EXHIBIT 10.8
$77,000,000 SENIOR SECURED FACILITY
By and Among
AXIA FINANCE CORP. and AXIA INCORPORATED
as Borrower
and
XXXX TAPING TOOL SYSTEMS, INC. AND
TAPE TECH TOOL CO. INC.
as Guarantors
and
PARIBAS
as Agent and as a Lender
and
THE LENDERS PARTY THERETO
CLOSING DATE: July 22,1998
Dallas, Texas
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; ACCOUNTING TERMS
1.01 Definitions............................................... 1
1.02 Type of Advances.......................................... 24
1.03 Accounting Terms.......................................... 24
1.04 Miscellaneous............................................. 24
ARTICLE II THE LOANS
2.01 The Revolving Credit Loans................................ 24
2.02 Acquisition Facility Loans................................ 25
2.03 The Term Loan and the ESOP Loan........................... 25
2.04 Notice of Advance......................................... 26
2.05 The Notes................................................. 26
2.06 Disbursement of Funds..................................... 27
2.07 Conversions and Continuances.............................. 28
2.08 Mandatory Repayments...................................... 28
2.09 Prepayments............................................... 30
2.10 Method and Place of Payments.............................. 32
2.11 Pro Rata Advances/Payments................................ 33
2.12 Interest.................................................. 33
2.13 Interest Periods.......................................... 34
2.14 Interest Rate Not Ascertainable........................... 35
2.15 Change in Legality........................................ 35
2.16 Increased Costs, Taxes or Capital Adequacy Requirements... 36
2.17 LIBOR Advance Prepayment and Default Penalties............ 37
2.18 Tax Forms................................................. 38
ARTICLE III LETTERS OF CREDIT
3.01 Letters of Credit......................................... 38
3.02 Letter of Credit Requests................................. 39
3.03 Letter of Credit Participations........................... 40
3.04 Increased Costs........................................... 41
3.05 Conflict Between Applications and Agreement............... 42
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ARTICLE IV FEES; COMMITMENTS
4.01 Fees........................................................ 42
4.02 Reduction of Total Commitment............................... 42
4.03 Reduction of Total Revolving Credit Commitment.............. 43
ARTICLE V CONDITIONS PRECEDENT
5.01 Conditions Precedent to the Initial Advance................. 43
5.02 Conditions Precedent to All Credit Events................... 46
5.03 Delivery of Documents....................................... 47
5.04 Acquisition Facility Loans.................................. 47
ARTICLE VI REPRESENTATIONS AND WARRANTIES
6.01 Organization and Qualification.............................. 49
6.02 Authorization and Validity.................................. 49
6.03 Governmental Consents....................................... 50
6.04 Conflicting or Adverse Agreements or Ratifications.......... 50
6.05 Title to Assets; Licenses and Permits....................... 50
6.06 Litigation.................................................. 51
6.07 Financial Statements........................................ 51
6.08 No Defaults................................................. 51
6.09 Investment Company Act...................................... 51
6.10 Utility Regulation.......................................... 51
6.11 ERISA....................................................... 52
6.12 Environmental Matters....................................... 52
6.13 Purpose of Loans............................................ 53
6.14 Subsidiaries................................................ 53
6.15 Solvency.................................................... 54
6.16 Accuracy of Information..................................... 54
6.17 Insurance................................................... 54
6.18 Indebtedness and Contingent Liabilities..................... 54
6.19 Compliance with Laws........................................ 54
6.20 Security Interests.......................................... 55
6.21 Material Contracts.......................................... 55
6.22 Year 2000................................................... 55
ARTICLE VII AFFIRMATIVE COVENANTS
7.01 Information Covenants....................................... 55
7.02 Books, Records and Inspections.............................. 58
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7.03 Insurance and Maintenance of Properties.................... 58
7.04 Payment of Taxes........................................... 59
7.05 Corporate Existence........................................ 59
7.06 Compliance with Statutes................................... 59
7.07 ERISA...................................................... 59
7.08 Utility Regulation......................................... 60
7.09 Subsidiaries............................................... 60
7.10 Material Contracts......................................... 60
7.11 Merger of Finance Corp. into AXIA.......................... 60
ARTICLE VIII NEGATIVE COVENANTS
8.01 Change in Business......................................... 60
8.02 Consolidation, Merger or Sale of Assets.................... 61
8.03 Indebtedness............................................... 61
8.04 Liens...................................................... 62
8.05 Investments................................................ 64
8.06 Guaranties................................................. 64
8.07 Restricted Payments........................................ 65
8.08 Change in Accounting....................................... 66
8.09 Prepayment of Other Indebtedness........................... 66
8.10 Transactions with Affiliates............................... 66
8.11 Subsidiaries' Stock........................................ 66
8.12 Material Contracts......................................... 66
8.13 Fixed Charge Coverage Ratio................................ 66
8.14 Capital Expenditures....................................... 68
8.15 Fiscal Year................................................ 68
8.16 Sale/Leaseback Transactions................................ 69
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
9.01 Events of Default.......................................... 69
9.02 Primary Remedies........................................... 71
9.03 Other Remedies............................................. 72
ARTICLE X THE AGENT
10.01 Authorization and Action................................... 72
10.02 Agents' Reliance........................................... 72
10.03 Agent and Affiliates....................................... 73
10.04 Lender Credit Decision..................................... 74
10.05 Agent's Indemnity.......................................... 74
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10.06 Successor Agent............................................ 75
10.07 Notice of Default.......................................... 75
ARTICLE XI MISCELLANEOUS
11.01 Amendments................................................. 75
11.02 Notices.................................................... 75
11.03 No Waiver, Remedies........................................ 77
11.04 Costs, Expenses and Taxes.................................. 77
11.05 Indemnity.................................................. 77
11.06 Right of Setoff............................................ 78
11.07 Governing Laws............................................. 79
11.08 Interest................................................... 79
11.09 Survival of Representations and Warranties................. 80
11.10 Successors and Assigns; Participations..................... 80
11.11 Confidentiality............................................ 82
11.12 Pro Rata Treatment......................................... 83
11.13 Separability............................................... 83
11.14 Execution in Counterparts.................................. 83
11.15 Interpretation............................................. 83
11.16 Limitation by Law.......................................... 84
11.17 Submission to Jurisdiction................................. 85
11.18 Waiver of Jury Trial....................................... 85
11.19 Final Agreement of the Parties............................. 85
11.20 Company Assumption of Obligations of Finance Corp.;
Certain Matters Concerning Binding Effect on AXIA,
AHC, Xxxx and TapeTech..................................... 86
11.21 Waiver of Consumer Rights.................................. 86
11.22 Nonapplicability of Chapter 346; Selection of Optional
Interest Rate Ceilings..................................... 86
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement"), dated as of July 22, 1998, is by
and among AXIA FINANCE CORP., a Delaware corporation ("Finance Corp.") to be
merged on or after the Effective Date into AXIA INCORPORATED, a Delaware
corporation (such corporation prior to the merger, "AXIA"), PARIBAS, a bank
organized under the laws of France acting through its Houston Agency, as Agent
(individually, "Paribas", and in such agency capacity, the "Agent"), and the
banks and other financial institutions listed on the signature pages hereto
under the caption "Lenders" (collectively, together with all successors and
assigns, the "Lenders").
Finance Corp. has requested the Lenders provide the Company (as herein
defined) with a $76,500,000 credit facility pursuant to which Lenders will
commit to make: (a) revolving credit loans of up to $15,000,000, (b) a term loan
of $35,000,000, (c) a second term loan of $1,500,000, and (d) acquisition term
loans of up to $25,000,000 in the aggregate. The proceeds of the $35,000,000
term loan and approximately $3,000,000 of the revolving credit loans shall be
used (i) to repay certain indebtedness and obligations of AXIA, (ii) to make a
loan by Finance Corp. to AXIA Acquisition Corp. to be used by Parent (as herein
defined) solely to finance the purchase of capital stock of AXIA Holdings Corp.
("AHC") pursuant to the Merger Agreement (as herein defined) and to pay
transaction expenses relating thereto, and (iii) to pay certain transaction
expenses incurred in connection with such purchase. The proceeds of the
$1,500,000 term loan shall be used to fund Finance Corp.'s loan to its employee
stock ownership plan ("ESOP") to enable the ESOP to purchase shares of common
stock of AXIA Group, Inc. ("Holding Co."). After the merger of Finance Corp.
into and with AXIA, (a) the proceeds of the $15,000,000 revolving credit loans
shall be used for general corporate purposes and for the issuance of letters of
credit, and (b) the proceeds of the $25,000,000 acquisition term loans shall be
used, during the Acquisition Facility Funding Period (as herein defined), to
finance Permitted Acquisitions (as herein defined). In connection therewith, the
Agent has agreed to serve as Agent for the Lenders.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth herein, the Company (as herein defined), the Agent, and the Lenders
agree as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS
SECTION 1.01 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Acquisition" has the meaning specified in Section 6.13
"Acquisition Agreements" has the meaning specified in Section 5.04.
"Acquisition EBITDA" means:
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(i) as of any measurement date for any period ending prior to July 31,
1999, the sum of (a) EBITDA of the Company and its Subsidiaries for the
period commencing on the Effective Date and ending on the measurement date,
plus (b) the aggregate Scheduled Pro Forma EBITDA for each month prior to
the Effective Date that is within the twelve (12) month period immediately
preceding the measurement date, plus (c) the Adjusted Target EBITDA of each
Prior Target or, as applicable, the Adjusted Target EBITDA of a Prior
Target attributable to the assets acquired from such Prior Target, for any
portion of such twelve (12) month period occurring prior to the date of the
Company's acquisition of such Prior Target or the related assets but only
to the extent that such Adjusted Target EBITDA for such Prior Target can be
established based upon financial statements of the Prior Target; and
(ii) as to any measurement date for any period ending on or after July
31, 1999, the sum of (a) EBITDA of the Company and its Subsidiaries for the
twelve (12) month period immediately preceding the measurement date plus
(b) the Adjusted Target EBITDA of each Prior Target or, as applicable, the
Adjusted Target EBITDA of a Prior Target attributable to the assets
acquired from such Prior Target, for any portion of such twelve (12) month
period occurring prior to the date of the Company's acquisition of such
Prior Target or the related assets but only to the extent that such
Adjusted Target EBITDA for such Prior Target can be established based upon
financial statements of the Prior Target.
"Acquisition Facility Commitment" shall mean, with respect to the
Acquisition Facility and as to any Lender, the amount set forth opposite such
Lender's name on the signature pages hereof, as modified from time to time
pursuant to the terms hereof, aggregating $25,000,000 as of the date hereof.
"Acquisition Facility Commitment Fee" shall have the meaning assigned to
such term in Section 4.01(b) hereof.
"Acquisition Facility Funding Period" shall mean the period commencing with
the Effective Date, and ending on June 30, 2001.
"Acquisition Facility Lender" means any Lender having an Acquisition
Facility Commitment hereunder.
"Acquisition Facility Loans" has the meaning specified in Section 2.02.
"Acquisition Facility Maturity Date" means June 30, 2004, unless
accelerated pursuant to Section 9.02.
"Acquisition Facility Notes" shall mean the Acquisition Facility Notes of
the Company, executed and delivered as provided in Section 2.05(d) hereof, in
substantially the form of Exhibit 2.05D annexed hereto, as amended, modified or
supplemented from time to time.
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"Acquisition Facility Pro Forma Senior Debt Leverage Ratio" means, as to
any proposed acquisition, the ratio of (a) the sum of (i) Senior Debt of the
Company and its Subsidiaries as of the date of the proposed acquisition plus
(ii) the amounts to be borrowed under the Acquisition Facility Commitments in
connection with the proposed acquisition, plus (iii) any other Indebtedness that
constitutes Senior Debt to be incurred or assumed in connection with such
proposed acquisition, to (b) the sum of (i) Acquisition EBITDA plus (ii)
Adjusted Target EBITDA.
"Acquisition Facility Pro Forma Total Debt Leverage Ratio" means, as to any
proposed acquisition, the ratio of (a) the sum of (i) Total Debt of the Company
and its Subsidiaries as of the date of the proposed acquisition plus (ii) the
amounts to be borrowed under the Acquisition Facility Commitments in connection
with the proposed acquisition, plus (iii) any other Indebtedness that
constitutes Total Debt to be incurred or assumed in connection with such
proposed acquisition, to (b) the sum of (i) Acquisition EBITDA plus (ii)
Adjusted Target EBITDA.
"Acquisition Facility Total Draw Amount" shall have the meaning assigned to
such term in Section 2.08(d) hereof.
"Additional ESOP" means any employee stock ownership plan (other than the
ESOP) as long as any loans by the Company to such plan pursuant to Section
8.05(d) do not exceed the amount permitted by such Section 8.05(d).
"Adjusted Target EBITDA" means, for the most recently completed twelve
month period prior to the date of determination for which financial statements
are available, the sum of the following, each calculated without duplication for
the Target or the assets acquired for such period: (1) Target EBITDA; plus (2)
all of those expenses which have been deducted in calculating Target EBITDA for
such period and which will be eliminated in the future upon the consummation of
the proposed acquisition by the Company as approved by Agent; minus (3) all
income or gains which have been added in calculating Target EBITDA for such
period and which will be eliminated in the future upon the consummation of the
proposed acquisition by the Company as approved by Agent.
"Administrative Questionnaire" means an Administrative Questionnaire in the
form of Exhibit 1.01A, completed by each Lender and provided to the Agent and
the Company.
"Advance" means (a) in respect of any Revolving Credit Loan or an
Acquisition Facility Loan an advance pursuant to a Notice of Advance or a notice
under Section 2.04(b), as the case may be, and (b) in respect of each of the
Term Loan and ESOP Loan, a single advance made on the Effective Date, in each
case comprised of a single Type of Loan made by all the Lenders concurrently to
the Company (or resulting from a conversion or continuance of all or any portion
(subject to minimums herein specified) having, in the case of LIBOR Rate
Advances, the same Interest Period (except as otherwise provided in this
Agreement)).
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"Advance Date" means, with respect to each Advance, the Business Day upon
which the proceeds of such Advance are to be made available to the Company as
selected by the Company in the relevant Notice of Advance, or a notice under
Section 2.04(b) as the case may be.
"Affiliate" means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and of under common control with") means the
possession, directly or indirectly, of the power to either (a) vote 10% or more
of the securities having ordinary voting power for election of directors of such
Person or (b) direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or otherwise.
Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate
of a corporation solely by reason of his or her being an officer or director of
such corporation.
"Agent" has the meaning specified in the introduction to this Agreement.
"Agent's Letter" means that certain letter to The Sterling Group, Inc.
dated May 7, 1998, from Paribas and acknowledged by The Sterling Group, Inc.
"Agreement" has the meaning specified in the introduction to this
Agreement.
"AHC" has the meaning specified in the introduction to this Agreement.
"Alternate Base Rate" means, for any day, a rate per annum (rounded upwards
to the nearest 1/100 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% per annum. If, for any reason, the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Advance" means any Advance bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Xxxx" means Xxxx Taping Tool Systems Inc., a Delaware corporation.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of an Alternate Base Rate Advance
and such Lender's LIBOR Lending Office in the case of a LIBOR Rate Advance.
"Application for Letter of Credit" means a letter of credit application in
a form satisfactory to the Issuing Bank.
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"Assignment and Acceptance" has the meaning specified in Section 11.10(c).
"AXIA" has the meaning specified in the introduction to this Agreement.
"Bankruptcy Code" has the meaning specified in Section 9.01(f).
"Board" means the Board of Governors of the Federal Reserve System of the
United States (or any successor) and any other banking authority to which the
Lenders are subject for Eurocurrency Liabilities or any other category of
deposits or liabilities by reference to which the LIBOR Rate is determined.
"Borrowing Base" shall mean, at any time, an amount equal to the sum (as
reflected in the Borrowing Base Certificate most recently delivered to the Agent
prior to such time) of
(A) Eighty-five percent (85%) of the Eligible Accounts (other than Eligible
Foreign Accounts), plus
(B) Seventy percent (70%) of the Eligible Foreign Accounts, but in no event
shall the portion of the Borrowing Base attributable to this clause (B) be
greater than $2,000,000 in the aggregate, plus
(C) Sixty percent (60%) of the Eligible Inventory, plus
(D) 100% of any cash held by the Agent as security for the Letter of Credit
Obligations.
"Borrowing Base Certificate" means, as of any date, a certificate as to the
Borrowing Base as of such date in the form of Exhibit 1.01B.
"Business Day" means any day (other than a day which is a Saturday, Sunday
or legal holiday in the State of Texas) on which banks are open for business in
Houston, Texas and New York and, if the applicable Business Day relates to any
LIBOR Rate Advance, on which dealings are carried on in the London eurodollar
market.
"Capital Expenditures" means all of the capital expenditures of the Company
and its Subsidiaries on a consolidated basis which, pursuant to GAAP, are
capitalized for balance sheet purposes.
"Capitalized Lease Obligations" means all lease or rental obligations of
the Company and its Subsidiaries determined on a consolidated basis which,
pursuant to GAAP, are capitalized for balance sheet purposes.
"Casualty Event" means with respect to any item of property, whether real,
personal or mixed, the total loss or constructive total loss (including, but not
limited to, as a result of
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destruction, damage, or seizure thereof by a governmental authority for a period
equal to the lesser of (i) the remaining period before the Term Loan Maturity
Date and (ii) one hundred eighty days after the occurrence of such event).
"Carryover Letters of Credit" shall mean those certain one or more Letters
of Credit issued by American National Bank and Trust Company of Chicago for the
account of AXIA prior to the Execution Date which are outstanding on the
Effective Date, true and correct copies of which are attached hereto as Schedule
1.01CLC.
"Change of Control" occurs when any Unrelated Person or any Unrelated
Persons, other than the Designated Shareholders, acting together which would
constitute a Group together with any Affiliates or Related Persons thereof (in
each case also constituting Unrelated Persons other than the Designated
Shareholders) shall at any time either (i) Beneficially Own more than 35% of the
aggregate voting power of all classes of Voting Equity Interests of the Company
or Holding Co. or (ii) succeed in having sufficient of its or their nominees
elected to the Board of Directors of Holding Co. such that such nominees, when
added to any existing director remaining on the Board of Directors of the
Company or Holding Co. after such election who is an Affiliate or Related Person
of such Person or Group, shall constitute a majority of the Board of Directors
of the Company or Holding Co.; provided, however, no Change of control shall
have occurred so long as the Designated Shareholders (or any combination
thereof) shall retain more than 50% of the aggregate voting power of all classes
of Voting Equity Interests of the Company and Holding Co. As used herein (a)
"Beneficially Own" shall mean "beneficially own" as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, or any successor provision thereto;
provided, however, that, for purposes of this definition, a Person shall not be
deemed to Beneficially Own securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's Affiliates
until such tendered securities are accepted for purchase or exchange; (b)
"Group" shall mean a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended; (c) "Unrelated Person" shall mean at any time
any Person other than the Company and Holding Co. or any of their Subsidiaries
and other than any trust for any employee benefit plan of the Company and
Holding Co. or any of their reported Subsidiaries; (d) "Related Person" of any
Person shall mean any other Person owning (1) 5% or more of the outstanding
common stock of such Person or (2) 5% or more of the Voting Equity Interests of
such Person; and (e) "Designated Shareholders" means (1) each Person who owns
any capital stock of Holding Co. on the Effective Date, (2) the officers,
employees and directors of Holding Co. or any of its Subsidiaries, (3) any
Person who on the Effective Date is or was before such date an officer,
director, stockholder, employee or consultant of The Sterling Group, Inc., (4)
the ESOP and any Additional ESOP, (5) any savings or investment plan sponsored
by Holding Co. or any of its Subsidiaries, (6) with respect to any Person
covered by the preceding clauses (1) through (5) (A) in the case of an entity,
any Affiliate of such Person, and (B) in the case of an individual, any spouse,
parent, sibling, child or grandchild (in each case, whether such relationship
arises from birth, adoption or through marriage), and (7) any trust, limited
liability company, corporation, limited or general partnership or other entity,
a majority of interest of the beneficiaries, stockholders, partners or owners
(direct or beneficial) of which are Persons of the type referred to in the
preceding clauses (1) through (6).
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"Code" means the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.
"Commitment" means the obligation of each of the Lenders to enter into and
perform this Agreement, to make available the Loans and to issue the Letters of
Credit to the Company in the amounts shown on the signature page of each Lender
hereto (or, as to any Lender that has entered into an Assignment and Acceptance,
in the amount resulting after giving effect to each Assignment and Acceptance
entered into by such Lender) and all other duties and obligations of the Lenders
hereunder.
"Company" means (a) before the Company Merger, Finance Corp., and (b) upon
and after the Company Merger, AXIA Incorporated, a Delaware corporation.
"Company Group" means, collectively, the Company and its Subsidiaries and
individually, any one of the foregoing; provided, however, that Company Group
also shall include Parent for purposes of Sections 6.01, 6.02, 6.03, 6.10, 6.15
(but only as to the period beginning on the Execution Date and continuing
through the Effective Date), Section 6.20 (but only as to the Security Documents
executed by Parent), 9.01(b), 9.01(d) (but only as to the Security Documents
executed by Parent), 9.01(f), 9.01(g) and the last sentence of Section 6.04.
"Company Merger" means the merger of Finance Corp. with and into AXIA, with
AXIA being the surviving entity.
"Credit Event" means the making of any Advance, the conversion of any
Advance into, or continuation of any Advance as, a LIBOR Rate Advance or the
issuance of any Letter of Credit.
"Default" means the occurrence of any event which with the giving of notice
or the passage of time or both would be an Event of Default.
"Default Rate" means the lesser of (a) the Highest Lawful Rate and (b) the
sum of (i) the Alternate Base Rate or, as to any LIBOR Rate Advance, during any
Interest Period in which an Event of Default is continuing, the LIBOR Rate for
such LIBOR Rate Advance, as the case may be, plus (ii) the applicable Margin,
plus (iii) two percent (2%) per annum.
"Derivatives" means, with respect to any Person, foreign exchange,
commodity, currency and interest rate swaps, floors, caps, collars, forward
sales, options and other similar transactions or combinations of the foregoing.
"Designated Payment Date" means September 30, December 31, March 31 and
June 30, in any calendar year, provided, however, if in any such year a
Designated Payment Date shall be a day which is not a Business Day, such
Designated Payment Date shall be the next succeeding Business Day, and such
extension of time shall be included in determining the amount to be paid on such
date.
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"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender designated from time to time as its "Domestic Lending Office"
hereunder.
"Domestic Subsidiaries" means the Subsidiaries of the Company that are
created or organized in or under the laws of the United States or any state
thereof and have their chief executive office and principal place of business in
the United States.
"Domestic Substantially Owned Subsidiaries" means the Substantially Owned
Subsidiaries of the Company that also are Domestic Subsidiaries.
"EBITDA" means, with respect to any Person for any measurement period,
without duplication, the result of net income less any non-cash income to the
extent included in determining net income and without giving effect to any non-
recurring items, extraordinary gains or losses from the sale of assets or write
down in the value of assets owned by the Company and its Subsidiaries for such
period plus depreciation, amortization, Interest Expense, taxes, and other non-
cash charges for such period to the extent deducted in determining net income.
"Effective Date" means the date on which all conditions to make an Advance
set forth in Section 5.01 are first met or waived in accordance with Section
11.01 hereof.
"Eligible Accounts" means, as to the Company and its Domestic Substantially
Owned Subsidiaries on a consolidated basis at any time of determination, all
Receivables of such Persons, each of which meets all of the following criteria
on the date of any determination:
(a) the payment of such Receivable is not more than sixty (60) days past
due;
(b) such Receivable was created in connection with the sale or rental of
Inventory, the performance of a service by the Company or any Domestic
Substantially Owned Subsidiary of the Company in the ordinary course of
business;
(c) such Receivable represents a legal, valid and binding payment
obligation of the account debtor enforceable in accordance with its terms and
arises from an enforceable contract the performance of which, insofar as it
relates to such Receivable, has been completed by the Company or such
Subsidiary;
(d) the Company or such Domestic Substantially Owned Subsidiary has good
title to such Receivable, and the Agent for the benefit of the Lenders, holds a
perfected first priority Lien (including compliance with the Federal Assignment
of Claim Act or any similar statute or regulation, if necessary) in such
Receivable pursuant to the Security Documents;
(e) such Receivable is not evidenced by a promissory note or other
instrument;
(f) such Receivable is not subject to any set-off (excluding any Receivable
set-off supported by a letter of credit satisfactory to the Agent),
counterclaim, defense, allowance,
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adjustment or understanding with the account debtor thereon that in any way
could reasonably be expected to adversely affect the payment of said Receivable,
and there exists no dispute by the account debtor concerning its payment
obligation for such Receivable (or the lesser amount that is not subject to any
of the same); provided, however, that any such Receivable, if otherwise an
Eligible Account, shall only not be an Eligible Account to the extent of such
set-off, counterclaim, defense, allowance, adjustment or understanding;
(g) such Receivable is payable in the United States and is denominated in
U.S. dollars;
(h) such Receivable or portion thereof due from an account debtor and
together with all other Receivables due from such account debtor, does not
comprise more than ten percent (10%) of the aggregate Receivables of the Company
and its Subsidiaries, provided, that in the event such account debtor or its
parent is rated at least BBB+ or the equivalent thereof by Standard & Poor's
Ratings Group or at least Baa1 or the equivalent thereof by Xxxxx'x Investors
Service, Inc., then such Receivable together with all other Receivables due from
such account debtor does not comprise more then twenty-five percent (25%) of the
aggregate Receivables of the Company and its Subsidiaries; provided, further,
that any such Receivable, if otherwise an Eligible Account, shall only not be an
Eligible Account to the extent of such excess;
(i) such Receivable is from an account debtor domiciled in the United
States; and
(j) such Receivable is not due from an account debtor subject to a
proceeding of the kind described in Section 9.01(f) or (g).
"Eligible Assignee" means (a) any Lender or any Affiliate thereof and (b)
any other bank or financial institution approved by the Agent and the Company.
