracted or added, as the case may be, in calculating
Adjusted Net Income of the Guarantor and its Restricted
Subsidiaries, on a consolidated basis, for such period all
determined in accordance with GAAP.
"ELECTRICAL TAPE" means Spinnaker Electrical Tape
Company, a Delaware corporation and an Unrestricted
Subsidiary.
"ELECTRICAL TAPE SALE" means the sale of all or
substantially all of the assets of Electrical Tape pursuant to
the Asset Purchase Agreement.
"ELIGIBLE ACCOUNTS RECEIVABLE" means Accounts of a
Borrower evidenced by an invoice and deemed by the Agent in
its Permitted Discretion to be eligible for inclusion in the
calculation of such Borrower's Borrowing Base; provided that
no Accounts acquired by a Borrower pursuant to a Permitted
Acquisition shall be included in such Borrower's Borrowing
Base until the Agent has completed its review of and due
diligence with respect to such Accounts and have agreed to the
inclusion of such Accounts in such Borrower's Borrowing Base.
In determining the amount to be so included, the face amount
of such Accounts shall be reduced by the amount of all
returns, discounts, claims, credits, charges, or other
allowances and by the aggregate amount of all reserves, limits
and deductions provided for in this definition and elsewhere
in this Credit Agreement. If any Account is denominated in a
currency other than Dollars, then the face amount of such
Account shall be converted into Dollars at the Rate of
Exchange on the date that the Accounts are calculated. Unless
otherwise approved in writing by the Agent, no Account shall
be deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale made by a Borrower to an
Affiliate to the extent such Account or all Accounts arising
out of sales made by a Borrower to any Affiliate exceed in the
aggregate $250,000; or
-16-
(b) its payment terms are forty-two (42) days or less
from the date of invoice and it remains unpaid ninety (90)
days from the date of invoice; or
(c) its payment terms are greater than forty-two (42)
days from the date of invoice and it remains unpaid for more
than ninety (90) but less than one hundred twenty (120) days
from the date of invoice to the extent the amount of such
Account or the total of all similar Accounts exceeds
$1,000,000 to the extent of such excess; or
(d) it is from the same account debtor (or any
Affiliate thereof) and fifty percent (50%) or more of all
Accounts from such account debtor (or any Affiliate thereof)
are ineligible under clause (b) or (c) above; or
(e) the Account, when aggregated with all other
Accounts of such account debtor, exceeds twenty-five percent
(25%) in face value of all Accounts of a Borrower then
outstanding, to the extent of such excess; PROVIDED, HOWEVER,
that Accounts supported or secured by an irrevocable letter of
credit in form and substance satisfactory to the Agent, issued
by a financial institution satisfactory to the Agent, and duly
pledged to the Agent (together with sufficient documentation
to permit direct draws by the Agent) shall be excluded for
purposes of such calculation; or
(f) the account debtor for the Account is a creditor
of a Borrower, has or has asserted a right of setoff, has
disputed its liability or made any claim with respect to the
Account or any other Account which has not been resolved, to
the extent of the amount owed by such Borrower to the account
debtor, the amount of such actual or asserted right of setoff,
or the amount of such dispute or claim, as the case may be; or
(g) the account debtor is (or its assets are) the
subject of an Insolvency Event or, in the reasonable judgment
of the Agent, likely to become subject to an Insolvency Event;
or
(h) the sale is to an account debtor outside of the
United States, unless (i) the Account is supported by an
irrevocable letter of credit issued or confirmed by a United
States bank satisfactory to the Agent in form and substance
satisfactory to the Agent and assigned to and directly
drawable by the Agent or (ii) the Account is supported by an
irrevocable letter of credit in form and substance
satisfactory to the
-17-
Agent which provides for payment directly into a bank
account controlled by the Agent and is issued by a
financial institution satisfactory to the Agent, does not
exceed $250,000 and when combined with all other such
Accounts does not exceed $1,000,000 in the aggregate, (iii)
the Account is denominated in Dollars, payable in the
United States and the sale giving rise to the Account is to
an account debtor in Canada and the amount of such Account
or the total of all similar Accounts does not exceed
$3,000,000 or (iv) the Account is covered by a credit
insurance policy in form and substance, and issued by an
insurer, satisfactory to the Agent; or
(i) the sale to the account debtor is on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval or consignment basis or made pursuant to any other
written agreement providing for repurchase or return; or
(j) the Agent determines in its Permitted Discretion
that collection of such Account is uncertain or the Account
may not be paid; or
(k) the goods giving rise to such Account have not
been shipped and delivered to and accepted by the account
debtor, the services giving rise to such Account have not been
performed and accepted by the account debtor or the Account
otherwise does not represent a final sale; or
(l) the Account does not comply with all Requirements
of Law, including, without limitation, the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board of Governors of the Federal Reserve
System; or
(m) the Agent for the ratable benefit of the Lenders
does not have a valid and perfected first priority Lien (other
than Liens permitted under the Credit Documents) on such
Account or the Account does not otherwise conform to the
representations and warranties contained in this Credit
Agreement or the other Credit Documents; or
(n) the account debtor is the United States of
America or any department, body, agency, authority or
instrumentality thereof, unless a Borrower duly assigns its
right to payment of such Account to the Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. xx.xx.
3727 et seq.), in form and substance satisfactory to the
Agent, and otherwise complies with such Act; or
-18-
(o) the Account is subject to any adverse security
deposit, progress payment or other similar advance made by or
for the benefit of the applicable account debtor; PROVIDED,
that such Accounts of Entoleter shall not be ineligible to the
extent that they are subject to adverse security deposits,
progress payments or other similar advances in an aggregate
amount not to exceed $250,000; or
(p) the account debtor with respect to the Account is
located in New Jersey, Minnesota or any other state imposing
conditions on the right of a creditor to collect accounts
receivable, unless the applicable 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 other appropriate report with the taxing
or other designated authorities of such state for the then
current year.
"ELIGIBLE ASSIGNEE" shall mean (i) a Lender or any
Affiliate thereof; (ii) a commercial bank having total assets
in excess of $1,000,000,000; (iii) a finance company,
insurance company, other financial institution or fund,
reasonably acceptable to the Agent, which is regularly engaged
in making, purchasing or investing in loans and having total
assets in excess of $1,000,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the
United States or any state thereof which has a net worth,
determined in accordance with GAAP, in excess of $500,000,000;
or (v) a finance company, insurance company, bank or other
financial institution reasonably acceptable to the Agent;
PROVIDED, HOWEVER, that neither a Credit Party nor an
Affiliate of a Credit Party shall qualify as an Eligible
Assignee under this definition.
"ELIGIBLE INVENTORY" means the aggregate amount of
Inventory of a Borrower deemed by the Agent in the exercise of
its Permitted Discretion to be eligible for inclusion in the
calculation of such Borrower's Borrowing Base; provided that
no Inventory acquired by a Borrower pursuant to a Permitted
Acquisition shall be included in such Borrower's Borrowing
Base until the Agent has completed its review of and due
diligence with respect to such Inventory and agreed to the
inclusion of such Inventory in such Borrower's Borrowing Base.
In determining the amount of Inventory to be included in a
Borrower's Borrowing Base, Inventory shall be valued at the
lower of cost or market on a FIFO or a specific identification
method
-19-
basis. Unless otherwise approved in writing by the Agent,
an item of Inventory shall not be included in Eligible
Inventory if:
(a) it is not owned solely by a Borrower or a
Borrower does not have good, valid and marketable title
thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by
a Borrower or in a contract warehouse, subject to a Collateral
Access Agreement executed by the mortgagee, lessor or the
contract warehouseman, as the case may be, and segregated or
otherwise separately identifiable from goods of others, if
any, stored on the premises; or
(d) it is not subject to a valid and perfected first
priority Lien (other than Liens permitted under the Credit
Documents) in favor of the Agent except, with respect to
Inventory stored at sites described in clause (c) above, for
Liens for unpaid rent or normal and customary warehousing
charges; or
(e) it consists of goods returned or rejected by a
Borrower's customers (other than first quality, unimpaired,
merchandisable and not special ordered goods) or goods in
transit to third parties (other than to warehouse sites
covered by a Collateral Access Agreement); or
(f) it is not first-quality finished goods, work in
process or raw materials, is obsolete or slow moving, or does
not otherwise conform to the representations and warranties
contained in the Credit Documents; or
(g) it was purchased by a Borrower in or as part of a
"bulk" transfer or sale of assets unless the seller thereof
and Borrower have complied with all applicable bulk sales or
bulk transfer laws or such Borrower has provided an indemnity
agreement satisfactory to the Agent; or
(h) it consists of supplies, catalysts or off-size
Inventory (if and to the extent that such inventory has not
been written down to the lower of its cost or market value);
or
(i) it is consigned Inventory.
"ENTOLETER" is defined in the Preamble to this
-20-
Credit Agreement.
"ENTOLETER ACCOUNTS BORROWING BASE" means, on any
day, an amount up to 85% of the outstanding Eligible Accounts
Receivable of Entoleter on such day.
"ENTOLETER BORROWING BASE" means, on any day, an
amount equal to the sum of (a) the Entoleter Accounts
Borrowing Base on such day and (b) the Entoleter Inventory
Borrowing Base on such day.
"ENTOLETER INVENTORY BORROWING BASE" means, on any
day, an amount up to (a) the sum of (i) 60% of the Eligible
Inventory of Entoleter consisting of uncut rolled steel, PLUS
(ii) 50% of the Eligible Inventory of Entoleter consisting of
raw materials other than rolled steel (cut or uncut) and spare
parts, PLUS (iii) 30% of the Eligible Inventory of Entoleter
consisting of spare parts.
"ENTOLETER LETTER OF CREDIT OBLIGATIONS" means the
sum of the aggregate undrawn amount of all Letters of Credit
outstanding for Entoleter's account, plus the aggregate amount
of all drawings under Letters of Credit issued for Entoleter's
account for which the Borrowers have not reimbursed the Agent,
plus the aggregate amount of all payments made by the Lenders
to the Agent for participations in Letters of Credit issued
for Entoleter's account for which the Borrowers have not
reimbursed the Lenders.
"ENTOLETER LINE OF CREDIT" means the aggregate
revolving line of credit extended by the Lenders to Entoleter
for Revolving Loans and Letters of Credit pursuant to and in
accordance with the terms of this Credit Agreement, in the
amount of $1,000,000 as such revolving line of credit may be
reduced from time to time in accordance with this Credit
Agreement.
"ENVIRONMENTAL INDEMNITY AGREEMENT" is defined in
Section 7.1(r)(v).
"ENVIRONMENTAL LAWS" means all federal, state and
local statutes, laws (including common or case law), rulings,
regulations or governmental, administrative or judicial orders
or interpretations applicable to the business or property of
the Credit Parties or any of their Subsidiaries relating to
pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including
without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of
-21-
Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials.
"EQUIPMENT" is defined in the Security Agreement.
"ERISA" means the Employee Retirement Income Security
Act of 1974, 29 U.S.C. xx.xx. 1000 et seq., amendments
thereto, successor statutes, and regulations or guidance
promulgated thereunder.
"ERISA AFFILIATE" means any entity required to be
aggregated with a Credit Party or any of its Subsidiaries
under Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
"EQUITY PROCEEDS AMOUNT" shall initially be zero,
which amount shall be (a) INCREASED at the time of receipt by
the Guarantor of Net Cash Proceeds from the issuance of any
equity securities after the Closing Date by the amount of such
Net Cash Proceeds, (b) REDUCED at the time any Capital
Expenditure is made pursuant to Section 7.2(r)(ii) by the
amount of such Capital Expenditure, and (c) REDUCED at the
time any prepayment of the SDW Subordinated Note is made in
accordance with Section 2.9(d) by the amount of such
prepayment.
"EURODOLLAR LENDING OFFICE" means, with respect to
any Lender, the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name on Schedule 1,
as such Schedule may be amended from time to time (or, if no
such office is specified, its Domestic Lending Office), or
such other office or Affiliate of such Lender as such Lender
may from time to time specify in writing to the Borrowers and
the Agent.
"EURODOLLAR RATE" means, with respect to the Interest
Period for each Eurodollar Rate Loan comprising part of the
same Borrowing, the reserve adjusted rate PER ANNUM equal to
the 30-day London Interbank Offered Rate (in the case of a
30-day Interest Period), the 60-day London Interbank Offered
Rate (in the case of a 60-day Interest Period) and the 90-day
London Interbank Offered Rate (in the case of a 90 day
Interest Period) that appears in the "Money Rates" section of
THE WALL STREET JOURNAL on the first day of such Interest
Period; PROVIDED, HOWEVER, that if THE WALL STREET JOURNAL no
longer publishes such London Interbank Offered Rate, reference
shall be made to the Reuters Screen ISDA Page for such London
Interbank
-22-
Offered Rate.
"EURODOLLAR RATE LOAN" means a Loan that bears
interest as provided in Section 4.2.
"EVENT OF DEFAULT" is defined in Section 8.1.
"EXISTING CREDIT AGREEMENT" means (a) the Credit
Agreement dated as of October 23, 1996 among the Borrowers,
the Guarantor, Central Products Company, the financial
institutions parties thereto, BT Commercial Corporation, as
agent, Transamerica Business Credit Corporation, as collateral
agent, and Bankers Trust Company, as issuing bank and (b) all
agreements, documents and instruments executed or delivered in
connection therewith, in each case as heretofore amended,
supplemented or otherwise modified.
"EXISTING INDEBTEDNESS" means the Indebtedness of the
Guarantor and its Restricted Subsidiaries existing on the date
of the initial Loan hereunder as set forth on Schedule 2.
"EXISTING LETTERS OF CREDIT" means the letters of
credit in an aggregate undrawn face amount of $542,079.70
which were issued under the Existing Credit Agreement and are
outstanding on the date hereof.
"EXPENSES" means all costs and expenses of the Agent
incurred in connection with the Credit Documents and the
transactions contemplated therein, including, without
limitation, (i) the costs of conducting record searches,
examining collateral, opening bank accounts and lockboxes,
depositing checks, receiving and transferring funds (including
charges for checks for which there are insufficient funds),
and other costs of administration and enforcement of the
rights of the Lenders under the Credit Documents, (ii) the
reasonable fees and expenses of legal counsel and paralegals
(including the allocated cost of internal counsel and
paralegals so long as not duplicative of outside counsel),
accountants, appraisers and other consultants, experts or
advisors retained by the Agent, (iii) fees and taxes in
connection with the filing of financing statements, and (iv)
the costs of preparing and recording Collateral Documents,
releases of Collateral, and waivers, amendments, and
terminations of any of the Credit Documents.
"EXPIRATION DATE" means the earlier of December 31,
2001 and the date of termination of the Commitments pursuant
to the terms hereof.
-23-
"FACING FEE" is defined in Section 4.4(a).
"FEDERAL FUNDS RATE" means, for any period, a
fluctuating interest rate per annum equal, for each day during
such period, to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is
a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal
Funds brokers of recognized standing selected by it.
"FEES" means, collectively, the Unused Line Fee, the
Agent Fee, the Closing Fee, Letter of Credit Fees, the Issuing
Bank Fees and the Facing Fee.
"FINANCIAL STATEMENTS" means the consolidated (and if
requested by the Agent, consolidating) balance sheets,
statements of operations, statements of cash flows and
statements of changes in shareholder's equity of a Person for
the period specified, prepared in accordance with GAAP and
consistent with prior practices.
"FOREIGN LENDER" means any Lender organized under the
laws of a jurisdiction outside of the United States.
"FUNDING BANK" is defined in Section 4.9.
"GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to
time.
"GOVERNING DOCUMENTS" means, as to any Person, the
certificate or articles of incorporation and by-laws or other
organizational or governing documents of such Person.
"GOVERNMENTAL AUTHORITY" means any nation or
government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"GUARANTOR" is defined in the Preamble to this
Agreement.
"GUARANTOR ACCOUNT" is defined in Section 7.2(p).
-24-
"GUARANTY" means the Guaranty, substantially in the
form of Exhibit H, made by the Guarantor in favor of the Agent
for the benefit of the Lenders, as amended, supplemented or
otherwise modified from time to time.
"HAZARDOUS MATERIALS" means any and all pollutants
and contaminants and any and all toxic, caustic, radioactive
or hazardous materials, substances or wastes that are
regulated under any Environmental Laws, including without
limitation, petroleum, its derivatives and by-products and any
other hydrocarbons.
"HIGHEST LAWFUL RATE" means, at any given time during
which any Obligations shall be outstanding hereunder, the
maximum non-usurious interest rate, if any, that at any time
or from time to time may be contracted for, taken, reserved,
charged or received on the Obligations, under the laws of the
State of New York (or the law of any other jurisdiction whose
laws may be mandatorily applicable notwithstanding other
provisions of this Credit Agreement and the other Credit
Documents), or under applicable federal laws which may
presently or hereafter be in effect and which allow a higher
maximum nonusurious interest rate than under New York (or such
other jurisdiction's) law, in any case after taking into
account, to the extent permitted by applicable law, any and
all relevant payments or charges under this Credit Agreement
and any other Credit Documents executed in connection
herewith, and any available exemptions, exceptions and
exclusions.
"INDEBTEDNESS" of any Person means (a) indebtedness
for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities incurred in
the ordinary course of business and payable in accordance with
customary practices), whether on open account or evidenced by
a note, bond, debenture or similar instrument, (b) obligations
under capital leases computed in accordance with GAAP, (c)
reimbursement obligations for letters of credit, banker's
acceptances or other credit accommodations, (d) liabilities
under any Interest Rate Agreement, (e) Contingent Obligations
and (f) obligations secured by any Lien on that Person's
property, even if that Person has not assumed such
obligations.
"INDEMNIFIED PARTY" is defined in Section 11.10(a).
-25-
"INDENTURE" means the Indenture dated as of October
23, 1996 among the Credit Parties and The Chase Manhattan
Bank, as Trustee, as amended, supplemented or otherwise
modified from time to time.
"INDENTURE BORROWING BASE" means, on any day, the
outstanding principal amount of Indebtedness permitted under
Section 4.09(b)(i) of the Indenture on such day.
"INDENTURE BORROWING BASE CERTIFICATE" is defined in
Section 7.1(b)(iii).
"INSOLVENCY EVENT" means, with respect to any Person,
the occurrence of any of the following: (a) such Person shall
be adjudicated insolvent or bankrupt, or shall generally fail
to pay or admit in writing its inability to pay its debts as
they become due, (b) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its
property, assets or business or to effect a plan or other
arrangement with its creditors, (c) such Person shall make a
general assignment for the benefit of its creditors, or
consent to or acquiesce in the appointment of a receiver,
trustee, custodian or liquidator for a substantial portion of
its property, assets or business, (d) such Person shall file a
voluntary petition under any bankruptcy, insolvency or similar
law, or (e) such Person, or a substantial portion of its
property, assets or business shall become the subject of an
involuntary proceeding or petition for its dissolution,
reorganization, or the appointment of a receiver, trustee,
custodian or liquidator or shall become subject to any writ,
judgment, warrant of attachment, execution or similar process.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the
Intellectual Property Security Agreement, substantially in the
form of Exhibit P, made by the Credit Parties in favor of the
Agent for the benefit of the Lenders, as amended, supplemented
or otherwise modified from time to time.
"INTERCOMPANY SUBORDINATED NOTE" means an
Intercompany Subordinated Note, substantially in the form of
Exhibit L and which incorporates the terms set forth on Annex
A thereto, made by one Credit Party in favor of another Credit
Party, as amended, supplemented or otherwise modified from
time to time.
"INTEREST EXPENSE" means the consolidated expense of
a Person for interest on Indebtedness, computed in
-26-
accordance with GAAP.
"INTEREST INCOME" means the consolidated income of a
Person from interest on the Central Proceeds, computed in
accordance with GAAP.
"INTEREST PERIOD" means for any Eurodollar Rate Loan
the period commencing on the date of such Borrowing and ending
on the 29th, 59th or 89th day thereafter, as selected by the
applicable Borrower; PROVIDED, HOWEVER, that (i) a Borrower
may not select any Interest Period that ends after the
Expiration Date; and (ii) whenever the last day of an Interest
Period would otherwise occur on a day other than a Business
Day, the last day of such Interest Period shall be extended to
occur on the next succeeding Business Day, except that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, then the last day
of such Interest Period shall occur on the next preceding
Business Day.
"INTEREST RATE AGREEMENT" means any interest rate
protection or hedge agreement, including, without limitation,
any interest rate future, option, swap and cap agreement
approved by the Majority Lenders.
"INTERNAL REVENUE CODE" means the Internal Revenue
Code of 1986, any amendments thereto, and any successor
statute thereto and regulations and guidance promulgated
thereunder.
"INTERNAL REVENUE SERVICE" or "IRS" means the United
States Internal Revenue Service and any successor agency.
"INVENTORY" is defined in the Security Agreement.
"INVESTMENT" means all expenditures made and all
liabilities incurred and assumed (including Contingent
Obligations) for or in connection with acquisitions, loans,
advances, capital contributions or transfers of property to a
Person. In determining the aggregate amount of Investments
outstanding at any particular time, (a) a guaranty shall be
valued at not less than the principal amount outstanding of
the obligation guaranteed, or if less, the maximum stated
amount of such guaranty; (b) returns of capital (but only by
repurchase, redemption, retirement, repayment, liquidating
dividend or liquidating distribution) shall be deducted; (c)
earnings, whether as dividends, interest or otherwise, shall
not be deducted; and (d) decreases in the market value of such
Investments
-27-
shall not be deducted unless such decreases are computed in
accordance with GAAP.
"ISSUING BANK FEES" is defined in Section 4.4(b).
"IVEX SALE" means the collective reference to (a) the
sale by Coating of the inventory, equipment, customer list and
outstanding contracts relating solely to Coating's dry gum,
non-postage conventional and instantaneous heat-sealed gummed
coating products business, excluding all assets relating to
business with Helisys, Inc., and (b) the grant by Coating of a
license to use all applicable technology, trade secrets and
intellectual property relating to the products described in
clause (a) above.
"LENDER" is defined in the Preamble to this Credit
Agreement.
"LENDER ADVANCES" is defined in Section 2.2.
"LETTER OF CREDIT AGREEMENT" means the collective
reference to any and all agreements from time to time entered
into by the Agent and a bank or financial institution (each,
an "issuing bank") pursuant to which the Agent causes such
issuing bank to issue Letters of Credit for the account or
benefit of a Borrower in accordance with the terms of his
Agreement.
"LETTER OF CREDIT FEE" is defined in Section 4.4(a).
"LETTER OF CREDIT OBLIGATIONS" means, without
duplication, the total of the SCM Letter of Credit
Obligations, the Coating Letter of Credit Obligations and the
Entoleter Letter of Credit Obligations.
"LETTER OF CREDIT RELATED DOCUMENTS" is defined in
Section 3.8.
"LETTER OF CREDIT REQUEST" is defined in Section 3.4.
"LETTERS OF CREDIT" means all letters of credit
issued for the account of a Borrower pursuant to Article III
of this Credit Agreement and all amendments, renewals,
extensions or replacements thereof.
"LIEN" means any lien, claim, charge, pledge,
security interest, assignment, hypothecation, deed of trust,
mortgage, lease, conditional sale, retention of title, or
other preferential arrangement having
-28-
substantially the same economic effect as any of the
foregoing, whether voluntary or imposed by law.
"LINE OF CREDIT" means the aggregate revolving line
of credit extended by the Lenders to the Borrowers for
Revolving Loans and Letters of Credit pursuant to and in
accordance with the terms of this Credit Agreement, in the
amount of $40,000,000, as such revolving line of credit may be
reduced from time to time in accordance with this Credit
Agreement.
"LOAN ACCOUNT" is defined in Section 2.10.
"LOANS" means the Revolving Loans made from time to
time hereunder.
"LOCKBOX AGREEMENTS" is defined in Section 2.12.
"LOCKBOX BANKS" is defined in Section 2.12.
"LOCKBOXES" is defined in Section 2.12.
"MAJORITY LENDERS" means those Lenders owed or
holding in the aggregate 51% or more of the total Commitments
or if the Commitments are terminated, 51% or more of the
Revolving Loans or Letter of Credit Obligations then
outstanding.
"MATERIAL ADVERSE EFFECT" means (i) a material
adverse effect on the business, prospects, operations, results
of operations, assets, liabilities or condition (financial or
otherwise) of the Guarantor and its Restricted Subsidiaries,
taken as a whole, (ii) the impairment of any Credit Party's
ability to perform its obligations under the Credit Documents
to which it is a party or the material impairment of the
ability of the Agent or the Lenders to enforce the Obligations
or realize upon the Collateral, or (iii) a material adverse
effect on the value of the Collateral or the amount which the
Agent or the Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement)
in the liquidation of such Collateral.
"MATERIAL CONTRACT" means any contract or other
arrangement to which a Credit Party or any of its Subsidiaries
is a party (other than the Credit Documents) for which breach,
nonperformance, cancellation or failure to renew could have a
Material Adverse Effect. Material Contract shall include the
Tax Sharing Agreement and the Overhead Allocation Agreement.
-29-
"MORTGAGED PROPERTIES" means the collective reference
to parcels of real property located at (a) 000 Xxxx Xxxxx
Xxxxxx, Xxxx, Xxxx 00000-0000, (b) 00 Xxxx Xxxx Xxxxx, Xxxx,
Xxxx 00000 and (c) 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx 00000.
"MORTGAGE" is defined in Section 7.1(r)(i).
"MULTIEMPLOYER PLAN" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which any Credit
Party, any of its Subsidiaries or any ERISA Affiliate has
contributed within the past six years or with respect to which
any Credit Party or any of its Subsidiaries may incur any
liability.
"NET CASH PROCEEDS" means, with respect to any Asset
Sale or issuance of any equity securities by a Credit Party,
the aggregate amount of cash received from time to time by or
on behalf of such Credit Party in connection with such
transaction after deducting therefrom only (a) reasonable and
customary brokerage commissions, underwriting fees and
discounts, legal fees, finder's fees and other similar fees
and commissions, (b) the amount of taxes payable in connection
with or as a result of such transaction, and (c) in the case
of any Asset Sale (other than the Central Sale or the sale of
stock in any other Borrower), the amount of any Indebtedness
secured by a Lien on such asset that, by the terms of such
transaction, is required to be repaid upon such disposition.
"NET DEBT" means Debt (other than the Senior Notes)
and Net Senior Note Indebtedness.
"NET DEBT TO ADJUSTED EBITDA RATIO" means at any date
of determination, the ratio of Net Debt as of the last day of
the most recently ended fiscal quarter to Adjusted EBITDA for
the most recently ended four fiscal quarters.
"NET INCOME" means, for any period, the net income of
a Person, as reflected on the Financial Statements of such
Person for such period.
"NET SENIOR NOTE INDEBTEDNESS" means, at any date,
the outstanding principal amount of the Senior Notes as
reduced by the amount of the Senior Notes redeemed with the
Central Proceeds through such date minus the cash balances on
deposit in the Designated Accounts on such date.
"NOTICE OF BORROWING" is defined in Section
-30-
2.2(a).
"NOTICE OF CONTINUATION" is defined in Section
4.8(a).
"NOTICE OF CONVERSION" is defined in Section 4.8(b).
"OBLIGATIONS" means the unpaid principal and interest
hereunder (including interest accruing on or after the
occurrence of an Insolvency Event, whether or not an allowed
claim), reimbursement obligations under Letters of Credit,
Fees, Expenses and all other obligations and liabilities of
the Guarantor or any of the Borrowers to the Agent, or to the
Lenders under this Credit Agreement, the Revolving Notes or
any other Credit Document.
"OTHER TAXES" is defined in Section 4.10(b).
"OVERHEAD ALLOCATION AGREEMENT" means the Overhead
Allocation Agreement among the Guarantor and its Restricted
Subsidiaries dated October 23, 1996.
