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Exhibit 4.1
LOAN AGREEMENT
This Agreement is dated December 15, 1997, is among Xxxx & Xxxxxx, Inc., a
Delaware corporation (the "Borrower"), Xxxx & Talbot, Wis., Inc. ("Wis"), Xxxx &
Xxxxxx International, Ltd., a British Columbia corporation ("Intl"), Xxxx &
Talbot, Ltd., a British Columbia corporation ("Ltd"), and U.S. Bank National
Association ("USB").
Recitals
A. The Borrower, USB, and certain banks and financial institutions are
parties to a Credit Agreement dated as of May 6, 1992, as modified and
extended, and certain notes, security agreements, and guaranties related
thereto (the "1992 credit documents"), under which USB and the other banks
and financial institutions provide a $75 million revolving line of credit
to the Borrower and its subsidiaries.
B. The purpose of this Agreement and the notes, guaranties, and security
documents related to this Agreement is to replace the credit facilities
provided in 1992 with a new $75 million line of credit and a $10 million
swingline subfacility.
C. On the date of this Agreement, the Borrower's only domestic subsidiary is
Wis and the Borrower's only foreign subsidiaries are Intl and its
subsidiary, Ltd.
NOW, THEREFORE, it is agreed that:
1. Definitions, Etc.
(a) Specific Definitions. As used in this Agreement:
"Advance" means a loan or extension of credit or the renewal of an
outstanding loan or extension of credit by the Lenders to the
Borrower under the Line of Credit.
"Agent" means USB when USB is the only Lender and USB when acting in
its capacity as administrative agent for the Lenders when there is
another Lender or Lenders in addition to USB.
"Agreement" means this Agreement, including all modifications,
supplements, and restatements.
"Availability" means the positive difference between $75 million and
the aggregate amount of all Advances and Swingline Loans outstanding
when Availability is being determined.
"BPS" means basis points. A basis point is equal to 1/100th of 1%
per annum.
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"Collateral" means all present and after-acquired inventory
(including supplies, materials, work in progress, finished goods,
and returned and repossessed goods) and receivables (accounts,
chattel paper, documents, instruments, distributions on account of
investment property, deposit accounts into which proceeds have been
deposited, rights to proceeds of written letters of credit, and all
entitlements and things in action related thereto) of the Borrower
and the Guarantors and all records and documents related thereto.
"Commitment Fee" means the annual fee that is to be paid by the
Borrower to the Lenders quarterly in arrears under this Agreement
for the Line of Credit. The fee is calculated by multiplying the
relevant BPS in the Pricing Matrix times the maximum amount of the
Line of Credit ($75 million unless reduced under Subsection 4(c)(7).
"Default Rate" means a rate or rates of interest equal to 2% per
annum in excess of the rate or rates of interest in effect at the
time of a default (including any subsequent fluctuations in the
prime rate) that will be payable on accrued but unpaid interest as
well as principal from the date of such default until the notes are
paid in full or the Lenders accept a tendered cure of the default
and restore in writing the pre-default rate of interest. When no
specific rate is then in effect, the Default Rate will equal the
Agent's publicly announced prime rate of interest plus 2% per annum.
"Expiry Date" means April 15, 1999, unless extended by mutual
agreement.
"Federal Funds Rate" means the weighted average of the rates of
interest (rounded upward to the nearest .1%) per annum at which
non-interest-bearing deposits held by member banks at the Federal
Reserve ("federal funds") are traded on an overnight basis among
such member banks through brokers in federal funds as published by
the Federal Reserve Bank of New York.
"Financing Statement" means any financing statement, amendment, or
continuation statement to be filed in order to perfect, amend, or
continue the security interest granted in the Collateral under the
Security Agreements.
"Guarantor" means each domestic and foreign Subsidiary who executes
a Guaranty under this Agreement. As of the date of this Agreement,
the only Subsidiary that can execute a Guaranty under this Agreement
is Wis.
"Guaranty" means the guaranty to be executed under this Agreement in
the form attached as Exhibit 1.
"Interest Coverage Ratio" means the ratio of the Borrower's
consolidated net income before deduction of interest, income taxes,
depreciation, and amortization expenses to interest expense on debt,
measured as of the end of each quarter on a four-quarter rolling
basis.