"Eligible Foreign Accounts" means, as to the Company and its Substantially
Owned Subsidiaries on a consolidated basis at any time of determination, all
Receivables with respect to which (i) the account debtor with respect to such
Receivable is not domiciled in the United States and/or (ii) the Receivable is
owed to a Foreign Subsidiary, provided that each such Receivable meets all of
the following criteria on the date of any determination:
(a) the payment of such Receivable is not more than sixty (60) days past
due;
(b) such Receivable was created in connection with the sale or rental of
Inventory, the performance of a service by the Company or any Substantially
Owned Subsidiary in the ordinary course of business;
(c) such Receivable represents a legal, valid and binding payment
obligation of the account debtor enforceable in accordance with its terms and
arises from an enforceable contract the performance of which, insofar as it
relates to such Receivable, has been completed by the Company or such
Subsidiary;
9
(d) the Company or such Substantially Owned Subsidiary has good title to
such Receivable and such Receivable is not subject to any Lien other than a Lien
permitted under Section 8.04(f);
(e) such Receivable is not evidenced by a promissory note or other
instrument;
(f) such Receivable is not subject to any set-off (excluding any Receivable
set-off supported by a letter of credit satisfactory to the Agent),
counterclaim, defense, allowance, adjustment or understanding with the account
debtor thereon that in any way could reasonably be expected to adversely affect
the payment of said Receivable, and there exists no dispute by the account
debtor concerning its payment obligation for such Receivable (or the lesser
amount that is not subject to any of the same); provided, however, that any such
Receivable, if otherwise an Eligible Foreign Account, shall only not be an
Eligible Foreign Account to the extent of such set-off, counterclaim, defense,
allowance, adjustment or understanding;
(g) such Receivable or portion thereof due from an account debtor and
together with all other Receivables due from such account debtor, does not
comprise more than ten percent (10%) of the aggregate Receivables of the Company
and its Subsidiaries, provided, that in the event such account debtor or its
parent is rated at least BBB+ or the equivalent thereof by Standard & Poor's
Ratings Group or at least Baal or the equivalent thereof by Xxxxx'x Investors
Service, Inc., then such Receivable together with all other Receivables due from
such account debtor does not comprise more then twenty-five percent (25%) of the
aggregate Receivables of the Company and its Subsidiaries; provided, further,
that any such Receivable, if otherwise an Eligible Foreign Account, shall only
not be an Eligible Foreign Account to the extent of such excess; and
(h) such Receivable is not due from an account debtor subject to a
proceeding of the kind described in Section 9.01(f) or (g).
"Eligible Inventory " means, as to the Company and its Domestic
Substantially Owned Subsidiaries on a consolidated basis at any time of
determination, the value (determined at the lower of cost or market) of all
Inventory owned by (and in the possession or under the control of the Company or
a Domestic Substantially Owned Subsidiary or is in the possession of a Person
who is not an Affiliate pursuant to a rental agreement between such Person and
the Company or a Domestic Substantially Owned Subsidiary) the Company or a
Domestic Substantially Owned Subsidiary which is located in the United States
and in which the Agent for the benefit of the Lenders has a perfected first
priority security interest pursuant to the Security Documents (subject only to
Permitted Liens under Section 8.04(b), (c)(i), (c)(ii) and (e)), but shall not
include any of the following:
(a) Inventory that has been shipped or delivered to any Person on
consignment;
(b) Inventory to the extent subject to any reasonable claim disputing the
Company's or any domestic Substantially Owned Subsidiary's title to or right to
possession of such Inventory;
10
(c) any allowances, reserves or accruals related to any Inventory;
(d) Inventory evidenced by a negotiable or non-negotiable document of
title; and
(e) Inventory that is not salable or not rentable in the ordinary course of
business.
"Employee Plan" means any employee benefit plan, program or policy with
respect to which the Company or any ERISA Affiliate may have any liability or
any obligation to contribute, other than a Plan or a Multiemployer Plan.
"Environmental Laws" means applicable federal, state or local laws, rules
or regulations, and any applicable judicial interpretations thereof, including
any judicial or administrative order, judgment, permit, approval decision or
determination, in each case pertaining to conservation or protection of the
environment, in effect at the time in question, including the Clean Air Act, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
the Federal Water Pollution Control Act, the Occupational Safety and Health Act,
the Resource Conservation and Recovery Act, the Safe Drinking Water Act, the
Toxic Substances Control Act, the Superfund Amendments and Reauthorization Act
of 1986, the Hazardous Materials Transportation Act and analogous state and
local laws as may be amended from time to time thereby imposing either more or
less stringent requirements as relates to activity occurring after the effective
date of any such amendments.
"Equity Interests" in any Person means any and all shares, interests,
rights to purchase, warrants, options, convertible debt, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity participations, including, membership interests or partnership interests,
whether general or limited, in such Person, together with all other rights and
interests convertible into or exchangeable for any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the regulations promulgated thereunder.
"ERISA Affiliate" means (a) any Person which, together with the Company, is
treated as a "single employer" under section 414 of the Code, and (b) any
Subsidiary of the Company.
"ESOP" has the meaning specified in the introduction to this Agreement.
"ESOP Lender" means any Lender having an ESOP Loan Commitment.
"ESOP Loan" has the meaning specified in Section 2.03(b).
"ESOP Loan Commitment" means, with respect to the ESOP Loan and as to any
Lender, the amount set forth opposite such Lender's name on the signature pages
hereof aggregating $1,500,000.
11
"ESOP Loan Maturity Date" means June 30, 2002, unless accelerated pursuant
to Section 9.02.
"ESOP Note" has the meaning specified in Section 2.05(c).
"Eurocurrency Liabilities" has the meaning specified in Regulation D as in
effect from time to time.
"Events of Default" has the meaning specified in Section 9.01.
"Excess Cash Flow" means, with respect to the Company and its Subsidiaries
determined on a consolidated basis for any fiscal year period ending after the
Effective Date, the sum of the following to the extent accruing after the
Effective Date, (a) EBITDA for such period, minus (b) the amount equal to (i)
actual Capital Expenditures (exclusive of Capitalized Lease Obligations)
incurred during such period plus (ii) the amount of Capital Expenditures for
such period permitted to be made in the next succeeding fiscal year under
Section 8.14(c), minus (iii) the amount of Capital Expenditures carried forward
from the prior fiscal year under Section 8.14(c) for such period, minus (c) cash
taxes, cash Interest Expense and scheduled payments or any voluntary prepayment
of principal made under the Term Loan, the Acquisition Loan and the ESOP Loan
(but only to the extent that net income for such period was not reduced for any
expense incurred by the Company for contributions to the ESOP), minus (d) any
dividend or payment permitted under Section 8.07(a)(ii) to the extent not
deducted in determining EBITDA for such period, minus (e) scheduled principal
payments under Capitalized Lease Obligations made during such period, and minus
(f) scheduled principal payments under all other Indebtedness made during such
period (but only to the extent that net income for such period was not reduced
for any expense incurred by the Company for contributions to any Additional
ESOP).
"Execution Date" means the date upon which this Agreement shall have been
executed by the Company, the Lenders, and the Agent.
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of 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 all amounts payable pursuant to Section 4.01.
"Finance Corp." has the meaning specified in the introduction to this
Agreement.
"Financials" has the meaning specified in Section 6.07.
12
"Financial Statement Delivery Date" means the last day on which the
quarterly or annual financial statements of the Company are to be delivered to
the Agent and the Lenders pursuant to Section 7.01(a) or Section 7.01(b), as the
case may be.
"Fixed Charge Coverage Ratio" means, as to any Person for any period, a
fraction, the numerator of which is EBITDA for such period minus cash taxes for
such period, and the denominator of which is Fixed Charges of such Person for
such period.
"Fixed Charges" means the sum of (a) scheduled payments of principal under
the Term Loan, the Acquisition Facility Loan and the ESOP Loan for such period
(but only to the extent that net income for such period was not reduced for any
expense incurred by the Company for contributions to the ESOP), (b) cash
Interest Expense for such period, (c) the lesser of (I) Scheduled Capital
Expenditures for such period and (II) actual Capital Expenditures for such
period which were not financed with purchase money Indebtedness or Capitalized
Lease Obligations otherwise permitted hereunder, (d) scheduled principal
payments under Capitalized Lease Obligations for such period, (e) scheduled
principal payments under all other Indebtedness made during such period (but
only to the extent that net income for such period was not reduced for any
expense incurred by the Company for contributions to any Additional ESOP), and
(f) payments permitted under Section 8.07(a)(ii), Section 8.07(a)(iii) and
Section 8.07(b)(ii) during such period (to the extent not deducted in
determining EBITDA for such period).
"Foreign Subsidiary" means a Subsidiary of Borrower that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States applied on a consistent basis.
"Guaranty" means collectively (i) those certain Guaranty Agreements dated
the Execution Date executed by TapeTech and Xxxx, respectively, and (ii) any
subsequent guaranty agreement executed and delivered pursuant to Section 7.09.
"Hazardous Materials" means (a) hazardous waste as defined in applicable
regulations issued pursuant to the Resource Conservation and Recovery Act of
1976, or in any applicable federal, state or local law or regulation, (b)
hazardous substances, as defined in CERCLA, or in any applicable state or
local law or regulation, (c) gasoline or any other petroleum product, (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or in any
applicable federal, state or local law or regulation, (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable federal, state or local law or
regulation as each such act, statute or regulation may be amended from time to
time, and (f) asbestos.
"Highest Lawful Rate" means, as to any Lender, the maximum nonusurious rate
of interest that, under applicable law, may be contracted for, taken, reserved,
charged or received by such Lender on the Loans or other obligations under the
Loan Documents at any time or from time to time after taking into account all
amounts that constitute interest. If the maximum rate of interest which, under
applicable law, any of the Lenders is permitted to charge the Company on
13
the Loans or other obligations shall change after the date hereof, then, to the
extent permitted or required by applicable law, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, as of the effective
time of such change without notice to the Company or any other Person.
"Holding Co." has the meaning specified in the introduction to this
Agreement.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than accounts payable), (b) all indebtedness of such
Person created or arising under any conditional sale or other title retention
agreement with respect to any property, (c) Capitalized Lease Obligations of
such Person, (d) all guaranties of such Person of Indebtedness of others
(including the granting of a Lien on the Company's or any Subsidiaries' assets
as security for such indebtedness) or other contingent liabilities of such
Person for Indebtedness of others of any kind (including any letter of credit,
any other letter of credit reimbursement obligations, any guarantee of the
financial position or covenants of any Person or any obligation as buyer under
any "take or pay" contract or similar arrangement), (e) any "xxxx to market"
exposure resulting from any Derivatives or any hedging transaction and (f) all
obligations to deliver goods or services in consideration of advance payments,
excluding such obligations incurred in the ordinary course of business as
conducted by the Company and its Subsidiaries.
"Indenture" means that certain Indenture, dated as of July 22, 1998,
between State Street Bank and Trust Company of Connecticut, N.A., as Indenture
Trustee, and Finance Corp., AXIA and other parties thereto, relating to the
issuance of the Subordinated Debt.
"Interest Expense" means, with respect to the Company and its Subsidiaries
determined on a consolidated basis, for any period the total interest expense
for such period determined in conformity with GAAP and including any interest
expense attributable to Capitalized Lease Obligations.
"Interest Period" has the meaning specified in Section 2.13.
"Inventory" means, as to the Company and its Subsidiaries, inventory as
defined in Article 9 of the Uniform Commercial Code (including goods held for
lease or rental in the ordinary course of business but excluding work-in-process
which is not readily marketable in its current form).
"Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of the stock or other securities of
any other Person, or any direct or indirect loan, advance or capital
contribution by such Person to any other Person, and any other item which would
be classified as an "investment" on a balance sheet of such Person prepared in
accordance with GAAP, including any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other business
entity in which such Person retains an interest.
14
"Issuing Bank" means, for each Letter of Credit, the Agent (or, at the
option of the Company, any other Lender designated by the Company and approved
in writing by the Agent, such approval not to be unreasonably withheld) as the
issuing bank for such Letter of Credit; provided, however, that American
National Bank and Trust Company of Chicago shall be included as an Issuing Bank
with respect to the Carryover Letters of Credit.
"Lender" has the meaning provided in the introduction to this Agreement.
"Letter of Credit Fee" shall mean:
(a) for any Letter of Credit with respect to the period during which
it is outstanding prior to the Financial Statement Delivery Date for the
Company's fiscal quarter ending on September 30, 1998, (i) payable to the
Issuing Bank, a 0.25% per annum fronting fee on the face amount of each
Letter of Credit, and (ii) payable pro rata to the Lenders, the sum of (A)
2.25% per annum on the face amount of such Letter of Credit minus (B) the
amount of the fronting fee on such Letter of Credit; and
(b) for any Letter of Credit with respect to the period during which
it is outstanding on or after the Financial Statement Delivery Date for any
of the Company's fiscal quarters ending after September 30, 1998, (i)
payable to the Issuing Bank, a 0.25% fronting fee on the face amount of
each Letter of Credit, and (ii) payable pro rata to the Lenders, the sum of
(A) the applicable Margin for any LIBOR Rate Advance minus (B) the amount
of the fronting fee on such Letter of Credit.
"Letter of Credit Obligations" means at any time the sum of (a) the
aggregate then undrawn and unexpired amount of outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit not reimbursed
pursuant to Section 3.03(c).
"Letter of Credit Request " has the meaning specified in Section 3.02(a).
"Letters of Credit" has the meaning specified in Section 3.01(a).
"LIBOR Lending Office" means, with respect to each Lender, the branches or
affiliates of such Lender designated as its "LIBOR Lending Office" from time to
time hereunder.
"LIBOR Rate" means, with respect to any LIBOR Rate Advance for any Interest
Period, (a) the interest rate per annum shown on page 3750 of the Dow Xxxxx &
Company Telerate screen or any successor page as the composite offered rate for
London interbank deposits with a period comparable to the Interest Period for
such LIBOR Rate Advance, as shown under the heading "USD" at 11:00 a.m. (London
time) two (2) Business Days prior to the first day of such Interest Period or
(b) if the rate in clause (a) of this definition is not shown for any particular
day, the average interest rate per annum (rounded upwards, if necessary, to the
next 1/16th of 1%) offered to the Agent in the interbank eurodollar market for
dollar deposits of amounts in funds comparable to the principal amount of the
LIBOR Rate Advance to which such LIBOR Rate is to
15
be applicable with maturities comparable to the Interest Period for which such
LIBOR Rate will apply as of approximately 11:00 a.m. (Houston, Texas time) two
(2) Business Days prior to the commencement of such Interest Period.
"LIBOR Rate Advance" means any Advance bearing interest at a rate
determined by reference to the LIBOR Rate in accordance with the provisions of
Article II.
"Lien" means when used with respect to any Person, any mortgage, lien,
charge, pledge, security interest or encumbrance of any kind (whether voluntary
or involuntary and whether imposed or created by operation of law or otherwise)
upon, or pledge of, any of its property or assets, whether now owned or
hereafter acquired, any lease that constitutes a security interest pursuant to
section 1.201 of the Texas Business and Commerce Code, any capital lease in the
nature of the foregoing, any conditional sale agreement or other title retention
agreement, in each case, for the purpose, or having the effect, of protecting a
creditor against loss or securing the payment or performance of an obligation.
"Loan" and "Loans" means, Revolving Credit Loans, the Term Loan, the ESOP
Term Loan, Acquisition Facility Loans and any Advances under Letters of Credit.
"Loan Documents" means this Agreement, the Notes, the Guaranty, any
agreement with respect to a Derivative entered into with a Lender existing from
time to time and the Security Documents.
"Majority Lenders" means Lenders holding at least 51% of the Total
Commitment (or, if the Total Commitment has been terminated, Lenders holding 51%
of the sum of the Loans plus the Letter of Credit Obligations).
"Margin" means, with respect to any Advance made under any Loan, the rate
of interest per annum determined as set forth below as a function of the Type of
such Loan:
(a) during the period from the Execution Date through the Financial
Statement Delivery Date for the fiscal quarter ending on September 30,
1998:
LIBOR RATE ALTERNATE BASE
ADVANCE RATE ADVANCE
---------- --------------
2.25% 1.00%
(b) during the period between any two Financial Statement Delivery
Dates for any Margin Period occurring after September 30, 1998, the rate
determined by reference to the pricing grid below as a function of the
ratio of Total Debt (on the last day of the quarter most recently ended
prior to the Financial Statement Delivery Date that is the commencement
date of such Margin Period) to EBITDA:
16
RATIO OF TOTAL APPLICABLE BASE APPLICABLE
DEBT TO EBITDA RATE MARGIN LIBOR MARGIN
-------------- --------------- ------------
= or greater than 5.25 1.00% 2.25%
= or greater than 4.75 and less than 5.25 0.75% 2.00%
= or greater than 4.25 and less than 4.75 0.50% 1.75%
= or greater than 3.50 and less than 4.25 0.25% 1.50%
less than 3.50 0.00% 1.00%
"Margin Period" means a period commencing on the most recent Financial
Statement Delivery Date and ending on the next Financial Statement Delivery
Date.
"Material Adverse Effect" means, relative to any occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), (a) a material adverse effect on the
financial condition, business, operations or assets of the Company and its
Subsidiaries taken as a whole, or (b) a material impairment of the ability of
the Company on an individual basis or the Company and its Subsidiaries taken as
a whole to perform obligations under the Loan Documents or (c) an impairment of
the validity or enforceability of any Loan Document which materially affects the
benefits intended to be bestowed thereunder.
"Material Contracts" means those agreements listed on Schedule 1.01MC
hereto.
"Merger Agreement" means the Agreement and Plan of Merger dated as of June
18, 1998 between Parent and AHC.
"Multiemployer Plan" means any plan which is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA) to which the Company or any
ERISA Affiliate contributes or has any obligation or liability to make
contributions, including any withdrawal liability, contingent or otherwise.
"Net Cumulative Retained Excess Cash Flow" means, as of any date of
measurement, the sum of (a) the cumulative amount of all Retained Excess Cash
Flow (as defined below) for each of Company's fiscal years ending after the
Effective Date, minus (b) the aggregate amount of all Investments which are
described in Section 8.05(g) and all Capital Expenditures described in Section
8.14(b) made during the Company's fiscal years ending after the Effective Date
from such Excess Cash Flow. "Retained Excess Cash Flow" means, as to any of the
Company's fiscal year periods, the portion of Excess Cash Flow for such fiscal
year which remains after deducting and giving effect to the prepayment of the
Loans in the amount of 50% of Excess Cash Flow pursuant to Section 2.09(b)(iii),
all as determined after giving effect to such prepayment on the date that it was
due or paid (whichever is earlier).
"Net Worth" means, as to the Company and its Subsidiaries determined on a
consolidated basis, at any time the aggregate amount which, in accordance with
GAAP, constitutes shareholders' equity.
17
"Notes" means the Revolving Credit Notes, the Term Notes, the ESOP Notes
and the Acquisition Facility Notes and "Note" means any one of the same.
"Notice of Advance" has the meaning specified in Section 2.04.
"Notice of Conversion" has the meaning specified in Section 2.07.
"Notice of Default" has the meaning specified in Section 9.02.
"Obligations" means all the obligations of the Company now or hereafter
existing under the Loan Documents, whether for principal interest, Fees,
expenses, indemnification or otherwise.
"Other Activities" has the meaning specified in Section 10.03.
"Other Financings" has the meaning specified in Section 10.03.
"Parent" means AXIA Acquisition Corp. ("AAC") until such time as AAC is
merged into AHC, and means AHC from and after the time that AAC is merged into
AHC.
"Parent Loan" means the loan in the stated amount of the Parent Note from
Finance Corp. to Parent evidenced by the Parent Note.
"Parent Merger" means the merger of Parent with and into AHC, with AHC
being the surviving entity.
"Parent Merger Certificate" shall mean a certificate or articles of merger
which describe the occurrence of the Parent Merger.
"Parent Note" means that certain promissory note executed by Parent, as
maker, to Finance Corp. dated as of the Effective Date evidencing the loan by
Finance Corp. of an amount equal to approximately $96,200,000 to be used solely
for the purpose of purchasing the capital stock of AHC and certain transaction
expenses incurred in connection with such purchase.
"Payment Office" means the office of the Agent located at 0000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or such other office as the Agent may
hereafter designate in writing as such to the other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permitted Acquisitions" shall mean acquisitions of not less than 90% of
all of the Voting Equity Interests of a Person or of all or substantially all of
(a) such Person's assets or (b) the
18
assets of a division or branch of such Person, in each case, in a transaction
that satisfies all the applicable criteria set out in Section 5.04 which have
not otherwise been waived by Agent.
"Permitted Investments" means, as to any Person:
(a) securities issued or directly and fully guaranteed or insured by
the United States or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than twelve months from the date of acquisition by such
Person;
(b) bankers acceptances or time deposits and certificates of deposit
with maturities of not more than twelve months from the date of acquisition by
such Person which deposits or certificates are either (i) insured by the Federal
Deposit Insurance Corporation or (ii) in any Lender or commercial bank
incorporated in the United States or any United States branch of any other
commercial bank and, in the case of any such other commercial bank, having
capital, surplus and undivided profits aggregating $200,000,000 or more with a
short-term unsecured debt rating of at least Al from Standard & Poor's Ratings
Group or PI from Xxxxx'x Investors Service;
(c) commercial paper issued by any Person incorporated in the United
States rated at least Al or the equivalent thereof by Standard & Poor's Ratings
Group or at least PI or the equivalent thereof by Xxxxx'x Investors Service and,
in each case, maturing not more than six months after the date of acquisition by
such Person;
(d) investments in any security issued by an investment company
registered under Section 8 of the Investment Company Act of 1940 (15 U.S.C.
80a-8) that is a money market fund in compliance with all applicable
requirements of SEC Rule 2a-7 (17 CFR 270.2a-7);
(e) money market mutual funds, all of the assets of which are invested
in securities and instruments of the types set forth in clauses (a) through (d)
above;
(f) repurchase or reverse repurchase agreements respecting obligations
with a term of not more than seven days for underlying securities of the types
described in clause (a) above entered into with any bank listed in or meeting
the qualifications specified in clause (b) above;
(g) deposits in local currencies in bank accounts of non-U.S.
Affiliates of Company not to exceed in the aggregate $1,000,000 at any time;
(h) capital contributions in or loans to Foreign Subsidiaries in the
aggregate amount not to exceed in the aggregate $250,000 at any time
outstanding; and
(i) any loans by a Foreign Subsidiary to any other Foreign Subsidiary.
19
"Permitted Liens" has the meaning specified in Section 8.04.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a federal, foreign
or domestic state or political subdivision thereof or any agency of such state
or subdivision.
"Plan" means any employee pension benefit plan (as defined in section 3(2)
of ERISA), subject to Title IV of ERISA or section 412 of the Code, other than a
Multiemployer Plan, with respect to which the Company, its Subsidiaries or an
ERISA Affiliate contributes or has an obligation or liability to contribute,
including any such plan that may have been terminated.
"Prime Rate" shall mean the rate which The Chase Manhattan Bank announces
from time to time as its prime rate, effective as of the date announced as the
effective date of any change in such prime rate. Without notice to the Company
or any other Person, the Prime Rate shall change automatically from time to time
as and in the amount by which such prime rate shall fluctuate. The Prime Rate is
a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Agent may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"Prior Target" means all Targets acquired or whose assets have been
acquired in a Permitted Acquisition.
"Qualified Domestic Substantially Owned Subsidiary" means a Domestic
Substantially Owned Subsidiary of the Company which has executed and delivered
to the Agent for the benefit of the Lenders all of the guaranties, security
agreements, deeds of trust, pledge agreements and other documentation described
in Section 7.09.
"Receivable" means, as to the Company or any Subsidiary, at any time of
determination thereof the unpaid portion of the obligation, as stated on the
respective invoice, or if no invoice, other writing or an electronic medium, of
an account debtor of such Person in respect of Inventory, goods, technology or
other assets purchased and shipped, leased or rented or services rendered in the
ordinary course of business of such Person.
"Register" has the meaning specified in Section 11.10(d).
"Regulation D" means Regulation D of the Board (respecting reserve
requirements), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board (respecting margin credit
extended by banks), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
20
"Regulation X" means Regulation X of the Board (respecting borrowers who
obtain margin credit), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles) other than in accordance with Environmental Laws.
"Reportable Event" means an event described in section 4043(c) of ERISA
with respect to a Plan, other than an event described in paragraphs (1) through
(8) as to which the 30 day notice requirement has been waived by the PBGC.
"Reserve Percentage" means, for any Interest Period and for any Lender, the
reserve percentage applicable during such Interest Period under regulations
issued from time to time by the Board (or if more than one such percentage is so
applicable, the daily average for such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) for
determining the maximum reserve requirement (including any marginal,
supplemental or emergency reserves) for such Lender in respect of liabilities or
assets consisting of or including Eurocurrency Liabilities.
"Responsible Officer" means, with respect to any Person, the chairman of
the board of directors, the president, chief executive officer, chief financial
officer or treasurer of such Person.
"Revolving Credit Commitment" means, with respect to the Revolving Credit
Loans and as to any Lender, the amount set forth opposite such Lender's name on
the signature pages hereof, as modified from time to time pursuant to the terms
hereof.
"Revolving Credit Commitment Fee" has the meaning specified in Section
4.01(a).
"Revolving Credit Lender" means any Lender having a Revolving Credit
Commitment hereunder.
"Revolving Credit Loan" has the meaning specified in Section 2.01.
"Revolving Credit Maturity Date" means June 30, 2004, unless accelerated
pursuant to Section 9.02.
"Revolving Credit Note" has the meaning specified in Section 2.05(a).
"Scheduled Capital Expenditures" has the meaning specified in Section 8.14.