"PBGC" means the Pension Benefit Guaranty Corporation
and any Person succeeding to the functions thereof.
"PENDING BORROWINGS" means, with respect to a
Borrower, prospective Borrowings by such Borrower for which a
Notice of Borrowing has been delivered but for which Revolving
Loans have not been advanced.
"PERMITTED ACQUISITIONS" means an Acquisition which:
(i) would not and does not contravene the
provisions of Sections 7.2(f) and (i), the SDW
Subordinated Note or any of the Senior Note
Documents;
(ii) is not an Acquisition of capital
stock or assets (unless such assets are principally
located in the United States) of a corporation
incorporated outside of the United States or an
Acquisition which is principally of assets located
outside of the United States; and
(iii) involves an Investment by or through
the Guarantor or a Borrower;
PROVIDED that (A) if capital stock of a Person is
issued or otherwise acquired by a Borrower or the
-31-
Guarantor in connection with such Investment, such Person
promptly becomes a Credit Party, guarantees the Obligations
and grants the Agent liens and security interests on all of
its assets, (B) if assets (other than capital stock) are
acquired in connection with such Acquisition, the Agent is
granted perfected, first priority liens and security
interests on all of such assets, (C) all documentation
granting the Agent a guaranty or a security interest shall
be in form and substance satisfactory to the Agent, (D) the
Credit Parties shall take, and shall cause each Subsidiary
to take, all such further actions and execute all such
further documents and instruments as the Agent reasonably
determines in its sole discretion to be necessary or
desirable to cause the execution, delivery and performance
of such documentation to be duly authorized and to perfect,
protect or enforce the security interests and Liens (and
the priority status thereof) granted to the Agent and (E)
the Agent shall receive such legal opinions and
certifications with respect to such Permitted Acquisition
(including, without limitation, as to the matters set forth
in clause (D) above) as the Agent shall reasonably request.
"PERMITTED DISCRETION" means the Agent's good faith
judgment based upon any factor which the Agent believes in
good faith: (i) will or could reasonably be expected to
materially adversely affect the value of any Collateral, the
enforceability or priority of the Agent's Liens thereon or the
amount which the Agent and the Lenders would be likely to
receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral;
(ii) suggests that any collateral report or financial
information delivered to the Agent by any Person on behalf of
a Credit Party is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of
a bankruptcy, reorganization or other insolvency proceeding
involving the Guarantor or any of its Subsidiaries or any of
the Collateral; or (iv) creates or reasonably could be
expected to create a Default or Event of Default. In
exercising such judgment, the Agent may consider such factors
already included in or tested by the definition of Eligible
Accounts Receivable or Eligible Inventory, as well as any of
the following factors: (i) changes in collection history and
dilution with respect to the Accounts, (ii) changes in demand
for, and pricing of, Inventory, (iii) changes in any
concentration of risk with respect to Accounts or Inventory,
and (iv) any other factors that change the credit risk of
lending to the Borrowers on the security of the Accounts or
-32-
Inventory. The burden of establishing lack of good faith shall
be on the Borrowers.
"PERMITTED HOLDERS" means and includes (a) Xxxxx
Xxxxxxx; each Affiliate of Xxxxx Xxxxxxx (or which was such
preceding the death of Xxxxx Xxxxxxx); Xxxxxxx X. Xxxxx; each
Affiliate of Xxxxxxx X. Xxxxx; Xxx X. Xxxxxxx, III; each
Affiliate of Xxx X. Xxxxxxx, III; each member of the immediate
family of each of the foregoing natural persons and any trust
or similar device created for the benefit of any one or more
of the foregoing and each Person which acquires a direct or
indirect beneficial ownership interest in shares of stock of
the Guarantor as an executor or administrator for or by way of
inheritance or bequest from one or more of the natural persons
described in the preceding clause (a) following the death of
such Person; and (b) each group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) which
is controlled by (with the term "controlled by" as used herein
to be determined in a manner consistent with the phrase
"controlled by" as used in the definition of Affiliate
contained herein) one or more of the Permitted Holders
described in the preceding clause (a), but only so long as the
respective such group to so controlled.
"PERMITTED LIENS" means such of the following as to
which no enforcement, collection, execution, levy or
foreclosure proceeding shall have been commenced and be
continuing: (a) Liens for taxes, assessments and governmental
charges not yet due and payable or which are being diligently
contested in good faith by a Credit Party or one of its
Subsidiaries by appropriate proceedings, provided that in any
such case an adequate reserve is being maintained by the
Credit Party or one of its Subsidiaries for the payment of the
same; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and
other similar Liens arising in the ordinary course of business
securing obligations that are not overdue and, in any case,
where the property subject thereto is not material to the
operations of the Person whose assets are subject to such Lien
or which are being diligently contested in good faith and by
appropriate proceedings and as to which appropriate reserves
are being maintained; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations, not
to exceed an aggregate of $200,000; and (d) easements, rights
of way and other encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in
amount and which
-33-
do not materially detract from the value of the property
subject thereto or materially interfere with the ordinary
conduct of the business of the Person whose property is
subject to such easement, right of way or encumbrance.
"PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity,
party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs
and assigns of each.
"PLAN" means any employee benefit plan, program or
arrangement maintained or contributed to by a Credit Party,
any of its Subsidiaries or any ERISA Affiliate or with respect
to which any of them may incur liability.
"PRIME LENDING RATE" means the higher of (a) the
highest prime, base or equivalent rate of interest publicly
announced from time to time by Citibank, N.A., Bank One,
Chicago, The First National Bank of Chicago and Bank of
America National Trust and Savings Association or any
successor to any of the foregoing banks (which may not be the
lowest rate of interest charged by such bank) and (b) the
published annualized rate for 90-day dealer commercial paper
that appears in the "Money Rates" section of THE WALL STREET
JOURNAL.
"PRIME RATE LOAN" means a Loan that bears interest as
provided in Section 4.1.
"PROHIBITED TRANSACTION" is defined in Section
6.1(r)(v).
"PROPORTIONATE SHARE" of a Lender means a fraction,
expressed as a decimal, obtained by dividing its Commitment by
the total Commitments of all the Lenders or, if the
Commitments are terminated, by dividing its then outstanding
Revolving Loans and/or Letter of Credit Obligations by the
aggregate Revolving Loans and/or Letter of Credit Obligations
then outstanding.
"PURCHASE AGREEMENTS" means the collective reference
to the Asset Purchase Agreement and the Stock Purchase
Agreement.
"PURCHASE DOCUMENTS" means the Purchase Agreements
and each other document, agreement and instrument executed in
connection therewith.
-34-
"PURCHASE MONEY LIENS" is defined in Section
7.2(b)(v).
"RATE OF EXCHANGE" means the rate at which the Agent
is able on the relevant date to purchase Dollars with other
currency and shall include any premiums and costs of exchange
payable in connection with the purchase of or conversion into
Dollars.
"REDUCED RATE" is defined in Section 4.10(e),
relating to backup withholding tax.
"REGISTER" is defined in Section 11.8(c).
"REPORTABLE EVENT" means any of the events described
in Section 4043 of ERISA and the regulations thereunder, other
than a reportable event for which the 30-day notice
requirement to the PBGC has been waived.
"REQUIRED LENDERS" means (a) if there are two Lenders
or less, those Lenders owed or holding in the aggregate more
than 75% of the total Commitments or if the Commitments are
terminated, more than 75% of the Revolving Loans or Letter of
Credit Obligations then outstanding or (b) if there are more
than two Lenders, the Majority Lenders.
"REQUIREMENT OF LAW" means (a) the Governing
Documents of a Person, (b) any law, treaty, rule or regulation
or determination of an arbitrator, court or other Governmental
Authority, or (c) any franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of
way, right or approval binding on a Person or any of its
property.
"RESTRICTED SUBSIDIARY" of any Person means any
Subsidiary of such Person which at the time of determination
is not an Unrestricted Subsidiary.
"RETIREE HEALTH PLAN" means an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA that
provides benefits to persons after termination of employment,
other than as required by Section 601 of ERISA.
"REVOLVING LOANS" is defined in Section 2.1(a).
"REVOLVING NOTE" means a promissory note of each
Borrower payable to the order of each Lender, substantially in
the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
-35-
"SCM" is defined in the Preamble to this Credit
Agreement.
"SCM ACCOUNTS BORROWING BASE" means, on any day, an
amount up to 85% of the outstanding Eligible Accounts
Receivable of SCM on such day.
"SCM BORROWING BASE" means, on any day, an amount
equal to the sum of (a) the SCM Accounts Borrowing Base on
such day and (b) the SCM Inventory Borrowing Base on such day.
"SCM INVENTORY BORROWING BASE" means, on any day, an
amount up to 65% of the Eligible Inventory of SCM on such day.
"SCM LETTER OF CREDIT OBLIGATIONS" means, the sum of
the aggregate undrawn amount of all Letters of Credit
outstanding for SCM's account, plus the aggregate amount of
all drawings under Letters of Credit issued for SCM's account
for which the Borrowers have not reimbursed the Agent, plus
the aggregate amount of all payments made by the Lenders to
the Agent for participations in Letters of Credit issued for
SCM's account for which the Borrowers have not reimbursed the
Lenders.
"SCM LINE OF CREDIT" means the aggregate revolving
line of credit extended by the Lenders to SCM for Revolving
Loans and Letters of Credit pursuant to and in accordance with
the terms of this Credit Agreement, in the amount of
$15,000,000, as such revolving line of credit may be reduced
from time to time in accordance with this Credit Agreement.
"SDW SUBORDINATED GUARANTY" means the subordinated
guaranty dated as of March 17, 1998 made by the Borrowers in
favor of S.D. Xxxxxx Company, as amended, supplemented or
otherwise modified from time to time in accordance with the
terms hereof.
"SDW SUBORDINATED NOTE" means the subordinated note
dated March 17, 1998 made by the Guarantor in favor of S.D.
Xxxxxx Company, as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"SECURITIES ACCOUNT" has the meaning specified in
Section 8-501 of the Code.
"SECURITY AGREEMENT" means the Security Agreement,
substantially in the form of Exhibit G, made by the Credit
Parties in favor of the Agent for the benefit of
-36-
the Lenders, as amended, supplemented or otherwise modified
from time to time.
"SENIOR NOTE DOCUMENTS" is defined in Section 5.1(g).
"SENIOR NOTE GUARANTY" means the Guaranty, dated
October 23, 1996, made by the Borrowers in favor of the Chase
Manhattan Bank, as Trustee, as amended, supplemented or
otherwise modified in accordance with the terms of this
Agreement and any Guaranty of the Senior Notes by any Credit
Party as permitted by the terms of this Agreement.
"SENIOR NOTES" means $115,000,000 aggregate principal
amount of the Guarantor's 10.75% Senior Secured Notes due 2006
issued pursuant to the Indenture.
"SETTLEMENT DATE" is defined in Section 2.6(a).
"SPECIFIED NET INCOME" means, in any fiscal period,
Net Income of a Person, minus Interest Income, plus or minus
(as the case may be) losses or gains from extraordinary items
and from sales of assets, other than the Central Sale, the
Electrical Tape Sale, other than asset sales resulting in a
loss or a gain of less than $100,000 and sales of Inventory in
the ordinary course of business, in each case to the extent
added or subtracted in determining such Person's Net Income.
"SPECIFIED PLAN WITHDRAWAL" means the complete
withdrawal by Electrical Tape from the Benefit Plan known as
the Laborer's International Union of North America Industrial
Pension Fund.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement dated as of April 9, 1999 between the Buyer and the
Guarantor, as amended, supplemented or otherwise modified from
time to time.
"SUBSIDIARY" means as to any Person, a corporation or
other entity in which that Person directly or indirectly owns
or controls the shares of stock or other ownership interests
having ordinary voting power to elect a majority of the board
of directors or appoint other managers of such corporation or
other entity. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Credit Agreement
shall refer to a Subsidiary or Subsidiaries of the Guarantor.
"TAXES" is defined in Section 4.10(a).
-37-
"TAX SHARING AGREEMENT" means the Tax Sharing
Agreement among the Guarantor and its Subsidiaries dated April
5, 1996.
"TAX TRANSFEREE" is defined in Section 4.10(a).
"TBCC" means Transamerica Business Credit
Corporation, in its individual capacity.
"TBCC ACCOUNT" is defined in Section 2.12.
"TERMINATION EVENT" means (i) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan; (ii) the
withdrawal of a Credit Party, any of its Subsidiaries or any
ERISA Affiliate from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section
4001(a)(2) of ERISA); (iii) the providing of notice of intent
to terminate a Benefit Plan in a distress termination (as
described in Section 4041(c) of ERISA); (iv) the institution
by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan; (v) any event or condition (a) which is
reasonably likely to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee
to administer, any Benefit Plan or Multiemployer Plan, or (b)
that is reasonably likely to result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of a Credit Party, any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan.
"TRUSTEE CERTIFICATIONS" is defined in Section
6.1(ah).
"TYPE" means, with respect to any Loan, whether such
Loan is a Eurodollar Rate Loan or a Prime Rate Loan.
"UNRESTRICTED SUBSIDIARY" means a Subsidiary of the
Guarantor (other than a Credit Party) that is designated an
Unrestricted Subsidiary by the Board of Directors of the
Guarantor in the manner provided below and any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the
Guarantor may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary but excluding any Credit
Party) to be an Unrestricted Subsidiary unless such Subsidiary
owns any capital stock of, or owns or holds any Lien on, any
property of the Guarantor or any of its Subsidiaries (other
than a Subsidiary of the Subsidiary to be
-38-
designated as an Unrestricted Subsidiary) PROVIDED that the
Guarantor certifies to the Agent that such designation
complies with 7.2(f)(x) and each Subsidiary to be so
designated and each of its Subsidiaries has not at the time
of designation, and does not thereafter, create, incur,
issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant
to which any lender has recourse to any of the assets of
the Guarantor or any of its Restricted Subsidiaries. The
Board of Directors of the Guarantor may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only
if immediately before and immediately after giving effect
to such designation, no Default or Event of Default shall
have occurred and be continuing and the Majority Lenders
approve such designation in writing. Any such designation
by the Board of Directors shall be evidenced to the Agent
by promptly sending to the Agent a copy of the resolution
giving effect to such designation and an officers'
certificate that such designation complied with the
foregoing provisions.
"UNUSED AVAILABILITY" means, at any time of
determination, the excess of (x) the lesser of the Borrowing
Base or the Line of Credit over (y) the sum of the unpaid
principal amount of the Loans outstanding, Pending Borrowings
and the Letter of Credit Obligations.
"UNUSED LINE FEE" is defined in Section 4.5(a).
"VOTING STOCK" with respect to any Person means all
classes of Capital Stock of such Person then outstanding and
normally entitled to vote in elections of directors of such
Person.
"YEAR 2000 COMPLIANT shall mean, with respect to any
Person, that (i) all software in the equipment used by and
material to the business, operations or financial condition of
such Person is able to interpret and manipulate data on and
involving all calendar dates correctly and without causing any
abnormal ending scenario, including dates in and after the
year 2000, and (ii) all equipment material to the business,
operations or financial condition of such Persons that
contains embedded microchips (including, without limitation,
all systems and equipment supplied by others or with which
such Person's information systems interface) will function
properly with respect to all dates in and after the year 2000.
-39-
SECTION .1 ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise defined or specified herein, all accounting terms used in this Credit
Agreement shall be construed in accordance with GAAP, applied on a basis
consistent in all material respects with the audited Financial Statements of the
Guarantor and its Restricted Subsidiaries delivered to the Agent on or before
the Closing Date. All accounting determinations for purposes of determining
compliance with Sections 7.2(r), (t) and (u) shall be made in accordance with
GAAP as in effect on the Closing Date and applied on a basis consistent in all
material respects with the audited Financial Statements of the Guarantor and its
Restricted Subsidiaries delivered to the Agent on or before the Closing Date.
The Financial Statements required to be delivered hereunder from and after the
Closing Date, and all financial records, shall be maintained in accordance with
GAAP. If GAAP shall change from the basis used in preparing the audited
Financial Statements of the Guarantor and its Restricted Subsidiaries delivered
to the Agent on or before the Closing Date, the certificates required to be
delivered pursuant to Section 7.1 demonstrating compliance with the covenants
contained herein shall include calculations setting forth the adjustments
necessary to demonstrate how the Guarantor and its Restricted Subsidiaries are
in compliance with the financial covenants based upon GAAP as in effect on the
Closing Date. All financial covenants hereunder shall be calculated without
giving effect to Central Products Company.
SECTION .2 OTHER TERMS; HEADINGS. Terms used herein that are
defined in the Uniform Commercial Code, in effect from time to time, in the
State of New York (the "CODE") shall have the meanings given in the Code. Each
of the words "hereof," "herein," and "hereunder" refer to this Credit Agreement
as a whole. An Event of Default shall "continue" or be "continuing" until such
Event of Default has been cured or waived in accordance with Section 11.11
hereof. References to Articles, Sections, Annexes, Schedules, and Exhibits are
internal references to this Credit Agreement, and to its attachments, unless
otherwise specified. The headings and the Table of Contents are for convenience
only and shall not affect the meaning or construction of any provision of this
Credit Agreement.
SECTION .3 COMPUTATION OF TIME PERIODS. In this Credit
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
-40-
ARTICLE I
REVOLVING LOANS
SECTION I.1 REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions set forth in
this Credit Agreement, on and after the Closing Date and to and excluding the
Expiration Date, each Lender severally agrees to make loans and advances
("REVOLVING LOANS") to the following Borrowers in an amount not to exceed at any
time its Proportionate Share of the following:
(i) TO COATING: an aggregate amount equal to the
lesser of (x) the Coating Line of Credit and (y) the Coating
Borrowing Base, minus in each case, the then outstanding
Coating Letter of Credit Obligations and the Pending
Borrowings of Coating; provided that no Revolving Loan or
Letter of Credit may be incurred if after giving effect
thereto an amount equal to fifty percent (50%) of the sum of
the Revolving Loans extended by the Lenders to Coating and
Coating Letter of Credit Obligations exceeds the Coating
Accounts Borrowing Base;
(ii) TO ENTOLETER: an aggregate amount equal to
the lesser of (x) the Entoleter Line of Credit and (y) the
Entoleter Borrowing Base, minus, in each case, the then
outstanding Entoleter Letter of Credit Obligations and the
Pending Borrowings of Entoleter; provided that no Revolving
Loan or Letter of Credit may be incurred if after giving
effect thereto an amount equal to forty-five percent (45%) of
the sum of the Revolving Loans extended by the Lenders to
Entoleter and Entoleter Letter of Credit Obligations exceeds
the Entoleter Accounts Borrowing Base; and
(iii) TO SCM: an aggregate amount equal to the
lesser of (x) the SCM Line of Credit and (y) the SCM Borrowing
Base, minus, in each case, the then outstanding SCM Letter of
Credit Obligations and the Pending Borrowings of SCM; provided
that no Revolving Loan or Letter of Credit may be incurred if
after giving effect thereto an amount equal to fifty percent
(50%) of the sum of the Revolving Loans extended by the
Lenders to SCM and SCM Letter of Credit Obligations exceeds
the SCM Accounts Borrowing Base.
(b) The Agent, at any time in the exercise of its
Permitted Discretion upon not less than ten (10) days' prior written notice to
the applicable Borrower, may (i) establish and
-41-
increase or decrease reserves against Eligible Accounts Receivable and
Eligible Inventory for any of the Borrowers, and (ii) impose additional
restrictions (or eliminate the same) to the standards of eligibility set
forth in the definitions of Eligible Accounts Receivable and Eligible
Inventory. The ten (10) day notice in this section shall not apply to a
determination by the Agent with respect to whether a specific Account, all
Accounts of an account debtor or any Inventory should be deemed ineligible.
Such determination may be made at any time by the Agent without notice in the
exercise of its Permitted Discretion. The Agent may, but shall not be
obligated to, rely on each Borrowing Base Certificate and any other schedules
or reports in determining the eligibility of Accounts and Inventory.
(c) Notwithstanding anything in this Credit Agreement
to the contrary, the Lenders shall not be obligated to make any Revolving Loans
to any Borrower if such requested Revolving Loan, when added to the aggregate
amount of Revolving Loans and all Letter of Credit Obligations then outstanding,
would cause the sum of the Revolving Credit Loans and the Letter of Credit
Obligations to exceed the lesser of (i) the Line of Credit and (ii) the
Borrowing Base then in effect.
(d) The outstanding principal amount of the Revolving
Loans, together with all accrued and unpaid interest thereon, shall be paid on
the Expiration Date.
SECTION I.2 BORROWING OF REVOLVING LOANS. It is contemplated
that Revolving Loans will be made available to the Borrowers by the Lenders
("LENDER ADVANCES") and, in the circumstances described in Section 2.2(b), from
the Agent acting on behalf of the Lenders ("AGENT ADVANCES"). The Revolving
Loans made by any Lender to any Borrower shall be evidenced by a Revolving Note
made by such Borrower payable to the order of such Lender, with appropriate
insertions as to the date and principal amount.
(a) LENDER ADVANCES OF REVOLVING LOANS. Subject to
the determination by the Agent and the Lenders that the conditions for borrowing
contained in Section 5.2 are satisfied, upon notice from a Borrower to the
Agent, substantially in the form of Exhibit C ("NOTICE OF BORROWING") received
by the Agent before 1:00 p.m. (New York City time) on a Business Day, Lender
Advances of Revolving Loans shall be made to such Borrower to the extent of each
Lender's Proportionate Share of the requested Borrowing. The Notice of Borrowing
shall specify whether the requested Borrowing is of Prime Rate Loans or
Eurodollar Rate Loans and, in the case of Eurodollar Rate Loans, the length of
the Interest Period therefor.
(b) AGENT ADVANCES OF REVOLVING LOANS. The
-42-
Agent is authorized by the Lenders, but is not obligated, to make Agent
Advances upon a Notice of Borrowing received by the Agent before 2:00 p.m.
(New York City time) on a Business Day. All Agent Advances shall be Prime
Rate Loans. Agent Advances will not at any time exceed the applicable amount
available for borrowing under Section 2.1(a). Agent Advances will be subject
to periodic settlement with the Lenders under Section 2.6. Agent Advances may
be made only in the following circumstances:
(i) For administrative convenience, the Agent
may, but is not obligated to, make Agent Advances in reliance
upon a Borrower's actual or deemed representations under
Section 5.2 that the conditions for borrowing are satisfied.
(ii) If the conditions for borrowing under Section
5.2 cannot be fulfilled, a Borrower shall in its Notice of
Borrowing or otherwise give immediate notice thereof to the
Agent, with a copy to each of the Lenders, and the Agent may,
but is not obligated to, continue to make Agent Advances for
twenty (20) Business Days from the date the Agent first
receives such notice, or until sooner instructed by the
Majority Lenders to cease.
SECTION I.3 DISBURSEMENT OF REVOLVING LOANS. The proceeds of
Revolving Loans shall be transmitted by the Agent (a) in the circumstances
described in Section 3.5, directly to the Agent and (b) in all other
circumstances, as requested by a Borrower in its Notice of Borrowing.
-43-
SECTION I.4 NOTICES OF BORROWING. Notices of Borrowing may be
given under this Section by telephone or facsimile transmission, and, if by
telephone, promptly confirmed by a writing. A Borrower shall specify in each
Notice of Borrowing whether the conditions for the requested borrowing are
satisfied. A Borrower may request one or more borrowings of Prime Rate Loans by
Notice of Borrowing given not later than 1:00 p.m. (New York City time) on the
same Business Day as the proposed Borrowing. Notice of Borrowing for Eurodollar
Rate Loans shall be given not later than 1:00 p.m. (New York City time) on the
third Business Day prior to the proposed Borrowing. Each Notice of Borrowing
shall, unless otherwise specifically provided herein, consist entirely of
Revolving Loans of the same Type and, if such Borrowing is to consist of
Eurodollar Rate Loans, shall be in an aggregate amount for all Lenders of not
less than $1,000,000 or an integral multiple of $100,000 in excess thereof. The
right of a Borrower to choose Eurodollar Rate Loans is subject to the provisions
of Section 4.8. Once given, a Notice of Borrowing is irrevocable by and binding
on the Borrower delivering such notice. Each Borrower shall provide to the Agent
a list, with specimen signatures, of officers authorized to request Revolving
Loans and Letters of Credit. The Agent is entitled to rely upon each such list
until it is replaced by the applicable Borrower.
SECTION I.5 SAME DAY SETTLEMENT OF LENDER ADVANCES. The Agent
shall give each Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing that requests Lender Advances of Revolving Loans. No later
than 2:00 p.m. (New York City time) on the date of receipt of the Notice of
Borrowing, each Lender shall make available to the Agent at the Agent's address
such Lender's Proportionate Share of such borrowing in immediately available
funds. Unless the Agent receives contrary written notice prior to the date of
any such borrowing of Revolving Loans, it is entitled to assume that each Lender
will make available its Proportionate Share of the borrowing and in reliance
upon that assumption, but without any obligation to do so, may advance such
Proportionate Share on behalf of such Lender.
SECTION I.6 PERIODIC SETTLEMENT OF AGENT ADVANCES AND
REPAYMENTS.
(a) THE SETTLEMENT DATE. The amount of each Lender's
Proportionate Share of Revolving Loans shall be computed weekly (or more
frequently in the Agent's discretion) and shall be adjusted upward or downward
based on all Revolving Loans (including Agent Advances) and repayments received
by the Agent as of 5:00 p.m. (New York City time) on the last Business Day of
the period specified by the Agent (such date, the "SETTLEMENT DATE").
-44-
(b) SUMMARY STATEMENTS; SETTLEMENTS OF PRINCIPAL. The
Agent shall deliver to each of the Lenders promptly after the Settlement Date a
summary statement of the amount of outstanding Revolving Loans (including Agent
Advances) to each of the Borrowers. As reflected on the summary statement: (i)
the Agent shall transfer to each Lender its Proportionate Share of repayments;
and (ii) each Lender shall transfer to the Agent, or the Agent shall transfer to
each Lender, such amounts as are necessary to insure that, after giving effect
to all such transfers, the amount of Revolving Loans made by each Lender shall
be equal to such Lender's Proportionate Share of the aggregate amount of
Revolving Loans outstanding as of such Settlement Date. If the summary statement
requires transfers to be made to the Agent by the Lenders and is received by the
Lenders prior to 12:00 Noon (New York City time) on a Business Day, such
transfers shall be made in immediately available funds no later than 3:00 p.m.
(New York City time) that day; and, if received after 12:00 Noon (New York City
time), then no later than 3:00 p.m. (New York City time) on the next Business
Day. The obligation of each Lender to transfer such funds is irrevocable,
unconditional and without recourse to or warranty by the Agent.
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES.
Interest on the Revolving Loans (including Agent Advances), shall be allocated
by the Agent to each Lender in accordance with the proportionate share of
Revolving Loans actually advanced by and repaid to each Lender, and shall accrue
from and including the date such Revolving Loans are so advanced and to but
excluding the date such Revolving Loans are either repaid or actually settled
under this Section. The amount of the Unused Line Fee shall be allocated by the
Agent to each Lender in accordance with that Lender's Proportionate Share. After
the end of each month, the Agent shall promptly, upon receipt from a Borrower,
distribute to each Lender its share of the interest and Unused Line Fee accrued
during such month. The Agent shall, upon receipt from a Borrower, distribute
interest on Eurodollar Rate Loans promptly after it is received from a Borrower.