"Lender" means USB and any other lender who is a party to this
Agreement.
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"Lender's Share" means the percentage interest of a Lender
calculated by dividing the dollar amount of such Lender's individual
commitment by $75 million.
"Leverage Ratio" means the ratio of Total Funded Debt to Tangible
Net Worth.
"LIBOR Advance" means an Advance based on the LIBOR.
"LIBOR Interest Period" means a period of 1, 2, 3, or 6 months as
selected by the Borrower for each LIBOR Advance.
"LIBOR" means an interest rate equal to the London interbank offered
market rate for Eurodollars (U.S. dollar denominated deposits) as
publicly quoted by USB as of 8:30 a.m. each banking day for a
interest period beginning on the second banking day after the day of
quotation, including any applicable reserve requirement costs, FDIC
insurance premiums, and related costs, and rounded to the nearest
1/16th of 1% per annum. If permitted by USB's Funds Management
Division, the Reuters or Telerate screens will be used in
determining the applicable LIBOR.
"Line of Credit" means the $75 million revolving line of credit
being provided by the Lenders to the Borrower under this Agreement.
"Line of Credit Note" means the note that the Borrower issues to
each Lender in the form attached as Exhibit 2.
"Loan Documents" means this Agreement, the Line of Credit Notes, the
Swingline Note, the Guaranties, and the Security Agreements,
including all modifications, supplements, and restatements.
"Material Adverse Effect" means a material adverse change in or
effect on the operations, business properties, condition (financial
or otherwise), of the Borrower and the Subsidiaries taken as a whole
or a material adverse effect on the legality, validity, binding
effect, or enforceability of Loan Documents against the Borrower or
any Subsidiary.
"Notice of Borrowing" means a written notice from the Borrower to
USB in the form attached as Exhibit 3 requesting an Advance.
"Pricing Matrix" means:
Level I Level II Level III
----------- --------------- ----------------
Leverage Ratio (*).50 (**).50 (***).80 (**).80 (***)1.0
Prime Margin 0 0 0
LIBOR Margin 43.75 BPS 50.00 BPS 62.50 BPS
Commitment Fee 15.00 BPS 18.75 BPS 20.00 BPS
Unused Fee 5.00 BPS 6.25 BPS 8.50 BPS
(*) Non-XXXXX symbol meaning LESS THAN
(**) Non-XXXXX symbol meaning GREATER THAN OR EQUAL TO
(**) Non-XXXXX symbol meaning LESS THAN OR EQUAL TO
"Prime Rate Advance" means an Advance at the prime rate.
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"Prime Rate" means a fluctuating rate of interest per annum which is
equal to the higher of (1) the rate of interest which the Agent
publicly announces from time to time as its prime or base rate for
loans to commercial borrowers or (2) the Federal Funds Rate, plus a
margin of 1/2% per annum. The Prime Rate will change at the same
time and to the full extent of any changes in the Agent's publicly
announced prime rate. The use of the word prime does not constitute
an express or implied representation that the rate is the lowest or
best rate of interest available to the most creditworthy customers
of the Agent or any Lender.
"Security Agreement" means the security agreement that the Borrower
and each Guarantor will execute in the form attached as Exhibit 4 to
grant a security interest in the Collateral to secure performance of
their obligations to the Lenders.
"Subsidiary" means any present or future subsidiary of the
Borrower.
"Swingline" means a revolving line of credit of up to $10 million
that USB will provide to assist the Borrower with its day-to-day
management of cash.
"Swingline Loan" is a loan made by USB to the Borrower under the
Swingline.
"Swingline Note" means the note that the Borrower issues to USB in
the form attached as exhibit 5.
"Tangible Net Worth" means as of any date and on a LIFO basis
shareholders' equity (including any minority interest) less
goodwill, loans and advances to shareholders, officers, directors,
and employees that exceed $250,000 in the aggregate, surplus from
write-up of assets, and general intangibles.
"Total Funded Debt" means all liabilities for borrowed money plus
all capital lease obligations.