"Scheduled Pro Forma EBITDA" means, as to any month set forth below, the
corresponding amount of "Pro Forma EBITDA" set forth below:
21
Month Pro Forma EBITDA
----- ----------------
October 1997 $2,130,000
November 1997 $2,130,000
December 1997 $2,130,000
January 1998 $2,340,000
February 1998 $2,340,000
March 1998 $2,340,000
April 1998 $2,302,667
May 1998 $2,302,667
June 1998 $2,302,667
July 1998 $2,302,667
"Security Documents" means all those certain security agreements, pledge
agreements, stock certificates, mortgages, assignments, UCC financing
statements, lien consents and waivers and all other similar documents executed
by the Company and its Subsidiaries and/or the Parent, as the case may be, in
connection herewith granting to the Agent for the benefit of the Lenders a Lien
in substantially all of the assets of the Company and its Domestic Subsidiaries
(other than stock of Foreign Subsidiaries, which is limited to 66%) and the
common stock of the Company, the voting capital stock of the Domestic
Subsidiaries owned by the Company or any of its Domestic Subsidiaries and 66% of
the voting capital stock of the Foreign Subsidiaries owned by the Company or any
of its Domestic Subsidiaries as security for the Obligations.
"Senior Debt" means, at the time of determination, the sum of (a) all
Indebtedness of the Company and the Subsidiaries determined on a consolidated
basis minus (b) the Subordinated Debt or other Indebtedness of the Company and
its Subsidiaries determined on a consolidated basis which is pari passu or
junior to the Subordinated Debt and subject to subordination agreements
satisfactory to the Agent.
"Subsidiary" means with respect to any Person (a) any corporation,
partnership, association, joint venture or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the directors (or other Persons performing similar functions) are at the time
owned by such Persons directly or indirectly and (b) any corporation,
partnership, association, joint venture or other entity in which such Person,
directly or indirectly, has greater than 50% of the equity interest.
"Subordinated Debt" means the unsecured subordinated Indebtedness of the
Company evidenced by $100,000,000 aggregate principal amount of 10 3/4% Senior
Subordinated Notes of the Company due 2008 and including any exchange notes
issued by the Company in exchange for such Senior Subordinated Notes.
"Substantially Owned Subsidiary" a Subsidiary of the Company in which the
Company owns not less than 90% of the Equity Interests and Voting Equity
Interests thereof.
"TapeTech" means TapeTech Tool Co. Inc., a Delaware corporation.
22
"Target" has the meaning specified in Section 5.04.
"Target EBITDA" means, with respect to a Target determined on a
consolidated basis for the most recently completed 12 month period prior to the
date of determination, without duplication, the result of net income less any
non-cash income to the extent included in determining net income and without
giving effect to any non-recurring items, extraordinary gains or losses from the
sale of assets or write down in the value of assets owned by the Target for such
period plus depreciation, amortization, Target Interest Expenses (as hereinafter
defined), taxes, and other non-cash charges for such period to the extent
deducted in determining net income. For purposes of this definition, "Target
Interest Expenses" means, with respect to the Target determined on a
consolidated basis, for any period the total interest expense for such period
determined in conformity with GAAP and including any interest expense
attributable to Target Capitalized Lease Obligations (as hereinafter defined).
"Target Capitalized Lease Obligations" means all lease or rental obligations of
the Target which, pursuant to GAAP, are capitalized for balance sheet purposes.
"Term Loan" has the meaning specified in Section 2.03(a).
"Term Loan Commitment" means, with respect to the Term Loan and as to any
Lender, the amount set forth opposite such Lender's name on the signature pages
hereof under the heading "Term Loan" aggregating $35,000,000.00.
"Term Loan Lender" means any Lender having a Term Loan Commitment
hereunder.
"Term Loan Maturity Date" means June 30, 2004, unless accelerated pursuant
to Section 9.02.
"Term Note" has the meaning specified in Section 2.05(b).
"Total Commitment" shall mean the sum of the Lenders' Term Loan
Commitments, ESOP Loan Commitments, Acquisition Facility Commitments and Total
Revolving Credit Commitments, as the same may be reduced from time to time in
accordance with the provisions of this Agreement.
"Total Debt" means, as to any Person at any time, without duplication, all
outstanding Indebtedness for borrowed money, all outstanding obligations
evidenced by bonds, debentures, notes, or other similar instruments, all
Capitalized Lease Obligations, and all guaranties of outstanding Indebtedness
for borrowed money or Capitalized Lease Obligations (without regard to maturity)
of other Persons.
"Total Revolving Credit Commitment" means $15,000,000 as same may be
reduced pursuant to Section 4.02 or 4.03.
"Type" has the meaning specified in Section 1.02.
23
"Unfunded Current Liability" means, with respect to any Plan, the amount,
if any, by which the value of the benefit liabilities under the Plan as of the
close of its most recent Plan year exceeds the fair market value of the assets
of the Plan, determined in accordance with section 412 of the Code.
"Unutilized Commitment" at, any time, means (a) with respect to Revolving
Credit Loans, the Total Revolving Credit Commitment less Letter of Credit
Obligations less the outstanding Advances under the Revolving Credit Loans as
same may be reduced pursuant to Section 4.02 or 4.03, and (b) during the
Acquisition Facility Funding Period, with respect to the Acquisition Facility
Loans, the Lenders' Acquisition Facility Commitments less the outstanding
Advances under the Acquisition Facility Loans as same may be reduced pursuant to
Section 4.02.
"Voting Equity Interests" means the Equity Interests in a corporation or
other Person with voting power under ordinary circumstances for the election of
directors (or persons performing similar functions) of such Person, whether at
all times or only so long as no senior class of securities has such voting power
by reason of any contingency.
SECTION 1.02 Type of Advances. Advances hereunder are distinguished by
"Type". The Type of an Advance refers to the determination whether such Advance
is a LIBOR Rate Advance or an Alternate Base Rate Advance.
SECTION 1.03. Accounting Terms. All accounting terms not defined herein
shall be construed in accordance with GAAP, as applicable, and all calculations
required to be made hereunder and all financial information (other than
projections) required to be provided hereunder shall be done or prepared in
accordance with GAAP, except as otherwise specified herein.
SECTION 1.04. Miscellaneous. In determining whether or not an item or event
is "material" under this Agreement, due consideration shall be taken into
account of insurance, indemnity, escrow or similar arrangements to the extent
that they are then available with respect to such item or event.
ARTICLE II
THE LOANS
SECTION 2.01 The Revolving Credit Loans. Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees at any time and
from time to time on and after the Effective Date and prior to the Revolving
Credit Maturity Date, to make and maintain revolving credit loans (the
"Revolving Credit Loans") up to the amount of such Lender's Revolving Credit
Commitment to the Company, which Loans (1) shall, at the option of the Company,
be made and maintained pursuant to one or more Advances comprised of Alternate
Base Rate Advances or LIBOR Rate Advances; provided that all Loans comprising
all or a portion of the same Advance shall when made be of the same Type, (2) in
the case of any LIBOR Rate Advance, shall be made in the minimum amount of
$1,000,000 and integral multiples of $100,000, (3) in the case
24
of any Alternate Base Rate Advance, shall be made in the minimum amount of
$250,000 (or if less, in the aggregate amount of the Unutilized Commitment)
and integral multiples of $50,000, and (4) may be repaid and, so long as no
Default or Event of Default exists hereunder, reborrowed, at the option of the
Company in accordance with the provisions hereof. Notwithstanding the foregoing,
the aggregate outstanding principal balance of all Revolving Credit Loans plus
the Letter of Credit Obligations shall not exceed the lesser of the Borrowing
Base then in effect and the Total Revolving Credit Commitment. There shall be no
further Advances after the Revolving Credit Maturity Date.
SECTION 2.02 Acquisition Facility Loans. Subject to the terms and
conditions hereof each Acquisition Facility Lender severally agrees at any time
and from time to time on and after the Effective Date and prior to the
expiration of the Acquisition Facility Funding Period, to make and maintain term
loans in an amount up to such Lender's Acquisition Facility Commitment (the
"Acquisition Facility Loans") to the Company for the purpose of funding
Permitted Acquisitions, which Loans (1) shall, at the option of the Company, be
made and maintained pursuant to one or more Advances comprised of Alternate Base
Rate Advances or LIBOR Rate Advances; provided that all Loans comprising all or
a portion of the same Advance shall when made be of the same Type, (2) in the
case of any LIBOR Rate Advance, shall be made in the minimum amount of
$1,000,000 and integral multiples of $100,000, (3) in the case of any Alternate
Base Rate Advance, shall be made in the minimum amount of $250,000 (or if less,
in the aggregate amount of the unutilized Acquisition Facility Commitments) and
integral multiples of $50,000, and (4) once repaid may not be reborrowed.
Notwithstanding the foregoing, the aggregate outstanding principal balance of
all Acquisition Facility Loans shall not exceed the Lenders' Acquisition
Facility Commitments.
SECTION 2.03 The Term Loan and the ESOP Loan.
(a) Term Loan. Subject to the terms and conditions herein set forth, each
Term Loan Lender agrees to make and maintain a term loan in the amount of such
Lender's Term Loan Commitment (the "Term Loan") to the Company. The Term Loan
shall be fully advanced on the Effective Date, and no Term Loan Lender shall
have an obligation to make any additional Advance under the Term Loan after such
date. Any amount repaid under the Term Loan may not be reborrowed. All amounts
outstanding under the Term Loan shall at the option of the Company, be made and
maintained as Alternate Base Rate Advances or LIBOR Rate Advances; provided that
all Loans comprising all or a portion of the same Advance shall when made be of
the same Type.
(b) The ESOP Loan. Subject to the terms and conditions herein set forth,
each ESOP Lender agrees to make and maintain a term loan in the amount of such
Lender's ESOP Loan Commitment (the "ESOP Loan") to the Company. The ESOP Loan
shall be fully advanced on the Effective Date, and no ESOP Lender shall have an
obligation to make any additional Advance under the ESOP Loan after such date.
Any amount repaid under the ESOP Loan may not be reborrowed. All amounts
outstanding under the ESOP Loan shall at the option of the Company, be made and
maintained as Alternate Base Rate Advances or LIBOR Rate Advances;
25
provided that all Loans comprising all or a portion of the same Advance shall
when made be of the same Type.
SECTION 2.04 Notice of Advance.
(a) Revolving Credit Loans. Whenever the Company requires an Advance
under the Revolving Credit Loans, it shall give written notice thereof (a
"Notice of Advance") (or telephonic notice promptly confirmed in writing) to the
Agent (i) in the case of an Alternate Base Rate Advance, not later than 11:00
a.m. (Houston, Texas time) on the date of such Advance and (ii) in the case of a
LIBOR Rate Advance, not later than 11:00 a.m. (Houston, Texas time) three (3)
Business Days prior to the date of such Advance. Each Notice of Advance shall be
irrevocable and shall be in the form of Exhibit 2.04 hereto, specifying (A) the
aggregate principal amount of the Advance to be made, (B) the Advance Date for
such Advance (which shall be a Business Day), (C) whether it is to be an
Alternate Base Rate Advance or a LIBOR Rate Advance and (D) if the proposed
Advance is to be a LIBOR Rate Advance, the initial Interest Period to be
applicable thereto. The Agent shall promptly give the Revolving Credit Lenders
written notice or telephonic notice (promptly confirmed in writing) of each
proposed Advance, of each Revolving Credit Lender's proportionate share thereof
and of the other matters covered by each Notice of Advance.
(b) Acquisition Facility Loans. Whenever the Company requires an
Advance under the Acquisition Facility Loans during the Acquisition Facility
Funding Period, it shall give written notice thereof (or telephonic notice
promptly confirmed in writing) to the Agent (i) in the case of an Alternate Base
Rate Advance, not later than 11:00 a.m. (Houston, Texas time) on the date of
such Advance and (ii) in the case of a LIBOR Rate Advance, not later than 11:00
a.m. (Houston, Texas time) three (3) Business Days prior to the date of such
Advance. Each such notice shall be irrevocable, shall specify the aggregate
principal amount of such Advance and the date of such Advance (which shall be a
Business Day) and shall specify, (A) the aggregate principal amount of the
Advance to be made, (B) the date of such Advance (which shall be a Business
Day), (C) whether it is to be an Alternate Base Rate Advance or a LIBOR Rate
Advance and (D) if the proposed Advance is to be a LIBOR Rate Advance, the
initial Interest Period to be applicable thereto. The Agent shall promptly give
the Acquisition Facility Lenders written notice or telephonic notice (promptly
confirmed in writing) of each proposed Acquisition Facility Loan, of each
Acquisition Facility Lender's proportionate share thereof and of the other
matters covered by each such notice.
SECTION 2.05 The Notes.
(a) The Company's obligations to repay the Revolving Credit Loans made
by each Revolving Credit Lender shall be evidenced by a revolving credit
promissory note duly executed and delivered by the Company to each Revolving
Credit Lender substantially in the form of Exhibit 2.05A hereto (each a
"Revolving Credit Note" and collectively, the "Revolving Credit Notes"), and
each Revolving Credit Note shall (i) be payable to the order of such Lender,
(ii) be in a stated principal amount equal to the Revolving Credit Commitment of
such Lender, (iii) be payable prior to maturity as provided herein and mature on
the Revolving Credit Maturity
26
Date, (iv) bear interest as provided in the appropriate clause of Section 2.12
and (v) be entitled to the benefits of this Agreement and the other Loan
Documents.
(b) The Company's obligation to repay the Term Loan made by each Term
Loan Lender shall be evidenced by a term promissory note duly executed and
delivered by the Company to each Term Loan Lender substantially in the form of
Exhibit 2.05B hereto (each a "Term Note" and collectively, the "Term Notes"),
and each Term Note shall (i) be payable to the order of such Lender, (ii) be in
a stated principal amount equal to the Term Loan Commitment of such Lender,
(iii) be payable prior to maturity as provided herein and mature on the Term
Loan Maturity Date, (iv) bear interest as provided in the appropriate clause of
Section 2.12 and (v) be entitled to the benefits of this Agreement and the other
Loan Documents.
(c) The Company's obligation to repay the ESOP Loan made by each ESOP
Lender shall be evidenced by a term promissory note duly executed and delivered
by the Company to each ESOP Lender substantially in the form of Exhibit 2.05C
hereto (each an "ESOP Note" and collectively, the "ESOP Notes"), and each ESOP
Note shall (i) be payable to the order of such Lender, (ii) be in a stated
principal amount equal to the ESOP Loan Commitment of such Lender, (iii) be
payable prior to maturity as provided herein and mature on the ESOP Loan
Maturity Date, (iv) bear interest as provided in the appropriate clause of
Section 2.12 and (v) be entitled to the benefits of this Agreement and the other
Loan Documents.
(d) The Company's obligation to repay the Acquisition Facility Loans
made by the Acquisition Facility Lender shall be evidenced by a promissory note
duly executed and delivered by the Company to the Acquisition Facility Lender
substantially in the form of Exhibit 2.05D hereto (each an "Acquisition Facility
Note" and collectively, the "Acquisition Facility Notes"), and shall (i) be in a
stated principal amount equal to the Acquisition Facility Commitment of such
Lender, (ii) be payable prior to maturity as provided herein and mature on the
Acquisition Facility Maturity Date, (iii) bear interest as provided in the
appropriate clause of Section 2.12 and (iv) be entitled to the benefits of this
Agreement and the other Loan Documents.
SECTION 2.06 Disbursement of Funds.
(a) With respect to any Advance to be made under any Loan, no later
than 1:00 p.m. (Houston, Texas time) on any Advance Date, each Lender shall make
available its pro rata portion of the amount of such Advance in U.S. dollars and
in immediately available funds at the Payment Office. The Agent shall
immediately credit the amounts so received as directed by the Company.
(b) Unless the Agent shall have been notified by any Lender prior to
disbursement of an Advance by the Agent that such Lender does not intend to make
available to the Agent such Lender's portion of the Advance to be made on such
date, the Agent may assume that such Lender has made such amount available to
the Agent on such Advance Date and the Agent may, in reliance upon such
assumption, make available to the Company a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
and the Agent has made available same to the Company, the Agent shall be
entitled to recover
27
such corresponding amount on demand from such Lender. If such Lender does not
pay such corresponding amount forthwith upon the Agent's demand therefor, the
Agent shall promptly notify the Company, and the Company shall pay such
corresponding amount to the Agent within two (2) Business Days after demand
therefor. The Agent shall also be entitled to recover from such Lender or the
Company, as the case may be, interest on such corresponding amount from the date
such corresponding amount was made available by the Agent to the Company to the
date such corresponding amount is recovered by the Agent, at a rate per annum
equal to, (i) as to any Lender, the Federal Funds Effective Rate on the date of
such Advance and (ii) as to the Company, at the LIBOR Rate or Alternative Base
Rate, as the case may be, applicable to such Advance plus the applicable Margin.
Nothing herein shall be deemed to relieve any Lender from its obligation for its
Commitments hereunder or to prejudice any rights which the Company may have
against any Lender as a result of any default by such Lender hereunder.
SECTION 2.07 Conversions and Continuances. Subject to the provisions of
Section 2.17 hereof, the Company shall have the option to convert on any
Business Day all or a portion of the outstanding principal amount of one Type of
Advance into another Type of Advance or continue all or a portion of any LIBOR
Advance for an additional Interest Period or Interest Periods, provided, no
Advances may be converted into or continued as LIBOR Rate Advances if an Event
of Default is in existence on the date of the conversion or continuation. Except
as provided in Section 2.13(b), each such conversion or continuation shall be
effective by the Company giving the Agent written notice (each a "Notice of
Conversion") (a) prior to 11:00 a.m. (Houston, Texas time) at least three (3)
Business Days prior to the date of such conversion in the case of conversion or
continuation into or continuance as a LIBOR Rate Advance and (b) prior to 11:00
a.m. (Houston, Texas time) on the date of such conversion in the case of a
conversion into an Alternate Base Rate Advance, specifying each Advance (or
portions thereof) to be so converted or continued and, if to be converted into
or continued as a LIBOR Rate Advance, the Interest Period to be initially
applicable thereto. The Agent shall thereafter promptly notify each affected
Lender of such Notice of Conversion. In no event shall there be more than five
(5) LIBOR Rate Advances outstanding at any time.
SECTION 2.08 Mandatory Repayments.
(a) The Revolving Credit Notes. All outstanding principal (and any
accrued, unpaid interest) on the Revolving Credit Notes shall be due and payable
on the Revolving Credit Maturity Date. Notwithstanding anything to the contrary
contained in this Agreement or in any other Loan Document, the aggregate
outstanding principal balance of the Revolving Credit Notes plus the Letter of
Credit Obligations shall not exceed the lesser of the Borrowing Base and the
Total Revolving Credit Commitment. The Revolving Credit Lenders shall never be
required to make any Advance under the Revolving Credit Loans or issue any
Letter of Credit that would cause the aggregate outstanding principal balance of
the Revolving Credit Notes plus the Letter of Credit Obligations at any time
exceeds the lesser of the Borrowing Base and the Total Revolving Credit
Commitment, the Company shall immediately repay the principal of the Revolving
Credit Notes in an amount at least equal to such excess. If after giving effect
to any
28
such principal repayment the Letter of Credit Obligations exceed the lesser of
the Borrowing Base and the Total Revolving Credit Commitment, the Company shall
pay an amount of cash equal to such excess to the Agent to be held as security
for the Letter of Credit Obligations, which shall be refunded once the lesser of
the Borrowing Base or the total Revolving Credit Commitment is greater than the
aggregate outstanding principal balance of the Revolving Credit Notes plus the
Letter of Credit Obligations.
(b) Term Notes. (i) Outstanding principal on the Term Notes shall be due
and payable on each Designated Payment Date commencing December 31, 1998, in
such aggregate amounts and for such periods as follows:
DESIGNATED TERM LOAN INSTALLMENT DUE ON
PAYMENT DATE EACH DESIGNATED PAYMENT DATE
------------ ----------------------------
December 31, 1998 $ 833,333
March 31, 1999 $ 833,333
June 30, 1999 $ 833,334
September 30, 1999 $1,000,000
December 31, 1999 $1,000,000
March 31, 2000 $1,000,000
June 30, 2000 $1,000,000
September 30, 2000 $1,375,000
December 31, 2000 $1,375,000
March 31, 2001 $1,375,000
June 30, 2001 $1,375,000
September 30, 2001 $1,687,500
December 31, 2001 $1,687,500
March 31, 2002 $1,687,500
June 30, 2002 $1,687,500
September 30, 2002 $1,875,000
December 31, 2002 $1,875,000
March 31, 2003 $1,875,000
June 30, 2003 $1,875,000
September 30, 2003 $2,187,500
December 31, 2003 $2,187,500
March 31, 2004 $2,187,500
Term Loan Maturity Date All remaining principal balance
(c) The ESOP Notes. Outstanding principal on the ESOP Notes shall be due
and payable on each Designated Payment Date commencing September 30, 1998, in
equal installments of $93,750.00 in the aggregate for all ESOP Lenders. All
outstanding principal (and
29
any accrued, unpaid interest) on the ESOP Notes shall be due and payable on the
ESOP Loan Maturity Date.
(d) The Acquisition Facility Notes. The aggregate principal amount of
the Acquisition Facility Loans as of the last day of the Acquisition Facility
Funding Period ("Acquisition Facility Total Draw Amount"), shall be payable on
each Designated Payment Date commencing September 30, 2001 in such aggregate
amounts and for such Designated Payment Date as follows:
PERCENTAGE OF ACQUISITION FACILITY
DESIGNATED TOTAL DRAW AMOUNT DUE ON
PAYMENT DATE EACH DESIGNATED PAYMENT DATE
---------------------------------- -------------------------------
September 30, 2001 6.25%
December 31, 2001 6.25%
March 31, 2002 6.25%
June 30, 2002 6.25%
September 30, 2002 8.75%
December 31, 2002 8.75%
March 31, 2003 8.75%
June 30, 2003 8.75%
September 30, 2003 10.0%
December 31, 2003 10.0%
March 31, 2004 10.0%
Acquisition Facility Maturity Date All remaining principal balance
SECTION 2.09 Prepayments.
(a) Voluntary Prepayments. The Company shall have the right to
voluntarily prepay Advances in whole or in part upon giving, in the case of a
LIBOR Rate Advance, two (2) Business Days' prior written notice to the Agent and
in the case of an Alternate Base Rate Advance written notice by 11:00 a.m.
(Houston, Texas time) on day of such prepayment to the Agent. Upon receipt of
such notice, the Agent shall promptly notify each applicable Lender of the
contents thereof and of such Lender's percentage participation of such
prepayment. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein and (a) no LIBOR Rate
Advance may be prepaid prior to the last day of its Interest Period unless,
simultaneously therewith, the Company pays to the Agent for the benefit of the
affected Lenders, all sums necessary to compensate such Lenders for all costs
and expenses resulting from such prepayment, as reasonably determined by such
Lenders, including but not limited to those costs described in Section 2.17
hereof; (b) each partial prepayment shall be made (i) in the case of a
prepayment of a LIBOR Rate Advance, in a minimum aggregate principal amount of
$1,000,000 and integral multiples of $100,000, and (ii) in the case of a
prepayment of an Alternate Base Rate Advance, in a minimum aggregate amount of
$250,000
30
and integral multiples of $50,000; and (c) during the Acquisition Facility
Funding Period, each prepayment of any Loans, other than Revolving Loans shall
be applied pro rata to each remaining principal installment of the Term Loan and
the ESOP Loan. After the Acquisition Facility Funding Period, each prepayment of
any Loans, other than Revolving Loans shall be applied pro rata to each
remaining principal installment of the Term Loan, ESOP Loan and Acquisition
Facility Loans until repayment of the Term Loan, ESOP Loan and Acquisition
Facility Loans in full. The amount of the Term Loan, ESOP Loan and Acquisition
Facility Loan prepaid may not be reborrowed.
(b) Mandatory Prepayments. The Company shall prepay the Loans in
amounts equal to:
(i) 100% of the net cash proceeds of all asset sales or other
dispositions (except sales of Inventory and surplus or obsolete assets in
the ordinary course of business that do not prejudice the Lenders in any
material way and dispositions permitted under subparagraphs (a)-(f) of
Section 8.02) generating net after-tax proceeds individually or in the
aggregate in excess of $1,000,000 per annum by the Company or any of its
Subsidiaries (such prepayment to be made on or before the fifth day
following the day of the receipt of such proceeds by the Company or any of
its Subsidiaries);
(ii) 100% of the net cash proceeds of all sale/leaseback
transactions by the Company, the Parent or any of their respective
Subsidiaries in the aggregate in excess of $1,000,000 per annum (such
prepayment to be made on or before the fifth day following the day of the
receipt of such proceeds by the Company or any of its Subsidiaries);
(iii) 50% of Excess Cash Flow for the immediately preceding
fiscal year (such prepayment to be made on or before each April 15
beginning April 15, 1999);
(iv) 100% of the net cash proceeds of any debt financing of the
Company or its Subsidiaries excluding Indebtedness permitted under
subparagraphs (a)-(i) of Section 8.03 (such prepayment to be made on or
before the fifth day following the day of the receipt of such proceeds by
the Company or any of its Subsidiaries); and
(v) 100% of the aggregate net cash proceeds of each Casualty
Event to the extent that the aggregate amount of net cash proceeds of all
Casualty Events exceeds $1,000,000 during any fiscal year (unless (A) the
Company has notified the Agent in writing, prior to the Company's receipt
of such proceeds, that the Company intends to apply such proceeds toward
replacement, restoration, rebuilding or repair of the damaged property
within one hundred eighty (180) days after the receipt of such net cash
proceeds and (B) at all times prior to such application of the proceeds, to
the extent that such proceeds are in excess of $1,000,000 with respect to
any Casualty Event, they are deposited in an escrow account with a
financial institution acceptable to the Agent and are encumbered by a
perfected first priority security interest in favor of the Agent for the
benefit of the Lenders not subject to any other Liens), such prepayment to
be made on or
31
before the fifth day following the day of the receipt of such proceeds by
the Company or any of its Subsidiaries.
(c) Any prepayments required by paragraph (b) above shall be applied
first to outstanding Alternate Base Rate Advances up to the full amount thereof,
then to outstanding LIBOR Rate Advances up to the full amount thereof and then
as cash collateral for outstanding Letters of Credit up to the full amount of
the Letter of Credit Obligations then existing, such cash collateral to be held
by the Agent for the benefit of the Lenders in a special cash collateral
account.