-45-
SECTION I.7 SHARING OF PAYMENTS. If any Lender shall obtain
any payment pursuant to the terms of this Credit Agreement (whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise) on
account of the Loans made by it or its participation in Letters of Credit in
excess of its Proportionate Share of payments on account of the Loans or Letters
of Credit obtained by all the Lenders, such Lender shall forthwith purchase from
the other Lenders such participations in the Loans made by them or in their
participation in Letters of Credit as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered, and PROVIDED,
further that this Section shall not apply with respect to any fees which are
intended to be for the benefit of less than all of the Lenders. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all of its rights of payment (including the right of set-off) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrowers in the amount of such participation. Notwithstanding anything
contained herein to the contrary, the sharing provisions of this Section shall
not apply to any payments received by any Lender from or on behalf of the
Borrowers or the Agent that is not made pursuant to the express terms and
provisions of this Credit Agreement.
-46-
SECTION I.8 DEFAULTING LENDERS.
(a) A Lender who fails to pay the Agent its
Proportionate Share of any Revolving Loans (including Agent Advances) made
available by the Agent on such Lender's behalf, or who fails to pay any other
amount owing by it to the Agent, is a defaulting lender ("DEFAULTING LENDER").
The Agent may recover all such amounts owing by a Defaulting Lender on demand.
If the Defaulting Lender does not pay such amounts on the Agent's demand, the
Agent shall promptly notify the Borrowers and the Borrowers shall, jointly and
severally, pay such amounts within five (5) Business Days. In addition, the
Defaulting Lender or the Borrowers, jointly and severally, shall pay the Agent
interest on such amount for each day from the date it was made available by the
Agent to the Borrowers to the date it is recovered by the Agent at a rate PER
ANNUM equal to (x) the overnight Federal Funds Rate, if paid by the Defaulting
Lender, or (y) the then applicable rate of interest calculated under Section
4.1, if paid by the Borrowers; plus, in each case, the Expenses and losses, if
any, incurred as a result of the Defaulting Lender's failure to perform its
obligations.
(b) The failure of any Lender to fund its
Proportionate Share of any Revolving Loan (including Agent Advances) shall not
relieve any other Lender of its obligation to fund its Proportionate Share of
such Revolving Loan. Conversely, no Lender shall be responsible for the failure
of another Lender to fund such other Lender's Proportionate Share of a Revolving
Loan.
-47-
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by a Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in its
discretion, re-lend to the Borrowers the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to the Credit Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero (-0-). This
Section shall remain effective with respect to such Lender until (x) the
Defaulting Lender has paid all amounts required to be paid to the Agent
hereunder or (y) the Majority Lenders, the Agent and the Borrowers shall have
waived such Lender's default in writing. The operation of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by the Borrowers of their duties and
obligations hereunder.
SECTION I.9 MANDATORY AND VOLUNTARY PAYMENT; MANDATORY AND
VOLUNTARY REDUCTION OF COMMITMENTS.
(a) In no event shall the sum of the aggregate
outstanding principal balance of the Revolving Loans and all Letter of Credit
Obligations outstanding exceed the lesser of the Borrowing Base and the Line of
Credit at any time. Immediately upon the discovery by a Borrower that any of the
lending limits set forth in Sections 2.1(a) or this Section 2.9(a) has been
exceeded, an amount sufficient to reduce the outstanding balances to the
applicable maximum allowed amount shall become immediately due and payable.
(b) On the Expiration Date, the Commitment of each
Lender and the Line of Credit shall automatically reduce to zero and may not be
reinstated.
(c) The Borrowers may reduce or terminate the
Commitments on a PRO RATA basis as among the Lenders at any time and from time
to time in whole or in part; PROVIDED, HOWEVER, that each such reduction must be
in an aggregate amount for all Lenders of not less than $1,000,000 (and in
increments of $1,000,000 thereafter). Any reduction in the Commitments shall
reduce the Line of Credit on a dollar-for-dollar basis. If the Borrowers seek to
reduce the Commitments to an aggregate amount of less than $5,000,000, then the
Commitments shall be reduced to zero and this Credit Agreement shall be
terminated. Once reduced, no portion of the Commitments or the Line of Credit
may be reinstated.
(d) If any Credit Party shall receive any Net Cash
Proceeds from the consummation of any Asset Sale (other than
-48-
the Central Sale) or from the issuance of any equity securities, (i) 100% of
such Net Cash Proceeds shall be immediately paid to the Agent to be applied
to repay the outstanding Revolving Loans, which amounts may be reborrowed,
subject to the terms and conditions contained herein and (ii) 100% of such
Net Cash Proceeds from the consummation of such Asset Sale shall be applied
as a mandatory reduction of the Commitments and the Line of Credit, except to
the extent that, within 270 days of the date of such sale, such Net Cash
Proceeds have been used to make Capital Expenditures permitted under Section
7.2(r)(i) and the Agent has received a certificate from an Authorized Officer
certifying the same. Any Net Cash Proceeds from the Central Sale shall be
applied as follows: (i) 100% of such Net Cash Proceeds shall be immediately
applied in accordance with Section 5.1(o) and (ii) at least $60,000,000 of
such Net Cash Proceeds shall be applied as a mandatory reduction of the
Commitments and the Line of Credit, except to the extent that, within 270
days of the date of the Central Sale, (A) such Net Cash Proceeds have been
used (x) to make Capital Expenditures permitted under Section 7.2(r)(i), (y)
to make Investments permitted under Section 7.2(f)(ix) or (z) to prepay or
redeem the Senior Notes in accordance with Section 4.11 of the Indenture and
(B) the Agent has received a certificate from an Authorized Officer of the
Guarantor certifying the same, together with a legal opinion relating thereto
as the Agent shall reasonably request. Any reduction of the Commitments shall
reduce the Commitment of each Lender proportionately by its Proportionate
Share of the amount of such reduction. Any reduction of the Line of Credit
shall reduce the Coating Line of Credit by 60% of the amount of such
reduction, the Entoleter Line of Credit by 2.5% of the amount of such
reduction and the SCM Line of Credit by 37.5% of the amount of such
reduction. Notwithstanding the foregoing, if (i) a Credit Party receives Net
Cash Proceeds from the issuance of equity securities, (ii) after giving
effect thereto, Unused Availability shall be equal to or greater than
$15,000,000 and (iii) no Event of Default has occurred and is continuing,
then such Credit Party shall not be required to apply such Net Cash Proceeds
to repay the Revolving Loans to the extent that Unused Availability exceeds
$15,000,000 (it being understood that such Credit Party may apply such excess
to make mandatory prepayments of the SDW Subordinated Note in accordance with
Section 3.1 of the SDW Subordinated Note as in effect on March 17, 1998).
-49-
SECTION I.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
ACCOUNT. The Agent shall maintain an account on its books in the name of each
Borrower (each, a "LOAN ACCOUNT") in which a Borrower will be charged with all
loans and advances made by the Lenders to such Borrower or for such Borrower's
account, including the Revolving Loans, the Letter of Credit Obligations, the
Fees, the Expenses and any other Obligations. Each Borrower's Loan Account will
be credited with all amounts received by the Agent from such Borrower or for
such Borrower's account, including, as set forth below, all amounts received in
the applicable Collection Account from any Lockbox Bank. The Agent shall send
each Borrower a monthly statement reflecting the activity in its Loan Account.
Absent manifest error, each monthly statement shall be an account stated and
shall be final, conclusive and binding on the Borrowers.
SECTION I.11 PAYMENT PROCEDURES. The Borrowers hereby
authorize the Agent to charge the Loan Accounts with the amount of all interest,
Fees and Expenses and other payments to be made hereunder and under the other
Credit Documents. The Borrowers' obligations to the Agent and the Lenders with
respect to such payments shall be discharged by the Agent's charging the Loan
Accounts as provided herein.
SECTION I.12 COLLECTIONS. The Borrowers shall at all times
maintain separate lockboxes (the "LOCKBOXES") and shall instruct all account
debtors on their Accounts to remit all Collections to their respective
Lockboxes. The Borrowers shall enter into agreements with the Agent and
financial institutions selected by the Borrowers and acceptable to the Agent
(the "LOCKBOX BANKS") substantially in the form of Exhibit I (the "LOCKBOX
AGREEMENTS"), which among other things shall provide for the opening of an
account with such Lockbox Bank for the deposit of Collections (each, a
"COLLECTION ACCOUNT") and shall require the Agent's consent to its termination.
All Collections and other amounts received by a Borrower from any account
debtor, in addition to all other cash received from any other source, shall upon
receipt be deposited into a Collection Account maintained by such Borrower. Upon
the terms and subject to the conditions set forth in the Lockbox Agreements, all
available amounts held in each Collection Account maintained by a Borrower shall
be wired each Business Day into an account maintained by the Agent at The First
National Bank of Chicago, Account No. 0000000 (the "TBCC ACCOUNT"). Termination
of such arrangements shall also be subject to approval by the Agent. All
amounts, other than Collections, received by the Borrowers from any source shall
upon receipt be deposited into a second Collection Account maintained by the
Agent at a Lockbox Bank.
-50-
SECTION I.13 APPLICATION OF PAYMENTS. All available amounts
held in the TBCC Account with respect to a Borrower shall be distributed and
applied on a daily basis in the following order: FIRST, to the payment of any
Fees, Expenses or other Obligations then due and payable by such Borrower to the
Agent under any of the Credit Documents, including amounts advanced by the Agent
on behalf of the Lenders pursuant to Section 2.4 or 2.5; SECOND, to the ratable
payment of fees, Expenses or other Obligations then due and payable by such
Borrower to the Lenders under any of the Credit Documents other than those
Obligations specifically referred to in this Section 2.13; THIRD, to the ratable
payment of any interest then due and payable on the Loans to such Borrower;
FOURTH, to the ratable payment of principal of any Loans to such Borrower which
is then due and payable; and FIFTH, to cash collateralize Letters of Credit in
accordance with the provisions of Section 8.2(c). On any date after giving
effect to the payment of all amounts required to be paid pursuant to the
immediately preceding sentence by all Borrowers, to the extent there remain
available funds in the TBCC Account with respect to a Borrower, such funds may
be accessed by such Borrower and utilized by it for general corporate purposes
pursuant to the terms of this Agreement. Any payment received hereunder as a
distribution in any proceeding referred to in Section 8.1(g) shall, unless paid
with respect to amounts specifically owing to the Agent, be distributed and
applied by the Agent to the payment of the amounts due hereunder and under the
Notes ratably in accordance with such amounts (or, if a court of competent
jurisdiction shall otherwise specify, as specified by such court).
ARTICLE II
LETTERS OF CREDIT
SECTION II.1 ISSUANCE OF LETTERS OF CREDIT. Subject to the
terms and conditions of this Credit Agreement and in reliance upon the
representations and warranties of Borrowers set forth herein, the Agent shall
use its best efforts to cause a bank acceptable to the Agent to issue Letters of
Credit hereunder at the request of a Borrower and for its account, as more
specifically described below. The Agent shall not be obligated to cause to be
issued any Letter of Credit for the account of any Borrower on or after the
Expiration Date or if at the time of such requested issuance:
(a) The face amount of such Letter of Credit
requested by Coating, (i) when added to the Coating Letter of Credit Obligations
then outstanding, would cause the Coating Letter of Credit Obligations to exceed
$5,000,000 or (ii) when added to the aggregate amount of Revolving Loans to
Coating and
-51-
all Coating Letter of Credit Obligations then outstanding would cause the sum
of the Revolving Loans to Coating and the Coating Letter of Credit
Obligations to exceed the lesser of (x) the Coating Line of Credit and (y)
the Coating Borrowing Base then in effect; or
(b) The face amount of such Letter of Credit
requested by Entoleter, (i) when added to the Entoleter Letter of Credit
Obligations then outstanding, would cause the Entoleter Letter of Credit
Obligations to exceed $1,000,000 or (ii) when added to the aggregate amount of
Revolving Loans to Entoleter and all Entoleter Letter of Credit Obligations then
outstanding, would cause the sum of Revolving Loans to Entoleter and the
Entoleter Letter of Credit Obligations to exceed the lesser of (x) the Entoleter
Line of Credit and (y) the Entoleter Borrowing Base in effect; or
(c) The face amount of such Letter of Credit
requested by SCM, (i) when added to the SCM Letter of Credit Obligations then
outstanding, would cause the SCM Letter of Credit Obligations to exceed
$4,000,000 or (ii) when added to the aggregate amount of Revolving Loans to SCM
and all SCM Letter of Credit Obligations then outstanding would cause the sum of
the Revolving Loans to SCM and the SCM Letter of Credit Obligations to exceed
the lesser of (x) the SCM Line of Credit and (y) the SCM Borrowing Base then in
effect; or
(d) The face amount of such Letter of Credit, when
added to the aggregate amount of Revolving Loans and all Letter of Credit
Obligations then outstanding would cause the sum of the Revolving Loans and the
Letter of Credit Obligations to exceed the lesser of (i) the Line of Credit and
(ii) the Borrowing Base then in effect; or
(e) Any order, judgment or decree of any Governmental
Authority or arbitrator shall purport by its terms to enjoin or restrain any
issuing bank from issuing such Letter of Credit or any Requirement of Law
applicable to such issuing bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
such issuing bank shall prohibit, or request such issuing bank refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon such issuing bank with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which the issuing bank is not
otherwise compensated) not in effect as of the Closing Date, or any unreimbursed
loss, cost or expense which was not applicable, in effect or known to such
issuing bank as of the Closing Date and which such issuing bank deems in good
faith to be material to it; or
(f) A default of any Lender's obligations to fund
under Section 3.6 exists, or such Lender is a Defaulting Lender
-52-
unless the Agent has entered into satisfactory arrangements with the
Borrowers to eliminate the Agent's risk with respect to such Lender,
including cash collateralization of such Lender's Proportionate Share of the
Letter of Credit Obligations.
SECTION II.2 TERMS OF LETTERS OF CREDIT. The Letters of Credit
shall be in a form customarily caused to be issued by the Agent or in such other
form as has been approved by the Agent. At the time of issuance, the amount and
the terms and conditions of each Letter of Credit, and of any drafts or
acceptances thereunder, shall be subject to approval by the Agent and the
applicable Borrower. In no event may the term of any Letter of Credit issued
hereunder exceed 365/366 days (except that such Letters of Credit may provide
for annual renewal) and all Letters of Credit issued hereunder shall expire no
later than the date that is five (5) Business Days prior to the Expiration Date.
Any Letter of Credit containing an automatic renewal provision shall also
contain a provision pursuant to which, notwithstanding any other provisions
thereof, it shall not be renewable on or after the Expiration Date and it shall
expire no later than the date that is five (5) Business Days prior to the
Expiration Date. Notwithstanding the foregoing, a Letter of Credit may have an
expiry date subsequent to the Expiration Date if such Letter of Credit is cash
collateralized in a manner satisfactory to the Agent and in an amount equal to
105% of the aggregate face amount thereof or is supported by another letter of
credit which is issued by a financial institution reasonably acceptable to the
Agent and is in a form and contains terms and conditions reasonably satisfactory
to the Agent.
SECTION II.3 LENDERS' PARTICIPATION. Immediately upon issuance
or amendment of any Letter of Credit in accordance with the procedures set forth
in Sections 3.1 and 3.2, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Agent, without recourse or
warranty, an undivided interest and participation to the extent of such Lender's
Proportionate Share of the liability and obligations under and with respect to
such Letter of Credit and the Letter of Credit Agreements (including, without
limitation, all obligations of the Borrowers with respect thereto, other than
amounts owing to the Agent consisting of Issuing Bank Fees) and any security
therefor or guaranty pertaining thereto.
-53-
SECTION II.4 NOTICE OF ISSUANCE. (i) Whenever a Borrower
desires the issuance of a Letter of Credit, such Borrower shall deliver to the
Agent a written notice no later than 1:00 p.m. New York City time at least ten
(10) Business Days (or such shorter period as may be agreed to by the Agent) in
advance of the proposed date of issuance of a letter of credit request in
substantially the form attached as Exhibit F (a "LETTER OF CREDIT REQUEST"). The
transmittal by a Borrower of each Letter of Credit Request shall be deemed to be
a representation and warranty by such Borrower that the Letter of Credit may be
issued in accordance with and will not violate any of the requirements of
Sections 3.1 and 3.2. Prior to the date of issuance of each Letter of Credit,
the requesting Borrower shall provide to the Agent a precise description of the
documents and the text of any certificate to be presented by the beneficiary of
such Letter of Credit which if presented by such beneficiary on or prior to the
expiration date of the Letter of Credit would require the issuing bank to make
payment under the Letter of Credit. The Agent, in its reasonable judgment, may
require changes in any such documents and certificates. No Letter of Credit
shall require payment against a conforming draft to be made thereunder prior to
the second Business Day after the date on which such draft is presented. A
Letter of Credit Request may be given in writing or electronically and, if
requested by the Agent, with prompt confirmation in writing. Any electronic
Letter of Credit Request shall be deemed to have been prepared by, or under the
supervision of the chief financial officer or other Authorized Officer of the
requesting Borrower.
-54-
SECTION II.5 PAYMENT OF AMOUNT DRAWN UNDER LETTERS OF CREDIT.
In the event of any request for drawing under any Letter of Credit by the
beneficiary thereof, (i) the Borrower on whose behalf such Letter of Credit was
issued shall be deemed to have timely given a Notice of Borrowing to the Agent
to make Revolving Loans to such Borrower on the date on which such drawing is
honored in an amount equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the applicable conditions specified in Article V and
the other terms and conditions of Borrowings contained herein, the Lenders
shall, on the date of such drawing, make Revolving Loans in the amount of such
drawing, the proceeds of which shall be applied directly by the Agent to
reimburse the issuing bank for the amount of such drawing or payment. The Agent
shall give such Borrower notice of such Revolving Loans. If for any reason,
proceeds of Revolving Loans are not received by the Agent on such date in an
amount equal to the amount of such drawing, the Borrowers shall, jointly and
severally, be obligated to and shall reimburse the Agent, on the Business Day
immediately following the date of such drawing, in an amount in same day funds
equal to the excess of the amount of such drawing over the amount of such
Revolving Loans, if any, which are so received, plus accrued interest on such
amount at the rate set forth in Section 4.1.
SECTION II.6 PAYMENT BY LENDERS. In the event that the
Borrowers do not reimburse Agent for the amount of any drawing pursuant to
Section 3.5, the Agent shall promptly notify each Lender of the unreimbursed
amount of such drawing and of such Lender's respective participation therein.
Each Lender shall make available to the Agent an amount equal to its respective
participation in same day funds, at the office of the Agent specified in such
notice, not later than 1:00 p.m. (New York City time) on the first Business Day
after the date notified by the Agent. In the event that any Lender fails to make
available to the Agent the amount of such Lender's participation in such Letter
of Credit as provided in this Section 3.6, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Federal Funds Rate for three (3) Business Days and thereafter at the Prime
Lending Rate. The Agent shall distribute to each Lender which has paid all
amounts payable by it under this Section 3.6 with respect to any Letter of
Credit such Lender's Proportionate Share of all payments subsequently received
by the Agent from the Borrowers in reimbursement of drawings honored under such
Letter of Credit when such payments are received.
-55-
SECTION II.7 NATURE OF AGENT'S DUTIES. As among the Borrowers,
the Agent and each Lender, each of the Borrowers assumes all risks of the acts
and omissions of the Agent and the issuing bank or misuse of the Letters of
Credit by the respective beneficiaries of such Letters of Credit. In furtherance
and not in limitation of the foregoing, neither the Agent nor any of the Lenders
shall be responsible (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
such Letters of Credit even if it should in fact prove to be in any or 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 any such Letter of Credit, 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 any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not they be in cipher, (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 drawing
under any such Letter of Credit, or of the proceeds thereof, (vii) for the
misapplication by the beneficiary of any such Letter of Credit, of the proceeds
of any drawing honored under such Letter of Credit, and (viii) for any
consequences arising from causes beyond the control of the issuing bank, the
Agent or the Lenders. None of the above shall affect, impair, or prevent the
vesting of any of the Agent's rights or powers hereunder. Any action taken or
omitted to be taken by the Agent under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create any liability of the Agent to the Borrower or any
Lender.
-56-
SECTION II.8 OBLIGATIONS ABSOLUTE. The joint and several
obligations of the Borrowers to reimburse the Agent for drawings honored under
the Letters of Credit and the obligations of the Lenders under Section 3.6 shall
be unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Credit Agreement under all circumstances including, without
limitation, the following circumstances: (i) any lack of validity or
enforceability of this Credit Agreement, any Letter of Credit, any Letter of
Credit Agreement or any other agreement or instrument relating thereto (the
"LETTER OF CREDIT RELATED DOCUMENTS"); (ii) the existence of any claim, setoff,
defense or other right which the Borrowers or any Affiliate of the Borrowers may
have at any time against a beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such beneficiary or transferee may be
acting), the Agent, any Lender or any other Person, whether in connection with
this Credit Agreement, the other Credit Documents, the transactions contemplated
herein or therein or any unrelated transaction; (iii) any draft, demand,
certificate or any other documents presented under any 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) the surrender
or impairment of any security for the performance or observance of any of the
terms of any of the Credit Documents; (v) payment by the issuing bank under any
Letter of Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit; (vi)
failure of any drawing under a Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of any drawing; or (vii) the
fact that a Default or Event of Default shall have occurred and be continuing;
PROVIDED, HOWEVER, that the Borrowers shall have no obligation to reimburse the
Issuing Bank in the event of the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under the Letter of Credit
comply with the terms of such Letter of Credit, as determined by a court of
competent jurisdiction in a final, nonappealable judgment.
-57-
ARTICLE III
INTEREST, FEES AND EXPENSES
SECTION III.1 INTEREST ON PRIME RATE LOANS. The Borrowers
shall, jointly and severally, pay to the Agent for the benefit of the Lenders
interest on Prime Rate Loans two (2) Business Days after the last Business Day
of each month, calculated monthly in arrears at an interest rate per annum equal
to the Prime Lending Rate plus the Applicable Margin on the average net balances
owing to the Agent and the Lenders at the close of business each day during such
month. The rate under this Section 4.1 shall change each day as the Prime
Lending Rate changes.
SECTION III.2 INTEREST ON EURODOLLAR RATE LOANS. The Borrowers
shall, jointly and severally, pay to the Agent for the benefit of the Lenders
interest on each Eurodollar Rate Loan two Business Days after the last Business
Day of each month, calculated monthly in arrears at an interest rate per annum
equal during the Interest Period for such Eurodollar Loan to the Adjusted
Eurodollar Rate for such Interest Period plus the Applicable Margin. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
SECTION III.3 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT
OF DEFAULT. From the date of occurrence of any Event of Default until the
earlier of the date upon which (i) all Obligations shall have been paid and
satisfied in full or (ii) such Event of Default shall have been waived or cured,
interest on the Loans, and Letter of Credit Fees on Letter of Credit
Obligations, shall each be payable on demand at a rate per annum equal to, with
respect to the Loans, the Prime Lending Rate or the Adjusted Eurodollar Rate, as
the case may be, plus two percent (2%) above the Applicable Margin at Level III,
and with respect to the Letter of Credit Obligations, the rate in effect under
the first sentence of Section 4.4(a), plus two percent (2%).
-58-
SECTION III.4 LETTER OF CREDIT FEES.
(a) The Borrowers shall, jointly and severally, pay
to the Agent for the ratable benefit of the Lenders two (2) Business Days after
the last Business Day of each month a fee (the "LETTER OF CREDIT FEE"), in an
amount per annum equal to the Applicable Margin with respect to Letters of
Credit of the daily average amount of Letter of Credit Obligations outstanding
during the immediately preceding month. In addition, the Borrowers shall,
jointly and severally, pay the Agent, for its own benefit, two (2) Business Days
after the last Business Day of each month a letter of credit facing fee (the
"FACING FEE") in an amount equal to .25% per annum on the undrawn amount of each
Letter of Credit.
(b) The Borrowers shall, jointly and severally, pay
to the Agent, on demand, the customary charges, fees and expenses charged to the
Agent by any issuer of a Letter of Credit (without duplication of the Letter of
Credit Fee) for the issuance, administration and negotiation of each Letter of
Credit (the "ISSUING BANK FEES"). Each determination by the Agent of Letter of
Credit Fees and other fees, charges and expenses under this Section shall be
conclusive and binding for all purposes, absent manifest error.
SECTION III.5 UNUSED LINE FEE; CLOSING FEE; AGENT FEE; EARLY
TERMINATION FEE.
(a) Each Borrower shall, jointly and severally, pay
to the Agent for the ratable benefit of the Lenders two (2) Business Days after
the last Business Day of each month and on the Expiration Date a fee equal to
0.375% per annum calculated monthly in arrears on the average unused portion of
the total Line of Credit at the close of business each day during such month or
such period prior to the Expiration Date (the "UNUSED LINE FEE").
(b) The Borrowers shall, jointly and severally, pay
to the Agent for the benefit of the Lenders, on the effectiveness of this Credit
Agreement, a fee (the "CLOSING FEE") in the amount of $75,000. The Agent shall
remit $50,000 of the Closing Fee to The CIT Group/Business Credit Inc. and
$25,000 of the Closing Fee to TBCC.
(c) The Borrowers shall, jointly and severally, pay
to the Agent solely for the account of the Agent, in advance on the first
Business Day of each month, a fee (the "AGENT FEE") in an amount equal to $7,500
per month.
(d) The Borrowers shall have the right to terminate
this Agreement at any time on 120 days' prior written notice to the Agent,
PROVIDED that on the date of such termination all Obligations, including all
interest and fees
-59-
payable to the date of such termination, shall be paid in full. If the
Borrowers give such notice to terminate or pay the Loans in full or
substantially in full, including as a result of the Lenders terminating the
Commitments pursuant to Section 8.2(b), the Borrowers shall, jointly and
severally, pay a fee to the Agent for the ratable benefit of the Lenders in
an amount equal to $100,000 if such termination occurs prior to the second
anniversary of the Closing Date.
SECTION III.6 OTHER FEES AND EXPENSES. The Borrowers agree,
jointly and severally, to pay fees to the Agent on behalf of the Lenders in the
amounts and at the times set forth herein and shall be obligated to reimburse
the Agent's Expenses promptly upon demand.
SECTION III.7 CALCULATIONS. All calculations of (i) interest
hereunder and (ii) Fees, including, without limitation, Unused Line Fees and
Letter of Credit Fees, shall be made by the Agent, on the basis of a year of 360
days for the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such interest or Fees
are payable. Each determination by the Agent of an interest rate, Fee or other
payment hereunder shall be conclusive and binding for all purposes, absent
manifest error.
-60-
SECTION III.8 SPECIAL PROVISIONS RELATING TO EURODOLLAR RATE
LOANS.
(a) CONTINUATION. With respect to any Borrowing
consisting of Eurodollar Rate Loans, the Borrowers may (so long as no Default or
Event of Default has occurred and is continuing), subject to the provisions of
Section 4.8(c), elect to maintain such Borrowing or any portion thereof as
consisting of Eurodollar Rate Loans by selecting a new Interest Period for such
Borrowing, which new Interest Period shall commence on the last day of the
immediately preceding Interest Period. Each selection of a new Interest Period
shall be made by notice given not later than 2:00 p.m. (New York City time) on
the third Business Day prior to the date of any such continuation relating to
Eurodollar Rate Loans, by the applicable Borrower to the Agent. Such notice by a
Borrower of a continuation (a "NOTICE OF CONTINUATION") shall be by telephone or
facsimile transmission, and if by telephone, promptly confirmed in writing
substantially in the form of Exhibit D, in each case specifying (i) the date of
such continuation, (ii) the Type of Loans subject to such continuation, (iii)
the aggregate amount of Loans subject to such continuation and (iv) the length
of the Interest Period. The Borrowers may elect to maintain more than one
Borrowing consisting of Eurodollar Rate Loans by combining such Borrowings into
one Borrowing and selecting a new Interest Period pursuant to this Section
4.8(a). If the Borrowers shall fail to select a new Interest Period for any
Borrowing consisting of Eurodollar Rate Loans in accordance with this Section,
such Revolving Loans will automatically, on the last day of the then existing
Interest Period therefor, convert into Prime Rate Loans. The Agent shall give
each Lender prompt notice by telephone or facsimile transmission of each Notice
of Continuation.