"Unused Fee" means a fee that is to be paid by the Borrower to the
Lenders quarterly in arrears under this Agreement for the average
amount of the Line of Credit that is not used in a quarter. The fee
is calculated by multiplying the relevant BPS in the Pricing Matrix
times the average amount of the Line of Credit that is unused in a
quarter. Swingline Loans will not be counted as Advances for the
purpose of calculating the Unused Fee.
"Yield Maintenance Charge" means p x (i - y) x f where "p" equals
the prepaid principal amount, "i" equals the margined LIBOR then
being paid on the amount prepaid, "y" equals the margined LIBOR most
recently quoted by the Agent with a term most closely matching the
remainder of the LIBOR Interest Period, and "f" is a fraction of
which the numerator is the number of days remaining in the LIBOR
Interest Period and the denominator is 360, plus any processing fee
and/or redeployment costs charged or incurred by a Lender.
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(b) General Definitions. As used in the Loan Documents:
"Affiliate" means any person that directly or indirectly through one
or more intermediaries controls, or is controlled by, or under
common control with, another person through the ownership of equity
securities or beneficial interests, relationship, control,
management of property or otherwise.
"Banking day" means a day, other than a Saturday or Sunday, on which
(a) the Lenders are open at their principal offices for carrying on
substantially all of their banking functions, and (b) with respect
to LIBOR loans also a day when dealers in the London interbank
market are quoting rates for Eurodollar deposits.
"Cancel" means to put an end to a contract because of the default
of the other party.
"Claim" means the right to damages and/or an equitable remedy, such
as specific enforcement, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured.
"Clean-up" means the activities necessary to reduce, remove,
remediate and/or dispose of hazardous materials, including the
studies, reports, and plans necessary for such activities.
"Contract" means indenture, agreement, contract, guaranty, lease,
mortgage, trust deed, security agreement, pledge agreement, and like
documents.
"Control" means the direct or indirect power to direct the
management and policies of a person, or the use or disposition of
that person's property, whether through the ownership of voting
securities, beneficial interests, contract or otherwise.
"Costs" means all reasonable costs and expenses, including attorney
fees, that are related to administration, extension, modification,
collection, and enforcement of the Loan Documents, and miscellaneous
charges such as photocopy and express mail expenses, documentary and
transfer taxes, and revenue stamps.
"Debt" means a liability for borrowed money, including liability
under capital leases, contingent liabilities arising from guaranties
of the debts or liabilities of another person. Debt includes
contingent liability for immediate reimbursement of drafts honored
under letters of credit, banker's acceptances, and for immediate
reimbursement for checks, drafts, and other deposit account items
when the issuer has insufficient funds on deposit to cover such
items.
"Distribution" means a direct or indirect transfer of money or other
property or incurring debt by an entity to or for the benefit of its
owners in respect of any of its securities or other ownership
interests, including the declaration or
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payment of cash or stock dividends, options, or warrants, a
purchase, redemption, or other acquisition of shares, or a
distribution of debt.
"Entity" or "organization" means a corporation, limited liability
company, partnership, business trust, estate, trust, association,
two or more persons having a joint or common interest, or any other
legal or commercial entity.
"Environmental laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"), the Resource
Conservation and Recovery Act of 1976 ("RCRA"), the National
Environmental Policy Act ("EPA"), the Clean Water Act, the Clean Air
Act, the Toxic Substances Control Act ("TSCA") and all other Laws
applicable to the generation, storage, release, discharge,
transportation, and clean-up of hazardous material, solid waste, or
air contaminates.
"Execute" means, when referring to execution of documents, to
subscribe, acknowledge where appropriate for recording/filing, and
deliver to the person or persons entitled thereto.
"Financial statements" means balance sheets and statements of income
and of cash flows prepared in reasonable detail, on a comparative
basis and in accordance with GAAP, including footnotes and
management explanations in annual financial statements, for the
periods required by this Agreement.
"Fiscal year" means the 12-month period starting on January 1 of a
calendar year and ending on December 31 of the same calendar year
and any particular fiscal year is identified by the coincidental
calendar year, i.e., the fiscal year that ends on December 31, 1997,
is the "1997 fiscal year."