(d) During the Acquisition Facility Funding Period all mandatory
prepayments shall be applied pro rata to each remaining principal installment of
the Term Loan and the ESOP Loan until repayment of the Term Loan and ESOP Loan
in full, then to the Revolving Credit Loans. After the Acquisition Facility
Funding Period, all mandatory prepayments shall be applied pro rata to each
remaining principal installment of the Term Loan, ESOP Loan and Acquisition
Facility Loans until repayment of the Term Loan, ESOP Loan and Acquisition
Facility Loans in full, then to the Revolving Credit Loans. The amount of the
Term Loan, ESOP Loan and Acquisition Facility Loan prepaid may not be
reborrowed.
SECTION 2.10 Method and Place of Payments. (a) Except as otherwise
specifically provided herein, all payments under this Agreement due from the
Company shall be made to the Agent for the benefit of the affected Lenders, not
later than 11:00 a.m. (Houston, Texas time) on the date when due and shall be
made in lawful money of the United States in immediately available funds at the
Payment Office.
(b) Except with respect to withholdings of United States taxes, as
provided in Section 2.18, all payments (whether of principal, interest, Fees,
reimbursements or otherwise) by the Company, under this Agreement shall be made
without set-off or counterclaim and shall be made free and clear of and without
deduction for any present or future tax, levy, impost or any other charge, if
any, of any nature whatsoever now or hereafter imposed by any taxing authority.
Except with respect to withholdings of United States taxes as provided in
Section 2.18, if the making of such payments by the Company is prohibited by law
unless such a tax, levy, impost or other charge is deducted or withheld
therefrom, the Company shall pay to the Agent, on the date of each such payment,
such additional amounts (without duplication of any amounts required to be paid
by the Company pursuant to Section 2.16 or Section 3.04) as may be necessary in
order that the net amounts received by the Lenders after such deduction or
withholding shall equal the amounts which would have been received if such
deduction or withholding were not required. The Company shall confirm that all
applicable taxes, if any, imposed on this Agreement or transactions hereunder
shall have been properly and legally paid by it to the appropriate taxing
authorities by sending official tax receipts or notarized copies of such
receipts to the Agent within thirty (30) days after payment of any applicable
tax. Notwithstanding the foregoing, in no event shall the compensation payable
under this Section 2.10(b) (to the extent, if any, constituting interest under
applicable laws) together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement, the Notes and the
other Loan Documents exceed the Highest Lawful Rate. Each Lender agrees that it
will use reasonable
32
efforts to designate a different Applicable Lending Office for the Loans due to
it affected by any matter described in this section 2.10, if such designation
will avoid or reduce the liability of the Company to such Lender under this
Section 2.10 so long as such designation is not disadvantageous to such Lender
as determined by such Lender in its sole discretion.
SECTION 2.11 Pro Rata Advances/Payments. All Advances under this Agreement
shall be incurred from the affected Lenders pro rata, and all payments in
respect of any Loan from the Company to the Agent shall be applied, on the basis
of the Lenders' respective percentage participations in the Revolving Credit
Commitment, the ESOP Loan Commitment, the Term Loan Commitment or the
Acquisition Facility Commitment, as the case may be. It is understood that no
Lender shall be responsible for any default by any other Lender in its
obligation to make Advances hereunder and that each Lender shall be obligated to
make the Advances provided to be made by it hereunder, regardless of the failure
of any other Lender to fulfill its commitments hereunder.
SECTION 2.12 Interest. (a) Subject to Section 11.08, the Company agrees to
pay interest on the total outstanding principal balance from time to time of all
Alternate Base Rate Advances from the date of each respective Advance to
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
Alternate Base Rate in effect from time to time plus the applicable Margin as
such applicable Margin may change from time to time. If the Alternate Base Rate
is based on the Prime Rate, interest shall be computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be. If the Alternate Base Rate is based on the Federal Funds Effective Rate,
interest shall be computed on the basis of the actual number of days elapsed
over a year of 360 days.
(b) Subject to Section 11.08, the Company agrees to pay interest on
the total outstanding principal balance of all LIBOR Rate Advances from time to
time from the date of each respective Advance to maturity (whether by
acceleration or otherwise) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) which shall, during each
Interest Period applicable thereto, be equal to the lesser of (i) the Highest
Lawful Rate and (ii) the applicable LIBOR Rate for such Interest Period plus the
applicable Margin. The applicable LIBOR Rate shall be fixed for each Interest
Period and shall not change during said Interest Period but the applicable
Margin, which is added to the LIBOR Rate to determine the total interest payable
to the affected Lender, shall be adjusted, effective on the first day of each
Margin Period, whether or not said adjustment occurs at a time other than the
beginning of an Interest Period.
(c) Subject to Section 11.08, overdue principal and to the extent
permitted by law, overdue interest in respect of any Advance and all other
amounts owing hereunder shall bear interest for each day that such amounts are
overdue at a rate per annum equal to the Default Rate.
(d) Interest on each Advance shall accrue from and including the date
of such Advance to but excluding the date of any repayment thereof and shall be
payable (i) in respect of LIBOR Rate Advances (A) on the last day of the
Interest Period applicable thereto and, in the
33
case of any Interest Period in excess of three months, on each day which occurs
every three months after the initial date of such Interest Period and on the
last day of the Interest Period and (B) on the date of any voluntary or
mandatory repayment of the Term Loan or any conversion or continuance to the
extent of interest accrued on such amount prepaid, converted or continued, (ii)
in respect of Alternate Base Rate Advances (A) on each Designated Payment Date
and (B) on the date of any voluntary or mandatory repayment to the extent of
interest accrued on such amount prepaid, and (iii) at maturity (whether by
acceleration or otherwise) and, after maturity, on demand.
(e) The Agent, upon determining the LIBOR Rate for any Interest
Period, shall notify the Company thereof. Each such determination shall, absent
manifest error, be final and conclusive and binding on all parties hereto. In
addition, prior to the due date for the payment of interest on any Advances set
forth in the immediately preceding paragraph, the Agent shall notify the Company
of the amount of interest due by the Company on all outstanding Advances on the
applicable due date, but any failure of the Agent to so notify the Company shall
not reduce the Company's liability for the amount owed.
(f) Subject to Section 11.08, the Company shall pay to the Agent for
the account of each affected Lender, so long as the Lenders shall be required
under regulations of the Board to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities, additional
interest on the unpaid principal amount of each such LIBOR Rate Advance from the
date of such Advance until such principal amount is paid in full, at an interest
rate per annum equal at all times during the Interest Period for such Advance to
the lesser of (i) the Highest Lawful Rate and (ii) the remainder obtained by
subtracting (A) the LIBOR Rate for such Interest Period from (B) the rate
obtained by dividing such LIBOR Rate referred to in clause (A) above by that
percentage equal to 100% minus the Reserve Percentage of such Lender for such
Interest Period. Such additional interest (i) shall be determined by such Lender
as incurred, (ii) shall be evidenced by a certificate setting forth in
reasonable detail the amount thereof, based on the foregoing calculation, and
(iii) shall be payable upon demand therefor by the Company to such Lender. Each
determination by such Lender of additional interest due under this Section
2.12(f) shall be conclusive and binding for all purposes in the absence of
manifest error.
SECTION 2.13 Interest Periods. (a) At the time the Company gives any Notice
of Advance or Notice of Conversion in respect of the making of, or conversion
into, a LIBOR Rate Advance, the Company shall have the right to elect, by giving
the Agent on the dates and at the times specified in Section 2.04 or Section
2.07, as the case may be, notice of the interest period (each an "Interest
Period") applicable to such LIBOR Rate Advance, which Interest Period shall be
either a one, two, three or six-month period; provided, that:
(i) the Initial Interest Period for any LIBOR Rate Advance shall
commence on the date of such LIBOR Rate Advance (including the date of any
conversion thereto or continuance thereof pursuant to Section 2.07); each
Interest Period occurring thereafter in respect of such LIBOR Rate Advance
shall commence on the expiration date of the immediately preceding Interest
Period;
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(ii) if any Interest Period relating to a LIBOR Rate Advance
begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such interest Period shall expire on the next
succeeding Business Day, provided, that if there are no more Business Days
in that month, the Interest Period shall expire on the proceeding Business
Day; and
(iv) no Interest Period for Advances shall extend beyond the
Revolving Credit Maturity Date, Term Loan Maturity Date, Acquisition
Facility Maturity Date or ESOP Loan Maturity Date, as the case may be.
(b) If, upon the expiration of any Interest Period applicable to a
LIBOR Rate Advance, the Company has failed to elect a new Interest Period to be
applicable to such Advance as provided above, the Company shall be deemed to
have elected to convert such Advance into an Alternate Base Rate Advance
effective as of the expiration date of such current Interest Period.
SECTION 2.14 Interest Rate Not Ascertainable. In the event that the Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
LIBOR Rate for any Interest Period, by reason of any changes arising after the
date of this Agreement affecting the LIBOR interbank market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of LIBOR Rate, then, and in any such event, the
Agent shall forthwith give notice to the Company and to the Lenders of such
determination. Until the Agent notifies the Company that the circumstances
giving rise to the suspension described herein no longer exist, the obligations
of the Lenders to make LIBOR Rate Advances shall be suspended.
SECTION 2.15 Change in Legality. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
or its LIBOR Lending Office to make or maintain any LIBOR Rate Advance or to
give effect to its obligations as contemplated hereby, then, by prompt written
notice to the Company, such Lender may:
(i) declare that LIBOR Rate Advances will not thereafter be made
by such Lender hereunder, whereupon the Company shall be prohibited from
requesting LIBOR Rate Advances from such Lender hereunder (and instead, any
request for a LIBOR Rate Advance, as to such Lender, shall be deemed to be
a request for an Alternate Base Rate Advance), unless such declaration is
subsequently withdrawn; and
35
(ii) require that all outstanding LIBOR Rate Advances made by
such Lender be converted to Alternate Base Rate Advances, in which event
(A) all such LIBOR Rate Advances made by such Lender shall be automatically
converted to Alternate Base Rate Advances as of the effective date of such
notice as provided in paragraph (b) below (or if so designated by such
Lender in such notice, effective as of another date) and (B) all payments
and prepayments of principal which would otherwise have been applied to
repay the converted LIBOR Rate Advances shall instead be applied to repay
the Alternate Base Rate Advances resulting from the conversion of such
LIBOR Rate Advances.
(b) For purposes of this Section 2.15, a notice to the Company by any
Lender pursuant to paragraph (a) above shall be effective on the date of receipt
thereof by the Company.
SECTION 2.16 Increased Costs, Taxes or Capital Adequacy Requirements. (a)
If, after the Execution Date, the application or effectiveness of any applicable
law or regulation or compliance by any Lender with any applicable guideline or
request from any central bank or governmental authority (whether or not having
the force of law) (i) shall change the basis of taxation of payments to such
Lender of the principal of or interest on any LIBOR Rate Advance made by such
Lender or any other Fees or amounts payable hereunder (other than taxes imposed
or measured on the overall net or gross income or revenue of such Lender or its
Applicable Lending Office or franchise taxes imposed upon it by the jurisdiction
in which such Lender or its Applicable Lending Office has an office), (ii) shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement with respect to any LIBOR Rate Advance made by such Lender against
assets of, deposits with or for the account of, or credit extended by, such
Lender (without duplication of any amounts paid pursuant to Section 2.12(f) or
(iii) shall impose on such Lender any other condition affecting this Agreement
or any LIBOR Rate Advance made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of maintaining its
Revolving Credit Commitment, Term Loan Commitment, ESOP Loan Commitment or the
Acquisition Facility Commitment, as the case may be, or of making or maintaining
any LIBOR Rate Advance or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise) in
respect thereof by an amount deemed in good faith by such Lender to be material,
then the Company shall pay to such Lender such additional amount as will
compensate it for such increase or reduction upon demand.
(b) If any Lender shall have determined in good faith that any change
after the Execution Date of any law, rule, regulation or guideline regarding
capital adequacy, or any change in the interpretation or administration thereof
or compliance 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 issued after the Execution Date has or would have the effect
of reducing the rate of return on the capital of such Lender as a consequence
of, or with reference to, such Lender's obligations hereunder to a level below
that which it could have achieved but for such change by an amount deemed in
good faith by such Lender to be material, then, from time to time, the Company
shall pay to the Agent for the benefit of such Lender such additional amount as
will reasonably compensate it for such reduction upon demand.
36
(c) Each Lender will notify the Company through the Agent of any event
occurring after the date of this Agreement which will entitle it to compensation
pursuant to this Section 2.16, as promptly as practicable. A certificate (i)
stating that the compensation sought to be recovered pursuant to this Section
2.16 is generally being charged to other similarly situated customers and (ii)
setting forth in reasonable detail the amount necessary to compensate the Lender
in question as specified in paragraph (a) or (b) above, as the case may be, and
the calculation of such amount under clause (a)(i), shall be delivered to the
Company and shall be conclusive absent manifest error. The Company shall pay to
the Agent for the account of such Lender the amount shown as due on any such
certificate upon demand. The failure on the part of any Lender to demand
increased compensation with respect to any Interest Period shall not constitute
a waiver of the right to demand compensation thereafter, provided that with
respect to events occurring prior to any notice as to such events given under
this Section 2.16(c), such Lenders shall only be entitled to recover
compensation for such events occurring over a period of 120 days. Upon the
request of the Company, each Lender agrees that it will use reasonable efforts
to designate a different Applicable Lending Office for the Loans due to it
affected by the matter described in Sections 2.16(a) and 2.16(b), if such
designation will avoid or reduce the liability of the Company to such Lender
under this Section 2.16 so long as such designation is not disadvantageous to
such Lender as determined by such Lender in its sole discretion.
(d) Except as expressly provided in Section 2.16(c) failure on the
part of any Lender to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in return on capital with respect
to any Interest Period shall not constitute a waiver of such Lender's rights to
demand compensation for any increased costs or reduction in amounts received or
receivables or reduction in return on capital with respect to such Interest
Period or any other Interest Period.
SECTION 2.17 LIBOR Advance Prepayment and Default Penalties. Subject to
Section 11.08, the Company shall indemnify each Lender against any loss or
expense (other than loss of profit) which it may sustain or incur as a
consequence of (a) an advance of, or a conversion into, or a continuance of,
LIBOR Rate Advances that does not occur on the date specified therefor in a
Notice of Advance or Notice of Conversion, (b) any payment, prepayment or
conversion of a LIBOR Rate Advance required by any other provision of this
Agreement or otherwise made on a date other than the last day of the applicable
Interest Period or (c) any default in the payment or prepayment of the principal
amount of any LIBOR Advance or any part thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, by notice of prepayment or
otherwise). Such loss or expense shall include the amount equal to the excess
determined by each Lender of (i) its cost of obtaining the funds for the Advance
being paid, prepaid or converted or not borrowed (based on the LIBOR Rate) for
the period from the date of such payment, prepayment or conversion or failure to
borrow to the last day of the Interest Period for such Advance (or, in the case
of a failure to borrow, the Interest Period for the Advance which would have
commenced on the date of such failure to borrow) over (ii) the amount of
interest (as determined by each Lender) that would be realized in reemploying
the funds so paid, prepaid or converted or not borrowed for such period or
Interest Period, as the case may be.
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The Agent on behalf of the Lenders, will notify the Company of any loss or
expense which will entitle the Lenders to compensation pursuant to this Section
2.17, as promptly as is practicable. A certificate of any Lender setting forth
any amount which it is entitled to receive pursuant to this Section 2.17 shall
be delivered to the Company and shall be conclusive absent manifest error. The
Company shall pay to the Agent for the account of the Lenders the amount shown
as due on any certificate upon demand. Without prejudice to the survival of any
other obligations of the Company hereunder, the obligations of the Company under
this Section 2.17 shall survive the termination of this Agreement and the
assignment of any of the Notes. The failure on the part of any Lender to demand
compensation with respect to this Section 2.17 shall not constitute a waiver of
the right to demand compensation thereafter, provided that with respect to any
loss or expense incurred prior to any notice as to such loss or expense given
under this Section 2.17, such Lender shall only be entitled to recover
compensation for such loss or expense incurred over a period of 120 days.
SECTION 2.18 Tax Forms. With respect to each Lender (including, but not
limited to, any Lender added by assignment pursuant to Section 11.10) which is
organized under the laws of a jurisdiction outside the United States, on the
date of the initial Advance hereunder, and from time to time thereafter if
requested by the Company or the Agent, each such Lender (including assignees of
any thereof from time to time) shall provide the Agent and the Company with the
forms prescribed by the Internal Revenue Service of the United States certifying
as to such Lender's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to such Lender
hereunder or other documents satisfactory to the Company and the Agent
indicating that all payments to be made to such Lender hereunder are subject to
such tax at a rate reduced by an applicable tax treaty. Unless the Company and
the Agent have received such forms or such documents indicating that payments
hereunder are not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Company or the Agent
shall withhold taxes from such payments at the applicable statutory rate in the
case of payments to or for any Lender organized under the laws of a jurisdiction
outside the United States.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Issuing Bank agrees that it will at any time
and from time to time on or after the Effective Date and prior to the Revolving
Credit Maturity Date, following its receipt of a Letter of Credit Request and
Application for Letter of Credit, issue for the account of the Company and in
support of the obligations of the Company or any of its Subsidiaries, one or
more letters of credit (the "Letters of Credit"), up to a maximum amount
outstanding at any one time for all Letters of Credit of $2,000,000, provided
that the Issuing Bank shall not issue any Letter of Credit if at the time of
such issuance: (i) Letter of Credit Obligations shall be greater than an amount
which, when added to all Advances under the Revolving Credit Notes then
outstanding, would exceed the lesser of the Borrowing Base and the Total
Revolving Credit Commitment or (ii) the expiry date or, in the case of any
Letter of Credit containing an expiration
38
date that is extendible at the option of the Issuing Bank, the initial expiry
date, of such Letter of Credit is a date that is later than the Revolving Credit
Maturity Date, provided, further, the Carryover Letters of Credit each shall be
deemed to have been issued under this Agreement and constitute a part of the
Obligations.
(b) The Issuing Bank shall neither renew or extend nor permit the
renewal or extension of any Letter of Credit (which renewal or extension will
not be for any period ending after the Revolving Credit Maturity Date) if any of
the conditions precedent to such renewal set forth in Section 5.02 are not
satisfied or waived or, after giving effect to such renewal, the expiry date of
such Letter of Credit would be a date that is later than the Revolving Credit
Maturity Date.
SECTION 3.02 Letter of Credit Requests. (a) Whenever the Company desires
that a Letter of Credit be issued for its account or that the existing
expiration date shall be extended, it shall give the Issuing Bank (with copies
to be sent to the Agent and each other Revolving Credit Lender) (i) in the case
of a Letter of Credit to be issued, at least five (5) Business Days' prior
written request therefor and (ii) in the case of the extension of the existing
expiry date of any Letter of Credit, at least five (5) Business Days prior to
the date on which the Issuing Bank must notify the beneficiary thereof that the
Issuing Bank does not intend to extend such existing expiry date. Each such
request shall be executed by the Company and shall be in the form of Exhibit
3.02 attached hereto (each a "Letter of Credit Request") and shall be
accompanied by an Application for Letter of Credit therefor, completed to the
reasonable satisfaction of the Issuing Bank, and such other certificates,
documents and other papers and information as the Issuing Bank or the Agent may
reasonably request. Each Letter of Credit shall be denominated in U.S. dollars,
shall expire no later than the date specified in Section 3.01, shall not be in
an amount greater than is permitted under the clause (i) of Section 3.01(a) and
shall be in such form as may be reasonably approved from time to time by the
Issuing Bank and the Company.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Company that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of this
Agreement. Unless the Issuing Bank has received notice from any Revolving Credit
Lender before it issues the respective Letter of Credit or extends the existing
expiry date of a Letter of Credit that one or more of the conditions specified
in Article V are not then satisfied, or that the issuance of such Letter of
Credit would violate this Agreement, then the Issuing Bank shall issue the
requested Letter of Credit for the account of the Company in accordance with the
Issuing Bank's usual and customary practices. Upon its issuance of any Letter of
Credit or the extension of the existing expiry date of any Letter of Credit, as
the case may be, the Issuing Bank shall promptly notify the Company and the
Agent and the Agent shall notify each Revolving Credit Lender of such issuance
or extension, which notices shall be accompanied by a copy of the Letter of
Credit actually issued or a copy of any amendment extending the existing expiry
date of any Letter of Credit, as the case may be.
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SECTION 3.03 Letter of Credit Participations. (a) All Letters of Credit
issued subsequent hereto shall be deemed to have been sold and transferred by
the Issuing Bank to each Revolving Credit Lender, and each Revolving Credit
Lender shall be deemed irrevocably and unconditionally to have purchased and
received from the Issuing Bank, without recourse or warranty, an undivided
interest and participation (to the extent of such Lender's percentage
participation in the Revolving Credit Commitments) in each such Letter of Credit
(including extensions of the expiry date thereof), each substitute Letter of
Credit, each drawing made thereunder and the obligations of the Company under
this Agreement and the other Loan Documents with respect thereto, and any
security therefor or guaranty pertaining thereto.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the Revolving Credit Lenders
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to comply on
their face with the requirements of such Letter of Credit.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit, the same shall be considered an Alternate Base Rate Advance
without further action by any Person. The Issuing Bank shall promptly notify the
Agent, which shall promptly notify each Revolving Credit Lender thereof. Each
Revolving Credit Lender shall immediately pay to the Agent for the account of
the Issuing Bank the amount of such Lender's percentage participation of such
Advance. If any Revolving Credit Lender shall not have so made its percentage
participation available to the Agent, such Lender agrees to pay interest
thereon, for each day from such date until the date such amount is paid at the
lesser of (i) the Federal Funds Effective Rate and (ii) the Highest Lawful Rate.
(d) The Issuing Bank shall not be liable for, and the obligations of
the Company and the Revolving Credit Lenders to make payments to the Agent for
the account of the Issuing Bank with respect to Letters of Credit shall not be
subject to, any qualification or exception whatsoever, including any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Company may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit, the Agent, any
Issuing Bank, any Revolving Credit Lender, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between the Company and the beneficiary named in any such
Letter of Credit);
(iii) any draft, certificate or any other document presented
under the 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;
40
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
or
(v) the occurrence of any Default or Event of Default.
(e) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted in connection with any Letter of Credit, except for
errors or omissions caused by such Issuing Bank's gross negligence or willful
misconduct. IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT SUCH ISSUING
BANK, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (OTHER THAN WITH RESPECT TO
ANY CLAIMS BY THE ISSUING BANK AGAINST ANY SUCH OFFICER, DIRECTOR, EMPLOYEE OR
AGENT THEREOF) SHALL BE INDEMNIFIED AND HELD HARMLESS FROM, SUBJECT TO THE SAME
TYPE OF PROTECTIONS SET FORTH IN SECTION 11.05(B), ANY ACTION TAKEN OR OMITTED
BY SUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY RELATED
DRAFT OR DOCUMENT ARISING OUT OF OR RESULTING FROM SUCH PERSON'S SOLE OR
CONTRIBUTORY NEGLIGENCE, BUT NOT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SUCH PERSON. The Company agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in accordance with the standards of care specified
in the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No. 500 (and any subsequent
revisions thereof approved by a Congress of the International Chamber of
Commerce and adhered to by the Issuing Bank) and, to the extent not inconsistent
therewith, the Uniform Commercial Code of the State of Texas, shall not result
in any liability of the Issuing Bank to the Company.
SECTION 3.04 Increased Costs. (a) Notwithstanding any other provision
herein, but subject to Section 11.08, if any Revolving Credit Lender shall have
determined in good faith that any change after the Execution Date of any law,
rule, regulation or guideline or the application or effectiveness of any
applicable law or regulation or any change after the Execution Date in the
interpretation or administration thereof, or compliance by any Revolving Credit
Lender (or any lending office of such Lender) with any applicable guideline or
request from any central bank or governmental authority (whether or not having
the force of law) issued after the Effective Date either (i) shall impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against Letters of Credit issued, or participated in, by any
Revolving Credit Lender or (ii) shall impose on any Revolving Credit Lender any
other conditions (without duplication of taxes covered in Section 2.16(a)(i) and
excluding the taxes specifically excluded in the parenthetical clause in
Section 2.16(a)(i) affecting this Agreement or any Letter of Credit; and the
result of any of the foregoing is to increase the cost to any Revolving Credit
Lender of issuing, maintaining or participating in any Letter of Credit, or
reduce the amount received or receivable by any Revolving Credit Lender
hereunder with respect to Letters of Credit, by an amount deemed by such Lender
to be material, then, from time to time, the Company shall pay to the Agent for
the account of such Lender such additional amount or amounts as will reasonably
compensate such Lender for such increased cost or reduction by such Lender.
(b) Each Revolving Credit Lender will notify the Company through the
Agent of any event occurring after the date of this Agreement which will entitle
such Lender to
41
compensation pursuant to subsection (a) above, as promptly as practicable. A
certificate of such Lender (i) stating that the compensation sought to be
recovered pursuant to this Section 3.04 is generally being charged to other
similarly situated customers and (ii) setting forth in reasonable detail such
amount or amounts as shall be necessary to compensate such Lender as specified
in subsection (a) above shall be delivered to the Company (with a copy to the
Agent) and shall be conclusive absent manifest error. The Company shall pay to
the Agent for the account of such Lender the amount shown as due on any such
certificate upon demand; provided that with respect to events occurring prior to
any notice as to such events given under the Section 3.04(b), such Lender shall
only be entitled to recover compensation for such events occurring over a period
of 120 days.
(c) Except as expressly provided in Section 3.04(b), failure on the
part of any Revolving Credit Lender to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any Letter of Credit shall not constitute a waiver of
such Lender's rights to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in return on capital with respect
to such Letter of Credit.