(b) CONVERSION. The Borrowers may on any Business Day
(so long as no Default or Event of Default has occurred and is continuing), upon
notice substantially in the form of Exhibit E (each such notice, a "NOTICE OF
CONVERSION") given to the Agent, and subject to the provisions of Section
4.8(c), convert the entire amount of or a portion of all Loans of one Type
comprising the same Borrowing into Loans of another Type; PROVIDED, HOWEVER,
that any conversion of any Eurodollar Rate Loans into Loans of another Type
shall be made on, and only on, the last day of an Interest Period for such
Eurodollar Rate Loans and, upon conversion of any Prime Rate Loans into Loans of
another Type, the Borrowers shall pay accrued interest to the date of conversion
on the principal amount converted. Each such Notice of Conversion shall be given
not later than 10:00 a.m. (New York City time) on the Business Day prior to the
date of any proposed conversion into Prime Rate Loans and on the third Business
Day prior to the date of any proposed conversion into Eurodollar Rate Loans.
Subject to the restrictions specified above, each Notice of Conversion shall be
-61-
by telephone or facsimile transmission, and if by telephone, promptly confirmed
by a writing, in each case specifying (i) the requested date of such conversion,
(ii) the Type of Loans to be converted, (iii) the portion of such Type of Loan
to be converted, (iv) the Type of Loan such Loans are to be converted into and
(v) if such Loans are converted into Eurodollar Rate Loans, the length of the
Interest Period with respect thereto. Each conversion shall be in an aggregate
amount for the Loans of all Lenders of not less than $1,000,000 or an integral
multiple of $100,000 in excess thereof. The Borrowers may elect to convert the
entire amount of or a portion of all Loans of one Type comprising more than one
Borrowing into Loans of another Type by combining such Borrowings into one
Borrowing; PROVIDED, HOWEVER, that if the Borrowings so combined consist of
Eurodollar Rate Loans, such Loans shall have Interest Periods ending on the same
date.
(c) CERTAIN LIMITATIONS ON EURODOLLAR RATE LOANS. The
right of the Borrowers to maintain, select, continue or convert Eurodollar Rate
Loans shall be limited as follows:
(i) If the Agent is advised by any Lender that it
is not offering U.S. dollar deposits (in the applicable
amounts) in the London interbank market, or the Agent
determines that adequate and fair means do not otherwise exist
for ascertaining the Eurodollar Rate for Eurodollar Rate Loans
comprising any requested Borrowing, continuation or
conversion, the right of the Borrowers to select or maintain
Eurodollar Rate Loans for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such
suspension no longer exist, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least one
(1) Business Day before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the
Eurodollar Rate for Loans comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or
funding their respective Loans for such Borrowing, the right
of the Borrowers to select Eurodollar Rate Loans for such
Borrowing shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such
suspension no longer exist, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent manifest error, be conclusive and
binding on all parties) that the making, continuation or
conversion of any Loan as a Eurodollar Rate Loan has become
unlawful or impermissible by
-62-
reason of compliance by that Lender with any law,
governmental rule, regulation or order of any Governmental
Authority (whether or not having the force of law or
resulting in costs or penalties), then, and in any such
event, such Lender may give notice of that determination in
writing, to the Borrowers and the Agent and the Agent shall
promptly transmit the notice to each other Lender. Until
such Lender gives notice otherwise, the right of the
Borrowers to select Eurodollar Rate Loans from that Lender
shall be suspended and each Eurodollar Rate Loan
outstanding from that Lender shall automatically and
immediately convert to a Prime Rate Loan.
(iv) There shall not be outstanding at any one
time more than an aggregate of three (3) Borrowings of Loans
which consist of Eurodollar Rate Loans for any one Borrower or
an aggregate of six (6) Borrowings of Loans which consist of
Eurodollar Rate Loans for all of the Borrowers.
(v) No Agent Advance shall be made as a
Eurodollar Rate Loan.
(d) COMPENSATION.
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on the Borrower
delivering such notice. In the case of any Borrowing,
continuation or conversion that the related Notice of
Borrowing, Notice of Continuation or Notice of Conversion
specifies is to be comprised of Eurodollar Rate Loans, the
Borrowers shall, jointly and severally, indemnify each Lender
against any loss, cost or expense incurred by such Lender as a
result of any failure to fulfill, on or before the date for
such Borrowing, continuation or conversion specified in such
Notice of Borrowing, Notice of Continuation or Notice of
Conversion, the applicable conditions set forth in Article V,
including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of
the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund the Loan to be made by such
Lender as part of such Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion
or continuation of, any Eurodollar Rate Loan is made other
than on the last day of the Interest Period for such Loan as a
result of a payment, prepayment, conversion or continuation of
such Loan or acceleration of the maturity of the Revolving
Notes pursuant to Article VIII or for any other reason, the
-63-
Borrowers shall, upon demand by any Lender (with a copy of
such demand to the Agent), jointly and severally, pay to the
Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other
funds acquired by any Lender to fund or maintain such Loan.
(iii) Calculation of all amounts payable to a
Lender under this Section 4.8(d) shall be made as though such
Lender elected to fund all Eurodollar Rate Loans by purchasing
U.S. dollar deposits in its Eurodollar Lending Office's
interbank eurodollar market.
-64-
SECTION III.9 INDEMNIFICATION IN CERTAIN EVENTS. If after the
Closing Date, either (i) any change in or in the interpretation of any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to the Agent or to any of the Lenders, or any other
banking or financial institution from whom any of the Lenders borrows funds or
obtains credit (a "FUNDING BANK"), or (ii) the Agent, a Funding Bank or any of
the Lenders complies with any future guideline or request from any central bank
or other Governmental Authority or (iii) the Agent, a Funding Bank or any of the
Lenders determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or the Agent, a Funding
Bank or any of the Lenders complies with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, and in the case of any event set forth in
this clause (iii), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any of the Lenders'
capital as a consequence of its obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Agent's or such Funding Bank's or
Lender's policies as the case may be with respect to capital adequacy) by an
amount deemed by such Lender to be material, and any of the foregoing events
described in clauses (i), (ii) or (iii) increases the cost to the Agent or any
of the Lenders of (A) funding or maintaining the total Commitments or (B)
causing the issuance of any Letter of Credit or of purchasing or maintaining any
participation therein, or reduces the amount receivable in respect thereof by
the Agent or any Lender, then the Borrowers shall upon demand by the Agent,
jointly and severally, pay to the Agent, for the account of each applicable
Lender or, as applicable, a Funding Bank, additional amounts sufficient to
indemnify the Lenders against such increase in cost or reduction in amount
receivable. A certificate as to the amount of such increased cost and setting
forth in reasonable detail the calculation thereof shall be submitted to the
Borrowers by the Agent, or the applicable Lender or Funding Bank, not later than
the earlier of (a) 180 days after the event giving rise to such increased costs
and (b) 45 days after the Person submitting such certificate has knowledge of
such event, and shall be conclusive absent manifest error. Prior to making any
such demand, each of the Lenders, the Agent, Funding Bank or other such party
shall use reasonable efforts to designate a different Lending Office if such a
designation could reduce or eliminate any such payment.
-65-
SECTION III.10 NET PAYMENTS.
(a) Any and all payments by the Borrowers hereunder,
under the Revolving Loans or under the Letters of Credit to or for the benefit
of any Lender or the Agent shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings and penalties, interests and all other liabilities with respect
thereto ("TAXES"), including any Taxes imposed under Section 7701(l) of the
Internal Revenue Code, excluding, (i) in the case of each such Lender or the
Agent, taxes imposed on its net income (including, without limitation, any taxes
imposed on branch profits) and franchise taxes imposed on it by the jurisdiction
under the laws of which such Lender, or the Agent (as the case may be) is
organized or any political subdivision thereof, (ii) in the case of each Lender,
taxes imposed on its net income (including, without limitation, any taxes
imposed on branch profits), and franchise taxes imposed on it, by the
jurisdiction of such Lender's applicable Lending Office or any political
subdivision thereof, (iii) in the case of each such Lender and the Agent, any
Taxes that are in effect and that would apply to a payment to such Lender or the
Agent, as applicable, as of the Closing Date (other than any Taxes imposed under
Section 7701(l) of the Internal Revenue Code), and (iv) if any Person acquires
any interest in this Credit Agreement, any Revolving Loan or Letter of Credit
pursuant to the provisions hereof, or a Foreign Lender or the Agent changes the
office in which the Borrowing is made, accounted for or booked (any such person,
or such Foreign Lender or the Agent in that event, being referred to as a "TAX
TRANSFEREE"), any Taxes (other than Taxes imposed under Section 7701(l) of the
Internal Revenue Code) to the extent that they are in effect and would apply to
a payment to such Tax Transferee as of the date of the acquisition of such
interest or change in office, as the case may be (all such nonexcluded Taxes
being hereinafter referred to as "COVERED TAXES"). If the Borrowers shall be
required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder, under any Revolving Loan or under any Letter of Credit to or
for the benefit of any Lender or the Agent or any Tax Transferee, (A) the sum
payable shall be increased as may be necessary so that after making all required
deductions of Covered Taxes (including deductions of Covered Taxes applicable to
additional sums payable under this Section 4.10) such Lender, the Agent or such
Tax Transferee, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (B) the Borrowers shall make
such deductions and (C) the Borrowers shall, jointly and severally, pay the full
amount so deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrowers agree, jointly and
severally, to pay any present or future stamp, documentary,
-66-
excise, privilege, intangible or similar levies that arise at any time or
from time to time (i) from any payment made under any and all Credit
Documents, (ii) from the transfer of the rights of the Lender under any
Credit Documents to any transferee, or (iii) from the execution or delivery
by the Borrowers of, or from the filing or recording or maintenance of, or
otherwise with respect to the exercise by the Agent or the Lenders of their
rights under, any and all Credit Documents (hereinafter referred to as "OTHER
TAXES").
(c) The Borrowers, jointly and severally, indemnify
each Lender, the Agent and any Tax Transferee for the full amount of (i) Covered
Taxes imposed on or with respect to amounts payable hereunder, (ii) Other Taxes,
and (iii) any Taxes (other than Covered Taxes imposed by any jurisdiction on
amounts payable under this Section 4.10) paid by such Lender, or the Agent or
such Tax Transferee, as the case may be, and any liability (including penalties,
interest and expenses) arising solely therefrom or with respect thereto. Payment
of this indemnification shall be made within 30 days from the date such Lender,
the Agent or such Tax Transferee certifies and sets forth in reasonable detail
the calculation thereof as to the amount and type of such Taxes. Any such
certificate submitted by a Lender, the Agent or a Tax Transferee in good faith
to the Borrowers shall, absent manifest error, be final, conclusive and binding
on all parties.
(d) Within 30 days after having received a receipt of
Covered Taxes or Other Taxes, the Borrowers will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(e) On or before the Closing Date, each Foreign
Lender shall deliver to the Agent and the Borrowers (i) two valid, duly
completed copies of IRS Form 1001 or 4224 or successor applicable form, as the
case may be, and any other required form, certifying in each case that such
Foreign Lender is entitled to receive payments under this Credit Agreement or
the Revolving Loans payable to it without deduction or withholding of any United
States federal income taxes or with such withholding imposed at a reduced rate
(the "REDUCED RATE"), and (ii) a valid, duly completed IRS Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each such Foreign Lender shall also
deliver to the Agent and the Borrowers two further copies of said Form 1001 or
4224 and W-8 or W-9, or successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from a required withholding of United States
federal income tax or entitlement to having such withholding imposed at the
Reduced Rate or after the occurrence of any event requiring a change in
-67-
the most recent form previously delivered by it to the Borrowers and the
Agent, and such extensions or renewals thereof as may reasonably be requested
by the Borrowers and the Agent, certifying (i) in the case of a Form 1001 or
4224 that such Foreign Lender is entitled to receive payments under this
Credit Agreement or the Revolving Notes payable to it without deduction or
withholding of any United States federal income taxes, unless in any such
case any change in a tax treaty to which the United States is a party, or any
change in law or regulation of the United States or official interpretation
thereof has occurred after the Closing Date and prior to the date on which
any such delivery would otherwise be required that renders all such forms
inapplicable or that would prevent such Foreign Lender from duly completing
and delivering any such form with respect to it, and such Foreign Lender
advises the Borrowers and the Agent that it is not capable of receiving
payments without any deduction or withholding at the Reduced Rate, or (ii) in
the case of a Form W-8 or W-9, establishing an exemption from United States
backup withholding tax.
(f) If a Tax Transferee that is organized under the
laws of a jurisdiction outside of the United States acquires an interest in this
Credit Agreement or any Revolving Loan or a Foreign Lender changes the office
through which Loans are made, accounted for or booked, the transferor, or the
applicable Foreign Lender, in the case of a change of office, shall cause such
Tax Transferee to agree that, on or prior to the effective date of such
acquisition or change, as the case may be, it will deliver to the Borrowers and
the Agent (i) two valid, duly completed copies of IRS Form 1001 or 4224 or
successor applicable form, as the case may be, and any other required form,
certifying in each case that such Tax Transferee is entitled to receive payments
under this Credit Agreement and the Revolving Notes payable to it without
deduction or withholding of United States federal income tax or with such
withholding imposed at a Reduced Rate; and (ii) a valid, duly completed IRS Form
W-8 or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax. Each Tax Transferee that
delivers to the Borrowers and the Agent a Form 1001 or 4224, and Form W-8 or W-9
and any other required form, pursuant to the next preceding sentence, further
undertakes to deliver two further copies of the said Form 1001 or 4224 and Form
W-8 or W-9, or successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from a required withholding of United States
federal income tax or entitlement to having such withholding imposed at the
Reduced Rate or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrowers and the Agent, and such
extensions or renewals thereof as may reasonably be requested by the Borrowers
and the Agent, certifying (i) in the case of a Form 1001 or 4224 that such Tax
-68-
Transferee is entitled to receive payments under this Restated Agreement
without deduction or withholding of any United States federal income taxes or
with such withholding imposed at the Reduced Rate, unless any change in
treaty, law or regulation or official interpretation thereof has occurred
after the effective date of such acquisition or change and prior to the date
on which any such delivery would otherwise be required that renders all such
forms inapplicable or that would prevent such Tax Transferee from duly
completing and delivering any such form with respect to it, and such Tax
Transferee advises the Borrowers and the Agent that it is not capable of
receiving payments (a) without any deduction or withholding of United States
federal income tax or (b) with such withholding at the Reduced Rate, as the
case may be, or (ii) in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(g) If any Taxes for which the Borrowers would be
required to make payment under this Section 4.10 are imposed, each Lender or the
Agent, as the case may be, shall use its reasonable best efforts to avoid or
reduce such Taxes by taking any appropriate action (including, without
limitation, assigning its rights hereunder to a related entity or a different
office) which would not in the sole opinion of such Lender or Agent be otherwise
disadvantageous to such Lender or the Agent, as the case may be.
(h) Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this Section 4.10 shall survive the payment in full of
the Obligations.
SECTION III.11 AFFECTED LENDERS. If the Borrowers are
obligated to pay to any Lender any amount under Sections 4.9 or 4.10 materially
in excess of any such amounts payable to the other Lenders, the Borrowers may,
if no Default or Event of Default then exists, replace such Lender with another
lender acceptable to the Agent, and such Lender hereby agrees to be so replaced
subject to the following:
(a) The obligations of the Borrowers hereunder to the
Lender to be replaced (including such increased or additional costs incurred
from the date of notice to the Borrowers of such increase or additional costs
through the date such Lender is replaced hereunder) shall be paid in full to the
Agent for the account of such Lender concurrently with such replacement;
(b) The replacement Lender shall be a bank or other
financial institution that is not subject to the increased costs arising under
Section 4.9 which may have effectuated the Borrowers' election to replace any
Lender hereunder, and each such replacement Lender shall execute and deliver to
the Agent such documentation satisfactory to the Agent pursuant to which
-69-
such replacement Lender is to become a party hereto, conforming to the
provisions of Section 11.8, with a Commitment equal to that of the Lender
being replaced (before giving effect to Section 0) and shall make a Loan or
Loans in the aggregate principal amount equal to the aggregate outstanding
principal amount of the Loan or Loans of the Lender being replaced (or Loans
that should have been made but for a Defaulting Lender's failure to lend);
(c) Upon such execution of such documents referred to
in clause (b) and repayment of the amounts referred to in clause (a), the
replacement lender shall be a "Lender" with a Commitment as specified
hereinabove and the Lender being replaced shall cease to be a "Lender"
hereunder, except with respect to indemnification provisions under this Credit
Agreement, which shall survive as to such replaced Lender;
(d) The Agent shall reasonably cooperate in
effectuating the replacement of any Lender under this Section 4.11, but at no
time shall the Agent be obligated to initiate any such replacement; and
(e) Any Lender replaced under this Section 4.11 shall
be replaced at the Borrowers' sole cost and expense and at no cost or expense to
the Agent or any of the Lenders (other than a Defaulting Lender).
ARTICLE IV
CONDITIONS PRECEDENT
SECTION IV.1 CONDITIONS TO INITIAL LOANS AND LETTERS OF
CREDIT. The obligation of each Lender to fund its Proportionate Share of the
initial Loan and the obligation of the Agent to cause to be issued the initial
Letter of Credit is subject to the satisfaction of the following conditions
precedent:
(a) There shall be no pending or, to the best
knowledge of the Credit Parties, litigation threatened in writing, proceeding,
inquiry or other action seeking an injunction or other restraining order,
damages or other relief with respect to the transactions contemplated by this
Credit Agreement, the other Credit Documents, the Purchase Documents or the
Credit Parties' other business activities, except where such litigation,
proceeding, inquiry or other action could not have a Material Adverse Effect.
(b) The Borrowers shall have paid all accrued fees
and expenses of the Agent and the Lenders in connection with the negotiation,
preparation, execution and delivery of the
-70-
Credit Documents (including, without limitation, the reasonable accrued fees
and expenses of counsel to the Agent).
(c) The Agent and the Lenders shall have received
each of the agreements, opinions, reports, approvals, consents, certificates and
other documents set forth on the Closing Document List attached hereto as
Schedule 5.1(c).
(d) All documentation relating to the transactions
contemplated hereby (including, without limitation, the Purchase Documents and
the Credit Documents) shall be in form and substance satisfactory to the Agent
and the Lenders.
(e) All Existing Indebtedness shall be on terms and
conditions (including, without limitation, amount, pricing, amortization,
intercreditor arrangements and extent of subordination) satisfactory to the
Agent.
(f) The Credit Parties shall have been released from
all obligations under the Existing Credit Agreement pursuant to a release in
form and substance satisfactory to the Agent and all liens and security
interests related thereto shall have been released or terminated.
(g) Except for (i) the filing of UCC financing
statements under the Code and the Intellectual Property Security Agreement with
the United States Patent and Trademark Office, (ii) consents or authorizations
which have been obtained or filings which have been made, and which in either
case are in full force and effect or (iii) consents or authorizations the
failure to obtain or filings the failure to make could not have a Material
Adverse Effect, no consent or authorization of, filing with or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the Borrowings hereunder, the grant of the Liens pursuant to the
Credit Documents, the consummation of the transactions contemplated by the
Purchase Documents or the continuing operations of the Guarantor and its
Subsidiaries following such consummation or with the execution, delivery,
performance, validity or enforceability of this Credit Agreement, the Revolving
Notes, the Letters of Credit, the other Credit Documents, the Purchase
Documents, the Senior Notes or other documents executed in connection with the
Senior Notes to which a Credit Party is a party (the Senior Notes and such other
documents, the "SENIOR NOTE DOCUMENTS").
(h) (i) No change, occurrence, event or development
or event involving a prospective change that could have a Material Adverse
Effect shall have occurred and be continuing since December 31, 1998, or (ii)
there shall not have occurred a substantial impairment of the financial markets
generally that is reasonably likely to materially and adversely affect the
transactions contemplated hereby, in each case as
-71-
determined by the Agent and each Lender in its sole discretion.
(i) There shall be established cash management
systems for the Borrowers on terms and conditions satisfactory to the Agent
including, without limitation, establishment of the Lockboxes with the Lockbox
Banks, and the Agent shall have received three separate Lockbox Agreements, duly
executed by a Borrower and a Lockbox Bank.
(j) Counsel to the Agent shall have performed a legal
review satisfactory to the Agent of all of each Credit Party's material
contracts and tax, litigation, environmental and other potential contingent
liabilities, and of the corporate and capital structure of the Guarantor and its
Subsidiaries.
(k) Each Credit Party shall be in compliance with the
Indenture and all other material indentures or agreements to which it is a
party.
(l) The Borrowing Base shall be appropriate, in the
Agent's sole discretion, for the Borrowers' overall business and working capital
requirements, and the Agent shall have performed an examination satisfactory to
it of the working capital assets of the Credit Parties.
(m) The Liens and all other security interests in
favor of the Agent, for the benefit of the Lenders, shall have been duly
perfected and shall constitute first and prior Liens, except as otherwise
permitted in the Credit Documents.
(n) The Agent shall have received evidence
satisfactory to it that there will be Unused Availability in an amount
satisfactory to it after giving effect to the Revolving Loans to be borrowed and
the Letters of Credit to be issued on the Closing Date.
(o) The Agent shall have received evidence
satisfactory to it that (i) the transactions contemplated by each Purchase
Agreement have been consummated in accordance with its terms, (ii) the Guarantor
has received Central Proceeds of at least $80,000,000 in immediately available
funds and (iii) the Guarantor has applied at least $35,000,000 of the Central
Proceeds to repay amounts owing under the Existing Credit Agreement.
(p) The Agent shall be satisfied that each of the
Credit Parties is and will be Year 2000 Compliant, (B) there are no reasonably
foreseeable consequences of any programming errors or systems failures related
to the year 2000 relating to the information systems of each of the Credit
Parties and (C) each of the Credit Parties has reviewed and assessed all areas
within its business and operations that could be adversely affected by the
failure of such Credit Party or its products to be Year 2000
-72-
Compliant.
(q) The Agent shall have received such other
approvals, opinions or documents as any Lender may reasonably request.
SECTION IV.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF
CREDIT. The obligation of each Lender to fund its Proportionate Share of any
requested Loan or of the Agent to cause to be issued any requested Letter of
Credit is subject to the conditions precedent set forth below. Each Notice of
Borrowing and each Letter of Credit Request shall constitute a representation
and warranty that such conditions are satisfied.
(a) All representations and warranties contained in
this Credit Agreement and the other Credit Documents shall be true and correct
on and as of the date of such Notice of Borrowing or Letter of Credit Request,
as if then made, other than representations and warranties that relate solely to
an earlier date;
(b) No Default or Event of Default shall have
occurred, or would result from the making of the requested Revolving Loan or the
issuance of the requested Letter of Credit, which has not been waived or cured;
and
(c) No event has occurred since December 31, 1998
which has had or could have a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION V.1 REPRESENTATIONS AND WARRANTIES OF THE CREDIT
PARTIES. Each Credit Party represents and warrants as follows:
(a) ORGANIZATION AND QUALIFICATION. Such Credit Party
and each of its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
(ii) has the power and authority to own its properties and assets and to
transact the businesses in which it presently is, or proposes to be, engaged and
(iii) is duly qualified and is authorized to do business and is in good standing
in each jurisdiction where it presently is, or proposes to be, engaged in
business, except where the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect. Schedule 6.1(a) lists all
jurisdictions in which such Credit Party and each of its Subsidiaries are
qualified to do business as foreign corporations as of the Closing Date.
-73-
(b) AUTHORITY. Such Credit Party has the requisite
corporate power and authority to execute, deliver and perform each of the Credit
Documents and Purchase Documents to which it is a party. All corporate action
necessary for the execution, delivery and performance of any of the Credit
Documents and the Purchase Documents has been taken.
(c) ENFORCEABILITY. This Credit Agreement is and,
when executed and delivered and each other Credit Document and Purchase Document
is and, when executed, and delivered, will be the legal, valid and binding
obligation of such Credit Party which is a party thereto, enforceable in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (ii) general principles of equity.
(d) NO CONFLICT. The execution, delivery and
performance by each Credit Party of each Credit Document and Purchase Document
to which it is a party does not, and the application of the Central Proceeds do
not and will not, contravene (i) the Governing Documents of such Credit Party,
or (ii) any Requirement of Law (including, without limitation, any Acquisition
Notification Laws) or (iii) any franchise, license, permit, indenture, contract,
lease, agreement, instrument or other commitment to which it is a party or by
which it or any of its properties are bound (including, without limitation, the
Indenture and the SDW Subordinated Note), and will not, except as contemplated
herein, result in the imposition of any material Liens upon any of its
properties.
(e) CONSENTS AND FILINGS. No consent, authorization,
approval or filing is required in connection with the execution, delivery and
performance of this Credit Agreement or any Credit Document, or the continuing
operations of such Credit Party except: (i) those that have been obtained or
made; (ii) filings necessary to create, perfect or retain the perfection of
Liens against the Collateral; and (iii) in the case of the continuing operations
of such Credit Party, those the failure to obtain could not have a Material
Adverse Effect. All applicable waiting periods under the Acquisition
Notification Laws have expired or been terminated.
(f) GOVERNMENT REGULATION. Such Credit Party is not
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, the Investment Company Act of
1940, or any other Requirement of Law that limits its ability to incur
indebtedness or its ability to consummate the transactions contemplated in the
Purchase Documents, this Credit Agreement and the other Credit Documents.
(g) SOLVENCY. The fair saleable value of the
-74-
assets of the Guarantor and its Restricted Subsidiaries (including contribution
rights) on a consolidated basis and of each Credit Party on an individual basis
exceeds all its probable liabilities, including those to be incurred pursuant to
the Senior Note Documents, this Credit Agreement and the other Credit Documents.
No Credit Party (i) has unreasonably small capital in relation to the business
in which it is or proposes to be engaged and (ii) has incurred, or believes that
it will incur, after giving effect to the transactions contemplated by the
Purchase Documents, this Credit Agreement and the other Credit Documents, debts
beyond its ability to pay as such debts become due.
(h) RIGHTS IN COLLATERAL; PRIORITY OF LIENS. All
property consisting of Collateral is owned or leased by such Credit Party, free
and clear of any and all Liens in favor of third parties, other than Permitted
Liens. Upon the proper filing of the UCC financing statements and the filing of
the Intellectual Property Security Agreement with the United States Patent and
Trademark Office, the security interests granted pursuant to the Credit
Documents constitute valid and enforceable first (except for Permitted Liens and
other liens permitted hereunder), prior and perfected Liens on the Collateral to
the extent such Liens can be perfected by the filing of such financing
statements and the filing of such Agreement.
(i) FINANCIAL DATA. The Guarantor and its Restricted
Subsidiaries have provided to the Agent and each of the Lenders complete and
accurate copies of its annual audited Financial Statements for the fiscal year
ended December 31, 1998 reported on by Ernst & Young L.L.P. and its unaudited
Financial Statements for the fiscal period ended June 30, 1999. Such Financial
Statements have been prepared in accordance with GAAP consistently applied
throughout the periods involved and fairly present the respective financial
positions, results of operations and cash flows of the Guarantor and its
Restricted Subsidiaries for each of the periods covered. Neither the Guarantor
nor any of its Subsidiaries has any Contingent Obligation, or liability for
taxes or long-term leases, which is not reflected in such Financial Statements
or the footnotes thereto. During the period from January 1, 1999 to and
including the Closing Date there has been no sale, transfer or other disposition
by the Guarantor or any of its Restricted Subsidiaries of any material part of
its business or property and no purchase or other acquisition of any business or
property (including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Guarantor and its Subsidiaries at
December 31, 1998, except for the Central Sale and the Electrical Tape Sale.