"GAAP" means generally accepted accounting principles and
practices consistently applied.
"Governmental unit" means the United States, any foreign state or
nation, any state or commonwealth, district, territory or
municipality, or any department, agency, court, tribunal, or other
instrumentality thereof.
"Hazardous material" means any waste, substance, mixture, pollutant
or contaminant defined as hazardous, toxic, or radioactive under any
environmental laws and includes, whether or not so defined,
petroleum and natural gas products, polychlorinated biphenyls, and
asbestos-containing materials.
"Insolvent" means a financial condition such that either the
person's total liabilities are greater than the fair value of all of
the person's assets or the person is unable to pay its liabilities
in the ordinary course of business as they become due.
"Insolvency proceedings" means an assignment for the benefit of
creditors or other proceeding intended to liquidate or
rehabilitate the estate of the person
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involved, involving all or substantially all of a person's property,
as well as any liquidation and reorganization proceeding under the
Bankruptcy Code.
"Judicial lien" means a lien obtained by judgment, levy,
sequestration, or other legal or equitable process or proceeding.
"Law" means an existing or future constitution, statute, ordinance,
code, regulation, rule, or similar legislative imposition of any
federal, state or local governmental unit, including any amendments
thereto.
"Liability" means an obligation for the payment of money whether
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or
unsecured.
"Lien" means a charge against or an interest in property to secure
payment or performance of an obligation including a security
interest, judicial lien, and statutory lien.
"Material" means that which in reasonable and objective
contemplation will or realistically is likely to affect the business
or property of a person taken as a whole, or the person's
creditworthiness as to such business or property, in a significant
manner.
"Obligation" means a duty imposed on a person by law, promise,
contract or otherwise, including liabilities and debts.
"Order" means any order, injunction, judgment, writ, decree,
license, or permit.
"Per annum" means, for the purpose of calculating fees and interest,
the actual number of days elapsed over a denominator of 360 days.
"Person" means an individual, entity, or governmental unit.
"Pro rata" means in accordance with the percentage interests of each
Lender calculated by dividing the dollar amount of such Lender's
individual commitment by the total commitment of all of the Lenders.
"Prospective default" means the occurrence of an event that would be
a default but for the giving of notice, the passage of time, or
both.
"Records and documents" means correspondence, memoranda, tapes,
computer databases and operating systems, papers, books and other
documents.
"Securities" means notes, stock, warrants, options, subscription or
conversion rights, treasury stock, bonds, debentures, evidences of
debt, or other certificates of interest or participation, all stock
dividends and distributions in respect thereof, and all entitlements
related thereto.
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"Statutory lien" means a lien arising solely by force of a statute
on specified circumstances or conditions.
"Subsidiary" means an entity that is owned (50% or more of the
outstanding voting shares) or controlled by a "parent" if the
results of their operations and financial position should be
presented on a consolidated basis under GAAP.
"Taxes" means all taxes, assessments, charges, license fees, levies,
and like governmental impositions charged against a person or such
person's property.
"Third party" means any person who is not a party to the Loan
Documents except future Subsidiaries and Lenders.
"Transfer" means every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of disposing of or parting
with property or any part thereof or interest therein.
(c) Additional References
(1) Accounting Terms. Accounting terms that are not specifically
defined in this Agreement will be defined or interpreted and
all reporting practices will be performed, in accordance with
GAAP unless the Agent has given its prior written consent to a
different accounting definition, interpretation or practice.
Without thereby limiting the generality of the foregoing, all
financial statements and calculations which are based on
financial condition or results of operations as of specific
dates or for specific periods (including compliance with
financial covenants) will be calculated on a consolidated
basis (as defined by Accounting Research Bulletin No. 51, as
amended) unless otherwise specified. Whenever this Agreement
calls for a payment to be made or an event to occur annually
or quarterly, the reference is to a fiscal year and a fiscal
quarter.
(2) Legal Terms. The definitions and substantive terms of the
Uniform Commercial Code, the Uniform Fraudulent Transfer Act,
and the Bankruptcy Code will be used as additional aids to
construction of the Loan Documents before resort to any other
source. Unless otherwise specifically stated, all dollar
amounts refer to U.S. dollars. The Borrower will be deemed to
borrow when a loan or extension of credit is made to or for
the account of the Borrower.