SECTION 3.05 Conflict between Applications and Agreement. To the extent
that any provision of any application related to any Letter of Credit is
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
ARTICLE IV
FEES; COMMITMENTS
SECTION 4.01 Fees.
(a) The Company agrees to pay to the Agent for the account of each
Revolving Credit Lender a commitment fee (the "Revolving Credit Commitment Fee")
for the period from and including the Effective Date to the Revolving Credit
Maturity Date, computed at a rate per annum of three-eighths of one percent
(0.375%) on the average daily unused amount of the outstanding Revolving Credit
Commitments. Accrued Revolving Credit Commitment Fees shall be calculated to the
day immediately preceding each Designated Payment Date and to the date the Total
Revolving Credit Commitment is terminated. Revolving Credit Commitment Fees
shall be due and payable in arrears (i) on each Designated Payment Date
commencing on the first such date following the Execution Date and (ii) on the
Revolving Credit Maturity Date.
(b) The Company agrees to pay to the Agent for the account of each
Acquisition Facility Lender a commitment fee (the "Acquisition Facility
Commitment Fee") for the period from and including the Effective Date to the
expiration of the Acquisition Facility Funding Period, computed at a rate per
annum of three-eighths of one percent (0.375%) on the average daily unused
amount of the outstanding Acquisition Facility Commitments. Accrued Acquisition
Facility Commitment Fees shall be calculated to the day immediately preceding
each Designated Payment Date and to the last day of the Acquisition Facility
Funding Period. Acquisition Facility Commitment Fees shall be due and payable in
arrears (i) on each Designated
42
Payment Date commencing on the first such date following the Execution Date and
(ii) on the last day of the Acquisition Facility Funding Period.
(c) The Company agrees to pay Letter of Credit Fees to the Issuing
Bank and each Lender in the applicable amount of the same payable thereto as set
forth in the definition of Letter of Credit Fee set forth in Section 1.01.
Accrued Letter of Credit Fees shall be due and payable in arrears (i) on each
Designated Payment Date commencing on the first such date following the
Execution Date and (ii) on the Revolving Credit Maturity Date, and shall be
calculated on the basis of a 360-day year.
(d) The Company agrees to pay to the Agent, for the account of Agent,
in connection with its duties as Agent and its arrangement and syndication of
this credit facility; and for the account of each Lender as consideration for
such Lender making available the Loans, all of such fees as have been agreed to
pursuant to the Agent's Letter.
(e) In no event shall the Fees payable under this Section 4.01 (to the
extent, if any, constituting interest under applicable laws) together with all
amounts constituting interest under applicable laws and payable in connection
with this Agreement, the Notes and the other Loan Documents exceed the Highest
Lawful Rate.
SECTION 4.02 Reduction of Total Commitment. Upon at least five (5) Business
Days' prior written notice to the Agent, the Company shall have the right
without premium or penalty, to reduce or terminate the Unutilized Commitment in
part or in whole; provided, that (a) any such reduction shall reduce
proportionately the Revolving Credit Commitment of each of the Revolving Credit
Lenders or the Acquisition Facility Commitment of each of the Acquisition
Facility Lenders, whichever is applicable and (b) any partial reduction shall be
in the amount of $1,000,000 or integral multiples thereof.
SECTION 4.03 Reduction of Total Revolving Credit Commitment. The Revolving
Credit Commitments, if not sooner terminated, shall terminate on the Revolving
Credit Maturity Date.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions Precedent to the Initial Advance. The obligation of
each Lender to make its initial Advance to the Company is subject to the
condition that the Agent shall have received the following, each in form and
substance reasonably satisfactory to the Agent:
(a) this Agreement executed by the Company;
(b) one Revolving Credit Note for each Revolving Credit Lender, each
executed by the Company and payable to the order of said Lender in the amount of
its Revolving Credit Commitment;
43
(c) one Term Note for each Term Loan Lender, each executed by the
Company and payable to the order of said Lender in the amount of its Term Loan
Commitment;
(d) one ESOP Note for each ESOP Lender, each executed by the Company
and payable to the order of said Lender in the amount of its ESOP Loan
Commitment;
(e) one Acquisition Facility Note for each Acquisition Facility
Lender, each executed by the Company and payable to the order of said Lender in
the amount of its Acquisition Facility Commitment;
(f) the Guaranty;
(g) the Security Documents executed by the Company, the Subsidiaries,
and the Parent, as the case may be, including all certificates evidencing shares
of stock of the Company, and Subsidiaries pledged to the Agent for the benefit
of the Lenders under the terms of any Security Document, together with related
stock powers duly executed by the Parent and the Company, as the case may be;
(h) a Borrowing Base Certificate dated as of May 31, 1998, executed by
an authorized officer of the Company;
(i) a Notice of Advance with respect to the initial Advance meeting
the requirements of Section 2.04(a);
(j) a certificate (i) of the secretary or an assistant secretary of
each of the Parent, Finance Corp., AXIA and the Company and each of their
respective Subsidiaries party hereto certifying (A) true and complete copies of
each of the articles or certificate of incorporation, as amended and in effect,
of such Person, the bylaws, as amended and in effect, of such Person and the
resolutions adopted by the Board of Directors of such Person, (1) authorizing
the execution, delivery and performance by such Person of the Loan Documents to
which it is or will be a party and, as to the Company, the Advances to be made
hereunder, (2) approving the forms of the Loan Documents to which it is or will
be a party and which will be delivered at or prior to the date of the initial
Advance, and (3) authorizing officers of such Person to execute and deliver the
Loan Documents to which it is or will be a party and any related documents,
including, any agreement contemplated by this Agreement, and (B) the incumbency
and specimen signatures of the officers of such Person executing any documents
on its behalf and (ii) of a Responsible Officer of the Company certifying, (A)
that there has been no change in the businesses or financial condition of AXIA
and its Subsidiaries since December 31, 1997 which would reasonably be expected
to have a Material Adverse Effect, and (B) that no Default or Event of Default
shall have occurred and be continuing or would result from the initial Advance;
(k) favorable, signed opinions addressed to the Agent and the Lenders
from Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel to Holding Co., the Parent, Finance
Corp. and the
44
Company and their respective Subsidiaries, in form and substance satisfactory to
the Agent and its counsel;
(1) the Agent shall have received the payment for the Agent and the
Lenders, as applicable, of all Fees and expenses agreed upon by such parties and
the Company to be payable on or prior to the Execution Date;
(m) certificates of appropriate public officials as to the existence,
good standing and qualification to do business as a foreign corporation, as
applicable, of the Parent, Finance Corp. and the Company and their respective
Subsidiaries in each jurisdiction in which the failure to be so qualified or in
good standing would reasonably be expected to have a Material Adverse Effect;
(n) a Solvency Certificate executed by the chief financial officer of
the Company that, after giving effect to the Merger Agreement, the Company
Merger and the transaction(s) contemplated thereby, (i) the aggregate fair value
and present fair saleable value of the Company's assets would exceed the
Company's total liabilities, including identified contingent liabilities; (ii)
the Company is able to pay its debts as they become absolute and mature in the
ordinary course of business; and (iii) the Company does not have an unreasonably
small amount of capital to engage in its business, as management has indicated
it is now conducted and is proposed to be conducted, following the consummation
of the Acquisition;
(o) Landlord Lien Waivers as required by the Agent for Inventory
locations located on leasehold estates listed on Schedule 5.01(o);
(p) copies of the executed Indenture evidencing the Subordinated Debt;
(q) a copy of each opinion of counsel delivered in connection with the
Merger Agreement either containing in the body thereof the right of the Agent
and the Lenders to rely thereon or accompanied by a letter from the Person
delivering such opinion authorizing reliance thereon by the Agent and the
Lenders;
(r) Certificates of Insurance evidencing the existence of all
insurance required to be maintained pursuant to Section 6.17;
(s) evidence of cancellation of existing debt facilities and Liens
securing such facilities (or written payoff letters in form and substance
acceptable to the Agent in its sole discretion);
(t) evidence satisfactory to the Agent that not less than $28,000,000
in equity has been contributed to the Parent and not less than $97,000,000 of
Subordinated Debt has been contributed to Finance Corp.; and
(u) evidence satisfactory to the Agent that the following has occurred
or will occur immediately following funding on the Effective Date:
45
(i) the Parent Merger; and
(ii) the Company Merger.
The acceptance of the benefits of the initial Credit Event shall
constitute a representation and warranty by the Company to the Agent and each of
the Lenders that all of the conditions specified in this Section 5.01, shall
have been satisfied or waived as of that time.
SECTION 5.02. Conditions Precedent to All Credit Events. The obligation of
the Lenders to make any Advance or issue a Letter of Credit is subject to the
further conditions precedent that on the date of such Credit Event:
(a) The conditions precedent set forth in Section 5.01 shall have
theretofore been satisfied or waived;
(b) The representations and warranties set forth in Article VI of this
Agreement and the representations and warranties set forth in the Guaranty and
the Security Documents shall be true and correct in all material respects as of,
and as if such representations and warranties were made on, the date of the
proposed Advance or Letter of Credit, as the case may be (unless such
representation and warranty expressly relates to an earlier date or is no longer
true and correct solely as a result of transactions not prohibited by the Loan
Documents), and the Company shall be deemed to have certified to the Agent and
the Lenders that such representations and warranties are true and correct in all
material respects (unless such representation and warranty expressly relates to
an earlier date or is no longer true and correct solely as a result of
transactions not prohibited by the Loan Documents) by submitting a Notice of
Advance;
(c) The Company shall have complied with the provisions of Section
2.04 or Section 3.02, as applicable;
(d) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event;
(e) No Material Adverse Effect shall have occurred since the delivery
of the most recent financials; and
(f) The Agent shall have received such other consents, approvals,
opinions or documents as the Agent may reasonably request.
The acceptance of the benefits of each such Credit Event shall constitute a
representation and warranty by the Company to the Agent and each of the Lenders
that all of the conditions specified in this Section 5.02 above exist as of that
time.
46
SECTION 5.03 Delivery of Documents. All of the Notes, Security Documents,
certificates and legal opinions referred to in this Article V, unless otherwise
specified, shall be delivered to the Agent for the account of each of the
Lenders and, except for the Notes, if requested by the Agent in sufficient
copies for each of the Lenders and shall be reasonably satisfactory in form and
substance to the Agent. Any Lender may request in writing to the Agent and the
Company a copy of any other document or paper referred to in this Article V and
the Company will thereafter provide same to such Lender.
SECTION 5.04 Acquisition Facility Loans. The obligation of each Lender to
make any Acquisition Facility Loan is subject to the further conditions
precedent that on the date of such Credit Event, unless waived by the Majority
Lenders:
(a) Acquisition Request. Company shall have provided to the Agent and
the Agent have in turn delivered to each Lender at least ten (10) Business Days
prior to the date that the proposed Acquisition Facility Loan is to be
requested, the following: (i) the name of the Person (the "Target") who is to be
acquired or whose assets are to be acquired; (ii) a description of the nature of
the Target's business; (iii) copies of the documentation (or substantially final
drafts of the documentation) intended to effect the proposed acquisition (the
"Acquisition Agreements"); (iv) a summary of the terms and conditions of the
proposed acquisition; (v) a certificate of the chief financial officer or chief
executive officer of the Company certifying that no Default or Event of Default
exists or could reasonably be expected to occur as a result of the proposed
acquisition; and (vi) any other information the Agent may reasonably request. In
addition, at least ten (10) Business Days prior to the date that the Acquisition
Facility Loan is to be requested, the Company and the management of the Target
must have been made available to the Agent and the Lenders to answer questions
regarding the proposed acquisition and the documentation related thereto.
(b) Acquisition Criteria. The Company shall provide to the Agent and
each Lender evidence of the following, unless otherwise consented to by the
Majority Lenders:
(i) The Company has completed due diligence on the Target and the
assets to be acquired satisfactory to Agent, including, without limitation,
if and to the extent appropriate, a due diligence investigation as to the
compliance in all material respects with all Environmental Laws by the
Target and the assets to be acquired;
(ii) The Target is involved in the same general type of business
activities as the Company and the Subsidiaries and types of business
activities reasonably related thereto;
(iii) If the proposed acquisition is an acquisition of the stock
of a Target, the acquisition will be structured so that the Target will
become a Substantially Owned Subsidiary. If the proposed acquisition is an
acquisition of assets, the acquisition will be structured so that either
the Company or a Substantially-Owned Subsidiary of the Company shall
acquire the assets;
47
(iv) Neither the Target nor its assets shall be subject to any
contingent obligations (including contingent obligations arising from any
environmental liabilities), environmental liabilities, unsatisfied judgments
or any pending action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration that could reasonably be expected
to result in the proposed acquisition having a Material Adverse Effect;
(v) The following criteria have been satisfied:
(A) The Company shall have provided to the Agent and each
Lender (i) copies of (a) the financial statements of the Target for
the twelve (12) month period prior to the closing of the proposed
Acquisition for which financial statements are available and (b)
audited or reviewed financial statements (by an accounting firm
acceptable to Agent) for the most recently completed fiscal year of
the Target, containing at a minimum, a balance sheet, statement of
income and statement of cash flow prepared in accordance with GAAP, in
form and substance acceptable to the Agent, and (ii) a pro forma
financial projection of the Company and the Subsidiaries (including
the Target) for the period of 12 months following the date of the
consummation of the proposed acquisition which reflects compliance
with the financial covenants set forth in Section 8.13 and Section
8.14 of this Agreement;
(B) The Acquisition Facility Pro Forma Total Debt Leverage
Ratio as of the date of the proposed acquisition shall not be greater
than five and three-quarters (5.75) to one (1.00);
(C) The Acquisition Facility Pro Forma Senior Debt Leverage
Ratio as of the date of the proposed acquisition shall not be greater
than three (3.00) to one (1.00);
(D) Adjusted Target EBITDA less the Target's unfinanced
Capital Expenditures for such period is greater than zero; and
(E) A certificate of a Responsible Officer of the Company
certifying to the calculations demonstrating compliance with this
clause (v).
(c) Acquisition Agreements. Prior to the closing of the Acquisition
Facility Loans to be used for the proposed acquisition, (i) Agent and the
Lenders shall have received executed or final copies of the Acquisition
Agreements relating to the proposed acquisition; (ii) the Acquisition Agreements
shall be in full force and effect and no material term or condition thereof
shall have been amended, modified, or waived after the execution thereof (other
than solely to extend the date by which the proposed acquisition is required to
occur) except those a copy of which was received by Agent and the Lenders prior
to the closing of such Acquisition Facility Loans; (iii) none of the parties to
the Acquisition Agreements shall have failed to perform any material obligation
or covenant required by the Acquisition Agreements to be
48
performed or complied with by it on or before the date of the closing of the
proposed acquisition unless waived with the consent of the Agent; and (iv) Agent
shall have received a certificate from a Responsible Officer of the Company to
the effect set forth in clauses (i), (ii) and (iii) above.
(d) Proposed Target Loan Documents. If the proposed acquisition is an
acquisition of the stock of a Target, then (i) the Target shall execute and
deliver to Agent the documentation required by Section 7.09, (ii) the Company or
the relevant Domestic Subsidiary, as the case may be, shall execute and deliver
to the Agent an amendment to the relevant Security Documents describing as
collateral thereunder the stock of the Target (or if the Target is a Foreign
Subsidiary, 66% thereof), and (iii) the Company or the relevant Domestic
Subsidiary, as the case may be, shall deliver to the Agent the certificates
representing the stock of the Target (or if the Target is a Foreign Subsidiary,
66% thereof) together with undated stock powers duly executed in blank. If the
proposed acquisition is an acquisition of assets, the Company or the Domestic
Subsidiary acquiring the assets shall execute and deliver to the Agent such
documentation reasonably requested by Agent to cause substantially all of the
property acquired to be subject to a perfected Lien in favor of Agent for the
benefit of the Lenders and for such Lien to have priority over all other Liens
other than Permitted Liens.
ARTICLE VI
REPRESENTATIONS AND WARRANTEES
In order to induce the Lenders to enter into this Agreement and to make the
Advances provided for herein, the Company for itself, the Parent and each of its
Subsidiaries makes, on or as of the occurrence of each such Credit Event (except
to the extent such representations or warranties relate to an earlier date or
are no longer true and correct in all material respects solely as a result of
transactions not prohibited by the Loan Documents), the following
representations and warranties to the Agent and the Lenders:
SECTION 6.01 Organization and Qualification. Each member of the Company
Group (a) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (b) has
the corporate power to own its property and to carry on its business as now
conducted and (c) is duly qualified as a foreign corporation to do business and
is in good standing, in each case in each jurisdiction in which the failure to
be so qualified or in good standing would reasonably be expected to have a
Material Adverse Effect.
SECTION 6.02 Authorization and Validity. Each member of the Company Group
has the corporate power and authority to execute, deliver and perform its
obligations hereunder and under the other Loan Documents to which it is a party
and all such action has been duly authorized by all necessary corporate
proceedings on its part. The Loan Documents to which any member of the Company
Group is a party have been duly and validly executed and delivered by such
member of the Company Group and constitute valid and legally binding agreements
of such member of the Company Group enforceable in accordance with the
respective terms thereof, except, in each case, as such enforceability may be
limited by bankruptcy, insolvency,
49
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity.
SECTION 6.03 Governmental Consents. No authorization, consent, approval,
license or exemption (other than such exemptions that exist under applicable
law, that are permitted, or that have been obtained) of any Person or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is necessary for the
valid execution, delivery or performance by any member of the Company Group of
any Loan Document to which it is a party or for the grant of a security interest
in or mortgage on the collateral covered by the Loan Documents, except such
matters relating to performance as would ordinarily be done in the ordinary
course of business after the Effective Date.
SECTION 6.04 Conflicting or Adverse Agreements or Ratifications. No member
of the Company Group is a party to any contract or agreement or subject to any
restriction which would reasonably be expected to have a Material Adverse
Effect. As of the Execution Date, all agreements (other than this Agreement and
the other Loan Documents and the agreements evidencing the Subordinated Debt) of
the Company and its Subsidiaries relating to the lending of money or the
issuance of letters of credit to or for the account of any party are described
hereto on Schedule 6.04. Neither the execution nor delivery of the Loan
Documents nor compliance with the terms and provisions hereof or thereof will be
contrary to the provisions of, or constitute a default under (a) the charter or
bylaws of any member of the Company Group or (b) any applicable law or any
applicable regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (c) any material agreement to which any member
of the Company Group is a party or by which it is bound or to which it is
subject.
SECTION 6.05 Title to Assets; Licenses and Permits. The Company has good
title to all personal property and good and indefeasible title to or a
subsisting leasehold interest in, all realty as reflected as of the Effective
Date on its books and records as being owned or leased by it after giving effect
to the Merger, subject to no Liens, except Permitted Liens. All of such assets
are being maintained by the appropriate Person in good working condition in
accordance with industry standards. All of the real property, other than the
Company's and its Subsidiaries' retail sales locations, which are owned or
leased by the Company as of the Effective Date are set forth on Schedule 6.05
hereto, with the applicable owner or lessee, location and real property interest
identified thereon. True, correct and complete copies of (i) each such real
property lease (and all amendments thereto) of which the Company has possession
or knowledge have been delivered to the Agent and (ii) all real property leases
(and amendments thereto), other than leases limited to the Company's and its
Subsidiaries' retail sales locations, executed after the Effective Date have
been delivered to the Agent. The items of real and personal property owned by or
leased to and used by the Company or any of its Subsidiaries constitute all of
the material assets used in the conduct of their respective businesses as
presently conducted after giving effect to the Merger, and neither this
Agreement nor any other Loan Document, nor any transaction contemplated under
any such agreement, will affect any right, title or interest of the Company or
any of its Subsidiaries in and to any of such assets in a manner that would have
or is reasonably likely to have a Material Adverse Effect. To the knowledge of
the Company there are no actual,
50
threatened or alleged defaults with respect to any leases of real property under
which the Company or any of its Subsidiaries is bound after giving effect to the
Merger which would have or is reasonably likely to have a Material Adverse
Effect. After giving effect to the Merger, the Company and each of its
Subsidiaries is current and in good standing with respect to all governmental
approvals, permits, certificates, licenses, consents and franchises necessary to
continue to conduct its business and to own or lease and operate its properties
as heretofore conducted, owned, leased or operated except where any such failure
to maintain, obtain or comply with approvals, permits, certificates, licenses,
consents and franchises would not have a Material Adverse Effect.
SECTION 6.06 Litigation. Except as shown on Schedule 6.06 as of the
Effective Date, no proceedings before any court or governmental agency or
department are pending against any member of the Company Group and, to the
knowledge of the Company, none of same have been threatened against any one in
the Company Group, which could reasonably be expected to have a Material Adverse
Effect. At any time after the Effective Date, no proceedings against or
affecting anyone in the Company Group are pending or, to the knowledge of the
Company, threatened before any court or governmental agency or department which
could reasonably be expected to have a Material Adverse Effect.
SECTION 6.07 Financial Statements. Prior to the Execution Date, Finance
Corp. has furnished to the Lenders the audited financial statements of AXIA and
its consolidated subsidiaries as of December 31, 1997 (such financials,
collectively, "Financials"). The Financials have been prepared in conformity
with GAAP consistently applied and present fairly, in all material respects, the
financial condition of AXIA and its consolidated subsidiaries as of the dates
thereof. Since December 31, 1997, through the Effective Date, there has not
occurred any event which would reasonably be expected have a Material Adverse
Effect.
SECTION 6.08 No Defaults. The Company and its Subsidiaries are not in
default (a) under any material provisions of any instrument evidencing any
Indebtedness or of any agreement relating thereto in such manner as to cause a
Material Adverse Effect or (b) in any respect under or in violation of any
order, writ, injunction or decree of any court or governmental instrumentality,
in such manner as to cause a Material Adverse Effect or (c) under any provision
of any Material Contract, which default would reasonably be expected to have a
Material Adverse Effect.
SECTION 6.09 Investment Company Act. Each of the Company and its
Subsidiaries is not, nor are they directly or indirectly controlled by or acting
on behalf of any Person which is, an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended.
SECTION 6.10 Utility Regulation. Neither the Company nor any of its
respective Subsidiaries, is (i) a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company," or an
"affiliate" of a "subsidiary company" of a "holding company", or a "public
utility company" within the meaning of the Public Utility Holding Company Act of
1935 or (ii) an "electric utility" or "public utility" within the meaning of the
51
Federal Power Act or (iii) an "electric utility," "public utility," or "utility"
under any state law regulating public utilities.
SECTION 6.11 ERISA. (a) The Company and each ERISA Affiliate have operated
and administered each Plan and Employee Plan in compliance with all applicable
laws except for such instances of noncompliance as have not resulted in and
would not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in Section 3 of ERISA) which would
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect and no event, transaction or condition has occurred or exists
that would reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.
(b) No accumulated funding deficiency (as defined in section 412 of
the Code or section 302 of ERISA), whether or not waived, exists or is expected
to be incurred with respect to any Plan that individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect.
(d) The expected post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries would not reasonably be expected
to have a Material Adverse Effect.
SECTION 6.12 Environmental Matters. Except as disclosed on Schedule 6.12
the Company and its Subsidiaries (a) possess all environmental, health and
safety licenses, permits, authorizations, registrations, approvals and similar
rights necessary under Environmental Laws for the Company and its Subsidiaries
to conduct their operations as now being conducted, except where failure to have
such licenses, permits, authorizations, registrations, approvals, and similar
rights would not reasonably be expected to have a Material Adverse Effect, and
(b) each of such licenses, permits, authorizations, registrations, approvals and
similar rights is valid and subsisting, in full force and effect and enforceable
by the Company and its Subsidiaries, and the Company and its Subsidiaries are in
compliance with all terms, conditions or other provisions of such permits,
authorizations, regulations, approvals and similar rights except for such
failure or noncompliance that, individually or in the aggregate for the Company
and its Subsidiaries, would not reasonably be expected to have a Material
Adverse Effect. Except as disclosed on
52
Schedule 6.12, neither the Company nor any Subsidiary has received any written
notices of any violation or noncompliance with, or remedial obligation under,
any Environmental Laws (other than any violation, non-compliance, or remedial
obligation that has been cured or would not reasonably be expected to have a
Material Adverse Effect) and there are no writs, injunctions, decrees, orders or
judgments outstanding under the Environmental Laws, or lawsuits, claims,
proceedings, or, to the knowledge of the Company, investigations or inquiries
pending or threatened under Environmental Laws, relating to the ownership, use,
condition, maintenance or operation of, or conduct of business related to, any
property owned, leased or operated by the Company and its Subsidiaries or other
assets of the Company and its Subsidiaries other than those violations,
instances of noncompliance, obligations, writs, injunctions, decrees, orders,
judgments, lawsuits, claims, proceedings, investigations or inquiries that,
individually or in the aggregate for the Company and its Subsidiaries, would not
reasonably be expected to have a Material Adverse Effect. Except as disclosed on
Schedule 6.12, there are no obligations, undertakings or liabilities arising out
of or relating to Environmental Laws which the Company and its Subsidiaries have
agreed to, assumed or retained, or by which the Company and its Subsidiaries are
adversely affected, by contract or otherwise, except such obligations,
undertakings or liabilities as would not reasonably be expected to have a
Material Adverse Effect. Except as disclosed on Schedule 6.12, the Company and
its Subsidiaries have not received a written notice or claim to the effect that
any of them are or may be liable to any other Person as the result of a Release
or threatened Release of a Hazardous Material except such notice or claim that
would not reasonably be expected to have a Material Adverse Effect.
SECTION 6.13 Purpose of Loans. (a) The proceeds of the Advances of the Term
Loan and approximately $3,000,000 of the Revolving Credit Loans will be used (i)
by Finance Corp. to repay certain indebtedness and obligations of AXIA and to
fund the Parent Loan to the Parent to be used by the Parent solely to finance
the purchase of the stock of AHC and AXIA pursuant to the Merger Agreement (the
"Acquisition") and to pay certain transaction expenses incurred in connection
with the Acquisition, and (ii) by the Company for general corporate purposes.