Since December 31, 1998 (a) there has been no change, occurrence, development or
event which has had or could have a Material Adverse Effect and (b) no dividends
or other returns of capital or other distributions have been declared, paid or
made upon the capital stock of any Credit Party, nor has any of the capital
stock of such Credit Party been redeemed, retired, purchased or
-75-
otherwise acquired for value by such Credit Party or any of its Subsidiaries.
(j) CASH FLOW STATEMENTS. The forecasted cash flow
statements and other financial statements of each Borrower individually and the
Guarantor and its Restricted Subsidiaries on a consolidated basis delivered to
the Lenders were prepared in good faith on the basis of assumptions which were
fair in light of the conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, such Credit Party's best
estimate of its and its Restricted Subsidiaries' future financial performance.
(k) LOCATIONS OF OFFICES, RECORDS AND COLLATERAL. The
address of the principal place of business and chief executive office of each
Credit Party is set forth on Schedule 6.1(k). The books and records of each
Credit Party, and all of its chattel paper and records of Accounts, are (or will
be) maintained exclusively at the locations for such Credit Party set forth on
such Schedule. There is no jurisdiction in which any Credit Party has any
Collateral (except for vehicles and Inventory in transit for processing) other
than those jurisdictions with respect to such Credit Party identified on
Schedule 6.1(k). A complete list of the legal name and address of each premises
at which any Credit Party's Inventory is located is set forth on Schedule
6.1(k). Schedule 6.1(k) indicates whether each premises listed thereon is leased
or owned by such Credit Party. None of the receipts received and to be received
by any Credit Party from any warehouseman state that any Credit Party's
Inventory covered thereby is to be delivered to bearer or to the order of a
named person or to a named person and such named person's assigns.
(l) SUBSIDIARIES; OWNERSHIP OF STOCK. The only direct
or indirect Subsidiaries of such Credit Party are those listed on Schedule
6.1(l). Such Credit Party is the record and beneficial owner of all of the
shares of capital stock of each of the Subsidiaries listed on Schedule 6.1(l).
There are no proxies, irrevocable or otherwise, with respect to the shares of
capital stock of the Borrowers or any of their Subsidiaries, and no equity
securities of any of the Borrowers or any of their Subsidiaries are or may
become required to be issued by reason of any options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of any
capital stock of any Borrower or any of their Subsidiaries and there are no
contracts, commitments, understandings or arrangements by which any Borrower or
any of its Subsidiaries is or may become bound to issue additional shares of its
capital stock or securities convertible into or exchangeable for such shares.
All of such shares so owned by such Credit Party are owned by such Credit Party
free and clear of any Liens, except for the Liens permitted by Section
7.2(a)(vii). As of the
-76-
Closing Date there are no Unrestricted Subsidiaries other than Electrical Tape.
(m) NO JUDGMENTS OR LITIGATION. Except as set forth
on Schedule 6.1(m), no judgments, orders, writs or decrees are outstanding
against the Credit Parties or any of their Subsidiaries nor is there now pending
or, to the best of such Credit Party's knowledge after diligent inquiry,
threatened any litigation, contested claim, investigation, arbitration, or
governmental proceeding by or against any of the Credit Parties or any of their
Subsidiaries that (i) could individually or in the aggregate, have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of the Senior Note Documents, this Agreement, any Note or any
other Loan Document or the consummation of the transactions contemplated hereby
or thereby.
(n) LICENSES AND PERMITS. Such Credit Party has
obtained and holds in full force and effect, all franchises, licenses, leases,
permits, certificates, authorizations, qualifications, easements, rights of way
and other rights and approvals which, to the best of such Credit Party's
knowledge, are necessary or advisable for the operation of its business as
presently conducted and as proposed to be conducted.
(o) NO DEFAULTS. None of the Credit Parties nor any
of their Subsidiaries is in default under any term of any indenture, contract,
lease, agreement, instrument or other commitment to which any of them is a party
or by which any of them is bound which could, individually or in the aggregate,
have a Material Adverse Effect. Such Credit Party knows of no dispute regarding
any such indenture, contract, lease, agreement, instrument or other commitment
which could, individually or in the aggregate, have a Material Adverse Effect.
(p) LABOR MATTERS. Schedule 6.1(p) accurately sets
forth all labor contracts, collective bargaining agreements or other agreements
with labor organizations to which a Credit Party or any of its Subsidiaries is a
party as of the Closing Date, and their dates of expiration. There are no
existing or threatened strikes, lockouts or other disputes relating to any
collective bargaining or similar agreement to which a Credit Party or any of its
Subsidiaries is a party which could, individually or in the aggregate, have a
Material Adverse Effect.
(q) COMPLIANCE WITH LAW. None of the Credit Parties
nor any of its Subsidiaries has violated or failed to comply with any
Requirement of Law, which violation or failure to comply could, individually or
in the aggregate, have a Material Adverse Effect. The transactions contemplated
by the Senior Note Documents have been consummated in accordance with all
applicable laws.
-77-
(r) ERISA.
(i) None of the Credit Parties or any of its
Subsidiaries or any ERISA Affiliate maintains or contributes
to any Plan, other than those listed on Schedule 6.1(r).
(ii) The Credit Parties, each of their Subsidiaries
and each ERISA Affiliate have fulfilled all contribution
obligations for each Plan (including obligations related to
the minimum funding standards of ERISA and the Internal
Revenue Code).
(iii) No Termination Event has occurred nor has any
other event occurred that is likely to result in a Termination
Event, except for the Specified Plan Withdrawal. The Specified
Plan Withdrawal has not resulted and will not result in any
liability to the Credit Parties, any of their subsidiaries or
any ERISA Affiliate.
(iv) None of the Credit Parties or any of their
Subsidiaries or any ERISA Affiliate is required to or
reasonably expects to be required to provide security to any
Plan under Section 401(a)(29) of the Internal Revenue Code.
(v) The Credit Parties, each of their Subsidiaries
and each ERISA Affiliate are in compliance in all material
respects with any applicable provisions of ERISA with respect
to all Plans. There has been no prohibited transaction as
defined in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code (a "PROHIBITED TRANSACTION") with
respect to any Plan or, to the best knowledge of such Credit
Party, with respect to any Multiemployer Plan, which could
result in any material liability to such Credit Party, its
Subsidiaries or any other ERISA Affiliates. The Credit
Parties, each of their Subsidiaries and each ERISA Affiliate
have made when due any and all payments required to be made
under any agreement relating to a Multiemployer Plan or any
Requirement of Law pertaining thereto. With respect to each
Plan and Multiemployer Plan, each Credit Party, each of their
Subsidiaries and each ERISA Affiliate have not incurred nor do
any of them expect to incur any liability to the PBGC and have
not had asserted against them any penalty for failure to
fulfill the minimum funding requirements of ERISA.
(vi) To such Credit Party's best knowledge, any
Multiemployer Plan to which a Credit Party, any of its
Subsidiaries or any ERISA Affiliate contributes is able to pay
benefits under each Multiemployer Plan when
-78-
due.
(vii) None of the Credit Parties, any of their
Subsidiaries or any ERISA Affiliate has instituted or intends
to institute proceedings to terminate any Plan.
(viii) The aggregate actuarial present value of all
accumulated benefit obligations (whether or not vested) under
each Plan, determined on an on-going plan basis using the
actuarial assumptions employed by the Plan's actuary for
expense purposes, as disclosed in, and as of December 31,
1998, the most recent actuarial report for such Plan, does not
exceed the aggregate fair market value of the assets of such
Plan by more than $1,300,000.
(ix) None of the Credit Parties, any of their
Subsidiaries or any ERISA Affiliate has incurred or reasonably
expects to incur any material withdrawal liability under ERISA
to any Multiemployer Plan.
(x) To the extent that any Plan is insured, the
Credit Parties, their Subsidiaries and all ERISA Affiliates
have paid when due all premiums required to be paid for all
periods through and including the Closing Date. To the extent
that any Plan is funded other than with insurance, the Credit
Parties, their Subsidiaries and all ERISA Affiliates have made
when due all contributions required to be paid for all periods
through and including the Closing Date.
(s) BUSINESS AND PROPERTIES. Neither the business nor
the properties of the Credit Parties or any of their Subsidiaries is affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could have a Material
Adverse Effect.
(t) INVESTMENT COMPANY. No Credit Party is an
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any Loans, nor
the issuance of any Letters of Credit, nor the application of the proceeds or
repayment thereof by such Borrower, nor the consummation of the other
transactions contemplated by this Credit Agreement, the other Credit Documents
or the Senior Note Documents, will violate any provision of such Act or any
rule, regulation or order of the Securities and Exchange Commission thereunder.
(u) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set
forth on Schedule 6.1(u), (i) to the best knowledge of the
-79-
Credit Parties, none of the Credit Parties or any of their Subsidiaries is the
subject of a judicial or administrative proceeding or investigation relating to
the violation of any Environmental Laws, or asserting potential liability
arising from the release or disposal by any Person of any Hazardous Materials
which individually or in the aggregate could have a Material Adverse Effect,
(ii) none of the Credit Parties or any of their Subsidiaries has filed or
received any notice under any Environmental Laws concerning the treatment,
storage, disposal, spill or release or threatened release of any Hazardous
Materials at, on, beneath or adjacent to property owned or leased by a Credit
Party or any of its Subsidiaries, or the release or threatened release at any
other location of any Hazardous Material generated, used, stored, treated,
transported or released by or on behalf of a Credit Party or any of its
Subsidiaries which individually or in the aggregate could have a Material
Adverse Effect; and (iii) none of the Credit Parties or any of their
Subsidiaries has knowledge of any contingent liability for any release of any
Hazardous Materials, in each case which individually or in the aggregate could
have a Material Adverse Effect.
(v) YEAR 2000 COMPLIANCE. (i) Such Credit Party has
reviewed and assessed all areas within its business that could be materially
adversely affected by the failure of it or its products to be Year 2000
Compliant and (ii) there are no reasonably foreseeable consequences of any
programming errors or systems failures related to the year 2000 relating to its
information systems.
(w) REAL PROPERTY. Except as set forth on Schedule
6.1(w), no Credit Party either owns or leases any real property. Schedule 6.1(w)
indicates whether such real property is leased or owned by each Credit Party.
(x) MATERIAL CONTRACTS. Set forth on Schedule 6.1(x)
is a complete and accurate list of all Material Contracts, showing as of the
date hereof the parties, subject matter and term thereof. Each such contract has
been duly authorized, executed and delivered by each Credit Party that is a
party thereto, and, to such Credit Party's best knowledge, each other party
thereto. Except as described on Schedule 6.1(x), none of the Material Contracts
contains any burdensome restrictions on a Credit Party or any of its Restricted
Subsidiaries or any of their respective properties, and each Material Contract
is in full force and effect and is binding upon and enforceable against each
Credit Party thereto in accordance with its terms, and there exists no default
under such contract by any party thereto.
(y) INTELLECTUAL PROPERTY. Set forth on Schedule
6.1(y) hereto is a complete and accurate list of all patents, trademarks, trade
names, service marks and copyrights, and all applications therefor and licenses
thereof, of each Credit Party
-80-
that are material to the financial condition or operation of its business,
showing as of the date hereof the jurisdiction in which registered, the
registration number, the date of registration and the expiration date. Each
Credit Party owns or licenses all material patents, trademarks, service-marks,
logos, tradenames, trade secrets, know-how, copyrights, or licenses and other
rights with respect to any of foregoing, which are necessary or advisable for
the operation of its business as presently conducted or proposed to be
conducted. To the best of such Credit Party's knowledge, no Credit Party has
infringed any patent, trademark, service-xxxx, tradename, copyright, license or
other right owned by any other Person by the sale or employment of any product,
process, method, substance, part or other material presently contemplated to be
sold or employed, where such sale or employment could have a Material Adverse
Effect on such Credit Party and no claim or litigation is pending, or to the
best of such Credit Party's knowledge, threatened against or affecting any
Credit Party that contests its right to sell or use any such product, process,
method, substance, part or other material.
(z) TAXES AND TAX RETURNS.
(i) The Credit Parties and each of their
Subsidiaries has properly completed and timely filed, without
request for extension, all income tax returns they are
required to file. The information filed is complete and
accurate in all material respects. All deductions taken in
such income tax returns are appropriate and in accordance with
applicable laws and regulations, except deductions that may
have been disallowed but are being challenged in good faith
and for which adequate reserves have been made in accordance
with GAAP.
(ii) All taxes, assessments, fees and other
governmental charges for periods beginning prior to the date
hereof have been timely paid (or, if not yet due, adequate
reserves therefor have been established) and none of the
Credit Parties or any of their Subsidiaries has any material
liability for taxes in excess of the amounts so paid or
reserves so established.
(iii) No deficiencies for taxes have been claimed,
proposed or assessed by any taxing or other Governmental
Authority against any Credit Party or any of its Subsidiaries
and no tax liens have been filed. There are no pending or
threatened audits, investigations or claims for or relating to
any liability for taxes and there are no matters under
discussion with any Governmental Authority which could result
in a material additional liability for taxes. Either the
federal income tax returns of such Credit
-81-
Party have been audited by the Internal Revenue Service and
such audits have been closed, or the period during which any
assessments may be made by the Internal Revenue Service has
expired without waiver or extension for all years up to and
including the fiscal year of such Credit Party ended December
31, 1993. No extension of a statute of limitations relating to
taxes, assessments, fees or other governmental charges is in
effect with respect to any of the Credit Parties or any of
their Subsidiaries.
(iv) None of the Credit Parties or any of their
Subsidiaries is a party to or has any obligation under any
written tax sharing agreement or agreement regarding payments
in lieu of taxes except as described on Schedule 6.1(w).
(v) The Guarantor and its Subsidiaries will not be
liable to pay more than $2,000,000 of cash taxes on account
of any taxable gain from the consummation of the Central Sale
and the Electrical Tape Sale.
(aa) CORPORATE AND TRADE NAME. During the past five
years, no Credit Party has been known by or used any other corporate or
fictitious name.
(bb) TITLE TO PROPERTY. Each Credit Party and its
Restricted Subsidiaries has (i) good and indefeasible fee simple title to or
valid leasehold interests in all of its real property and (ii) good and
marketable title to all of its other property (including, without limitation,
all real and other property in each case as reflected in the Financial
Statements of the Guarantor and its Restricted Subsidiaries delivered to the
Agent hereunder), other than, with respect to properties described in clause
(ii) above, properties disposed of in the ordinary course of business or in any
manner otherwise permitted under this Credit Agreement since the date of the
most recent audited consolidated balance sheet of the Guarantor and its
Subsidiaries, and in each case subject to no Liens other than those Liens that
are permitted by Section 7.2(a).
(cc) ACCURACY AND COMPLETENESS OF INFORMATION. All
factual information heretofore, contemporaneously or hereafter furnished by or
on behalf of a Credit Party or any of its Subsidiaries in writing to the Agent,
any Lender, or the Auditors for purposes of or in connection with this Credit
Agreement or any Credit Documents, or any transaction contemplated hereby or
thereby is or will be true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information not misleading at
such time. There are no facts now known to any officer of such Credit Party
which individually or in the aggregate could
-82-
have a Material Adverse Effect and which have not been set forth herein, in the
Financial Statements of the Guarantor and its Restricted Subsidiaries, or any
certificate, opinion or other written statement made or furnished by such Credit
Party to the Agent.
(dd) AFFILIATE TRANSACTIONS. Except as set forth on
Schedule 6.1(ad), none of the Credit Parties or any of their Subsidiaries is a
party to or bound by any agreement or arrangement (whether oral or written) to
which any Affiliate of any of the Credit Parties or any of its Subsidiaries is a
party except (i) in the ordinary course of and pursuant to the reasonable
requirements of such Credit Party's or such Subsidiary's business and (ii) upon
fair and reasonable terms no less favorable to the Credit Party or such
Subsidiary than it could obtain in a comparable arm's-length transaction with an
unaffiliated Person.
(ee) NO OTHER INDEBTEDNESS. After giving effect to
the closing of this Credit Agreement and the transactions contemplated hereby,
none of the Credit Parties or any of their Restricted Subsidiaries has any
Indebtedness other than Indebtedness that is permitted under Section 7.2(b).
(ff) NO CHANGE OF CONTROL. The consummation of the
transactions contemplated by the Purchase Agreements does not and will not
constitute or trigger (i) a "Change of Control" as such term is defined in the
Indenture or (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Guarantor and its Restricted Subsidiaries
(determined on a consolidated basis for the Guarantor and its Restricted
Subsidiaries taken as a whole).
(gg) SENIOR INDEBTEDNESS. All of the Obligations
(including, without limitation, outstanding Loans in the principal amount of up
to $40,000,000) do and at all times will constitute "Senior Indebtedness" as
such term is defined in the SDW Subordinated Note.
(hh) CENTRAL SALE. (i) All of the conditions set
forth in Section 4.11 of the Indenture have been satisfied with respect to the
Central Sale, (ii) the Guarantor has executed and delivered an officer's
certificate and Xxxxxx & Xxxxx has executed and delivered an opinion
(collectively, the "TRUSTEE CERTIFICATIONS") to that effect to the trustee under
the Indenture, (iii) the trustee under the Indenture has (A) released Central
Products Company as a guarantor under the Indenture in accordance with Section
10.06 of the Indenture and (B) released its Lien on the capital stock of Central
Products in accordance with Section 11.13(b) of the Indenture, (iv) the
transactions contemplated by each Purchase Agreement have been consummated in
accordance with its terms, (v) none of the proceeds from the Central Sale or any
other "Asset Sale" (as such term is defined
-83-
in the Indenture) have been or will be applied to permanently reduce any
Indebtedness permitted under Section 4.09(b)(i) of the Indenture, (vi) after
giving effect to the application of all of the Central Proceeds, Section
4.09(b)(i) of the Indenture permits and will permit the Borrowers to incur at
least $40,000,000 of outstanding Loans under this Credit Agreement and (vii)
the application by the Guarantor on the Effective Date of approximately
$35,000,000 of the proceeds from the Central Sale to repay Indebtedness owing
under the Existing Credit Agreement (A) is permitted to be deducted from the
gross proceeds received from the Central Sale under the definition of "Net
Proceeds" set forth in the Indenture and (B) is not a prepayment of Indebtedness
under Section 4.11(b)(ii) of the Indenture.
(ii) SURVIVAL OF REPRESENTATIONS. All representations
made by such Credit Party in this Credit Agreement and in any other Credit
Document executed and delivered in connection herewith shall survive the
execution and delivery hereof and thereof and the closing of the transactions
contemplated hereby.
ARTICLE VI
COVENANTS OF THE CREDIT PARTIES
SECTION VI.1 AFFIRMATIVE COVENANTS. Until termination of this
Credit Agreement and all outstanding Letters of Credit and payment and
satisfaction of all Obligations due hereunder:
(a) FINANCIAL REPORTING. The Credit Parties shall
timely deliver to each Lender the following information:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as
available, but not later than 90 days after the end of each
fiscal year, beginning with the fiscal year ending December
31, 1999: (A) an annual audited consolidated Financial
Statement of the Guarantor and its Restricted Subsidiaries and
the annual unaudited consolidating statements of the
Guarantor's Restricted Subsidiaries; (B) a comparison in
reasonable detail to the prior year audited consolidated
Financial Statements of the Guarantor and the consolidating
statements of its Restricted Subsidiaries; (C) the Auditors'
unqualified opinion, "Management Letter" and a statement
indicating that the Auditors have not obtained knowledge of
the existence of any Default or Event of Default during their
audit; (D) a narrative discussion of the Guarantor's
consolidated and consolidating financial condition and results
of operations and the consolidated liquidity and capital
resources for such fiscal year, prepared by an Authorized
Officer of the
-84-
Guarantor; and (E) a compliance certificate signed by an
Authorized Officer, substantially in the form of Exhibit M (a
"COMPLIANCE CERTIFICATE"), with an attached schedule of
calculations demonstrating compliance with the financial
covenants in Section 7.2. To the extent that the Guarantor's
annual report on Form 10-K contains any of the foregoing
items, the Agent will accept the Agent's Form 10-K in lieu of
such items.
(ii) PROJECTIONS. Not later than 45 days after
each fiscal year end, beginning with the fiscal year ended
December 31, 1999, projections of the Credit Parties' and
Restricted Subsidiaries' financial condition and results of
operations (on a consolidated and consolidating basis) for the
next five (5) years prepared in good faith and based upon
reasonable assumptions, containing projected consolidating
balance sheets, statements of operations, a consolidated
statement of cash flows and a calculation of EBITDA for the
Guarantor and its Restricted Subsidiaries reconciled to Net
Income and statements of changes in shareholders equity on a
monthly basis for the first year and annually thereafter. The
projections provided pursuant to this Section will not be
construed by the Agent or the Lenders as a guaranty of results
or performance in the future.
(iii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, but not later than 45 days after the end of each of
the first three fiscal quarters, beginning with the fiscal
quarter ending June 30, 1999: (A) the Financial Statements of
the Guarantor and its Restricted Subsidiaries as of the fiscal
quarter then ended, and for the fiscal year to date; (B) a
comparison in reasonable detail to the Financial Statements of
the Guarantor and its Restricted Subsidiaries for the
corresponding periods of the prior fiscal year; (C) the
certification of an Authorized Officer of the Guarantor that
such Financial Statements have been prepared in accordance
with GAAP (subject to year-end audit adjustments); (D) a
narrative discussion of the Guarantor's consolidated and
consolidating financial condition and results of operations
and the consolidated and consolidating liquidity and capital
resources for such fiscal quarter and fiscal year to date,
prepared by an Authorized Officer of the Guarantor; and (E) a
Compliance Certificate signed by an Authorized Officer of the
Guarantor with an attached schedule of calculations
demonstrating compliance with the financial covenants in
Section 7.2. To the extent that the Guarantor's quarterly
report on Form 10-Q contains any of the foregoing items, the
Agent will
-85-
accept the Guarantor's Form 10-Q in lieu of such items.
(iv) MONTHLY FINANCIAL STATEMENTS. As soon as
available, but not later than thirty (30) days after the end
of each month other than December, commencing with the month
of June 30, 1999, and 45 days after the end of each fiscal
year of the Guarantor: (A) a consolidated and consolidating
balance sheet for the Guarantor and its Restricted
Subsidiaries as at the end of such month and for the fiscal
year to date, consolidated and consolidating statements of
operations for such month and for the fiscal year to date and
a calculation of EBITDA and Capital Expenditures for the
Guarantor and its Restricted Subsidiaries for such month and
for the fiscal year to date; (B) a comparison to the balance
sheet, statement of operations , EBITDA and Capital
Expenditures for the same periods in the prior year; (C) a
certification by an Authorized Officer of the Guarantor that
such balance sheets, statements of operations and statement of
cash flows have been prepared in accordance with GAAP (subject
to year-end audit adjustments); and (D) a Compliance
Certificate signed by an Authorized Officer of the Guarantor
with an attached schedule of calculations demonstrating
compliance with the financial covenants in Section 7.2.
(v) MONTHLY COMPARISON TO PRIOR PROJECTIONS. As
soon as available, but not later than 30 days after the end of
each month other than December, commencing with the month of
June, 1999, and 45 days after the end of each fiscal year of
the Guarantor, a comparison of actual results of operations
and capital expenditures for the Guarantor and its Restricted
Subsidiaries for such month and for the period from the
beginning of the current fiscal year through the end of such
month with amounts previously projected for those periods and
with actual results for corresponding periods in the previous
fiscal year.
(vi) PUBLIC FILINGS. As soon as available, copies
of all 00-Xx, 00-Xx, 0-Xx, proxy statements, annual reports,
quarterly reports, registration statements and any other
filings or other communications made by the Credit Parties to
their stockholders or the Securities Exchange Commission from
time to time pursuant to the Securities Exchange Act of 1934,
as amended, or the Securities Act of 1933, as amended.
(vii) OTHER FINANCIAL INFORMATION. Promptly after
the request by the Agent therefor, such additional financial
statements and other related data
-86-
and information as to the business, prospects, operations,
results of operations, assets, liabilities or condition
(financial or otherwise) of any Borrower or other Credit
Party, as the Agent may from time to time reasonably
request.
(b) COLLATERAL REPORTING. The Credit Parties shall
timely deliver to the Agent the following certificates and reports:
(i) WEEKLY AND MONTHLY BORROWING BASE
CERTIFICATES. Weekly, before 12:00 noon on the second Business
Day of each week (except the last week of each month);
monthly, within five (5) Business Days after the last Business
day of each month, and at any other time requested by the
Agent in its reasonable discretion, a borrowing base
certificate (the "BORROWING BASE CERTIFICATE"), which shall
be: (A) completed substantially in the form of Exhibit B,
detailing each Borrower's Eligible Accounts Receivable and
each Borrower's Eligible Inventory as of each Friday of the
immediately preceding week and as of the last day of each
month, as applicable (or as of such other date as the Agent
may request); (B) prepared by or under the supervision of each
Borrower's Authorized Officer and certified by such officer
subject only to adjustment upon completion of the normal
year-end audit of physical inventory; and (C) attached to such
additional schedules and other information as the Agent may
reasonably request.
(ii) APPRAISALS. When requested by the Agent but
no more than once in any fiscal year (unless a Default or an
Event of Default has occurred and is continuing), a report of
Inventory, based upon a physical count, which shall describe
each Credit Party's Inventory by category and by item (in
reasonable detail) and report the then appraised value (at
lower of cost or market) of such Inventory. The right to an
appraisal set forth in this subsection shall be in addition to
and not in lieu of the Agent's rights under Section 7.1(e).
(iii) WEEKLY AND MONTHLY INDENTURE BORROWING BASE
CERTIFICATES. Weekly, before 12:00 noon on the second Business
Day of each week (except the last week of each month),
monthly, within five (5) Business Days after the last Business
Day of each month, and at any other time requested by the
Agent in its reasonable discretion, a borrowing base
certificate (an "INDENTURE BORROWING BASE CERTIFICATE"), which
shall be: (A) completed substantially in the form of Exhibit
O, detailing the Indenture Borrowing Base as of each
-87-
Friday of the immediately preceding week and as of the last
day of each month, as applicable (or as of such other date
as the Agent may request); (B) prepared by or under the
supervision of an Authorized Officer of the Guarantor and
certified by such officer subject only to adjustment upon
completion of the normal year-end audit of physical
inventory; and (C) attached to such additional schedules
and other information as the Agent may reasonably request.
(iv) FURTHER ASSURANCES. When requested by the
Agent, any further information regarding the Collateral,
business affairs and financial condition of the Credit Parties
or any of their Subsidiaries.
(c) NOTIFICATION REQUIREMENTS. The Borrowers shall
timely give the Agent and each of the Lenders the following notices:
(i) NOTICE OF DEFAULTS. Promptly, and in any
event within three (3) Business Days after becoming aware of
the occurrence of a Default or Event of Default, a certificate
of an Authorized Officer of the Guarantor or a Borrower
specifying the nature thereof and the Guarantor's and
Borrowers' proposed response thereto, each in reasonable
detail.
(ii) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and
in any event within five (5) Business Days after a Credit
Party becomes aware of (A) any proceeding being instituted or
threatened to be instituted by or against a Credit Party or
any of its Restricted Subsidiaries in any federal, state,
local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) involving a
sum in excess of $1,000,000, (B) any order, judgment or decree
in excess of $1,000,000 being entered against a Credit Party
or any of its Restricted Subsidiaries or any of their
respective properties or assets or (C) any actual or
prospective change, development or event which has had or
could have a Material Adverse Effect, a written statement
describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect
thereto by a Credit Party or any such Subsidiary.
(iii) ERISA NOTICES.