(3) Date/Time. Whenever a date or time is specified in the Loan
Documents, it means such date or time in Portland, Oregon.
(4) Schedules/Exhibits. The schedules and exhibits, if any, that
are attached to this Agreement are incorporated into this
Agreement by this reference.
(5) Gender; Number. The Loan Documents are intended to be gender
neutral and the neuter pronoun can refer not only to an entity
but also to an individual. Use of the singular can include the
plural and vice
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versa. Where the singular refers to several persons, the
liability of such persons is joint and several except as
otherwise specifically noted.
(6) Conflicts. The terms and conditions of the Loan Documents are
intended to complement and supplement each other and are to be
construed so as to be consistent and complimentary. In the
event that a conflict of terms cannot be reconciled, the terms
and conditions of this Agreement will govern over any
conflicting terms or conditions in any other Loan Document.
(7) Captions. Captions and headings are merely for convenience and
substantively are not a part of any Loan Document.
(8) Governing Law. Construction, performance, and enforcement of
the Loan Documents will be governed by the substantive
provisions (i.e., without regard to the rules for conflict of
laws) of Oregon law, but if any Lender or Agent has greater
rights or remedies under federal, then such rights and
remedies under federal law also will be available to such
party.
(9) Complete Agreement. The Loan Documents are the complete,
final, and exclusive agreement of the parties as to the terms
and conditions of the credit facilities. No term or condition
can or will be explained, supplemented, waived, or modified by
conduct or oral agreement either before, at, or after signing
and delivery of the Loan Documents. The terms and conditions
of the Loan Documents will govern over any conflicting term or
condition contained in any commitment letter or term sheet.
2. Representations & Warranties.
(a) Original Inducement. To induce the Lenders to enter into this
Agreement, the Borrower and each Subsidiary represents and warrants
that:
(1) Organization. The Borrower and Wis are Delaware corporations
that are duly incorporated, organized, and qualified to
transact business in all other countries, states, and
provinces where the nature of its business operations or the
ownership of assets require such qualification except if no
Material Adverse Effect results. Each Subsidiary other than
Wis is duly incorporated, organized, and qualified to transact
business in all other countries, states, and provinces where
the nature of its business operations or the ownership of
assets require such qualification except if no Material
Adverse Effect results.
(2) Government Authority. The Borrower and each Subsidiary has all
material permits and governmental approvals that are necessary
to operate their businesses.
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(3) Authorization. The Borrower and each Subsidiary is authorized
to execute the Loan Documents and to perform their obligations
thereunder.
(4) Due Execution and Delivery. A duly authorized representative
of the Borrower and each existing Subsidiary will execute this
Agreement and each of the other Loan Documents to which such
entity is a party.
(5) Legally Binding Documents. The Loan Documents are the legally
valid and binding contractual obligations of the Borrower and
the Subsidiaries, and are enforceable against the entities
that are parties thereto in accordance with their respective
terms except as such enforcement may be limited by insolvency
laws affecting the rights and remedies of creditors generally,
general principles of equity, whether applied by a court of
law or equity, and other generally applicable rules of law.
(6) Guarantors, Etc. The only Subsidiaries that cannot guarantee
performance of the Borrower's obligations to the Lenders or
grant a security interest in the items of the Collateral owned
by them are Intl and Ltd. The only direct Subsidiary of the
Borrower in which the Borrower may pledge less than 100% of
the stock is Intl. The Borrower may pledge 66% of the stock of
Intl to the Agent.
(7) Accurate Financial Statements. The consolidated financial
statements of the Borrower and the Subsidiaries that have been
provided to the Lenders fairly present the consolidated
financial position and results of operations of the Borrower
and the Subsidiaries.
(8) No Violations. Neither the execution of the Loan Documents nor
the borrowing or repayment by the Borrower or a Guarantor of
loans and extensions of credit under the Loan Documents
violates any law or constitutes a breach or repudiation of any
significant contract to which the Borrower or any Subsidiary
is a party or by which its assets are bound, except for any
consent required by Wachovia Bank of Georgia, N.A.