The proceeds of the ESOP Loan will be loaned by the Company to the ESOP to
enable the ESOP to purchase Holding Co. common stock.
(b) None of the proceeds of any Advance will be used directly or
indirectly for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation U (herein called "margin stock") or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock, or for any other purpose which might constitute this
transaction as a "purpose credit" within the meaning of Regulation U. Neither
the Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or any other Loan Document to violate, or
involve the Lenders in a violation of, Regulation U, Regulation X or any other
regulation of the Board of Governors or to violate the Securities and Exchange
Act of 1934, as amended and the rules and regulations promulgated thereunder.
SECTION 6.14 Subsidiaries. On the Effective Date, except as disclosed on
Schedule 6.14, the Company does not have any Subsidiaries and is not a party to
any joint
53
venture, partnership or similar organization. Upon the consummation of the
Company Merger, the Company will have Xxxx and TapeTech as its additional
Subsidiaries.
SECTION 6.15 Solvency. After giving effect to the initial Advance
hereunder, the Merger, and all other Indebtedness of the Company at the time of
such Advance, (i) the fair value and present fair saleable value of the
Company's assets exceeds the Company's stated liabilities and identified
contingent liabilities; (ii) the Company is able to pay its debts as they become
due; and (iii) the Company has sufficient capital to engage in its business as
management has indicated it is now conducted and is proposed to be conducted
following the consummation of the Acquisition.
SECTION 6.16 Accuracy of Information. Neither this Agreement nor any other
document, certificate, statement or other further information (excluding
projections), taken as a whole, furnished in writing to the Agent or any Lender
by or on behalf of the Company or any of its Subsidiaries in connection with
this Agreement or any transaction contemplated hereby, taken as a whole,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading. The financial information with respect to the Company's projections,
copies of which have been furnished to each Lender prior to the Execution Date,
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were believed by the Company to be reasonable in all material
respects at the time made.
SECTION 6.17 Insurance. The Company and its Subsidiaries maintain insurance
of such types as is usually carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated with
financially sound, responsible and reputable insurance companies or associations
(or, as to workers' compensation or similar insurance, with an insurance fund or
by self-insurance authorized by the jurisdiction in which its operations are
carried on) and in such amounts (and with co-insurance and deductibles) as such
insurance is usually carried by corporations of established reputation and
engaged in the same or similar businesses and similarly situated. Neither the
Company nor its Subsidiaries maintains any formalized self-insurance program
with respect to its assets or operations or material risks with respect thereto
in excess of $2,500,000 in the aggregate.
SECTION 6.18 Indebtedness and Contingent Liabilities. As of the Effective
Date, except as listed on Schedule 6.18 or as otherwise permitted hereby, the
Company does not have any outstanding Indebtedness (excluding the Loans and the
Subordinated Debt) or material contractually assumed contingent liabilities.
SECTION 6.19 Compliance with Laws. The Company and its Subsidiaries are in
compliance with all of the following, (except as to ERISA and Environmental
Laws, only to the extent required under Sections 6.11 and 6.12, respectively) as
applicable in respect of the conduct of their respective businesses and the
ownership of their respective properties: all statutes, material regulations and
material orders of, and all restrictions imposed by all governmental bodies,
except any failure to comply that would not reasonably be expected to have a
Material Adverse Effect.
54
SECTION 6.20 Security Interests. The Security Documents create valid Liens
in all of the collateral described therein in favor of the Agent for the benefit
of the Lenders securing the Obligations and constitute (subject to (i) the
filing after the Effective Date of financing statements and assignments of
patents and trademarks delivered to the Agent on the Execution Date and
thereafter from time to time and (ii) delivery of any collateral after the
Effective Date as provided herein or any other Loan Document) perfected first
priority (other than Permitted Liens) Liens in substantially all of such
collateral described therein subject to no Liens other than Permitted Liens
(other than titled equipment, rolling stock and patents, trademarks, copyrights
and similar items existing or issued outside of the United States).
SECTION 6.21 Material Contracts. (a) As of the Execution Date, the Material
Contracts have been duly executed and delivered by, and constitute the legal,
valid and binding obligation of the Company and its Subsidiaries to the extent
that it is a party thereto, and to its knowledge all other parties thereto,
enforceable against such parties in accordance with its terms, (i) are in full
force and effect and (ii) except as disclosed to the Agent, have not been
amended or modified in any material respect.
(b) All consents required under the Material Contracts in connection
with (i) the Merger and (ii) the Security Documents have been obtained by the
Company.
SECTION 6.22. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Company's computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which Company's systems interface) and the
testing of all such systems and equipment, as so reprogrammed, which are
required for the Company and its Subsidiaries to operate their businesses as
they have prior to the Effective Date will be completed by September 30, 1999.
The cost to the Company of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Company (including, without
limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default of an Event of Default. Except for such
of the reprogramming referred to in the preceding sentence as may be necessary,
the computer and management information systems of the Company and its
Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue to be, sufficient to permit the Company to conduct its business.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company covenants and agrees that on and after the date hereof and
until the Notes are paid in full and the Total Commitment has terminated:
SECTION 7.01 Information Covenants. Except for those items described below
in Sections 7.01(c), (e), (f), (h) and (i) which will be furnished by the
Company to the Agent, the Company will furnish or cause to be furnished to each
Lender:
55
(a) As soon as available, and in any event within thirty (30) days
after each month-end and forty-five (45) days after the close of each of the
first three fiscal quarters in each fiscal year of the Company, the consolidated
monthly and consolidated quarterly unaudited balance sheets of the Company and
its Subsidiaries as of the end of such periods and the related consolidated and
consolidating (on a business unit basis) unaudited statements of income and cash
flows for such periods, setting forth, in each case, commencing on the Financial
Statement Delivery Date after the first anniversary of this Agreement,
comparative figures for the related periods in the prior fiscal year and,
commencing fiscal year 1999 on a quarterly basis, for the budget delivered
pursuant to subsection (h) below, all of which shall be certified by any
Responsible Officer as fairly presenting in all material respects, the financial
position of the Company as of the end of such period and the results of its
operations for the period then ended in accordance with GAAP, subject to changes
resulting from normal year-end adjustments, excluding footnotes; and
(b) As soon as available, and in any event within ninety (90) days
after the close of each fiscal year of the Company, the audited consolidated and
unaudited consolidating (on a business unit basis) balance sheets of the Company
and its Subsidiaries as at the end of such fiscal year and the related audited
consolidated and unaudited consolidating (on a business unit basis) statements
of income and cash flows for such fiscal year, setting forth, in each case,
comparative figures for the preceding fiscal year and (i) in the case of such
consolidated financials certified by Deloitte & Touche, L.L.P. or other
independent certified public accountants of recognized national standing, whose
report shall be without limitation as to the scope of the audit and unqualified
and otherwise reasonably satisfactory in substance to the Agent and (ii) in the
case of such consolidating financials certified as set forth in Section 7.01 (a)
above.
(c) Promptly after any Responsible Officer of the Company obtains
knowledge thereof, notice of;
(i) any material violation of, noncompliance with, or remedial
obligations under, Environmental Laws,
(ii) any material Release or threatened material Release of
Hazardous Materials affecting any property owned, leased or operated by the
Company or its Subsidiaries,
(iii) the existence of any event or condition which constitutes
a Default or an Event of Default,
(iv) any material violation of public health or welfare laws or
regulations,
(v) the filing of any tax or other governmental Liens,
(vi) the creation of any Subsidiary,
56
(vii) any Person having given any written notice to the Company
or its Subsidiaries or taken any other action with respect to a claimed
default or event of default under any Material Contract or under any other
instrument or agreements in each case which would reasonably be expected to
have a Material Adverse Effect,
(viii) the institution of any litigation in which the damages
claimed are in excess of $500,000 beyond the amount which is covered by the
Company's insurance for which the insurer has acknowledged coverage with
respect thereto, and
(ix) any other condition or event which, in the opinion of
management of the Company, would reasonably be expected to have a Material
Adverse Effect, which notice shall specify the nature and period of
existence thereof and specifying the notice given or action taken by such
Person and the nature of any such claimed default, event or condition and,
in the case of an Event of Default or Default, what action has been taken,
is being taken or is proposed to be taken with respect thereto.
(d) On any Financial Statement Delivery Date, a certificate of a
Responsible Officer to the effect that no Default or Event of Default exists or,
if any Default or Event of Default does exist, specifying the nature and extent
thereof and the action that is being taken or that is proposed to be taken with
respect thereto, which certificate shall set forth the calculations required to
establish whether the Company was in compliance with the provisions of Section
8.13 and Section 8.14 as at the end of such fiscal period or year, as the case
may be.
(e) As soon as available and in any event within twenty-five (25) days
after the end of each month commencing August, 1998, a Borrowing Base
Certificate and an aging of Receivables in form and substance reasonably
satisfactory to the Agent.
(f) Upon request by the Agent any existing environmental report, study
or audit of the Company's or its Subsidiaries' procedures and policies, assets
and operations in respect of Environmental Laws as the Agent may reasonably
request, provided that such existing report, study or audit is in the possession
of the Company or its Subsidiaries or, if not in their possession, is reasonably
obtainable from a third party having possession and subject to such conditions
and requirements as the Company or its Subsidiaries may reasonably impose to
protect legal privilege, provided that such conditions or requirements may not
extend to withholding information pertaining to factual circumstances or
conditions that the Company would otherwise be required to disclose under this
Agreement.
(g) Promptly upon receipt thereof, a copy of any report or management
letter submitted to the Company or its Subsidiaries by its independent
accountants in connection with any regular or special audit of the Company's or
its Subsidiaries' records.
(h) Within sixty (60) days after the start of each fiscal year of the
Company beginning with fiscal year 1999, a financial plan and budget of the
Company and its Subsidiaries for such fiscal year prepared by the Company in its
ordinary course of business, which financial
57
plan and budget shall include a balance sheet and related statements of income
and cash flow for such fiscal year.
(i) From time to time and with reasonable promptness, such other
information or documents as the Agent or any Lender through the Agent may
reasonably request.
(j) Promptly upon filing, a copy of any Company Current Report Form 8K
filed by the Company with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities and
Exchange Commission).
SECTION 7.02 Books, Reports and Inspections. The Company and its
Subsidiaries will maintain corporate books and financial records, and will
permit, or cause to be permitted any Person designated by the Agent, and after
the occurrence and during the continuance of an Event of Default, any Person
designated by any Lender, to visit and inspect any of the properties of the
Company, to examine such corporate books and financial records of the Company
and to make copies thereof or extracts therefrom and to discuss the affairs,
finances and accounts of any such corporations with the officers, employees and
agents of the Company and its Subsidiaries, with their independent public
accountants, all at such reasonable times and upon reasonable notice and as
often as the Agent may reasonably request. Upon the occurrence and during the
continuance of an Event of Default, any Person designated by the Agent may
request that such independent public accountants obtain Receivable confirmation
reports from account receivable debtors of the Company and its Subsidiaries.
SECTION 7.03 Insurance and Maintenance of Properties. (a) The Company will
and will cause its Subsidiaries to keep reasonably adequately insured by
financially sound and reputable insurers all of its material property, which is
of a character, and in amounts and against such risks, usually and reasonably
insured by similar Persons engaged in the same or similar businesses (subject
to reasonable deductibles and reasonable self-insurance), including, without
limitation, insurance against fire, casualty, business interruption and any
other hazards normally insured against. The Company will at all times maintain
and will cause its Subsidiaries to maintain insurance against its liability for
injury to Persons or property, which insurance shall be by financially sound and
reputable insurers and in such amounts and form as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties (subject to reasonable deductibles
and reasonable self-insurance), and shall annually provide the Agent a listing
of all such insurance and such other certificates and other evidence thereof, as
the Agent shall reasonably request. A listing of all policies existing on the
Execution Date (including policy limits) of the Company and its Subsidiaries is
attached hereto as Schedule 7.03. The Company shall obtain and cause its
Subsidiaries to obtain all such endorsements as are available to such policies
showing the Agent as an additional insured, and, at the Agent's option, co-loss
payee, thereunder. In the event that any improvements are located on any real
property of the Company or any Subsidiary designated as "flood prone" or a
"flood risk area," as defined by the Flood Disaster Protection Act of 1973 (42
U.S.C. (S) 4121), then the Company or such Subsidiary shall maintain flood
insurance in an amount required by the National Flood Insurance Program on such
improvements and shall comply with all additional requirements of the National
Flood Insurance Program as set forth
58
herein. All policies of insurance required by the terms of this
Agreement or any Security Document shall provide that at least fifteen
(15) days prior written notice be given to the Agent of any termination,
cancellation, reduction or other material modification of such
insurance.
(b) The Company will cause all of its and its Subsidiaries'
Properties used or useful in the conduct of their respective businesses
to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
reasonably necessary repairs, renewals and replacements thereof, all as
in the reasonable judgment of the Company may be reasonably necessary so
that the business carried on in connection therewith may be properly
conducted at all times.
SECTION 7.04 Payment of Taxes. The Company will pay and discharge
and will cause its Subsidiaries to pay and discharge all material taxes,
assessments and governmental charges or levies imposed upon them or upon
their respective incomes or profits, or upon any properties belonging to
any of them, prior to the date on which penalties attach thereto, except
for such amounts that are being contested in good faith and by
appropriate actions and for which appropriate reserves have been made on
the books of such entity in accordance with GAAP.
SECTION 7.05 Corporate Existence. The Company will do all things
necessary and will cause its Subsidiaries to do all things necessary to
(i) except as permitted under Section 8.02, preserve and keep in full
force and effect their respective corporate existences and (ii) maintain
all rights, franchise agreements, business contracts, patents,
trademarks, licenses and Material Contacts as may be required so that
the business carried on in connection therewith may be properly
conducted at all times, except for any failure to so maintain that would
not reasonably be expected to have a Material Adverse Effect.
SECTION 7.06 Compliance with Statues. The Company will comply with
and will cause its Subsidiaries to comply with all applicable statutes
(except as to ERISA and Environmental Laws, only to the extent required
under Sections 6.11 and 6.12, respectively), regulations and orders of,
and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, except for any failure to so comply that would not
reasonably be expected to have a Material Adverse Effect.
SECTION 7.07 ERISA. Immediately after any Responsible Officer of
the Company knows or has reason to know any of the following items are
true, the Company will deliver or cause to be delivered to the Agent a
certificate of a Responsible Officer of the Company setting forth
details as to such occurrence and such action, if any, the Company or
any ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by the
Company or its ERISA Affiliate with respect thereto: that a Reportable
Event has occurred or that an application may be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum
funding standard; that a Multiemployer Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA; that any required contribution which is material to a Plan,
Multiemployer Plan or Employee Plan has not been or may not be timely
made; that proceedings may be or have been instituted under
Section 4069(a) of ERISA to impose liability on the Company or an ERISA
Affiliate or under
59
Section 4042 of ERISA to terminate a Plan or appoint a trustee to administer a
Plan; that the Company or any ERISA Affiliate has incurred or may incur any
liability (including any contingent or secondary liability) on account of the
termination of or withdrawal from a Plan or a Multiemployer Plan; and that the
Company or any ERISA Affiliate may be required to provide security to a Plan
under section 401(a)(29) of the Code; or any other conditions(s) exist(s) or may
occur with respect to one or more Plans, Employee Plans and/or Multiemployer
Plans which would reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect.
SECTION 7.08 Utility Regulation. The Company will cause the representations
and warranties set forth in Section 6.10 hereof to be and remain at all times
true and correct.
SECTION 7.09 Subsidiaries. The Company will (a) cause any Person that on
the Effective Date is, or on or after the Effective Date becomes, a Domestic
Subsidiary of the Company (including, but not limited to, Xxxx and TapeTech) to
execute in form and substance satisfactory to the Agent guaranties, security
agreements, deeds of trust and/or other security instruments in favor of the
Agent for the benefit of the Lenders sufficient to (x) obligate such Domestic
Subsidiary for repayment of all the Loans and (xx) pledge substantially all of
such Domestic Subsidiaries' assets as collateral for the Loans, and (b) execute,
and cause any such Domestic Subsidiary to execute, as applicable, one or more
pledge agreements in favor of the Agent for the benefit of the Lenders in form
and substance satisfactory to the Agent pledging all of its shares of capital
stock of any such Subsidiary that is either a direct Subsidiary of the Company
or a direct Subsidiary of a Subsidiary (except that for purposes of this clause
(b), pledges of shares of voting capital stock of which a Foreign Subsidiary is
the issuer shall be limited to a pledge of sixty-six percent (66%) of such
shares of such voting capital stock).
SECTION 7.10 Material Contracts. The Company will notify the Agent of any
material default under any Material Contract promptly after a Responsible
Officer obtains knowledge thereof.
SECTION 7.11 Merger of Finance Corp. into AXIA. Not later than the close of
business on the Effective Date, Finance Corp. shall have been merged with and
into AXIA, with AXIA being the surviving entity.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees as to itself and each of its Subsidiaries
that on and after the date hereof and until the Notes are paid in full and the
Total Commitment has terminated:
SECTION 8.01 Change in Business. The Company and its Subsidiaries will not
engage in any businesses not of the same general type as, or reasonably related
to, those conducted by the Company on the Effective Date.
60
SECTION 8.02 Consolidation, Merger or Sale of Assets. Neither the Company
nor any Subsidiary will wind up, liquidate or dissolve its affairs, or enter
into any transaction of merger or consolidation, or sell, transfer or otherwise
dispose of all or any part of its property or assets (other than sales of
Inventory and surplus or obsolete assets in the ordinary course of business,
provided that any disposal does not prejudice the Lenders in any material way),
except that:
(a) any Subsidiary of the Company may merge, consolidate, wind up,
liquidate or dissolve into and with the Company or any Substantially-Owned
Subsidiary of the Company;
(b) the Company and its Subsidiaries may make Investments permitted
hereby;
(c) the Company may sell or otherwise dispose of its assets to any
Qualified Domestic Substantially Owned Subsidiary, and any Subsidiary of the
Company may sell or otherwise dispose of its assets to the Company or a
Qualified Domestic Substantially Owned Subsidiary of the Company;
(d) the Company or its Subsidiaries may sell assets in an aggregate
amount not to exceed $1,000,000 in any fiscal year;
(e) the Company or its Subsidiaries may make Permitted Acquisitions;
and
(f) the Company may effect the Company Merger.
Upon the request and at the expense of the Company in connection with any
sale, transfer or other disposition of property or assets permitted hereunder or
under any other Loan Document, and so long as no Default or Event of Default has
occurred and is continuing, the Agent shall upon request execute and deliver, or
shall cause the secured party, mortgagee, trustee or other appropriate Person to
execute and deliver, to the Company duly executed releases or partial releases,
as applicable, of any Lien pursuant to any Loan Document which it may have in
such property or assets, in form and substance reasonably satisfactory to the
Agent, the secured party, mortgagee, trustee or other appropriate Person, as the
case may be, and the Company.
SECTION 8.03 Indebtedness. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness except:
(a) Indebtedness existing hereunder;
(b) the Subordinated Debt or any other Indebtedness of the Company or
any of its Subsidiaries which is expressly and validly subordinated to the
Obligations pursuant to terms, conditions and amounts of such other subordinated
Indebtedness which are satisfactory to the Majority Lenders in their reasonable
discretion;
61
(c) Capitalized Lease Obligations and purchase money financing not to
exceed $2,500,000 in the aggregate outstanding at any time;
(d) Indebtedness (i) relating to loans or advances permitted under
Section 8.05 or (ii) constituting guaranties permitted under Section 8.06;
(e) Indebtedness that constitutes "xxxx to market" exposure resulting
from any Derivative or other hedging transaction for the purpose of hedging in
the ordinary course of business against fluctuations in interest rates,
commodity prices and foreign exchange rates;
(f) obligations under "take or pay" contracts or similar arrangements
entered into the ordinary course of business; provided that the Company or any
of its Subsidiaries have not made payments under any such contracts or
arrangements other than payments for products received or products the Company
or any of its Subsidiaries reasonably expects it will be able to receive within
one year from the date the payment was made and the amount of all such payments
in the aggregate could not reasonably be expected to have a Material Adverse
Effect;
(g) Indebtedness that constitutes a renewal, refinancing or extension
of any Indebtedness referred to in this Section 8.03; provided, that (i) no
Lien existing at the time of such renewal, refinancing or extension shall be
extended to cover any property not already subject to such Lien and (ii) the
principal amount of any Indebtedness renewed, refinanced or extended shall not
exceed the amount of such Indebtedness outstanding immediately prior to such
renewal, refinancing or extension plus the reasonable costs incurred to renew,
refinance or extend such Indebtedness;
(h) Indebtedness existing on the Execution Date that is described on
Schedule 8.03; and
(i) other Indebtedness, not to exceed $5,000,000 in the aggregate at
any time outstanding.
SECTION 8.04 Liens. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of its property or assets of any kind whether now owned or
hereafter acquired (nor will it covenant with any other Person not to grant such
a lien to the Agent other than with respect to assets encumbered by a Lien
permitted hereby), except in connection with the following which are permitted
liens ("Permitted Liens"):
(a) Liens existing on the Execution Date and listed on Schedule
8.04(a);
(b) Liens for taxes or assessments or other governmental charges or
levies, either not yet due and payable or being contested in good faith and by
appropriate actions for which adequate reserves have been established;
62
(c) non-consensual Liens imposed by operation of law including,
without limitation, (i) landlord Liens for rent not yet due and payable, and
(ii) Liens for materialmen, mechanics, warehousemen, carriers, employees,
workmen, repairmen, current wages or accounts payable not yet delinquent and
arising in the ordinary course of business or being contested in good faith by
appropriate proceedings and subject to maintenance of adequate reserves;
(d) easements, rights-of-way, restrictions and other similar Liens or
imperfections to title which do not materially interfere with the occupation,
use, and enjoyment by the Company or any of its Subsidiaries of the property or
asset encumbered thereby or materially impair the value of the property or asset
subject thereto and none of which are violated by existing or proposed
improvements or land use of such property or asset;
(e) Liens arising under worker's compensation laws, unemployment
insurance laws or similar legislation;
(f) Liens in favor of the Agent for the benefit of the Lenders
pursuant to the Loan Documents;
(g) Liens securing Indebtedness permitted by Section 8.03(c);
(h) Liens of any judgments or orders not constituting an Event of
Default;
(i) any right of set off relating to any Indebtedness or Investment
that is not prohibited by this Agreement;
(j) any renewal extension or replacement of any Lien referred to in
subparagraph (a) above; provided, that no Lien arising or existing as a result
of such extension, renewal or replacement shall be extended to cover any
property not theretofore subject to the Lien being extended, renewed or replaced
and provided that the principal amount of the Indebtedness secured thereby shall
not exceed the principal amount of the Indebtedness so secured at the time of
such extension, renewal or replacement;
(k) Liens in favor of Rubbermaid on raw materials purchased from
Rubbermaid and products thereof;
(1) Liens from deposits or pledges securing bids, tenders, or
contracts (other than contracts for the payment of money) made in the ordinary
course of business or securing or in lieu of surety, appeal or customs bonds in
proceedings to which the Company or any of its Subsidiaries is a party;
(m) landlord Liens encumbering goods and fixtures located on the
premises leased to the Company by such landlord (but no other assets or
properties) arising in the ordinary course of business which secure only rents
payable under the lease of such premises and other ordinary and customary
charges and reimbursement items arising under such lease; and
63
(n) other Liens which are not material that secure obligations which
do not exceed $100,000 in the aggregate.
SECTION 8.05 Investments. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, make or own any Investment in any Person,
except:
(a) the Company and its Subsidiaries may make and own Permitted
Investments;
(b) the Company and its Subsidiaries may continue to own Investments
owned by such Person on the Execution Date as set forth on Schedule 8.05(b);
(c) loans by any Domestic Subsidiary to the Company or any other
Domestic Substantially Owned Subsidiary, or loans in the ordinary course of
business by the Company to any Qualified Domestic Substantially Owned
Subsidiary, and loans by any Foreign Subsidiaries to the Company or any
Substantially Owned Subsidiary of the Company;
(d) loans by the Company to the ESOP or any Additional ESOP to
purchase shares of the Parent in the aggregate at any time outstanding not in
excess of $2,000,000;
(e) Investments arising out of loans and advances for expenses, travel
per diem and similar items in the ordinary course of business to officers,
directors, and employees not to exceed $500,000 in the aggregate outstanding at
any time;
(f) other Investments in an amount not to exceed $500,000 outstanding
at any time;
(g) other Investments by the Company and its Qualified Domestic
Substantially Owned Subsidiaries provided that, after giving effect to each such
Investment, the Company would have positive Net Cumulative Retained Excess Cash
Flow on the date upon which such Investment is made;
(h) Permitted Acquisitions;
(i) buybacks of employee stock permitted by Section 8.07; and
(j) the Parent Loan.
SECTION 8.06 Guaranties. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, guarantee the Indebtedness of any Person,
except:
(a) endorsements of instruments for deposit or collection in the
ordinary course of business;
(b) guaranties in favor of the Agent or the Lenders evidenced by a
Loan Document;
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(c) subordinated guaranties of the Subordinated Debt which are
expressly subordinated in writing to all guaranties and other obligations
(contingent or otherwise) of the Company or such Subsidiary, as the case may be,
with respect to the Obligations pursuant to subordination agreements
satisfactory to the Agent;
(d) guaranties by the Company of any obligations of its Subsidiaries
incurred in the ordinary course of business and not prohibited hereby; and
(e) guaranties by Subsidiaries of Indebtedness of the Company and
other Subsidiaries if such Indebtedness is permitted under Section 8.03.