(A) Promptly, and in any event within ten
(10) Business Days after a Credit Party, any of its
Subsidiaries or any ERISA Affiliate knows or has
reason to know that a Termination Event has
-88-
occurred, a written statement of an Authorized
Officer of a Credit Party describing such
Termination Event and any action that is being
taken with respect thereto by a Credit Party, any
such Subsidiary or ERISA Affiliate, and any action
taken or threatened with respect thereto by the
Internal Revenue Service, Department of Labor or
PBGC. The Credit Parties, their Subsidiaries and
the ERISA Affiliate shall be deemed to know all
facts known by the administrator of any Benefit
Plan of which it is the plan sponsor;
(B) promptly, and in any event within three
(3) Business Days after a Credit Party, any of its
Subsidiaries of any ERISA Affiliate knows or has
reason to know of the filing thereof with the
Internal Revenue Service, a copy of each funding
waiver request filed with respect to any Benefit Plan
and all communications received by any Credit Party,
any of its Subsidiaries or any ERISA Affiliate with
respect to such request;
(C) promptly, and in any event within three
(3) Business Days after receipt by any Credit Party,
any of its Subsidiaries or any ERISA Affiliate, of
the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
(D) promptly, and in any event within three
(3) Business Days after receipt by any Credit Party,
any of its Subsidiaries or any ERISA Affiliate, of
notice (including the nature of the event and, when
known, any action taken or threatened by the Internal
Revenue Service or the PBGC with respect thereto) of:
(1) any Prohibited Transaction which
could subject a Credit Party, any of its
Subsidiaries or any ERISA Affiliate to a
material civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code in
connection with any Plan, or any trust
created thereunder,
(2) any cessation of operations by a
Credit Party, any of its Subsidiaries or any
ERISA Affiliate at a facility in the
circumstances described in Section 4062(e)
of ERISA,
-89-
(3) a failure by a Credit Party, any
of its Subsidiaries or any ERISA Affiliate
to make a payment to a Plan required to
avoid imposition of a lien under Section
302(f) of ERISA,
(4) the adoption of an amendment to
a Plan requiring the provision of security
to such Plan pursuant to Section 307 of
ERISA, or
(5) any change in the actuarial
assumptions or funding methods used for any
Benefit Plan, where the effect of such
change is to materially increase or
materially reduce the unfunded benefit
liability or obligation to make periodic
contributions;
(E) promptly upon the request of the Agent
or any Lender, each annual report (IRS Form 5500
series) and all accompanying schedules, the most
recent actuarial reports, the most recent financial
information concerning the financial status of each
Plan administered or maintained by a Credit Party,
any of its Subsidiaries or any ERISA Affiliate, and
schedules showing the amounts contributed to each
such Plan by or on behalf of such Credit Party,
Subsidiary or ERISA Affiliate in which any of their
personnel participate or from which such personnel
may derive a benefit, and each Schedule B (Actuarial
Information) to the annual report filed by such
Credit Party, Subsidiary or ERISA Affiliate with the
Internal Revenue Service with respect to each such
Plan; and
(F) Promptly upon the filing thereof, copies
of any Form 5310, or any successor or equivalent form
to Form 5310, filed with the PBGC in connection with
the termination of any Benefit Plan.
(iv) MATERIAL CONTRACTS. Promptly, and in any
event within ten (10) Business Days after any Material
Contract of a Credit Party or any of its Restricted
Subsidiaries is terminated prior to its scheduled termination
or a material modification, amendment or waiver of such
Material Contract is entered into or any new Material Contract
is entered into, a written statement describing such event,
with copies of amendments or new contracts, and an explanation
of any actions being taken with respect thereto.
-90-
(v) COLLATERAL MATTERS. At least twenty (20)
Business Days prior written notice to the Agent of any change
in the location of any Collateral or in the location of the
chief executive office or place of business of any Credit
Party from the locations specified in Schedule 6.1(k). At
least ten (10) Business Days prior to any such change, the
Credit Parties shall cause to be executed and delivered to the
Agent any financing statements, Collateral Access Agreements
or other documents reasonably required by the Agent, all in
form and substance reasonably satisfactory to the Agent.
(d) CORPORATE EXISTENCE. Except as permitted by
Section 7.2(d), the Credit Parties shall, and shall cause each of their
Restricted Subsidiaries to, (i) maintain its corporate existence, (ii) maintain
in full force and effect all material licenses, bonds, franchises, leases,
trademarks and qualifications to do business, and all material patents,
contracts and other rights necessary or advisable to the profitable conduct of
their businesses, and (iii) continue in, and limit their operations to, the same
general lines of business as presently conducted by them.
(e) BOOKS AND RECORDS; INSPECTIONS. The Credit
Parties agree to maintain, and cause each of their Restricted Subsidiaries to
maintain, books and records (including computer records and programs) of account
pertaining to the COLLATERAL in such detail, form and scope as is consistent
with good business practice. The Credit Parties agree that the Agent and its
agents may enter upon the premises of each Credit Party and its Restricted
Subsidiaries at any time and from time to time, during normal business hours and
upon reasonable notice under the circumstances, and at any time after the
occurrence and during the continuance of a Default or Event of Default, for the
purposes of (i) inspecting and verifying the Collateral, (ii) inspecting and
copying (at the Credit Parties' expense) any and all records pertaining thereto,
and (iii) discussing the affairs, finances and business of any Credit Party with
any officer or director of any Credit Party or with the Auditors, all of whom
are hereby authorized to disclose to the Agent all financial statements, work
papers, and other information relating to such affairs, finances or business.
The Credit Parties shall jointly and severally reimburse the Agent for the
reasonable travel and related out-of-pocket expenses of the Agent's employees
or, at the Agent's option, of such outside accountants or examiners as may be
retained by the Agent to verify or inspect Collateral, records or documents of a
Credit Party on a regular basis or for a special inspection if the Agent deems
the same appropriate (but not more than four times per year unless an Event of
Default has occurred and is continuing). If the Agent's own employees are used,
the Credit Parties shall also jointly and
-91-
severally pay a PER DIEM allowance of $400 per day per employee, or, if
outside examiners or accountants are used, the Credit Parties shall also
jointly and severally pay the Agent such sum as the Agent may be obligated to
pay as fees therefor. All such Obligations may be charged to the Loan Account
or any other account of any of the Credit Parties with the Agent, any Lender
or any of their affiliates. The Credit Parties hereby authorize the Agent,
upon prior notice to the Credit Parties, to communicate directly with the
Auditors to disclose to the Agent any and all financial information regarding
any of the Credit Parties including, without limitation, matters relating to
any audit and copies of any letters, memoranda or other correspondence
related to the business, financial condition or other affairs of any of the
Credit Parties. Upon notice to the Credit Parties that the Agent intends to
conduct verifications of Accounts of the Credit Parties (but without any
requirement that the Lender specify which Accounts are to be verified), the
Agent may from time to time contact account debtors and take such other
action as the Agent deems necessary to verify Accounts.
(f) INSURANCE. The Credit Parties agree to maintain,
and to cause each of their Restricted Subsidiaries to maintain, public liability
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on their assets (including the
Collateral) under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are at all times satisfactory to the
Agent in its commercially reasonable judgment. All policies covering the
Collateral are to name the Agent for the benefit of the Lenders as an additional
insured and the loss payee in case of loss, and are to contain such other
provisions as the Agent may reasonably require to fully protect the interest of
the Agent for the benefit of the Lenders in the Collateral and to any payments
to be made under such policies.
(g) CASUALTY LOSS. The Credit Parties shall provide
written notice to the Agent and the Lenders of the occurrence of any of the
following events within five (5) Business Days after the occurrence of such
event: any asset or property owned or used by any Credit Party is (i) damaged or
destroyed, or suffers any material loss, or (ii) condemned, confiscated or
otherwise taken, in whole or in part, or the use thereof is otherwise diminished
so as to render impracticable or unreasonable the use of such asset or property
for the purposes to which such asset or property were used immediately prior to
such condemnation, confiscation or taking, by exercise of the powers of
condemnation or eminent domain or otherwise, and in either case the amount of
the damage, destruction, loss or diminution in value is in excess of $1,000,000
(collectively, a "CASUALTY LOSS"). The Credit Parties shall diligently file and
prosecute their claim or claims for any award or payment in connection with a
Casualty Loss.
-92-
(h) TAXES. The Credit Parties agree, jointly and
severally, to pay, when due, and to cause each of their Subsidiaries to pay when
due, all taxes lawfully levied or assessed against the Credit Parties, any of
their Subsidiaries or any of the Collateral before any penalty or interest
accrues thereon; PROVIDED, HOWEVER, that, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of the Credit Parties or any of
their Subsidiaries, no such tax need be paid if the same is being contested, in
good faith, by appropriate proceedings promptly instituted and diligently
conducted and if an adequate reserve or other appropriate provision shall have
been made therefor as required in order to be in conformity with GAAP.
(i) COMPLIANCE WITH LAWS. The Credit Parties agree to
comply, and to cause each of their Subsidiaries to comply, with all Requirements
of Law applicable to the Collateral or any part thereof, or to the operation of
their businesses or their assets generally, unless the Credit Parties or their
Subsidiaries contest any such Requirements of Law in a reasonable manner and in
good faith. other than those Requirements of Law the non-compliance with which
would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
(j) USE OF PROCEEDS. The Revolving Loans and Letters
of Credit made to the Borrowers hereunder shall be used by the Borrowers (i)
together with approximately $35,000,000 of the Central Proceeds, to refinance
the Existing Indebtedness owed under the Existing Credit Agreement and (ii) for
the Borrowers' general corporate purposes. The Borrowers shall not use any
portion of the proceeds of any Revolving Loans for the purpose of purchasing or
carrying any "margin stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) in any manner which violates the
provisions of Regulation T, U or X of said Board of Governors or for any other
purpose in violation of any applicable statute or regulation, or of the terms
and conditions of this Credit Agreement.
(k) FISCAL YEAR. Each Credit Party agrees to
maintain, and to cause each of its Subsidiaries to maintain, its fiscal year as
a year ending December 31.
(l) MAINTENANCE OF PROPERTY. Except as permitted by
Section 7.2(e), the Credit Parties agree to keep, and to cause each of their
Restricted Subsidiaries to keep, all property useful and necessary to their
respective businesses in good working order and condition (ordinary wear and
tear excepted) in accordance with their past operating practices and not to
commit or suffer any material waste with respect to any of their properties.
(m) ERISA DOCUMENTS. The Credit Parties will
-93-
cause to be delivered to the Agent, upon the Agent's request, each of the
following: (i) a copy of each Plan (and if applicable, related trust
agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have
been distributed to employees or former employees of the Credit Parties or
their Subsidiaries; (ii) the most recent determination letter issued by the
Internal Revenue Service with respect to each Plan; (iii) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Plan; (iv) all actuarial reports
prepared for the last three plan years for each Plan; (v) a listing of each
Plan, with the aggregate amount of the most recent annual contributions
required to be made by the Credit Parties, any of their Subsidiaries or any
ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to the Credit Parties, any of their Subsidiaries or any ERISA
Affiliate regarding withdrawal liability under any Multiemployer Plan; and
(vii) information relating to the aggregate amount of the most recent annual
payments made to former employees of the Credit Parties, any of their
Subsidiaries or any ERISA Affiliate under any Retiree Health Plan.
-94-
(n) ENVIRONMENTAL AND OTHER MATTERS.
-95-
(i) The Credit Parties and their Subsidiaries
will conduct their businesses so as to comply in all material
respects with all applicable Environmental Laws, in all
jurisdictions in which any of them is doing business,
including, without limitation, compliance in all material
respects with the terms and conditions of all permits and
governmental authorizations, except to the extent that the
Credit Parties or any of their Subsidiaries are contesting, in
good faith by appropriate legal proceedings, any such
Environmental Law or interpretation thereof or application
thereof; PROVIDED, FURTHER, that the Credit Parties and each
of their Subsidiaries shall comply in all material respects
with the applicable order of any court or other governmental
agency relating to such Environmental Laws unless a Credit
Party or any Subsidiary shall currently be prosecuting an
appeal or proceedings for review and shall have secured a stay
of enforcement or execution or other arrangement postponing
enforcement or execution pending such appeal or proceedings
for review. If a Credit Party or any of its Subsidiaries shall
(A) receive written notice that any material violation of any
Environmental Law may have been committed or is about to be
committed by such Credit Party or any of its Subsidiaries, (B)
receive written notice that any administrative or judicial
complaint or order has been filed or is about to be filed
against such Credit Party or any of its Subsidiaries alleging
material violations of any Environmental Law, or requiring
such Credit Party or any of its Subsidiaries to take any
action in connection with the release of Hazardous Materials
into the environment or (C) receive any written notice from a
federal, state, or local governmental agency or private party
alleging that such Credit Party or any of its Subsidiaries may
be liable or responsible for material costs associated with a
response to or cleanup of a release of Hazardous Materials
into the environment or any damages caused thereby, such
Credit Party shall provide the Agent and the Lenders with a
copy of such notice within ten (10) days after the receipt
thereof by such Credit Party or any of its Subsidiaries.
Within ten (10) days after a Credit Party learns of the
enactment or promulgation of any Environmental Law, which
could have a Material Adverse Effect, such Credit Party shall
provide the Agent and the Lenders with notice thereof. Each
Credit Party shall promptly take all reasonable actions
necessary to prevent the imposition of any Liens on any of its
properties arising out of or related to any environmental
matters. At the request of the Agent, the Credit Party shall
provide the Agent with any
-96-
additional information relating to environmental matters
and any potential related liability resulting therefrom as
the Agent may reasonably request.
(ii) For purposes of this Section 7.1(n),
"material" means any noncompliance or basis of liability that
would reasonably be expected to subject the Credit Parties or
any of their Subsidiaries to liability in excess of $500,000.
(o) SECURITY INTERESTS. The Credit Parties will
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein, other than claims relating to Liens
permitted by the Credit Documents. The Credit Parties agree to comply with the
requirements of all state and federal laws in order to grant to the Lenders
valid and perfected first priority security interests in the Collateral, except
as otherwise permitted by the Credit Documents. The Agent is hereby authorized
by the Credit Parties to file any financing statements covering the Collateral
whether or not the Credit Parties' signatures appear thereon. The Credit Parties
agree to do whatever the Agent may reasonably request, from time to time, by way
of: filing notices of liens, financing statements, and amendments, renewals and
continuations thereof; cooperating with the Agent's representatives; keeping
stock records; paying claims which could, if unpaid, become a Lien on the
Collateral; and performing such further acts as the Agent may reasonably require
in order to effect the purposes of this Credit Agreement and the other Credit
Documents. Any and all fees, costs and expenses incurred in connection with the
actions contemplated by this Section 7.1(o) shall be jointly and severally borne
and paid by the Credit Parties. If same are not promptly paid by the Credit
Parties, the Agent may pay same on the Credit Parties' behalf, and the amount
thereof shall be an Obligation secured hereby and due to the Agent on demand.
(p) TRADEMARKS. The Credit Parties shall do and cause
to be done all things necessary to preserve and keep in full force and effect
all of their and their Restricted Subsidiaries' material registrations of
trademarks, service marks and other marks, trade names or other trade rights.
(q) YEAR 2000 COMPLIANCE. Each Credit Party will, and
will cause each of its Subsidiaries to, be Year 2000 Compliant at all times.
(r) MORTGAGES, ETC. Not later than September 30,
1999, the Credit Parties shall deliver or cause to be delivered to the Agent the
following:
(i) a mortgage or deed of trust, in form and
substance satisfactory to the Agent (each as amended,
supplemented or otherwise modified from time to time, a
-97-
"MORTGAGE"), encumbering each Mortgaged Property, duly
executed by the Borrower that owns such Mortgaged Property;
(ii) a mortgagee's title policy for each Mortgage
(A) dated on or about the date of such Mortgage in an amount
reasonably satisfactory to the Agent; (B) insuring that such
Mortgage creates a valid first Lien on the Mortgaged Property,
free and clear of all Liens except Liens permitted under this
Credit Agreement; (C) naming the Agent as the insured
thereunder; (D) in the form of ALTA Loan Policy-1992 or such
other form as is acceptable to the Agent; and (E) containing
such endorsements and affirmative coverages as the Agent may
reasonably request, together with evidence that all premiums
in respect of each such policy have been paid by or on behalf
of the Borrowers;
(iii) a survey of each Mortgaged Property, in form
and substance satisfactory to the Agent and certified within
45 days prior to the date of the related Mortgage by an
independent public surveyor reasonably satisfactory to the
Agent, meeting the minimum standard detail requirements for
ALTA/ACSM surveys, and showing (A) the exact location and
dimensions of such Mortgaged Property and the improvements
thereon, (B) the exact location of all lot and street lines,
required height and setback lines, all means of access to and
all easements relating to such Mortgaged Property, (C) the
names of all streets and alleys abutting such Mortgaged
Property and (D) the absence of any encroachments,
rights-of-way or easements on such Mortgaged Property or any
encroachments by the improvements thereon on adjoining
property, or any other defects except Liens permitted under
this Credit Agreement, together with a surveyor's certificate
reasonably satisfactory to the Agent;
(iv) a copy of an appraisal of each Mortgaged
Property conducted in accordance with sound appraisal
standards by independent appraisers acceptable to, and in form
and substance satisfactory to, the Agent, showing the fair
market value of such Mortgaged Property as of a recent date;
and
(v) an environmental indemnity agreement, in form
and substance satisfactory to the Agent (as amended,
supplemented or otherwise modified from time to time, the
"ENVIRONMENTAL INDEMNITY AGREEMENT") made by the Credit
Parties in favor of the Agent for the benefit of the Lenders.
(s) PATENTS AND TRADEMARKS. Each Credit Party
-98-
shall use its best efforts to, on or before December 9, 1999, (i) cause each
patent and trademark listed on Schedule 6.1(y) opposite its name to be
registered in the United States Patent and Trademark under the name of such
Credit Party and (ii) execute and deliver such amendments to the Intellectual
Property Security Agreement as the Agent shall request to perfect the Agent's
Lien on all of such Credit Party's right, title and interest in such patents
and trademarks.
(t) FURTHER ASSURANCES. The Credit Parties shall
take, and shall cause each of their Subsidiaries to take, all such further
actions and execute all such further documents and instruments as the Agent may
at any time reasonably determine in its sole discretion to be necessary or
desirable to further carry out and consummate the transactions contemplated by
the Credit Documents, to cause the execution, delivery and performance of the
Credit Documents to be duly authorized and to perfect or protect the Liens (and
the priority status thereof) of the Agent for the benefit of the Lenders on the
Collateral.
SECTION VI.2 NEGATIVE COVENANTS. Until termination of this
Credit Agreement and all outstanding Letters of Credit and payment and
satisfaction of all Obligations due hereunder:
(a) LIENS, ETC. The Credit Parties will not, nor will
they permit any of their Restricted Subsidiaries to, directly or indirectly at
any time create, incur, assume or suffer to exist any Lien on or with respect to
any of their properties of any character (including, without limitation,
Accounts) whether now owned or hereafter acquired, except:
(i) Liens created by the Collateral
Documents;
(ii) Permitted Liens;
(iii) the Liens existing on the date hereof
and described on Schedule 7.2(a);
(iv) Purchase Money Liens or Liens securing
capital leases permitted under Section 7.2(b)(x);
(v) cash deposits for bids and other
performance obligations under contracts entered into
in the ordinary course of business;
(vi) the replacement, extension or renewal
of any Lien permitted by clauses (iii), (iv) or (v)
above upon or in the same property theretofore
subject thereto or the replacement, extension or
renewal (without increase in the amount or change in
any direct or contingent obligor) of the Indebtedness
secured
-99-
thereby;
(vii) Liens granted by the Guarantor on the
shares of stock of the Borrowers, any of their
Restricted Subsidiaries or any other Restricted
Subsidiary of the Guarantor and the proceeds thereof
to secure the Senior Notes;
(viii) leases or subleases of real estate
granted by a Credit Party to other Persons in the
ordinary course of business and not materially
interfering with the conduct of the business of such
Credit Party and cash security deposits made pursuant
to real estate leases in customary amounts; and
(ix) Liens granted by the Guarantor on up to
$600,000 of cash collateral which secure the Existing
Letters of Credit.
(b) INDEBTEDNESS. The Credit Parties will not, nor
will they permit any of their Restricted Subsidiaries to, directly or
indirectly, at any time create, incur, assume or suffer to exist, any
Indebtedness other than:
(i) Indebtedness under the Credit Documents;
(ii) Indebtedness secured by Liens permitted
by Section 7.2(a)(iii);
(iii) the Existing Indebtedness;
(iv) indorsement of negotiable instruments
for deposit or collection or similar transactions in
the ordinary course of business;
(v) Indebtedness of a Borrower or its
Restricted Subsidiaries secured by purchase money
liens on equipment acquired after the date of this
Credit Agreement not to exceed $1,250,000 in the
aggregate outstanding at any one time ("PURCHASE
MONEY LIENS") so long as such Indebtedness shall be
from parties and on terms and conditions satisfactory
to the Agent. Each Purchase Money Lien shall attach
only to the property to be acquired, a description
shall have been furnished to the Agent for any item
of equipment for which the purchase price is greater
than $250,000, and the debt incurred shall not exceed
one hundred percent (100%) of the purchase price of
the item or items of equipment purchased;
(vi) Indebtedness constituting Contingent
Obligations otherwise permitted by Section 7.2(v);
-100-
(vii) Indebtedness evidenced by the
Intercompany Subordinated Notes owing by one Borrower
or the Guarantor to another Borrower or the
Guarantor; PROVIDED that (A) such Indebtedness is
used only for general corporate purposes, (B) such
Indebtedness is evidenced by one or more promissory
notes subordinated to the payment of the Obligations
and otherwise in form and substance satisfactory to
the Agent, (C) such promissory notes are pledged to
the Agent for the ratable benefit of the Lenders
pursuant to documentation in form and substance
satisfactory to the Agent and (D) such notes are
delivered to the Agent with note powers executed in
blank;
(viii) (A) the Senior Notes and (B) the SDW
Subordinated Note;
(ix) Indebtedness under the Senior Note
Guaranty;
(x) Indebtedness for capital leases not
to exceed $3,500,000; and
(xi) Indebtedness under the Existing
Letters of Credit in an aggregate amount not to
exceed $543,000.
(c) LEASE OBLIGATIONS. The Credit Parties will not,
nor will they permit any of their Restricted Subsidiaries to, at any time
create, incur or assume any obligations as lessee for the rental or hire of
other real or personal property of any kind under leases or agreements to lease
other than operating leases existing on the Closing Date, leases entered into by
any of the Credit Parties or their Restricted Subsidiaries in the ordinary
course of their business and capital leases permitted under this Agreement.
(d) CORPORATE CHANGES, ETC. The Credit Parties will
not, nor will they permit any of their Restricted Subsidiaries to, directly or
indirectly, at any time merge or consolidate or otherwise alter or modify the
Credit Parties' or any such Restricted Subsidiary's Governing Documents,
corporate names, mailing addresses, principal places of business, structure,
status or existence, or liquidate or dissolve itself (or suffer any liquidation
or dissolution), except, provided the Agent receives five (5) Business Days'
prior written notice thereof, for the merger of any Borrower with and into
another Borrower or the merger of a Borrower's Restricted Subsidiary with
another Restricted Subsidiary or with a Borrower.
(e) SALES, ETC. OF ASSETS. The Credit Parties will
not, nor will they permit any of their Restricted Subsidiaries to, directly or
indirectly, at any time make any
-101-
Asset Sale other than, subject to Section 2.9(d):
(i) sales of Inventory and obsolete equipment in the
ordinary course of its business;
(ii) the sale of any other assets that do not
constitute Collateral (other than the capital stock of the
Borrowers), PROVIDED that (A) such sales are for fair value,
(B) at least eighty percent (80%) of the aggregate
consideration is paid in full in cash at the time of sale and
(C) the aggregate amount of all such sales does not exceed
$1,000,000 in the aggregate for any fiscal year;
(iii) so long as no Event of Default shall occur and
be continuing, the grant of any option or other right to
purchase any asset in a transaction which would be permitted
under the provisions of the immediately preceding clause (ii);
(iv) Asset Sales by a Credit Party or one of its
Subsidiaries to another Credit Party to the extent permitted
by Section 7.2(g);
(v) the Central Sale; PROVIDED that the Central
Proceeds (A) shall not be less than $80,000,000 in immediately
available funds and (B) shall be applied on the Closing Date
in accordance with Section 5.1(o); and
(vi) the Ivex Sale.
(f) INVESTMENTS IN OTHER PERSONS. The Credit Parties
will not, nor will they permit any of their Restricted Subsidiaries to, directly
or indirectly, at any time make or hold any Investment in any Person (whether in
cash, securities or other property of any kind) other than:
(i) Investments in Cash Equivalents so long as the
Agent has a perfected, first priority Lien on such Cash
Equivalents;
(ii) Advances or loans made in the ordinary course of
business not to exceed $250,000 outstanding at any one time to
any one Person and $1,000,000 in the aggregate outstanding at
any one time;
(iii) Investments between the Credit Parties and
their Restricted Subsidiaries in existence as of the date
hereof and described on Schedule 7.2(f);
(iv) the endorsement of instruments for collection or
deposit in the ordinary course of
-102-
business;
(v) stock or obligations issued to a Credit Party by
any Person (or the representative of such Person) in respect
of Indebtedness of such Person owing to such Credit Party in
connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment
of the debts of such Person; PROVIDED, THAT, the original of
any such stock or instrument evidencing such obligations and
issued to a Credit Party or any of its Restricted Subsidiaries
shall be promptly delivered to the Agent, upon the Agent's
request, together with such stock power, assignment or
endorsement by such Credit Party or Subsidiary as the Agent
may request;
(vi) Investments in existence on the date hereof and
described on Schedule 7.2(f);
(vii) Investments of up to $60,000,000 of the Central
Proceeds in the Designated Accounts, pending application of
such proceeds in accordance with the second sentence of
Section 2.9(d);
(viii) So long as no Default or Event of Default has
occurred and is continuing or would result therefrom, upon the
Agent's receipt of a certificate from an Authorized Officer of
the Guarantor in reasonable detail certifying that the
Guarantor will promptly apply a specified amount of funds in
the Designated Accounts toward one of the permitted uses set
forth in clauses (x), (y) or (z) of Section 2.9(d) and a legal
opinion reasonably satisfactory to the Agent that such
application will not violate the Indenture, then the Guarantor
may apply such amount in accordance with such clauses;
(ix) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom and the
Unused Availability is at least $10,000,000 after giving
effect thereto, upon prior written notice to the Agent and the
Lenders, Permitted Acquisitions; PROVIDED, HOWEVER, that (A)
prior to any such Permitted Acquisition the Credit Parties
shall deliver to the Agent and the Lenders good faith
projections in form and substance acceptable to the Agent and
the Lenders which demonstrate that the Credit Parties will
remain in compliance with the covenants in this Credit
Agreement after giving effect to such Acquisition and (B) the
Net Debt to Adjusted EBITDA Ratio of the Guarantor and its
Restricted Subsidiaries calculated on a pro forma basis
satisfactory to the Majority Lenders after giving effect to
such Permitted
-103-
Acquisition and the Central Sale is not greater than 6.5:1.0;
(x) such other Investments as the Agent and the
Majority Lenders may approve in writing in their sole
discretion; and
(xi) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom and the
Consolidated Interest Coverage Ratio is at least 1.6:1.00 for
the most recently ended fiscal quarter, upon prior written
notice to the Agent and the Lenders, Acquisitions in an
Unrestricted Subsidiary with Capital Stock of the Guarantor.