SECTION 8.07 Restricted Payments. The Company will not, and will not permit
any Subsidiary to, (a) pay any dividends or make any other distributions, direct
or indirect, on account of any shares of any class of stock of the Company or
such Subsidiary now or hereafter outstanding, except as follows, provided that
(except as to payments of ordinary director fees to directors under subclause
(ii), payments to the Company under subclause (iv) but only to the extent that
such payments are made by a wholly-owned Subsidiary of the Company, and payments
under subclause (iii)) there is not then in existence any Default or Event of
Default (i) dividends payable solely in shares of stock or warrants, rights or
options to acquire shares of stock of the Company or any Subsidiary, (ii)
payments to or on behalf of the Parent in reimbursement of actual out of pocket
costs and expenses paid to Persons which are not Affiliates of the Company, not
to exceed in any fiscal year $500,000, (iii) payments by the Company to the
Parent pursuant to a tax sharing agreement reasonably satisfactory to the Agent
between such parties, (iv) payments by a Substantially Owned Subsidiary of the
Company to its shareholders, (v) the Parent Loan on the Effective Date from
Finance Corp. to Parent for the sole purpose of funding the purchase price for
the Acquisition and to pay transaction expenses relating thereto and (vi)
cancellation of the Parent Loan, or transfer of the Parent Note to the Parent,
at any time after the consummation of the Company Merger; or (b) redeem, retire,
purchase or make any other acquisition, direct or indirect, of any shares of any
class of stock of the Company, the Parent or Holding Co. and/or of any warrants,
rights or options to acquire any such shares, now or hereafter outstanding,
except as follows, provided that there is not then in existence any Default or
Event of Default (i) to the extent that the consideration therefor consists
solely of shares of stock (including warrants, rights or options relating
thereto) of the Company and (ii) payments by the Company to the Parent or
Holding Co. or payments made directly by the Company to be used to repurchase,
redeem, acquire or retire for value any capital stock of the Parent or Holding
Co. pursuant to any stockholders' agreement, management equity subscription plan
or agreement, stock option plan or agreement, any Additional ESOP or the ESOP
(but the requirement that there be no Default or Event of Default as a condition
to payments under this subclause (ii) shall not apply to the extent necessary to
maintain the ESOP's or any Additional ESOP's qualification under the Code) or
other employee benefit plan or agreement; provided that the aggregate price
paid, and not reimbursed, for all such repurchased, redeemed, acquired or
retired capital stock shall not exceed during any one fiscal year of the Company
the greater of (A) $250,000 or (B) the minimum amount required under the ESOP or
any Additional ESOP.
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SECTION 8.08 Change in Accounting. The Company will not change its method
of accounting except for (a) immaterial changes permitted by GAAP in which the
Company's auditors concur or (b) changes required by GAAP; provided that the
Company and the Agent shall negotiate in good faith, to renegotiate any affected
provision of this Agreement to reflect any such change. The Company shall notify
the Agent and the Lenders in writing promptly upon any material change to the
extent same is not disclosed in the financial statements required under Section
7.01 hereof.
SECTION 8.09 Prepayment of Other Indebtedness. The Company (a) will not
make any voluntary prepayments or defeasements of principal or interest on any
other Indebtedness of the Company including the Subordinated Debt (including any
redemptions prior to scheduled maturity whether voluntary or obligatory), except
for permanent reduction of Indebtedness other than the Subordinated Debt and (b)
will not amend any material term (including interest, payment or subordination
terms) of any other Indebtedness including the Subordinated Debt without the
prior written consent of the Lenders except such amendments of Indebtedness
other than Subordinated Debt which do not make any material term less favorable
to the Company or the Lenders.
SECTION 8.10 Transactions with Affiliates. Other than (a) those
arrangements disclosed to and approved by the Agent in writing which are to be
created on or before the Effective Date, or (b) payment of reasonable and
customary salaries, benefits and directors fees in the ordinary course of
business, the Company will not, and will not permit any Subsidiary to, directly
or indirectly, engage in any transaction with any Affiliate, including the
purchase, sale or exchange of assets or the rendering of any service, except
transactions in the ordinary course of business or pursuant to the reasonable
requirements of its business and, in each case, upon terms that are no less
favorable than those which might be obtained in an arm's-length transaction at
the time from non-Affiliates.
SECTION 8.11 Subsidiaries' Stock. After the Effective Date, the Company
will not sell, transfer or otherwise dispose of any class of stock or any of the
voting rights of any Subsidiary of the Company, except as permitted under
Section 8.02.
SECTION 8.12 Material Contracts. Neither the Company nor any of its
Subsidiaries will amend, cancel or breach any of the Material Contracts except
such amendments, cancellations or breaches as would not reasonably be expected
to cause a Material Adverse Effect.
SECTION 8.13 Financial Ratios.
(a) Fixed Charge Coverage Ratio. The Company will not permit at any
time the Fixed Charge Coverage Ratio of the Company and its Subsidiaries on a
consolidated basis to be (i) for the period from the Effective Date to and
including December 31, 1998, less than 1.05 to 1.0 and (ii) at any time after
December 31, 1998, less than 1.05 to 1.0. For the sole purpose of the
computation of the Fixed Charge Coverage Ratio in this subparagraph, (I) as to
any determination of the amounts of EBITDA, cash taxes and Fixed Charges to be
including in the
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Fixed Charge Coverage Ratio calculation for any period ending prior to September
30, 1999, the amount of such items shall be included only to the extent that
such amounts arose during the period commencing on the Effective Date and ending
as of such determination date, and (II) as to any determination of the EBITDA,
cash taxes and Fixed Charges to be included in the Fixed Charge Coverage Ratio
for any period ending on or after September 30, 1999, the amount of such items
shall be included to the extent that such amounts arose during the four (4)
fiscal quarter period immediately preceding such determination date. The first
test date for determination of the Company's compliance with the covenant
contained in this Section 8.13(a) shall be December 31, 1998.
(b) Total Debt to Acquisition EBITDA Ratio. The Company will not
permit at any time the ratio of (i) Total Debt of the Company and its
Subsidiaries on a consolidated basis at such time to (ii) Acquisition EBITDA of
the Company and its Subsidiaries on a consolidated basis, to be greater than (a)
for the period from the Effective Date to and including June 30, 2001, greater
than 5.75 to 1.0, (b) for the period from July 1, 2001 to and including
September 30, 2001, greater than 5.50 to 1.0, (c) for the period from October 1,
2001 to and including December 31, 2001, greater than 5.25 to 1.0, (d) for the
period from January 1, 2002 to and including March 31, 2002, greater than 5.00
to 1.0, (e) for the period from April 1, 2002 to and including June 30, 2002,
greater than 4.75 to 1.0, (f) for the period from July 1, 2002 to and including
September 30, 2002, greater than 4.50 to 1.0, (g) for the period from October 1,
2002 to and including December 31, 2002, greater than 4.25 to 1.0, (h) for the
period from January 1, 2003 to and including March 31, 2003, greater than 4.0 to
1.0, (i) during the period from April 1, 2003 to and including June 30, 2003,
and for each fiscal quarter of the Company ending after such date, greater than
3.75 to 1.0. The first test date for the determination of the Company's
compliance with the covenant contained in this Section 8.13(b) shall be
September 30, 1998.
(c) Net Worth. The Company will not permit at any time Net Worth
(determined without giving effect to reductions due to the value of common stock
held by the ESOP or any Additional ESOP or foreign currency translation gains or
losses) to be less than Applicable Minimum Net Worth (as defined below).
"Applicable Minimum Net Worth" means for the Company and its Subsidiaries on a
consolidated basis: (x) during each fiscal quarter of the Company ending prior
to September 30, 1998, $24,000,000; and (y) during each fiscal quarter of the
Company ending on or after September 30, 1998 (for purposes of this definition,
the "current fiscal quarter of the Company"), the sum of (i) the Applicable
Minimum Net Worth that was applicable to the immediately prior fiscal quarter of
the Company, plus (ii) seventy-five percent (75%) of the positive net income, if
any, of the Company and its Subsidiaries on a consolidated basis arising during
the current fiscal quarter of the Company, plus (iii) seventy-five percent (75%)
of the proceeds of any equity offering of the Company or its Subsidiaries during
the current fiscal quarter of the Company.
(d) Interest Coverage Ratio. The Company will not permit at any time
the ratio for the Company and its Subsidiaries on a consolidated basis of (i)
EBITDA for the Company and its Subsidiaries on a consolidated basis to (ii) cash
Interest Expense for the Company and its Subsidiaries on a consolidated basis to
be: (A) for the period from the Execution Date to and including December 31,
1999, less than 1.75 to 1.0; (B) for the period
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from January 1, 2000 to and including June 30, 2000, less than 1.85 to 1.0; (C)
for the period from July 1, 2000 to and including June 30, 2001, less than 2.00
to 1.0; (D) for the period from July 1, 2001 to and including December 31, 2002,
less than 2.25 to 1.0; and for the period from January 1, 2003 through and
including March 31, 2003, and thereafter, less than 2.50 to 1.0. For the sole
purpose of the computation of the ratio set forth in this subparagraph (d), (I)
as to any determination date of the amounts of EBITDA to be included in the
ratio calculation for any period ending prior to September 30, 1999, the amount
of such items shall be included only to the extent that such amounts arose
during the period commencing on the Effective Date and ending as of such
determination date, and (II) as to any determination of EBITDA to be included in
such ratio for any period ending on or after September 30, 1999, the amount of
such items shall be included to the extent that such amounts arose during the
four (4) fiscal quarter period immediately preceding such determination date.
The first test date for determination of the Company's compliance with the
covenant contained in this Section 8.13(d) shall be December 31, 1998.
SECTION 8.14 Capital Expenditures. (a) Except as permitted in subclauses
(b) and (c) below, the Company will not permit any Capital Expenditures to be,
in the aggregate, in excess of the following amounts during the following
periods of the Company (together with the amounts described in clause (c) below
of this Section 8.14, "Scheduled Capital Expenditures"):
SCHEDULED CAPITAL
PERIOD EXPENDITURE AMOUNT
------ ------------------
Effective Date Through December 31, 1998 $3,000,000
Fiscal Year 1999 $5,000,000
Fiscal Year 2000 and Each Fiscal Year Thereafter $5,500,000
(b) The Company and its Domestic Substantially Owned Subsidiaries may
make additional Capital Expenditures provided that, after giving effect to each
such Capital Expenditure, the Company would have positive Net Cumulative
Retained Excess Cash Flow on the date upon which such Capital Expenditure is
made.
(c) To the extent any amount of Scheduled Capital Expenditures is not
used during any single calendar year, such unexpended amount may be carried
forward and expended during the next calendar year (but not any other calendar
year); provided that during any calendar year in which such unexpended amounts
have been so carried forward, all Capital Expenditures are deemed to apply first
to the carry forward amount and then to the Scheduled Capital Expenditures for
such year.
SECTION 8.15 Fiscal Year. The Company will not change its fiscal year end.
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SECTION 8.16 Sale/Leaseback Transactions. The Company will not enter, and
will not permit any Subsidiary to enter, into any arrangement with any Person or
to which such Person is a party providing for the leasing by the Company or any
of its Subsidiaries of real or personal property which has been or is to be sold
or transferred by the Company 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 the Company; provided that
the Company or any of its Subsidiaries may at any time enter into sale/leaseback
transactions so long as the aggregate amount of all such obligations incurred by
the Company and its Subsidiaries does not exceed $2,500,000 outstanding at any
time.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
9.01 Events of Default. The following events shall constitute Events of
Default ("Events of Default") hereunder:
(a) any installment of principal on any Note shall not be paid on the
date on which such payment is due, or any payment of interest on any Note or any
payment of any Fee shall not be paid on or before the fifth (5th) day after such
payment is due; or
(b) any representation or warranty made or, for purposes of Article
VI, deemed made by the Company or any member of the Company Group herein or in
any of the Loan Documents or other document, certificate or financial statement
delivered in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made or
reaffirmed, as the case may be; or
(c) the Company shall fail to perform or observe any duty or covenant
contained in Article VIII (other than those contained in Section 8.04(b), (c) or
(e)), or in Section 7.01(f) or Section 7.03(a) or Section 7.09 hereof; or
(d) the Company or any member of the Company Group shall fail to
perform or observe any duty or covenant contained in (i) Section 7.01(a), (b),
(c), (d), (e), or (h) or Section 8.04(b), (c), or (e) and such failure is not
remedied within the earlier of (A) ninety (90) days or (B) ten (10) days after
the earlier of (x) notice of such failure by the Agent to the Company or (xx)
after a Responsible Officer of the Company or any Subsidiary has actual
knowledge thereof; or (ii) this Agreement or any Loan Document, other than those
referenced in Section 9.0l(a), (b), (c) or clause (i) of this Section 9.01(d)
and such failure is not remedied within the earlier of (A) ninety (90) days or
(B) thirty (30) days after the earlier of (x) notice of such failure by the
Agent to the Company or (xx) after a Responsible Officer of the Company or any
Subsidiary has actual knowledge thereof; or
(e) the Company or any member of the Company Group shall (i) fail to
make (whether as primary obligor or as guarantor or other surety) any principal
payment of or interest or premium, if any, on any instruments of Indebtedness in
the aggregate in excess of $500,000 allowed hereunder (other than the Notes) and
such failure remains outstanding beyond any period
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of grace provided with respect thereto or (ii) fail to duly observe, perform or
comply with any agreement, with any Person, or any term or condition of any
instrument of Indebtedness in excess of $500,000 beyond any period of grace
provided with respect thereto, if such failure causes (unless such failure has
been waived by the holder(s) of such Indebtedness), or permits the holder(s) to
cause, such obligations to become due prior to any stated maturity; or
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any member of the Company Group or of a substantial
part of the property or assets of the Company or any member of the Company
Group, under Title 11 of the United States Code, as now or hereafter in effect,
or any successor thereto (the "Bankruptcy Code"), or any other federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or any member of the Company Group or for a substantial part of the
property or assets of the Company or any member of the Company Group or (iii)
the winding-up or liquidation of the Company or any member of the Company Group;
and such proceeding or petition shall continue undismissed for sixty (60) days
or an order or decree approving or ordering any of the foregoing shall be
entered; or
(g) the Company or any member of the Company Group shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
the Bankruptcy Code or any other federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in clause (f) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any member of the Company Group or for a
substantial part of the property or assets of the Company or any member of the
Company Group, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing; or
(h) the Company shall (i) fail to make any principal payment of or
interest or premium, if any, on the Subordinated Debt beyond any period of grace
provided with respect thereto, (ii) fail to duly observe, perform or comply with
any agreement beyond any period of grace provided with respect thereto, if such
failure causes, or permits the holder(s) of the Subordinated Debt to cause, such
obligations to become due prior to any stated maturity or (iii) become obligated
to redeem, repurchase or repay all or any portion of any principal, interest or
premium on the Subordinated Debt prior to its scheduled payment; or
(i) a judgment or order, which with other outstanding judgments and
orders against the Company or any member of the Company Group (other than the
Parent) equal or exceed $500,000 in the aggregate (to the extent not covered by
insurance as to which the respective insurer has acknowledged coverage), shall
be entered against the Company or any member of the Company Group and (A) within
sixty (60) days after entry thereof such judgment shall not have been paid or
discharged or execution thereof stayed pending appeal or, prior to the
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expiration of any such stay, such judgment shall not have been paid or
discharged or (B) any enforcement proceeding shall have been commenced (and not
stayed) by any creditor upon such judgment, or
(j) if (A) (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any Subsidiary or any ERISA Affiliate that a Plan may become subject
to any such proceedings, (iii) any Plan shall have any Unfunded Current
Liability, (iv) the Company or any Subsidiary or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any Subsidiary or any ERISA Affiliate
withdraws from any Multiemployer Plan, (vi) the Company or any Subsidiary or any
ERISA Affiliate fails to make any contribution due, or payment to or with
respect to, any employee benefit plan, or (vii) the Company or any Subsidiary or
any ERISA Affiliate establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary or any ERISA Affiliate thereunder,
and (B) any such event or events described in clauses (i) through (vii) above,
either individually or together with any other such event or events, would
reasonably be expected to have a Material Adverse Effect; or
(k) after the Effective Date, the occurrence of any Change of Control
(as such term is defined in this Agreement) or any "Change of Control" as such
term is defined in the Indenture; or
(1) the Obligations shall cease, except as permitted hereby, being
secured by substantially all of the assets of the Company (other than the
portion of the capital stock of the Foreign Subsidiaries which is in excess of
66% of such capital stock).
SECTION 9.02 Primary Remedies. In the event of any Event of Default, and at
any time after the occurrence of any Event of Default, the Agent shall, if
requested by the Majority Lenders, by written notice to the Company (a "Notice
of Default") take any or all of the following actions (without prejudice to the
rights of any Lender to enforce any other rights it may have against the
Company, provided that, if an Event of Default specified in Section 9.01(f) or
Section 9.01(g) shall occur, the following shall occur automatically without the
giving of any Notice of Default): (a) declare the Total Commitment terminated
whereupon the Total Commitment shall forthwith terminate immediately and any
Revolving Credit Commitment Fee and Acquisition Facility Commitment Fee shall
forthwith become due and payable without any other notice of any kind, (b)
declare the principal of and any accrued and unpaid interest in respect of all
Advances, and all obligations owing hereunder, to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, notice of demand
or of dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate, declaration or
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notice of acceleration or any other notice of any kind, all of which are hereby
waived by the Company; and (c) exercise any rights or remedies under any of the
Loan Documents.
SECTION 9.03 Other Remedies. Upon the occurrence and during the continuance
of any Event of Default, the Agent may proceed to protect and enforce its and
the Lenders' rights, either by suit in equity or by action at law or both,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in any other Loan Document or in aid of the exercise of any
power granted in this Agreement or in any other Loan Document; or may proceed to
enforce the payment of all amounts owing to the Lenders under the Loan Documents
and any accrued and unpaid interest thereon in the manner set forth herein or
therein; it being intended that no remedy conferred herein or in any of the
other Loan Documents is to be exclusive of any other remedy, and each and every
remedy contained herein or in any other Loan Document shall be cumulative and
shall be in addition to every other remedy given hereunder and under the other
Loan Documents or now or hereafter existing at law or in equity or by statute or
otherwise.
ARTICLE X
THE AGENT
SECTION 10.01 Authorization and Action. Each Lender hereby irrevocably
appoints and authorizes the Agent to act on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are specifically
delegated to or required of the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. The Agent may perform any of its
duties hereunder by or through its agents and employees. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have by
reason of this Agreement or any other Loan Document a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any other Loan Document,
expressed or implied, is intended to, or shall be so construed as to, impose
upon the Agent any obligations in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein. As to any matters not
expressly provided for by this Agreement, the Notes or the other Loan Documents
(including enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon the Lenders and all holders of Notes and the
Obligations; provided, that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or applicable law.
SECTION 10.02 Agent's Reliance. (a) Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Lenders for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, the Notes or any of the other Loan Documents (i) with the
consent or at the request of the Majority Lenders or (ii) in the absence of its
or their own gross negligence or willful misconduct (IT BEING THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT THE AGENT AND ITS DIRECTORS, OFFICERS,
AGENTS AND
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EMPLOYEES SHALL HAVE NO LIABILITY FOR ACTIONS AND OMISSIONS UNDER THIS SECTION
10.02 RESULTING FROM THEIR SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE).
(b) Without limitation of the generality of the foregoing, the Agent:
(i) may treat the payee of each Note and the Obligations as the holder thereof
until the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Agent; (ii) may consult
with legal counsel (including counsel for the Company), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement, any Note or any other Loan Document; (iv) except as otherwise
expressly provided herein, shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement, any Note or any other Loan Document or to inspect the property
(including the books and records) of the Company, (v) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
collectibility, genuineness, sufficiency or value of this Agreement, any Note,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (vi) shall not be responsible to any Lender for the
perfection or priority of any Lien securing the Obligations; and (vii) shall
incur no liability under or in respect of this Agreement, any Note or any other
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, telecopier, cable or telex)
reasonably believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 10.03 Agent and Affiliates. Without limiting the right of any other
Lender to engage in any business transactions (including, but not limited to,
equity investments) with the Company or any of its Affiliates, with respect to
their commitments, the Loans made by them and the Notes issued to them, the
Agent and each other Lender who may become the Agent shall have the same rights
and powers under this Agreement and its Notes as any other Lender and may
exercise the same as though it was not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Paribas and any
such other Lender, in their individual capacities. Paribas, each other Person
who becomes the Agent and their respective Affiliates may be engaged in, or may
hereafter engage in, one or more loans, letters of credit, leasings or other
financing activity not the subject of this Agreement (collectively, the "Other
Financings") with the Company or any of its Affiliates, or may act as trustee on
behalf of or depository for, or otherwise engage in business transactions with
the Company or any of its Affiliates (all Other Financings and other such
business transactions being collectively, the "Other Activities") with no
responsibility to account therefor to the Lenders. Without limiting the rights
and remedies of the Lenders specifically set forth herein, no other Lender by
virtue of being a Lender hereunder shall have any interest in (a) any Other
Activities, (b) any present or future guaranty by or for the account of the
Company not contemplated or included herein, (c) any present or future offset
exercised by the Agent in respect of any such Other Activities, (d) any present
or future property taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the Agent which may be
or become security for the obligations of the Company hereunder and under the
Notes by reason of the general
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description of indebtedness secured, or of property contained in any other
agreements, documents or documents related to such Other Activities; provided,
however, that if any payment in respect of such guaranties or such property or
the proceeds thereof shall be applied to reduction of the Obligations evidenced
hereunder and by the Note, then each Lender shall be entitled to share in such
application according to its pro rata portion of such Obligations.
SECTION 10.04 Lender Credit Decision. Each Lender acknowledges and agrees
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 7.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges and agrees that it will, and without reliance upon the Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
SECTION 10.05 Agent's Indemnity. (a) The Agent shall not be required,
insofar as the Lenders are concerned, to take any action hereunder or to
prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document unless indemnified to the Agent's satisfaction by the
Lenders against loss, cost, liability and expense. If any indemnity furnished to
the Agent shall become impaired, it may call for additional indemnity and cease
to do the acts indemnified against until such additional indemnity is given. In
addition, the Lenders agree to indemnify the Agent (to the extent not reimbursed
by the Company), ratably according to the respective aggregate principal amounts
of the Notes then held by each of them (or if no Notes are at the time
outstanding, ratably according to the respective amounts of the Total
Commitment), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whosoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent (in such capacity) under
this Agreement, the Notes and the other Loan Documents. Without limitation of
the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Agent in connection with the preparation,
execution, administration, or enforcement of, or legal advice in respect of
rights or responsibilities under, this Agreement, the Notes and the other Loan
Documents to the extent that the Agent is not reimbursed for such expenses by
the Company. The provisions of this Section 10.05(a) shall survive the
termination of this Agreement, the payment of the Obligations and/or the
assignment of any of the Notes.
(b) Notwithstanding the foregoing, no Lender shall be liable under
this Section 10.05(b) to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements due to the Agent resulting from the Agent's gross
negligence or willful misconduct. EACH LENDER AGREES, HOWEVER, THAT IT
EXPRESSLY INTENDS, UNDER THIS SECTION 10.05(b) TO INDEMNIFY THE AGENT RATABLY AS
AFORESAID FOR ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR
RESULTING FROM THE AGENT'S SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE.
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SECTION 10.06 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Company and may be removed as
Agent under this Agreement, the Notes and the other Loan Documents at any time
with or without cause by the Majority Lenders. Upon any such resignation or
removal the Majority Lenders shall have the right to appoint a successor Agent,
subject to the approval of the Company, if no Event of Default has occurred and
is continuing (which approval will not be unreasonably withheld). If no
successor Agent shall have been so appointed by the Majority Lenders, and shall
have accepted such appointment, within 30 calendar days after the resigning
Agent's giving of notice of resignation or the Majority Lenders' removal of the
resigning Agent, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any state thereof and having a combined
capital and surplus of at least $200,000,000. Upon the acceptance of any
appointment as Agent hereunder and under the Notes and the other Loan Documents
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, power, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement, the Notes and the other Loan Documents. After any retiring
Agent's resignation or removal as Agent hereunder and under the Notes and the
other Loan Documents, the provisions of this Article X shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement, the Notes and the other Loan Documents. If for any reason
there shall not be any duly appointed Agent, the Lenders shall act collectively
by taking actions on the direction of the Majority Lenders until an agent is
duly appointed as Agent hereunder.
SECTION 10.07 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a Lender or the
Company referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default." If the Agent receives
such notice, the Agent shall give notice thereof to the Lenders; provided
however, if such notice is received from a Lender, the Agent also shall give
notice thereof to the Company. The Agent shall be entitled to take action or
refrain from taking action with respect to such Default or Event of Default as
provided in Section 10.01 and Section 10.02.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Amendments. No amendment or waiver of any provision of this
Agreement, any Note or any other Loan Document, nor consent to any departure by
the Company herefrom or therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Company, as to amendments, and by the
Majority Lenders in all cases, and then, in any case, such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given provided, no such amendment shall be effective unless signed by
all of the Lenders if it attempts to: (a) change the definition of "Commitment,"
"Designated Payment Date," "Majority Lenders," "Margin," "Revolving Credit
Commitment," "Revolving Credit Maturity Date," "Term Loan Commitment," "Term
Loan Maturity Date,
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"Acquisition Facility Commitment," "Acquisition Facility Maturity Date," "ESOP
Loan Commitment," "ESOP Loan Maturity Date," "Total Commitment," or "Total
Revolving Credit Commitment"; (b) unless consented to by the affected Lender,
reduce or increase the amount or alter the terms of the Commitment of any Lender
or subject any Lender to additional obligations; (c) modify this Section 11.01;
(d) waive any Default under Section 9.01 (a); (e) unless consented to by the
affected Lender, in any manner change the amount of, or any date fixed for, any
payment of principal or interest on the Notes or any Fee or the reimbursement
obligations of the Company under any Letter of Credit; (f) modify or waive the
mandatory prepayment requirements set forth in Section 2.08 hereof or the
allocation of such prepayments to the Lenders; or (g) except as expressly
permitted hereby, release any collateral pledged as security for the Obligations
or release any Guarantor from its obligations under the Guaranty.