(g) AFFILIATE TRANSACTIONS. The Credit Parties will
not, nor will they permit any of their Restricted Subsidiaries to, at any time
enter into, directly or indirectly, any transaction with (including, without
limitation, the purchase, sale or exchange of property or the rendering of any
service to) any Affiliate of the Credit Parties without the consent of the
Majority Lenders unless such transaction is in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's or such
Restricted Subsidiary's business, as the case may be, and upon fair and
reasonable terms no less favorable to such Credit Party or such Restricted
Subsidiary than could be obtained in a comparable arm's-length transaction with
an unaffiliated Person and such transaction or series of transactions does not
involve aggregate payments in excess of $250,000; PROVIDED HOWEVER that the
foregoing shall not prohibit (i) any employment agreement entered into by a
Credit Party in the ordinary course of business and consistent with the past
practices of the Credit Party, (ii) transactions between or among a Credit Party
(other than the Guarantor) and another Credit Party (other than the Guarantor),
(iii) so long as no Default or Event of Default has occurred and is continuing
or would result therefrom, payments pursuant to agreements or contracts with, or
for the benefit of, any Affiliate, which exists on the date of this Agreement
and which are listed on Schedule 6.1(ad), (iv) transactions permitted by, and
complying with, Section 7.2(h) and (v) the payment by the Guarantor to Xxxxx
Corporation of management fees of up to $100,000 per year. The Credit Parties
will not, nor will they permit any of their Restricted Subsidiaries to, sell any
goods or render any services to Electrical Tape on credit terms (it being
understood that Electrical Tape shall pay for any such goods or services
immediately upon its receipt thereof).
(h) DIVIDENDS, EXCHANGE, ETC. The Credit Parties will
not, nor will they permit any of their Restricted Subsidiaries to, directly or
indirectly, declare or pay any dividends (other than solely in shares of stock)
on, or make any payment on account of, or set apart assets for a sinking or
other
-104-
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of its capital stock or any warrants,
options or rights to purchase any such capital stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof
(including, without limitation, any payment on account of the Contingent
Rights), either directly or indirectly, whether in cash or property or in
obligations of the Credit Parties or any of their Restricted Subsidiaries,
except that (A) Subsidiaries of the Borrowers may pay dividends to the
Borrowers, (B) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, the Borrowers may pay dividends to the
Guarantor (i) to the extent (and only to the extent) required to enable the
Guarantor to pay accrued and unpaid interest on the Senior Notes, (ii) to pay
taxes pursuant to the Tax Sharing Agreement, (iii) to make payments in the
ordinary course of business pursuant to the Overhead Allocation Agreement and
(iv) to enable the Guarantor to make Permitted Acquisitions, in each case to
the extent such payments are actually made by the Guarantor and (C) with the
prior written consent of the Majority Lenders, the Guarantor may make cash
payments on account of the Contingent Rights.
(i) CHANGE IN NATURE OF BUSINESS. The Credit Parties
will not, nor will they permit any of their Restricted Subsidiaries to, at any
time make any material change in the lines of their business as carried on at
the date hereof.
(j) CHARTER AMENDMENTS, ETC. The Credit Parties will
not, nor will they permit any of their Restricted Subsidiaries to, at any time
amend their certificates of incorporation.
(k) ACCOUNTING CHANGES. The Credit Parties will not,
nor will they permit any of their Restricted Subsidiaries to, at any time make
or permit any change in accounting policies or reporting practices, except as
required by GAAP.
(l) PREPAYMENTS AND MATERIAL AMENDMENTS OF MATERIAL
CONTRACTS. The Credit Parties will not, nor will they permit any of their
Restricted Subsidiaries to, at any time (i) prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Indebtedness, other
than the prepayment of the Loans in accordance with the terms of this Credit
Agreement or the prepayment or redemption of the Senior Notes with the Net Cash
Proceeds from the Central Sale to the extent provided in the second sentence of
Section 2.9(d), (ii) amend, modify, cancel or terminate or permit the amendment,
modification, cancellation or termination of, any of the Material Contracts,
except in the event that such amendments or modifications could not have a
Material Adverse Effect or (iii) amend, modify, cancel or
-105-
terminate or permit the amendment, modification, cancellation or termination
of the Tax Sharing Agreement or the Overhead Allocation Agreement. Without
limiting the generality of the foregoing, the Credit Parties shall not, and
shall not permit any of their Restricted Subsidiaries to, amend, modify or
change, or consent or agree to any amendment, modification or change, to any
of the terms of the Senior Notes, the Intercompany Subordinated Notes, the
SDW Subordinated Note, the SDW Subordinated Guaranty and any other
Indebtedness subordinated to the payment of the Obligations (A) if the effect
of such amendment, modification or change is to (directly or indirectly) (i)
increase the amount of any payment of principal thereof, (ii) increase the
interest rate or premium payable thereon, (iii) increase the amount of fees
or any other amounts payable with respect thereto, (iv) shorten the scheduled
amortization or average weighted life thereof, (v) shorten the date for
payment of interest or principal thereon, (vi) shorten the final maturity
thereof or (vii) change any covenant or any event of default or condition to
an event of default thereunder, or (B) if such amendment, modification or
change would, together with all other amendments, modifications or changes
made, increase materially the obligations of such Credit Party or any such
Restricted Subsidiary or confer additional material rights on the holder of
the Intercompany Subordinated Notes, the SDW Subordinated Note, the Senior
Notes or such other Indebtedness subordinated to the payment of the
Obligations. The Credit Parties will not, nor will they permit any of their
Restricted Subsidiaries, to make any cash payments on account of the SDW
Subordinated Note at any time, except (i) prepayments of the SDW Subordinated
Note to the extent expressly permitted by the last sentence of Section
2.9(d), (ii) so long as, both before and after giving effect thereto, no
Event of Default has occurred and is continuing and Unused Availability is at
least $15,000,000 after giving effect thereto, mandatory prepayments of
principal of the SDW Subordinated Note in accordance with the terms thereof
as in effect on March 17, 1998 and (iii) so long as, both before and after
giving effect thereto, no Event of Default has occurred and is continuing and
the Credit Parties would be in compliance with Section 7.2(u) on a pro forma
basis, regularly scheduled payments of interest on the SDW Subordinated Note
in accordance with the terms thereof as in effect on March 17, 1998.
(m) NEGATIVE PLEDGE. The Credit Parties will not, nor
will they permit any of their Restricted Subsidiaries to, at any time enter into
or suffer to exist, any agreement prohibiting or conditioning the creation or
assumption of any Lien upon any of their property or assets other than (i) in
favor of the Agent and the Lenders, (ii) in connection with Liens described in
Section 7.2(a)(iv), but solely with respect to the property so acquired, or
(iii) in favor of the trustee for the benefit of the holders of the Senior Notes
so long as there is no restriction on the liens granted under this Agreement.
-106-
(n) LIMITATION ON SALES AND LEASEBACKS. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries to,
at any time enter into any arrangement with any Person providing for the leasing
by such Credit Party or such Subsidiary of real or personal property which has
been or is to be sold or transferred by such Credit Party or such Subsidiary to
such Person or to any other Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations of such
Credit Party or such Subsidiary.
(o) PARTNERSHIPS; RESTRICTED SUBSIDIARIES; JOINT
VENTURES. The Credit Parties will not, nor will they permit any of their
Restricted Subsidiaries to, at any time create any direct or indirect
subsidiary, enter into any joint venture or similar arrangement or become a
partner in any general or limited partnership except as otherwise permitted by
Section 7.2(f) and except for the joint venture created with Ivex Packaging
Corporation as a result of the Ivex Sale; provided that a Credit Party may,
subject to Section 7.2(f), create or acquire a Restricted Subsidiary if the
following conditions are met: (i) such new Subsidiary shall promptly guarantee
the Obligations and grant the Agent liens and security interests in all of its
Accounts, Inventory, Equipment and other assets for the benefit of the Lenders
pursuant to documentation in form and substance satisfactory to the Agent; and
(ii) the Credit Parties shall take and shall cause such Subsidiary to take, all
such further actions and execute all such further documents and instruments as
the Agent reasonably determines in its sole discretion to be necessary or
desirable to cause the execution, delivery and performance of such documentation
to be duly authorized and to perfect, protect or enforce the security interests
and Liens (and the priority status thereof) granted to the Agent.
(p) ADDITIONAL BANK ACCOUNTS. The Borrowers and the
Guarantor will not at any time open, maintain or otherwise have or permit their
Restricted Subsidiaries to enter into or otherwise have any checking, savings or
other accounts at any bank or other financial institution, or any other account
where money is or may be deposited or maintained with any Person, other than the
Collection Accounts, the Designated Accounts, the operating account of the
Guarantor at Comerica Bank-Texas (the "GUARANTOR ACCOUNT") or as otherwise
agreed to in writing by the Agent except those accounts listed on Schedule
7.2(p).
(q) EXCESS CASH. Each Borrower and Restricted
Subsidiary will not, and will not permit any of their Restricted Subsidiaries
to, directly or indirectly, maintain in the aggregate in all deposit accounts of
the Borrowers, and their Restricted Subsidiaries (other than payroll accounts)
total cash balances and Investments permitted by Section 7.2(f)(i) in excess of
$25,000 at any time during which any Revolving Loans are outstanding, the
Guarantor will not maintain in excess of
-107-
$500,000 in the Guarantor Account and the Guarantor will not maintain any
amounts in the Designated Accounts other than a portion of the Central
Proceeds and interest thereon.
(r) CAPITAL EXPENDITURES. The Credit Parties and
their Restricted Subsidiaries will not at any time make or commit to make any
payments for Capital Expenditures other than Capital Expenditures which are
directly related to the business conducted by the Borrowers and their Restricted
Subsidiaries on the Closing Date:
(i) in the aggregate not exceeding the amount (the
"BASE AMOUNT") for each six month period (or portion thereof)
set forth below:
Period Amount
------ ------
July 1, 1999 through December 31, 1999 $1,400,000
January 1, 2000 through June 30, 2000 $1,600,000
July 1, 2000 through December 31, 2000 $1,700,000
Each six month period ended each June 30 $1,700,000
and December 31 thereafter
PROVIDED, HOWEVER, that for any six month period commencing
with the six month period ending December 31, 1999, the Base
Amount set forth above may be increased by carrying over to
any such six month period any portion of the Base Amount not
spent in the immediately preceding six month period (but not
in any period prior thereto); PROVIDED, FURTHER, THAT the
Borrower may, with the prior written consent of the Agent,
apply up to $5,000,000 of the Central Proceeds to make Capital
Expenditures to purchase a short-run coater machine; and
(ii) at any time in an aggregate amount equal to the
Equity Proceeds Amount at such time (which Capital
Expenditures will not be included in any determination under
clause (i) above).
(s) SECURITIES ACCOUNTS. The Credit Parties will not,
and will not permit any of their Restricted Subsidiaries to, (i) establish or
maintain any Securities Account unless the Agent shall have received a Control
Agreement in respect of such Securities Account, duly executed by the Credit
Party and the securities intermediary parties thereto that is in full force and
effect, or (ii) transfer any financial assets from any Securities Account;
PROVIDED, HOWEVER, that, so long as no Event of Default has occurred and is
continuing or would result therefrom, the
-108-
Credit Parties and their Restricted Subsidiaries may (A) use such assets to
the extent permitted by this Credit Agreement, or (B) sell or trade such
assets in the ordinary course of business so long as the proceeds of such
sales or trades are deposited in a Collection Account or a Securities Account
in respect of which the Agent has received a Control Agreement duly executed
by the Credit Party and the securities intermediary or depository party
thereto and that otherwise is in full force and effect.
(t) MINIMUM CONSOLIDATED NET WORTH. The Credit
Parties will not permit the Consolidated Net Worth, at any time during each
fiscal period set forth below, to be less than (i) 100% of the aggregate Net
Cash Proceeds received by a Credit Party from any Person (other than a
Subsidiary of a Credit Party) from the issuance or sale of capital stock of any
Credit Party from the Closing Date through the last day of such fiscal period,
PLUS (ii) the amount set forth below opposite such period:
-109-
Period Consolidated
------
Net Worth
---------
July 1, 1999 through September 30, 1999 $10,900,000
October 1, 1999 through December 31, 1999 $10,000,000
January 1, 2000 through March 31, 2000 $8,800,000
April 1, 2000 through June 30, 2000 $6,700,000
July 1, 2000 through September 30, 2000 $6,000,000
At all times thereafter $5,500,000
PROVIDED, that with respect to all periods in which Senior Notes are prepaid or
redeemed with the Net Cash Proceeds from the Central Sale, Consolidated Net
Worth shall be adjusted for extraordinary gains or losses and finance charges
related to such prepayment or redemption and the interest expense (net of taxes)
on the Senior Notes so prepaid or redeemed.
(u) MINIMUM CONSOLIDATED FIXED CHARGE COVERAGE RATIO.
The Credit Parties will not permit Consolidated Fixed Charge Coverage Ratio, for
each fiscal period set forth below, to be less than the ratio set forth below
opposite such period:
Period Ratio
------ -----
July 1, 1999 through September 30, 1999 .50:1.00
July 1, 1999 through December 31, 1999 .75:1.00
July 1, 1999 through March 31, 2000 .85:1.00
July 1, 1999 through June 30, 2000 .85:1.00
October 1, 1999 through September 30, 2000 .95:1.00
January 1, 2000 through December 31, 2000 .95:1.00
Four fiscal quarters ended each March 31, 1.00:1.00
June 30, September 30 and December 31
thereafter
-110-
(v) CONTINGENT OBLIGATIONS. The Credit Parties shall
not, and shall not permit any of their Restricted Subsidiaries to, directly or
indirectly incur, assume, or suffer to exist any Contingent Obligation,
excluding (i) indemnities given in connection with the sale of Inventory or
other asset dispositions permitted hereunder, (ii) Contingent Obligations for
Indebtedness permitted to be incurred under Section 7.2(b) (excluding Section
7.2(b)(viii)(B)), (iii) the SDW Subordinated Guaranty and (iv) guaranties,
substantially in the form of the SDW Subordinated Guaranty, made by Restricted
Subsidiaries pursuant to Section 6.4 of the SDW Subordinated Note as in effect
on March 17, 1998.
(w) NO PROHIBITED TRANSACTIONS UNDER ERISA. The
Credit Parties shall not, and shall not permit any of the Subsidiaries to,
directly or indirectly:
(i) engage in any prohibited transaction which could
reasonably be expected to result in a material civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of
the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been
previously obtained from the Department of Labor;
(ii) permit to exist with respect to any Plan any
accumulated funding deficiency (as defined in Sections 302 of
ERISA and 412 of the Internal Revenue Code), whether or not
waived;
(iii) fail to pay timely required contributions or
annual installments due with respect to any waived funding
deficiency to any Benefit Plan, which failure could be
reasonably expected to have a Material Adverse Effect or
result in any material liability of a Credit Party, any of its
Subsidiaries or any ERISA Affiliate;
(iv) terminate any Benefit Plan where such event
would result in any material liability of a Credit Party, any
of its Subsidiaries or any ERISA Affiliate under Title IV of
ERISA;
(v) fail to make any required contribution or payment
to any Multiemployer Plan;
(vi) fail to pay any required installment or any
other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or
other payment, which failure could be reasonably expected to
have a Material Adverse Effect or result in any material
liability of a Credit Party, any of its Subsidiaries or any
ERISA Affiliate;
-111-
(vii) amend a Plan resulting in an increase in
current liability for the plan year such that either of a
Credit Party, any of its Subsidiaries or any ERISA Affiliate
is required to provide security to such Plan under Section
401(a)(29) of the Internal Revenue Code; or
(viii) withdraw from any Multiemployer Plan where
such withdrawal is reasonably likely to result in any material
liability of any such entity under Title IV of ERISA.
(x) HEDGING TRANSACTIONS. The Credit Parties shall
not, and shall not permit any of their Restricted Subsidiaries to, engage in any
speculative hedging or similar transactions.
(y) USE OF CENTRAL PROCEEDS. The Guarantor shall not,
and shall not permit any of its Subsidiaries to, use any of the Central Proceeds
for any purpose, except (i) up to $36,000,000 of the Central Proceeds may be
used to repay Existing Indebtedness owed under the Existing Credit Agreement and
(ii) the balance of the Central Proceeds may be used either (A) to prepay the
Loans and permanently reduce the Commitments and the Line of Credit or (B) for
one of the permitted uses set forth in clauses (x), (y) or (z) of Section
2.9(d).
ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an "EVENT OF DEFAULT":
(a) the Borrowers shall fail to pay (i) any interest,
Fees, Expenses or other Obligations (other than principal) when due or within
three (3) Business Days of when due, whether at stated maturity, by
acceleration, or otherwise or (ii) any principal when due, whether at stated
maturity, by acceleration or otherwise; or
(b) any representation or warranty made by any Credit
Party under or in connection with any Credit Document shall prove to have been
incorrect in any material respect when made or deemed made; or
(c) a Credit Party shall fail to perform or observe
any term, covenant or agreement contained in Section 7.1(b), (c), (e) and (f)
and 7.2 of this Credit Agreement,
-112-
Section 4(b), (d) or (e) of the Security Agreement, or Section 2(h) of the
Intellectual Property Security Agreement; or
(d) any Credit Party shall fail to perform or observe
any term, covenant or agreement contained in any Credit Document (other than as
set forth in Sections 8.1(a) and (c)) on its part to be performed or observed or
a Credit Party or any of its Restricted Subsidiaries shall fail to comply with
any provisions contained in any Material Contract to which it is a party if such
failure shall remain unremedied for the lesser of thirty (30) days after its
occurrence or ten (10) days after notice from the Agent to such Credit Party; or
(e) a Credit Party or any of its Restricted
Subsidiaries (i) shall fail to pay any Indebtedness or any interest or premium
thereon, when due (whether at scheduled maturity or by required prepayment,
acceleration, demand or otherwise), or (ii) shall otherwise be in breach or
default in any of its obligations under any agreement with respect to any such
Indebtedness, if the effect of such failure to pay, breach or default is to
cause such Indebtedness to become due or redeemed or permit the holder or
holders of Indebtedness in an amount in excess of $1,000,000 (or a trustee or
agent on behalf of such holder or holders) to declare such Indebtedness due or
require such Indebtedness to be redeemed prior to its stated maturity; or
(f) any Credit Party shall dissolve, wind up or
otherwise cease its business; or
(g) a Credit Party or any of its Restricted
Subsidiaries shall become the subject of (i) an Insolvency Event as set forth in
clause (e) of the definition of Insolvency Event that is not resolved or
dismissed within sixty (60) days or (ii) any Insolvency Event except as set
forth in clause (e) of the definition of Insolvency Event; or
(h) any judgment or order for the payment of money in
excess of $1,000,000 shall be rendered against any Credit Party or any of its
Restricted Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of ten (10) consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(i) any non-monetary judgment or order shall be
rendered against a Credit Party or any of its Restricted Subsidiaries that could
have a Material Adverse Effect, and there shall be any period of thirty (30)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
-113-
(j) any covenant, agreement or obligation of any
Credit Party contained in or evidenced by any of the Credit Documents or any of
the subordination provisions in any Intercompany Subordinated Note, in the SDW
Subordinated Note or in the SDW Subordinated Guaranty, shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms; any Credit Party shall deny or disaffirm its obligations under any of the
Credit Documents or any Liens granted in connection therewith; or any Liens
granted in any of the Collateral shall be determined to be void, voidable or
invalid, are subordinated or are not given the priority contemplated by this
Credit Agreement; or
(k) a Collateral Document shall for any reason (other
than pursuant to the terms thereof) cease to create a valid and, except as
otherwise permitted under Section 7.2(a), perfected first priority Lien on the
Collateral purported to be covered thereby; or
(l) a Change in Control shall have occurred; or
(m) the President or Chief Executive Officer of the
Guarantor shall at any time for any reason cease to be employed by the Guarantor
and shall not be replaced to the satisfaction of the Agent within 90 days
thereof and such event, in the reasonable determination of the Majority Lenders,
has a Material Adverse Effect; or
(n) the occurrence of any event or condition that, in
the reasonable judgment of the Majority Lenders, could be reasonably expected to
have a Material Adverse Effect.
SECTION VII.2 ACCELERATION, TERMINATION AND CASH
COLLATERALIZATION. Upon the occurrence and during the continuance of an Event of
Default, the Agent may take any or all of the following actions, without
prejudice to the rights of the Agent or any Lender to enforce its claims against
the Credit Parties:
(a) ACCELERATION. Upon the written request of the
Required Lenders, and by delivery of written notice to the Borrowers from the
Agent, all Obligations shall be declared to be immediately due and payable
(except with respect to any Event of Default with respect to a Credit Party set
forth in Section 8.1(g) hereof, in which case all Obligations shall
automatically become immediately due and payable without the necessity of any
request of the Required Lenders or notice or other demand to the Borrowers)
without presentment, demand, protest or any other action or obligation of the
Agent or any Lender.
(b) TERMINATION OF COMMITMENTS. Upon the written
request of the Required Lenders, and by delivery of written
-114-
notice to the Borrowers from the Agent, the Commitments and the Line of
Credit shall be immediately terminated, the Agent shall have no obligation to
use its best efforts to cause a bank to issue Letters of Credit and, at all
times thereafter, all Revolving Loans made by any Lender pursuant to this
Credit Agreement shall be at such Lender's sole discretion, unless such Event
of Default is cured or waived in accordance with Section 11.11.
(c) CASH COLLATERALIZATION. On demand of the Agent or
the Required Lenders the Borrowers shall immediately deposit with the Agent for
each Letter of Credit then outstanding, cash or Cash Equivalents in an amount
equal to 105% of the greatest amount drawable thereunder.
SECTION VII.3 RESCISSION OF ACCELERATION. After acceleration
of the maturity of the Revolving Loans, if the Borrowers pay all accrued
interest and all principal due (other than by reason of the acceleration) and
all Defaults and Events of Default are otherwise remedied or waived in
accordance with Section 11.11, the Required Lenders may elect in their sole
discretion, to rescind the acceleration and return any cash collateral. (This
Section is intended only to bind all of the Lenders to a decision of the
Required Lenders and not to confer any right on the Borrowers, even if the
described conditions for the Required Lenders' election may be met.)
SECTION VII.4 REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, the Agent and the Lenders shall have all
rights and remedies with respect to the Obligations under the Credit Documents
and the Collateral available to it as creditors under applicable law and the
Credit Documents and the Agent may do any or all of the following:
(a) remove for copying all documents, instruments,
files and records (including the copying of any computer records) relating to
the Accounts or use (at the joint and several expense of the Borrowers) such
supplies or space of any Credit Party at such Credit Party's place of business
necessary to properly administer and collect the Accounts thereon;
(b) accelerate or extend the time of payment,
compromise, issue credits, or bring suit on the Accounts (in the name of the
Borrowers or the Lenders) and otherwise administer and collect the Accounts;
(c) sell, assign and deliver the Accounts and any
returned, reclaimed or repossessed merchandise, with or without advertisement,
at public or private sale, for cash, on credit or otherwise, subject to
applicable law; and
-115-
(d) foreclose the security interests created pursuant
to the Credit Documents by any available procedure, or take possession of any or
all of the Collateral without judicial process and enter any premises where any
Collateral may be located for the purpose of taking possession of or removing
the same.
Any Lender may bid or become a purchaser at any sale, free from any right of
redemption, which right is expressly waived by the Credit Parties. If notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) Business Days notice shall constitute reasonable notification. The Credit
Parties will assemble the Collateral and make it available to the Agent at such
locations as the Agent may specify, whether at the premises of such Credit Party
or elsewhere, and will make available to the Agent the premises and facilities
of such Credit Party for the purpose of the Agent's taking possession of,
removing or putting the Collateral in saleable form.
SECTION VII.5 RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that any Lender may have under applicable
law, upon the occurrence of any Event of Default, and whether or not any Lender
has made any demand or the Obligations of any Credit Party have matured, each
Lender shall have the right to appropriate and apply to the payment of the
Obligations of a Credit Party all deposits and other obligations then or
thereafter owing by such Lender to such Credit Party. Each Lender exercising
such rights shall notify the Agent thereof (and the Agent shall promptly notify
the Borrowers thereof) and any amount received as a result of the exercise of
such rights shall be shared in accordance with Section 2.7.
SECTION VII.6 LICENSE FOR USE OF SOFTWARE AND OTHER
INTELLECTUAL PROPERTY. Unless expressly prohibited by the licensor thereof, if
any, the Agent is hereby granted a license to use all computer software
programs, data bases, processes, assets and materials used by the Credit Parties
and their Subsidiaries in connection with their businesses or in connection with
the Collateral. The Agent agrees not to use any such license prior to the
occurrence of an Event of Default without giving the Borrowers prior notice.
-116-
SECTION VII.7 NO MARSHALING; DEFICIENCIES; REMEDIES
CUMULATIVE. The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights to liquidate all or substantially all of the Collateral
(after deducting all of the Agent's Expenses related thereto) shall be applied
by the Agent to the payment of the Obligations to the Agent and the Lenders,
whether due or to become due, in such order as the Agent may elect. The Credit
Parties shall remain jointly and severally liable to the Agent and the Lenders
for any deficiencies, and the Agent and the Lenders in turn agree to remit to
the Credit Parties or their respective successors or assigns, any surplus
resulting therefrom. The foregoing remedies are not intended to be exhaustive
and the full or partial exercise of any of them shall not preclude the full or
partial exercise of any other available remedy under this Credit Agreement,
under any other Credit Document, at equity or at law.
ARTICLE VIII
CROSS GUARANTIES
SECTION VIII.1 GUARANTEE. Each of the Borrowers, jointly and
severally, unconditionally and irrevocably guarantees to the Agent, for the
benefit of the Lenders the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations. Each of the
Borrowers hereby further agrees, jointly and severally, to pay any and all
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) which may be paid or incurred by the Agent in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and enforcing any rights with respect
to, or collecting against, the Borrowers under this Article IX.
-117-
SECTION VIII.2 OBLIGATIONS UNCONDITIONAL. The obligations of
each of the Borrowers under Section 9.1 are continuing, absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the other Borrowers under this Agreement or
any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Obligations or any other collateral security therefor or guaranty or
right of offset with respect thereto at any time or from time to time held by
the Agent or the Lenders, and, to the fullest extent permitted by applicable law
irrespective of any other circumstance whatsoever (with or without notice to or
knowledge of the Borrowers) that might otherwise constitute, or might be
construed to constitute, a legal or equitable discharge or defense, setoff or
counterclaim of the other Borrowers for the Obligations, or the Borrowers under
this Article IX, in bankruptcy or in any other instance, it being the intent of
this Section 9.2 that the obligations of each of the Borrowers under this
Article IX shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of each of the Borrowers under this Article IX which shall remain
absolute and unconditional as described above:
(i) at any time or from time to time, without notice
to the Borrowers, the time for any performance of or
compliance with any of the Obligations shall be extended, or
such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the
provisions of this Agreement or any other agreement or
instrument referred to herein or therein shall be done or
omitted;
(iii) the maturity of any of the Obligations shall be
accelerated, or any of the Obligations shall be modified,
supplemented or amended in any respect, or any right under
this Credit Agreement or any other Credit Document or
agreement or instrument referred to herein or therein shall be
waived or any other guarantee of any of the Obligations or any
security therefor shall be released or exchanged in whole or
in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in
favor of, the Agent or any Lender as security for any of the
Obligations shall fail to be perfected.
Each of the Borrowers waives any and all notice of the creation,
-118-
renewal, extension or accrual of any of the Obligations and notice of or
proof of reliance by any Lender upon this cross guaranty or acceptance of
this cross guaranty; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this cross guaranty; and all dealings
between any of the Borrowers, on the one hand, and the Agent and the Lenders,
on the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this cross guaranty. Each of the Borrowers
hereby expressly waives diligence, presentment, demand of payment, protest
and all notices whatsoever, and any requirement that the Agent or any Lender
exhaust any right, power or remedy or proceed against any Borrower under this
Credit Agreement or any other Credit Document or agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Obligations. When pursuing its
rights and remedies under this Article IX against a Borrower, the Agent and
each Lender may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the other Borrowers or any other Person or
against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Agent or any Lender to
pursue such other rights or remedies or to collect any payments from the
other Borrowers or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of setoff, or
any release of the other Borrowers or any such other Person or of any such
collateral security, guarantee or right of setoff, shall not relieve the
Borrowers of any liability under this Article IX, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Agent and the Lenders against the Borrowers.
SECTION VIII.3 REINSTATEMENT. The obligations of each of the
Borrowers under this Article IX shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Borrowers in
respect of the Obligations is rescinded or must be otherwise restored by the
Agent or any Lender, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise.
-119-
ARTICLE IX
THE AGENT
SECTION IX.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates TBCC as its Agent
and irrevocably authorizes the Agent to take action on such Lender's behalf
under the Credit Documents and to exercise the powers and to perform the duties
described therein and to exercise such other powers as are reasonably incidental
thereto. The Agent may perform any of its duties by or through its agents or
employees.
(b) Other than the Borrowers' rights under Section
10.9, the provisions of this Article X are solely for the benefit of the Agent
and the Lenders, and none of the Credit Parties shall have any rights as a third
party beneficiary of any of the provisions hereof. The Agent shall act solely as
agent of the Lenders and assumes no obligation toward or relationship of agency
or trust with or for any Credit Party.
SECTION IX.2 NATURE OF DUTIES OF AGENT. The Agent shall not
have any duties or responsibilities except those expressly set forth in the
Credit Documents. Neither the Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature. The Agent shall not have a fiduciary relationship
in respect of any Lender or any participant of any Lender.
SECTION IX.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the
Agent, each Lender, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial or other
condition and affairs of each Credit Party in connection with the taking or not
taking of any action in connection herewith and (ii) its own appraisal of the
creditworthiness of each Credit Party, and, except as expressly provided in this
Credit Agreement, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender
for any recitals, statements, information, representations
-120-
or warranties herein or in any document, certificate or other writing delivered
in connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of this Credit
Agreement or the Revolving Notes or the financial or other condition of any
Credit Party. The Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Credit Agreement or the Revolving Notes, or the financial
condition of any Credit Party, or the existence or possible existence of any
Default or Event of Default, unless specifically requested to do so in writing
by any Lender.
SECTION IX.4 CERTAIN RIGHTS OF THE AGENT. The Agent may
request instructions from the Majority Lenders at any time. If the Agent
requests instructions from the Majority Lenders with respect to any action or
inaction, the Agent shall be entitled to await instructions from the Majority
Lenders before such action or inaction. No Lender shall have any right of action
based upon the Agent's action or inaction in response to instructions from the
Majority Lenders.
SECTION IX.5 RELIANCE BY AGENT. The Agent may rely upon
written or telephonic communication it believes to be genuine and to have been
signed, sent or made by the proper person. The Agent may obtain the advice of
legal counsel (including counsel for the Borrowers with respect to matters
concerning the Borrowers), independent public accountants and other experts
selected by it and shall have no liability for any action or inaction taken or
omitted to be taken by it in good faith based upon such advice.
SECTION IX.6 INDEMNIFICATION OF AGENT. To the extent the Agent
is not reimbursed and indemnified by the Borrowers, each Lender will reimburse
and indemnify the Agent to the extent of its Proportionate Share for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever (including all Expenses) which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder or
otherwise relating to the Credit Documents unless resulting from the Agent's
gross negligence or willful misconduct. The agreements contained in this Section
shall survive any termination of this Credit Agreement and the other Credit
Documents and the payment in full of the Obligations.
-121-
SECTION IX.7 THE AGENT IN ITS INDIVIDUAL CAPACITY. In its
individual capacity, the Agent shall have the same rights and powers hereunder
as any other Lender or holder of a Revolving Note or participation interests and
may exercise the same as though it was not performing the duties specified
herein. The terms "Lenders," "Majority Lenders," "holders of Revolving Notes,"
or any similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent and its Affiliates may
accept deposits from, lend money to, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory or other business with
the Borrowers or any Affiliate of the Borrowers as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Borrowers for services in connection with this Credit Agreement and otherwise
without having to account for the same to the Lenders.
SECTION IX.8 HOLDERS OF REVOLVING NOTES. The Agent may deem
and treat the payee of any Revolving Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Revolving Note, shall be conclusive and binding on
any subsequent holder, transferee or assignee of such Revolving Note or of any
Revolving Note or Revolving Notes issued in exchange therefor.
SECTION IX.9 SUCCESSOR AGENT.
(a) The Agent may, upon ten (10) Business Days'
notice to the Lenders and the Borrowers, resign by giving written notice thereof
to the Lenders and the Borrowers. The Agent's resignation shall be effective
upon the appointment of a successor Agent.
(b) Upon receipt of the Agent's resignation, the
Majority Lenders may appoint a successor Agent which shall also be a Lender.
Unless an Event of Default shall have occurred and be continuing at the time of
such appointment, the successor Agent shall be subject to approval by the
Borrowers, which approval shall not be unreasonably withheld and shall be
delivered to the Majority Lenders within ten (10) Business Days after the
Borrowers' receipt of notice of a proposed successor Agent. If a successor Agent
has not accepted its appointment within fifteen (15) Business Days, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent.
(c) Upon its acceptance of the agency hereunder, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent,
-122-
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement. The retiring Agent shall continue to have the benefit of
this Article X for any action or inaction while it was Agent.
SECTION IX.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to
enter into the Collateral Documents for the benefit of the Lenders. Except as
otherwise set forth herein, any action or exercise of powers by the Majority
Lenders under the Credit Documents, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders. Prior to an Event of Default, without notice to or consent from any
Lender, the Agent may take any action necessary or advisable to perfect and
maintain the perfection of the Liens upon the Collateral.
(b) The Agent is authorized to release any Lien
granted to or held by the Agent upon any Collateral (i) upon termination of the
Commitments and all outstanding Letters of Credit and payment and satisfaction
of all of the Obligations, (ii) required to be delivered from permitted sales of
Collateral hereunder, if any, upon receipt of the proceeds or (iii) if the
release can be and is approved by the Majority Lenders. The Agent may request
and the Lenders will provide confirmation of the Agent's authority to release
particular types or items of Collateral.
(c) Upon any sale and transfer of Collateral which is
expressly permitted pursuant to the terms of this Credit Agreement, or consented
to in writing by the Majority Lenders or all of the Lenders, as applicable, and
upon at least five (5) Business Days' prior written request by the Borrowers,
the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Liens granted
to the Agent for the benefit of the Lenders herein or pursuant hereto upon the
Collateral that was sold or transferred; PROVIDED that (i) the Agent shall not
be required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Credit Parties or any
Subsidiary in respect of) all interests retained by the Credit Parties or any
Subsidiary, including (without limitation) the proceeds of the sale, all of
which shall continue to constitute part of the Collateral. In the event of any
sale or transfer of Collateral, or any foreclosure with respect to any of the
Collateral, the Agent shall be authorized to deduct all of the Expenses
reasonably incurred by the Agent from the proceeds of any such sale, transfer or
foreclosure.
-123-
(d) The Agent shall have no obligation to assure that
the Collateral exists or is owned by the Credit Parties or any Subsidiary, that
such Collateral is cared for, protected or insured, or that the Liens in the
Collateral have been created, perfected, or have any particular priority. With
respect to the Collateral, the Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent's own interest in the
Collateral as one of the Lenders and it shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful
misconduct.
SECTION IX.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to
the Agent's right to take actions on its own accord as permitted under this
Credit Agreement, the Agent shall take such action with respect to a Default or
Event of Default as shall be directed by the Majority Lenders. Until the Agent
shall have received such directions, the Agent may act or not act as it deems
advisable and in the best interests of the Lenders.
SECTION IX.12 DELIVERY OF INFORMATION. The Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the Agent
from the Borrowers, any Subsidiary, the Majority Lenders, any Lender or any
other Person under or in connection with this Credit Agreement or any other
Credit Document except (i) as specifically provided in this Credit Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE X
MISCELLANEOUS
SECTION X.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE
CREDIT DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS
OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS
OF THE STATE OF NEW YORK.
-124-
SECTION X.2 SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE
CREDIT PARTIES AND THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN
APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF
THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE CREDIT PARTIES OR THEIR PROPERTY IN ANY LOCATION REASONABLY
SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT.
THE CREDIT PARTIES AGREE THAT THEY WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS,
SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT. THE CREDIT
PARTIES WAIVE ANY OBJECTION THAT THEY MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
SECTION X.3 SERVICE OF PROCESS. THE CREDIT PARTIES HEREBY
IRREVOCABLY DESIGNATE CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX XXXX, XXX XXXX
00000 AS THE DESIGNEE, APPOINTEE AND AGENT OF THE CREDIT PARTIES TO RECEIVE, FOR
AND ON BEHALF OF THE CREDIT PARTIES, SERVICE OF PROCESS IN SUCH RESPECTIVE
JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT. IT IS UNDERSTOOD THAT COPIES OF SUCH
PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL
TO THE CREDIT PARTIES, BUT FAILURE OF THE CREDIT PARTIES TO RECEIVE SUCH COPIES
SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
SECTION X.4 JURY TRIAL. THE CREDIT PARTIES, THE AGENT AND THE
LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES
WILL BE RESOLVED IN A BENCH TRIAL.
SECTION X.5 LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY
LENDER SHALL HAVE ANY LIABILITY TO THE CREDIT PARTIES (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE CREDIT PARTIES IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES
WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. THE CREDIT PARTIES HEREBY WAIVE ALL FUTURE CLAIMS AGAINST THE AGENT
AND EACH LENDER FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES UNLESS
RESULTING FROM THE GROSS NEGLIGENCE OF SUCH PERSON OR SUCH PERSON'S KNOWING
VIOLATION OF THE LAW.
-125-
SECTION X.6 DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or
omission of the Agent or the Lenders to exercise any right or remedy hereunder
shall impair any such right or operate as a waiver thereof. No single or partial
exercise by the Agent or the Lenders of any right or remedy shall preclude any
other or further exercise thereof, or preclude any other right or remedy.
SECTION X.7 NOTICES. Except as otherwise provided herein, all
notices and correspondences hereunder shall be in writing and sent by certified
or registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent, or any of the Lenders, then to
Transamerica Business Credit Corporation, at 0000 Xxxx Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000, Attention: Xx. Xxxxxx X. Xxxxx, with a copy to
Transamerica Business Credit Corporation, 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000, Attention: General Counsel, and if to a Credit Party,
to such Credit Party at Spinnaker Industries, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: President, or if by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent or any of the Lenders, at (000) 000-0000, with a copy to (000) 000-0000,
and if to a Credit Party, at (000) 000-0000. All such notices and correspondence
shall be deemed given (i) if sent by certified or registered mail, three (3)
Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is refused
and (iii) if sent by telex or facsimile transmission, when receipt of such
transmission is acknowledged.
SECTION X.8 ASSIGNMENTS AND PARTICIPATIONS.
(a) BORROWER ASSIGNMENT. The Borrowers shall not
assign this Credit Agreement or any rights or obligations hereunder, without the
prior written consent of the Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Credit Agreement, the Revolving Notes and the other Credit Documents, with
the consent of the Agent (not to be unreasonably withheld), and provided that no
Default or Event of Default has occurred and is continuing with the consent of
the Borrowers (not to be unreasonably withheld), and upon execution and delivery
to the Agent, for its acceptance and recording in the Register, of an agreement
in substantially the form of Exhibit N (an "ASSIGNMENT AND ASSUMPTION
AGREEMENT"), together with surrender of any Revolving Note or Revolving Notes
subject to such assignment and a processing and recordation fee of $3,500.00,
PROVIDED, that each such assignment shall be of a uniform, and not a varying,
percentage of all rights and
-126-
obligations under this Credit Agreement, the Revolving Notes and the other
Credit Documents. No such assignment shall be for less than $5,000,000 of the
Commitments unless it is to another Lender. Upon such execution and delivery of
the Assignment and Assumption Agreement to the Agent and the payment to the
Agent of such processing and recordation fee, from and after the date specified
as the effective date in the Assignment and Assumption Agreement (the
"ACCEPTANCE DATE"), (x) the assignee thereunder shall be a party hereto, and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Assumption Agreement, such assignee shall have
the rights and obligations of a Lender hereunder and (y) the assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Assumption Agreement, relinquish its rights
(other than any rights it may have pursuant to Section 11.10 which will survive)
and be released from its obligations under this Credit Agreement (and, in the
case of an Assignment and Assumption Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this Credit
Agreement, such Lender shall cease to be a party hereto). (This Section does
not apply to branches and Affiliates of a Lender, it being understood that a
Lender may make, carry or transfer Revolving Loans at or for the account of any
of its branch offices or Affiliates without consent of the Borrowers, the Agent
or any Lender.)
By executing and delivering an Assignment and Assumption
Agreement, the assignee thereunder confirms and agrees as follows: (i) other
than as provided in such Assignment and Assumption Agreement, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement, the
Revolving Notes or any other instrument or document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or any
other Credit Parties or the performance or observance by the Borrowers or any
other Credit Parties of any of their obligations under this Credit Agreement or
any other instrument or document furnished pursuant hereto, (iii) such assignee
confirms that it is an Eligible Assignee and has received a copy of this Credit
Agreement, together with copies of the Financial Statements referred to in
Section 6.1(i), the Financial Statements delivered pursuant to Section 7.1(a),
if any, and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Assumption Agreement, (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
-127-
action under this Credit Agreement, (v) such assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under this Credit Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Credit Agreement are required to be
performed by it as a Lender.
(c) AGENT'S REGISTER. The Agent shall maintain a
register of the names and addresses of the Lenders, their Commitments, and the
principal amount of their Revolving Loans (the "REGISTER"). The Agent shall also
maintain a copy of each Assignment and Assumption Agreement delivered to and
accepted by it and modify the Register to give effect to each Assignment and
Assumption Agreement. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Credit Agreement. The Register and
copies of each Assignment and Assumption Agreement shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice. Upon its receipt of each Assignment and
Assumption Agreement and surrender of the affected Revolving Note or Revolving
Notes subject to such assignment, the Agent will give prompt notice thereof to
the Borrowers. Within five (5) Business Days after its receipt of such notice,
the Borrowers shall execute and deliver to the Agent a new Revolving Note or
Revolving Notes to the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the Commitment or
Commitments retained by it, if any. Such new Revolving Note or Revolving Notes
shall re-evidence the indebtedness outstanding under the surrendered Revolving
Note or Revolving Notes and shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Revolving Note or Revolving
Notes, shall be dated as of the Closing Date. The Agent shall be entitled to
rely upon the Register exclusively for purposes of identifying the Lenders
hereunder.
(d) LENDER PARTICIPATIONS. Each Lender may sell
participations (without the consent of the Agent, the Borrowers or any other
Lender) to one or more parties (other than any Person in competition with any of
the Credit Parties in the same or a similar business as a Credit Party) in or to
all or a portion of its rights and obligations under this Credit Agreement, the
Revolving Notes and the other Credit Documents. Notwithstanding a Lender's sale
of a participation interest, such Lender's obligations hereunder shall remain
unchanged. The Borrowers, the Agent, and the other Lenders shall continue to
deal solely and directly with such Lender. No participant shall have rights to
approve any amendment or waiver of this Credit
-128-
Agreement except to the extent such amendment or waiver would (i) increase the
Commitment of the Lender from whom the participant purchased its participation
interest; (ii) reduce the principal of, or rate or amount of interest on the
Revolving Loans subject to such participation; (iii) postpone any date fixed
for any payment of principal of, or interest on, the Revolving Loans subject to
the participation interest; or (iv) release all or a substantial portion of the
Collateral, other than in each case when otherwise permitted hereunder.
Each Lender agrees that, without the prior written consent of
the Borrowers and the Agent, it will not make any assignment hereunder in any
manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan, Revolving Note or other
Obligation under the securities laws of the United States or of any
jurisdiction.
(e) CONFIDENTIALITY. In connection with their efforts
to assign its rights or obligations or sell participations pursuant to Sections
11.8(b) and (d) hereof, the Agent or the Lenders may disclose any information
they have, now or in the future, with respect to the business of the Borrowers
to prospective assignees or purchasers, provided that such disclosure is subject
to confidentiality arrangements substantially similar to those entered into by
TBCC and the Borrowers in connection with the transactions contemplated by this
Credit Agreement.
SECTION X.9 CONFIDENTIALITY. Except as provided in Section 11.8(e),
each Lender agrees that it will not disclose, without the prior consent of the
Borrowers, any information with respect to the Borrowers or any of their
Subsidiaries which is furnished pursuant to this Credit Agreement and which is
designated by the Borrowers to the Lenders in writing as confidential (the
information delivered pursuant to Sections 7.1(a)(ii), (iv) and (v), 7.1(b), (c)
and (e) and 8.4(a) being hereby so designated), PROVIDED, THAT any Lender may
disclose any such information (a) to its Affiliates, employees, auditors, or
counsel, or to another Lender if the disclosing Lender or such disclosing
Lender's holding or parent company in its reasonable discretion determines that
any such party should have access to such information provided that each such
person will be advised of the confidential nature of such information, (b) as
has become generally available to the public, (c) as may be required or
appropriate in any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender, (d) as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation and (e) in order to comply with any Requirement
of Law.
-129-
SECTION X.10 INDEMNIFICATION; REIMBURSEMENT OF EXPENSES OF
COLLECTION.
-130-
(a) The Borrowers hereby, jointly and severally,
indemnify and agree to defend and hold harmless the Agent and each of the
Lenders and their respective directors, officers, agents, employees and counsel
(each, an "INDEMNIFIED PARTY") from and against any and all losses, claims,
damages, liabilities, deficiencies, judgments or expenses incurred by any of
them (except to the extent that it is finally judicially determined to have
resulted from their own gross negligence or willful misconduct) arising out of
or by reason of (i) any litigations, investigations, claims or proceedings which
arise out of or are in any way related to (A) this Credit Agreement, any other
Credit Document or the transactions contemplated hereby or thereby including,
without limitation, the transactions contemplated by the Senior Note Documents,
(B) the issuance of the Letters of Credit, (C) the failure of any issuer of
Letters of Credit to honor a drawing under any Letter of Credit, as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, (D) any actual or
proposed use by the Borrowers of the proceeds of the Revolving Loans or (E) the
Agent's or the Lenders' entering into this Credit Agreement, the other Credit
Documents or any other agreements and documents relating hereto, including,
without limitation, amounts paid in settlement, court costs and the reasonable
fees and disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice rendered in
connection with any of the foregoing and (ii) any remedial or other action taken
by the Borrowers, the Agent or any of the Lenders in connection with compliance
by the Borrowers or any of the Subsidiaries, or any of their respective
properties, with any federal, state or local Environmental Laws. In addition,
the Borrowers shall, upon demand, jointly and severally, pay to the Agent all
costs and expenses incurred by the Agent (including the reasonable fees and
disbursements of counsel and other professionals) in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Credit Documents, all costs and expenses incurred by it in connection with
collateral audits and inspections, and pay to the Agent and any Lender all costs
and expenses (including the reasonable fees and disbursements of counsel and
other professionals) paid or incurred by the Agent or such Lender in (A)
enforcing or defending its rights under or in respect of this Credit Agreement,
the other Credit Documents or any other document or instrument now or hereafter
executed and delivered in connection herewith, (B) in collecting the
Obligations, (C) in foreclosing or otherwise collecting upon the Collateral or
any part thereof and (D) obtaining any legal, accounting or other advice in
connection with any of the foregoing. If and to the extent that the Obligations
of the Borrowers hereunder are unenforceable for any reason, the Borrowers
hereby agree to make the maximum contribution to the payment and satisfaction of
such Obligations which is permissible under applicable law.
-131-
(b) The Borrowers' Obligations under Sections 4.9,
4.10, 10.6 and this Section 11.10 shall survive any termination of this Credit
Agreement and the other Credit Documents and the payment in full of the
Obligations, and are in addition to, and not in substitution of, any other of
their Obligations set forth in this Credit Agreement.
SECTION X.11 AMENDMENTS AND WAIVERS.
(a) No amendment or waiver of any provision of this
Credit Agreement or any other Credit Document shall be effective unless in
writing and signed by the Majority Lenders (or by the Agent on their behalf) and
the Credit Parties, except that:
(i) the consent of all the Lenders is required to
(A) reduce the principal of, or interest on, the Revolving
Notes, any Letter of Credit reimbursement obligations or any
Fees hereunder (other than Fees that are exclusively for the
account of the Agent), (B) postpone the final scheduled date
of maturity of the Revolving Notes or any date fixed for any
payment in respect of interest on the Revolving Notes, any
Letter of Credit reimbursement obligations or any Fees
hereunder, (C) change any minimum requirement necessary for
the Lenders or Majority Lenders to take any action hereunder
or the percentage of Commitments necessary to take any such
action, (D) amend or waive this Section 11.11(a), or change
the definition of Majority Lenders, (E) release any Liens in
favor of the Lenders on all or substantially all of the
Collateral, except as otherwise expressly provided in this
Credit Agreement, and other than in connection with the
financing, refinancing, sale or other disposition of any asset
of the Credit Parties permitted under this Credit Agreement,
(F) increase any of the advance rates from those set forth in
any of the definitions of SCM Accounts Borrowing Base, SCM
Inventory Borrowing Base, Coating Accounts Borrowing Base,
Coating Inventory Borrowing Base, Entoleter Accounts Borrowing
Base or Entoleter Inventory Borrowing Base, or (G) consent to
the assignment or transfer by the Borrowers of any of their
rights and obligations under this Credit Agreement;
(ii) the consent of the Required Lenders is
required to (A) change the definition of Required Lenders or
(B) amend or waive Section 7.2(f)(ix), (r), (t) or (u), 8.2 or
8.3.
(iii) no such amendment or waiver shall increase
the Commitment of any Lender over the amount thereof then in
effect without the consent of such
-132-
Lender (it being understood that amendments or waivers of
conditions precedent, covenants, Defaults or Events of Default
shall not constitute an increase in the Commitment of any
Lender, and that an increase in the available portion of any
Commitment of any Lender shall not constitute an increase in
the Commitment of such Lender);
(iv) the consent of the Agent shall be required
for any amendment, waiver or consent affecting the rights or
duties of the Agent under any Credit Document, in addition to
the consent of the Lenders otherwise required by this Section
11.11; and
(v) the consent of the Borrowers shall not be
required for any amendment, modification or waiver of the
provisions of Article X (other than Section 10.9).
(b) The Borrowers and the Lenders hereby authorize
the Agent to modify this Credit Agreement by unilaterally amending or
supplementing Annex I to reflect assignments of the Commitments.
(c) Notwithstanding the foregoing, the Borrowers may
amend Schedule 6.1(a) without the consent of the Majority Lenders; provided
that, except as contemplated by Section 8.1, no amendment to any such Schedule
shall be permitted to cure any Default or Event of Default which would otherwise
have existed in the absence of such amendment.
(d) If, in connection with any proposed amendment or
waiver of any of the provisions of this Credit Agreement as contemplated by
Section 11.11(a)(i), the consent of the Majority Lenders is obtained but the
consent of one or more of such other Lenders whose consent is required is not
obtained, then the Borrowers shall have the right to replace each such
non-consenting Lender or Lenders (so long as all non-consenting Lenders are so
replaced) with one or more replacement Lenders pursuant to Section 4.11 so long
as at the time of such replacement, each such replacement Lender consents to the
proposed amendment or waiver; provided that the Borrowers shall not have the
right to replace a Lender solely as a result of the exercise of such Lender's
rights (and the withholding of any required consent by such Lender) pursuant to
Section 11.11(a)(ii).
-133-
SECTION X.12 NONLIABILITY OF AGENT AND LENDERS. The
relationship between the Borrowers and the Lenders or the Agent shall be solely
that of borrower and lender. Neither the Agent nor any Lender shall have any
fiduciary responsibilities to the Credit Parties. Neither the Agent nor any
Lender undertakes any responsibility to the Credit Parties to review or inform
the Credit Parties of any matter in connection with any phase of the Credit
Parties' business or operations.
SECTION X.13 INDEPENDENT NATURE OF LENDERS' RIGHTS. The
amounts payable at any time hereunder to each Lender under such Lender's
Revolving Note or Notes shall be a separate and independent debt.
SECTION X.14 COUNTERPARTS. This Credit Agreement and any
waiver or amendment hereto may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
SECTION X.15 EFFECTIVENESS. This Credit Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Agent, or, in the case of the Lenders, shall have given to the Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
SECTION X.16 SEVERABILITY. In case any provision in or
obligation under this Credit Agreement or the Revolving Notes or the other
Credit Documents shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
-134-
SECTION X.17 MAXIMUM RATE. Notwithstanding anything to the
contrary contained elsewhere in this Credit Agreement or in any other Credit
Document, the Borrowers, the Agent and the Lenders hereby agree that all
agreements among them under this Credit Agreement and the other Credit
Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to the Agent or any Lender for the use,
forbearance, or detention of the money loaned to the Borrowers and evidenced
hereby or thereby or for the performance or payment of any covenant or
obligation contained herein or therein, exceed the Highest Lawful Rate. If due
to any circumstance whatsoever, fulfillment of any provisions of this Credit
Agreement or any of the other Credit Documents at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance any Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the Borrowers.
All sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other indebtedness of the
Borrowers to the Agent or any Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness, until payment in full thereof, so that the actual
rate of interest on account of all such indebtedness does not exceed the Highest
Lawful Rate throughout the entire term of such indebtedness. The terms and
provisions of this Section shall control every other provision of this Credit
Agreement and all agreements among the Credit Parties, the Agent and the
Lenders.
SECTION X.18 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This
Credit Agreement and the other Credit Documents constitute the entire agreement
among the Credit Parties, the Agent and the Lenders with respect to the subject
matter hereof, supersedes any prior agreements among them, and shall bind and
benefit the Credit Parties, the Agent and the Lenders and their respective
successors and permitted assigns.
-135-
SECTION X.19 RELEASE OF ENTOLETER. If (a) Entoleter terminates
the Entoleter Line of Credit and the credit facility under Section 2.1(a)(ii),
(b) Entoleter repays the outstanding principal amount of all Revolving Loans
made to it, all unpaid interest thereon and other Obligations owing by
Entoleter, (c) all Letters of Credit issued for the account of Entoleter have
terminated, expired or been cash collateralized in a manner acceptable to the
Agent, (d) Entoleter repays all of its Indebtedness and other liabilities owing
to any Credit Party, and (e) no Event of Default has occurred and is continuing
or would result therefrom, then the Agent shall (and is hereby authorized by the
Lenders to) execute such documents as may be necessary to release Entoleter from
its obligations under the Credit Documents and release the Liens granted by
Entoleter to the Agent on the Collateral of Entoleter.
-136-
IN WITNESS WHEREOF, the parties hereto have caused
this Credit Agreement to be executed by their proper and duly authorized
officers as of the date set forth above.
BORROWERS
SPINNAKER COATING, INC.,
formerly known as
Xxxxx-Bridge Industries,
Inc.
By:/s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
SPINNAKER COATING-MAINE, INC.
By:/s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
ENTOLETER, INC.
By:/s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
GUARANTOR
SPINNAKER INDUSTRIES, INC.
By:/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President Finance &
Treasurer
-137-
AGENT
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Agent
By:/s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
LENDERS
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:/s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.
By:/s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title: Assistant Vice President
-138-
SCHEDULE 1
LENDERS, LENDING OFFICES AND COMMITMENTS
Domestic and Eurodollar
Lender Lending Office Commitment
------ ----------------------- -----------
Transamerica Business Credit 0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxxx Xxxxx 000 $30,000,000
Xxxxxxxx, Xxxxxxxx 00000
The CIT Group/Business Credit, Inc. 0000 XXX Xxxxxxx 00,000,000
Xxxxx 000
Xxxxxx, Xxxxx 00000
============
Total Commitments $40,000,000