SECTION 11.02 Notices. Except with respect to telephone notifications
specifically permitted pursuant to Article II, all notices, consents, requests,
approvals, demands and other communications provided for herein shall be in
writing (including telecopy communications) and mailed, telecopied, sent by
overnight courier or delivered:
(a) If to the Company: 000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No: (000) 000-0000
Attention: Xxxx Xxxx
(b) If to the Agent: 0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy No: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx
with copies to: Paribas
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No: (000) 000-0000
Attention: Loan Administration
and to: Xxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
if to any Lender: To the address specified by such Lender (or
the Agent on behalf of such Lender) to the
Company
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other
parties.
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(c) All communications to the Agent shall, when mailed, telecopied or
delivered, be effective when mailed by certified mail, return receipt requested
to such party at its address specified above, or telecopied to any party to the
telecopy number set forth above, or delivered personally to such party at its
address specified above; provided, that communications to the Agent pursuant to
Article II shall not be effective until actually received by the Agent.
SECTION 11.03 No Waiver, Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right hereunder, under
any Note or under any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, or any abandonment or
discontinuance of any steps to enforce such right, preclude any other or further
exercise thereof or the exercise of any other right. No notice to or demand on
the Company in any case shall entitle the Company to any other or further notice
or demand in similar or other circumstances. The remedies herein are cumulative
and not exclusive of any other remedies provided by law, at equity or in any
other agreement.
SECTION 11.04 Costs, Expenses and Taxes. The Company agrees to pay on
demand: (a) all reasonable out-of-pocket costs and expenses of the Agent in
connection with the preparation, execution and delivery of this Agreement, the
Notes, the other Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities under this Agreement, the Notes and the other
Loan Documents, and any modification, supplement or waiver of any of the terms
of this Agreement or any other Loan Document, (b) all reasonable costs and
expenses of any Lender, including reasonable legal fees and expenses, in
connection with the enforcement of or preservation of rights under this
Agreement, the Notes and the other Loan Documents and (c) reasonable costs and
expenses incurred in connection with third party professional services required
by the Agent such as appraisers, environmental consultants, accountants or
similar Persons, provided that, prior to any Event of Default hereunder, the
Agent will first obtain the consent of the Company to such expense, which
consent shall not be unreasonably withheld. Without prejudice to the survival of
any other obligations of the Company hereunder and under the Notes, the
obligations of the Company under this Section 11.04 shall survive the
termination of this Agreement or the replacement of the Agent and each
assignment of the Notes.
SECTION 11.05 Indemnity. (a) The Company shall indemnify and hold harmless
the Agent and each Lender and each Affiliate thereof and their respective
directors, officers, employees and agents (OTHER THAN WITH RESPECT TO ANY CLAIM
BY THE AGENT, AND/OR ANY LENDER OR AFFILIATE, DIRECTOR, OWNER, EMPLOYEE OR AGENT
THEREOF AGAINST THE AGENT, OR ANY LENDER, OR ANY AFFILIATE, DIRECTOR, OFFICER,
EMPLOYEE OR AGENT THEREOF) (such indemnified Persons called the "Indemnitees")
from and against any and all losses, liabilities, claims or damages (including
reasonable legal fees and expenses) to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from (i) this Agreement, the Notes or any other Loan Document or any actual or
proposed use by the Company of the proceeds of any extension of credit
hereunder, (ii) any investigation, litigation, claims, or demands under any
Environmental Laws, or (iii) any other proceeding (including any threatened
investigation or proceeding) relating to the foregoing clauses (i) and (ii),
whether in each such
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case arising as a result of this Agreement or any of the other Loan Documents or
the transactions contemplated hereby, and the Company shall reimburse such
Indemnitees, upon demand for any expenses (including legal fees) reasonably
incurred in connection with any such investigation or proceeding; but excluding
any such losses, liabilities, claims, lines or expenses incurred by reason of
the gross negligence or willful misconduct of the Indemnitees. WITHOUT LIMITING
ANY PROVISION OF THIS AGREEMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT EACH INDEMNITEE SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ALL
SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISING OUT OF OR RESULTING FROM
THE SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE OF SUCH INDEMNITEE, BUT NOT FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE. Without prejudice
to the survival of any other obligations of the Company hereunder and under the
other Loan Documents, the obligations of the Company under this Section 11.05
shall survive the termination of this Agreement and the other Loan Documents and
the payment of the Obligations or the assignment of the Notes.
(b) Notwithstanding anything set forth herein to the contrary, the
Company shall not, in connection with any one legal proceeding or claim, or
separate but related proceedings or claims arising out of the same general
allegations of circumstances, in which the interest of the Indemnitees (in the
reasonable judgment of such Indemnitees) does not differ in any material
respect, be liable to the Indemnitees (or any of them) under any of the
provisions set forth herein for the fees or expenses of more than one separate
firm of attorneys in each jurisdiction in which legal action is being taken or
may be taken at any time, which firm shall be selected by the Agent (or, if the
Agent fails to so select after notice from the Indemnitees involved, such firm
shall be selected by such Indemnitees), except for any additional firms
reasonably recommended by such firm in good faith for purposes of obtaining
special expertise in any area of law or for purposes of having local counsel in
each court in which such proceeding or proceedings are pending. In any
litigation or other proceeding in which the interests of the Company and any
Indemnitee affected thereby are not adverse (in the reasonable judgment of such
Indemnitee) and with respect to which such Indemnitee may seek indemnification
or reimbursement from the Company hereunder, the Company shall be entitled to
participate (in conjunction with counsel for the Indemnitees), at the Company's
expense, in the defense of such litigation or proceeding with its own counsel.
No Indemnitee shall consent to entry of any judgment or enter into any
settlement of any action or proceeding that would give rise to any liability of
the Company hereunder without the prior written consent of the Company (which
consent shall not be unreasonably withheld).
SECTION 11.06 Right of Setoff. If any Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits held and other obligations owing by such Lender, or any branch, or
subsidiary or Affiliate, to or for the credit or the account of the Company
against any and all the Obligations of the Company now or hereafter existing
under this Agreement and the other Loan Documents and other obligations of the
Company held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement, its Note or the Obligations and
although the Obligations may be unmatured. The rights of each Lender under this
Section 11.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
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SECTION 11.07 Governing Law. This Agreement, all Notes, the other Loan
Documents and all other documents executed in connection herewith shall be
deemed to be contracts and agreements executed by the Company and each Lender
under the laws of the State of Texas and of the United States of America and for
all purposes shall be construed in accordance with, and governed by, the laws of
said state and of the United States of America. Without limitation of the
foregoing, nothing in this Agreement, or in the Notes or in any other Loan
Document shall be deemed to constitute a waiver of any rights which any Lender
may have under applicable federal legislation relating to the amount of interest
which such Lender may contact for, take, receive or charge in respect of the
Loan and the Loan Documents, including any right to take, receive, reserve and
charge interest at the rate allowed by the law of the state where any Lender is
located.
SECTION 11.08 Interest. It is the intention of the parties hereto that the
Agent, the Issuing Bank and each Lender shall conform strictly to usury laws
applicable to it, if any. Notwithstanding anything to the contrary set forth
herein, in any other Loan Document or in any other document or instrument, no
provision of any of the Loan Documents or any other instrument or document
furnished pursuant hereto or in connection herewith is intended or shall be
construed to require the payment or permit the collection of interest in excess
of the maximum non-usurious rate permitted by applicable law. Each provision in
this Agreement and each other Loan Document, agreement or writing is expressly
limited so that in no event whatsoever shall the amount paid, or otherwise
agreed to be paid, to the Agent, the Issuing Bank or any Lender, or charged,
contracted for, reserved, taken or received by the Agent, Issuing Bank or any
Lender, for the use, forbearance or detention of the money to be loaned under
this Agreement or any Loan Document or otherwise (including any sums paid as
required by any covenant or obligation contained herein or in any other Loan
Document which is for the use, forbearance or detention of such money), exceed
that amount of money which would cause the effective rate of interest to exceed
the Highest Lawful Rate, and all amounts owed under this Agreement and each
other Loan Document, agreement or writing shall be held to be subject to
reduction to the effect that such amounts so paid or agreed to be paid, charged,
contracted for, reserved, taken or received which are for the use, forbearance
or detention of money under this Agreement or such Loan Document, agreement or
writing shall in no event exceed that amount of money which would cause the
effective rate of interest to exceed the Highest Lawful Rate. If the
transactions with any Lender, the Issuing Bank or the Agent contemplated hereby
would be usurious under applicable law then, in that event, notwithstanding
anything to the contrary in any Note payable to such Lender, this Agreement, any
other Loan Document or any other agreement or writing, it is agreed that in the
event that the maturity of any Note payable to such Lender is accelerated or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to such Lender, the Issuing Bank or
the Agent may never include more than the maximum amount allowed by such
applicable law and excess interest, if any, to such Lender, the Issuing Bank or
the Agent provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender, the Issuing Bank or the
Agent on the principal amount of the indebtedness owed to such Lender, the
Issuing Bank or the Agent by the Company and any excess refunded by such Lender,
the Issuing Bank or the Agent, as the case may be, to the
79
Company. Anything in any Note or any other Loan Document, agreement or writing
to the contrary notwithstanding, the Company shall not be required to pay
unearned interest on any Note or other Loan Document, agreement or writing and
the Company shall not be required to pay interest on the Obligations at a rate
in excess of the Highest Lawful Rate, and if the effective rate of interest
which would otherwise be payable under such Note or other Loan Document,
agreement or writing would exceed the Highest Lawful Rate, or if the holder of
such Note or other Loan Document, agreement or writing shall receive any
unearned interest or shall receive monies that are deemed to constitute interest
which would increase the effective rate of interest payable by the Company under
such Note or other Loan Document, agreement or writing to a rate in excess of
the Highest Lawful Rate, then (a) the amount of interest which would otherwise
be payable by the Company shall be reduced to the amount allowed under
applicable law and (b) any unearned interest paid by the Company or any interest
paid by the Company in excess of the Highest Lawful Rate shall in the first
instance be credited on the principal of the Obligations of the Company (or if
all such Obligations shall have been paid in full, refunded to the Company). It
is further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, reserved, taken, charged or received by any
Lender, the Issuing Bank or the Agent under the Notes, the Obligations and the
other Loan Documents, agreements and writings or made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate, shall be made, to
the extent permitted by usury laws applicable to such Lender, the Issuing Bank
or the Agent, as the case may be, by amortizing, prorating and spreading in
equal parts during the period of the full stated term of the Notes and this
Agreement.
SECTION 11.09 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the
Company in connection herewith and the other Loan Documents shall survive the
execution and delivery of this Agreement, the Notes and the other Loan
Documents, and the termination of the Total Commitment of the Lenders and will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto, whether so expressed or not, provided, that the Total Commitment
of the Lenders shall not inure to the benefit of any non-approved successor or
assign of the Company.
SECTION 11.10 Successors and Assigns; Participations. (a) All covenants,
promises and agreements by or on behalf of the Company or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective permitted successors and assigns. The Company may not assign or offer
any of its rights or obligations hereunder without the consent of the Lenders.
(b) Any of the Lenders may assign to or sell participations to an
Eligible Assignee a portion of its rights and obligations under this Agreement
and the other Loan Documents (including a portion of its share of the Total
Commitment, the Advances and the Obligations of the Company owing to it and the
Notes); provided, that, in the case of participations (i) such Eligible
Assignees shall be entitled to the cost protection provisions contained in
Article II and Section 11.04 to the extent the Lender selling the participation
is so entitled, (ii) the Company shall continue to deal solely and directly with
the Agent in connection with its rights and obligations under this Agreement and
the other Loan Documents and (iii) each Lender shall retain the sole right and
responsibility to enforce the Obligations relating to the
80
Loans including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; but such Lender may
grant a participant rights only to the extent such amendments, modifications or
waivers would effect such participant interests in any fees payable hereunder
(including, without limitation, the amount and the dates fixed for payment of
any such fees) or the amount of principal or the rate of interest payable on, or
the dates fixed for any payment of principal or of interest on, the Loans.
Except with respect to cost protections provided to a participant pursuant to
this paragraph hereof, no participant shall be a third party beneficiary of this
Agreement nor shall it be entitled to enforce any rights provided to the Lenders
against the Company under this Agreement.
(c) A Lender may assign to any of its Affiliates and to any other
Lender and, with the prior written consent of the Company and the Agent (which
consents shall not be unreasonably withheld), a Lender may assign to one or more
other Eligible Assignees, all or a portion of its interests, rights, and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its share of the Total Commitment and the same portion of the Loans
and other obligations of the Company at the time owing to it and the Note held
by it); provided however, that each such assignment (i) shall be in a minimum
principal amount of not less than $5,000,000 or such Lender's remaining
Commitment, (ii) shall not reduce any Lender's Commitment to an amount less than
$5,000,000 (other than to zero) and shall be of a constant, and not a varying,
percentage of the assigning Lender's Revolving Credit Commitment, Term Loan
Commitment, ESOP Loan Commitment and the Acquisition Facility Commitment and the
rights and obligations attendant to such under this Agreement, (iii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance, an Assignment and Acceptance in form and substance satisfactory to
the Agent (an "Assignment and Acceptance") substantially in the form of
Exhibit 11.10 hereto, and any Note subject to such assignment and (iv) no
assignment shall be effective until receipt by the Agent from the assignee or
assignor of a reasonable service fee in respect of said assignment equal to
$2,500 from the assignee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof unless otherwise agreed to by the assigning Lender, the
Eligible Assignee thereunder and the Agent (x) the Eligible Assignee thereunder
shall be a party hereto and to the other Loan Documents and to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder and under the other Loan Documents and (y) the assignor Lender
thereunder shall to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto except,
in the case of an Issuing Bank, with respect to Letters of Credit issued by such
Issuing Bank which are then outstanding).
(d) The Agent shall maintain at its office (i) a copy of each
Assignment and Acceptance delivered to it and (ii) a register (the "Register")
for the recordation of the names and addresses (and taxpayer identification
numbers, if any) of the Lenders and the principal amount and types of Loans
owing to each Lender pursuant to the terms hereof from time to time. The entries
in the Register shall be conclusive in the absence of manifest error, and the
Company, the
81
Agent, and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a "Lender" hereunder for all purposes
of this Agreement and the Loan Documents. The Register shall be available for
inspection by the Company, the Agent, and any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a copy of (or copies of signed counterparts
of) a duly completed and fully executed Assignment and Acceptance, together with
the existing Note or Notes of the assigning Lender subject to such Assignment
and Acceptance, the Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Company and the affected Lenders. Not later than five (5)
Business Days after the receipt of the notice from the Agent referred to in
clause (iii) above, the Company, at its own expense shall execute and deliver to
the Agent, in exchange for the Note or Notes of the assigning Lender surrendered
to the Agent pursuant to this paragraph, a new Note or Notes payable to the
order of the assignee Lender and its registered assigns in the principal amount
of the Loans assigned to it. Any such new Note shall be substantially in the
form of Exhibit 2.05A, 2.05B, 2.05C, and 2.05D, hereto as appropriate. Canceled
Notes shall be promptly returned to the Company.
(f) Notwithstanding any other provision herein but subject to Section
11.11, any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.10(f) disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Company or any Subsidiary furnished to such Lender
by or on behalf of the Company or any Subsidiary.
(g) Anything in this Section 11.10 to the contrary notwithstanding,
any Lender may at any time, without the consent of the Company or the Agent,
assign and pledge all or any portion of its Commitments and the Loans owing to
it to any Federal Reserve Bank (and its transferees) as collateral security
pursuant to Regulation A of the Board and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
SECTION 11.11 Confidentiality. Each Lender agrees to exercise its best
efforts to keep any information delivered or made available by the Company
confidential from anyone other than Persons employed or retained by such Lender
who are or are expected to become engaged by such Lender in evaluating,
approving, structuring or administering the Loans and who are subject to this
confidentiality provision; provided that nothing herein shall prevent any Lender
from disclosing such information (a) to any other Lender, (b) pursuant to
subpoena or upon the order of any court or administrative agency, (c) upon the
request or demand of any regulatory agency (including self-regulatory agencies)
or authority having jurisdiction over such Lender, (d) which has been publicly
disclosed, (e) to the extent reasonably required in connection with any
litigation to which the Agent, any Lender, the Company or its respective
Affiliates may be a party, (f) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (g) to such Lender's legal counsel
and independent auditors (who are subject to this confidentiality provision or
similar confidentiality provision), (h) to any actual or proposed participant or
assignee of all or part of its rights hereunder which has agreed in writing to
be
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bound by the provisions of this Section 11.11 and (i) which is clearly not
confidential. To the extent legally permitted, each Lender will use its best
reasonable efforts to promptly notify the Company of any information that it is
required or requested to deliver pursuant to clause (b), (c) or (e) of this
Section 11.11; provided that no notice shall be required for any review of
information by representatives of regulators at any Lender's places of business.
SECTION 11.12 Pro Rata Treatment. (a) Except as otherwise specifically
permitted hereunder, each payment or prepayment of principal, if permitted under
this Agreement, and each payment of interest with respect to an Advance shall be
made pro rata among the Lenders on the basis of their respective percentage
participations in the Revolving Credit Commitment, the ESOP Loan Commitment, the
Term Loan Commitment or the Acquisition Facility Commitment, as the case may be.
(b) Each Lender agrees that if, through the exercise of a right of
banker's lien, setoff or claim of any kind against the Company as a result of
which the unpaid principal portion of the Notes and the Obligations held by it
shall be proportionately less than the unpaid principal portion of the Notes and
Obligations held by any other Lender, it shall be deemed to have simultaneously
purchased from such other Lender a participation in the Notes and Obligations
held by such other Lender, in the amount required to render such amounts
proportional; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 11.12(b) and the payment
giving rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustments restored without interest.
SECTION 11.13 Separability. Should any clause, sentence, paragraph or
section of this Agreement be judicially declared to be invalid, unenforceable or
void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
SECTION 11.14 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 11.15 Interpretation. (a) In this Agreement, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any gender includes each other gender;
83
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision,
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
provided that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary herein,
reference to any agreement, document or instrument (including this
Agreement) means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms hereof and reference to any
Note or other note includes any Note issued pursuant hereto in extension or
renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof
or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of time
except as expressly provided to the contrary, the word "from" means "from
and including" and the word "to" means "to but excluding"; and
(ix) reference to any law, rule or regulation means such as
amended, codified or reenacted, in whole or in part, and in effect from
time to time.
(b) The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
SECTION 11.16 Limitation by Law. All rights, remedies and powers provided
in this Agreement and the other Loan Documents may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law, and all the provisions of this Agreement and the other Loan Documents are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement or any other Loan Document illegal, not binding, invalid
or unenforceable, in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law.
84
SECTION 11.17 SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF TEXAS, XXXXXX COUNTY, OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY,
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY
SUCH ACTION OR PROCEEDING, THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAKING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL
POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 11.02 SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
(b) THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO IN THE FIRST SENTENCE OF CLAUSE (a) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
SECTION 11.18 WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT, THE ISSUING
BANK AND EACH LENDER HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM OR RELATING TO ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
SECTION 11.19 FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT (INCLUDING THE
SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
85
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
WRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 11.20 Company Assumption of Obligations of Finance Corp.; Certain
Matters Concerning Binding Effect On AXIA, AHC, Xxxx and TapeTech. AXIA hereby
assumes and agrees to pay, perform and discharge all of the obligations of
Finance Corp. under this Agreement and all other Loan Documents, whether for
interest, fees, expenses, indemnification or any other obligation whatsoever.
This Agreement and the other Loan Documents, together with the other agreements
and instruments executed in connection therewith, shall not become binding upon
AXIA until the earlier of (i) the filing of the Parent Merger Certificate with
the Secretary of State of the State of Delaware, or (ii) the Company notifying
the Agent in writing that the Parent Merger has been consummated. The Security
Documents, together with the other agreements and instruments executed in
connection therewith, executed by AHC, Xxxx and TapeTech shall not become
binding upon AHC, Xxxx and TapeTech until the earlier of (i) the filing of the
Parent Merger Certificate with the Secretary of State of the State of Delaware
or (ii) the Company notifying the Agent in writing that the Parent Merger has
been consummated.
SECTION 11.21 WAIVER OF CONSUMER RIGHTS. COMPANY HEREBY WAIVES ITS RIGHTS
UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41
ET. SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, COMPANY
VOLUNTARILY CONSENTS TO THIS WAIVER. COMPANY EXPRESSLY WARRANTS AND REPRESENTS
THAT IT (a) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO
THE AGENT AND EACH LENDER, AND (b) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
SECTION 11.22. Nonapplicability of Chapter 346; Selection of Optional
Interest Rate Ceilings. The Company, the Agent and the Lenders hereby agree
that, except for Section 346.004 thereof, the provisions of Chapter 346 of the
Texas Finance Code (Vernon's Texas Code Annotated), as amended from time to time
(as amended, the "Texas Finance Code") shall not apply to this Agreement or any
of the other Financing Agreements. To the extent that any of the optional
interest rate ceilings provided in Chapter 303 of the Texas Finance Code may be
available for application to any loan(s) or extension(s) of credit under this
Agreement for the purpose of determining the maximum allowable interest
hereunder pursuant to the Texas Finance Code, the applicable "monthly ceiling"
(as such term is defined in Chapter 303 of the Texas Finance Code) from time to
time in effect shall be used to the extent that it is so available, and if such
"monthly ceiling" at any time is not so available then the applicable "weekly
ceiling" (as such term is defined in Chapter 303 of the Texas Finance Code) from
time to time in effect shall be used to the extent that it is so available.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
86
IN WITNESS WHEREOF, the Company, the Guarantors, the Agent and the Lenders
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
FINANCE CORP.:
AXIA FINANCE CORP.
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name: Xxxxx 0. Xxxxxx
Title: President
AXIA:
AXIA INCORPORATED
By: /s/ XXXX X. XXXX
--------------------------------
Name: Xxxx X. Xxxx
Title: Vice President - Finance
AGENT:
PARIBAS
By: /s/ XXXXX XXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Director
By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
LENDER:
Revolving Credit PARIBAS
Commitment: $2,254,901.98
Term Loan
Commitment: $5,261,437.90 By: /s/ XXXXX XXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Director
ESOP Loan
Commitment: $225,490.19
Acquisition Facility
Commitment: $3,758,169.93 By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Address:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Eurodollar Lending Office
-------------------------
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
LENDER:
Revolving Credit THE CIT GROUP/BUSINESS CREDIT, INC.
Commitment: $1,960,784.31
Term Loan
Commitment: $4,575,163.40 By: /s/ XXX XXXXXX
--------------------------------
Name: Xxx Xxxxxx
------------------------------
Title: Vice President
-----------------------------
ESOP Loan
Commitment: $196,078.43
Acquisition Facility
Commitment: $3,267,973.86
Address:
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Eurodollar Lending Office
-------------------------
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
LENDER:
Revolving Credit AMERICAN NATIONAL BANK AND
Commitment: $1,960,784.31 TRUST COMPANY OF CHICAGO
Term Loan
Commitment: $4,575,163.40 By: /s/ XXXX XXXXXXXX
--------------------------------
Name: Xxxx Xxxxxxxx
------------------------------
Title: Assistant Vice President
-----------------------------
ESOP Loan
Commitment: $196,078.43
Acquisition Facility
Commitment: $3,267,973.86
Address:
000 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
000 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Eurodollar Lending Office
-------------------------
000 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
LENDER:
Revolving Credit LASALLE NATIONAL BANK
Commitment: $1,764,705.88
Term Loan
Commitment: $4,117,647.06 By: /s/ XXXXX X. THICK
--------------------------------
Name: Xxxxx X. Thick
------------------------------
Title: Structured Finance Officer
-----------------------------
ESOP Loan
Commitment: $176,470.59
Acquisition Facility
Commitment: $2,941,176.47
Address:
000 X. XxXxxxx Xxxxxx, Xxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
135 X. XxXxxxx Street, Room 306
Xxxxxxx, Xxxxxxxx 00000
Eurodollar Lending Office
-------------------------
135 X. XxXxxxx Street, Room 306
Xxxxxxx, Xxxxxxxx 00000
LENDER:
Revolving Credit NATIONAL BANK OF CANADA
Commitment: $1,764,705.88
Term Loan
Commitment: $4,117,647.06 By: /s/ XXXXXXX XXXXXXX
--------------------------------
Name: Xxxxxxx Xxxxxxx
------------------------------
Title: Vice President
-----------------------------
ESOP Loan
Commitment: $176,470.59
Acquisition Facility
Commitment: $2,941,176.47 By: /s/ XXXXX X. XXXXX
--------------------------------
Name: Xxxxx X. Xxxxx
------------------------------
Title: Vice President and Manager
-----------------------------
Address:
0000 Xxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Eurodollar Lending Office
-------------------------
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
LENDER:
Revolving Credit NATIONAL CITY BANK
Commitment: $1,764,705.88
Term Loan
Commitment: $4,117,647.06 By: /s/ XXXXX XXXXX
--------------------------------
Name: Xxxxx Xxxxx
------------------------------
Title: Vice President
-----------------------------
ESOP Loan
Commitment:$176,470.59
Acquisition Facility
Commitment: $2,941,176.47
Address:
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Eurodollar Lending Office
-------------------------
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
LENDER:
Revolving Credit THE BANK OF NOVA SCOTIA
Commitment: $1,764,705.88
Term Loan
Commitment: $4,117,647.06 By: /s/ F.C.H. XXXXX
-----------------------------------
Name: F.C.H. Xxxxx
---------------------------------
Title: Senior Manager Loan Operations
--------------------------------
ESOP Loan
Commitment: $176,470.59
Acquisition Facility
Commitment: $2,941,176.47
Address:
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Xxxxxx
-----------------------
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Eurodollar Lending Office
-------------------------
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
LENDER:
Revolving Credit THE NORTHERN TRUST COMPANY
Commitment: $1,764,705.88
Term Loan
Commitment: $4,117,647.06 By: /s/ XXXXXX X. XXXXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
-----------------------------
ESOP Loan
Commitment: $176,470.59
Acquisition Facility
Commitment: $2,941,176.47
Address:
00 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Domestic Lending Office
-----------------------
00 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Eurodollar Lending Office
-------------------------
00 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