("Wachovia").
(9) No Legal Proceedings or Matters. There are no civil,
criminal, or administrative proceedings or matters now
pending or overtly threatened in writing against the
Borrower, a Subsidiary, or their assets that are not
disclosed in writing to the Lenders before the date of this
Agreement except for such matters that the Borrower
believes will not have a Material Adverse Effect.
(10) No Breach or Default. Neither the Borrower nor any Subsidiary
is in non-technical breach of or default under any employee
pension benefit plan or employee benefit plan (as those terms
are defined by Section 3 of the Employee Retirement Income
Security Act of 1974, as amended) to which such entity is a
party or sponsor or is in breach of or default under any other
significant contract to which it is a party
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or by which its assets are bound except for such matters that
the Borrower believes will not have a Material Adverse Effect.
(11) Tax Returns. The Borrower and each Subsidiary has filed all
material tax returns that it is required by law to file and
has paid all taxes owed by it when due except for taxes now
being contested by such party in good faith, by appropriate
means and with adequate reserves being maintained for payment
in the event of an outcome of such contest adverse to such
party.
(12) Compliance with Law and Order. The Borrower and each
Subsidiary are in substantial compliance with all laws and
orders that are applicable to such persons except for such
matters that the Borrower believes will not have a Material
Adverse Effect.
(13) Hazardous Materials. To the best knowledge of the Borrower and
each Subsidiary, neither the Borrower nor any Subsidiary has
released any hazardous materials into the environment in
violation of any applicable laws or orders or owns or operates
any facility at which any hazardous materials are stored in
violation of applicable law or have been released in
quantities or concentrations that are reportable to
governmental agencies but have not yet been so reported except
for such matters that the Borrower believes will not have a
Material Adverse Effect.
(14) Solvency. The Borrower and each Guarantor will have the
ability to pay and perform their obligations to USB as they
become due in the ordinary course of business. The Borrower
and each Guarantor will have assets that at fair value exceed
its liabilities. Neither the Borrower nor any Subsidiary is
the subject of any insolvency proceedings.
(15) Material Adverse Change. No material adverse change has
occurred in the financial condition, business operations, or
business prospects of the Borrower or any Subsidiary since the
Borrower provided financial information in connection with its
application for the credit facilities being provided under
this Agreement.
(16) Security Interest. The security interests granted by the
Borrower and each Guarantor to the Lenders in the Collateral
is valid and prior to any other lien, security interest, or
adverse claim except the security interests that were granted
to USB and the other lenders under the 1992 loan documents and
the security interest of Wachovia, that is acknowledged in an
intercreditor and agency agreement dated January 22, 1996, to
secure the liability of Wis and the guarantor liability of the
Borrower to reimburse Wachovia for amounts paid by Wachovia on
account of $18.8 million in City of Eau Claire, Wisconsin,
Tax-Exempt Adjustable Mode Solid Waste Disposal Revenue Bonds.
The Agent will cause the old security interests to be
terminated when the security interests granted under this
Agreement have been
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perfected and the priority thereof confirmed by the
governmental units having jurisdiction or by private UCC
search agencies. The Agent's existing Financing Statements may
be used temporarily to perfect such security interests.
(b) Reaffirmation. The Borrower and reach Subsidiary will be deemed to
reaffirm the foregoing representations and warranties each time that
the Borrower requests a loan or extension of credit under this
Agreement but the representations and warranties regarding financial
statements will be deemed to refer to the last day of the most
recent interim and annual fiscal period for which financial
statements then have been delivered.
3. Conditions Precedent. The following are conditions precedent that must be
satisfied by the Borrower or waived by the Agent before any Lender is
obligated to make a loan or otherwise extend credit to the Borrower under
the Loan Documents:
(a) Formation & Qualification. The Borrower and Wis have furnished
certificates of existence and qualification to Agent that establish
to Agent's reasonable satisfaction that each such party exists, is
organized, and is authorized to transact business in Delaware,
Oregon, Wisconsin and Pennsylvania. On or before 12/31/97, each
foreign Subsidiary will deliver public authority documents to the
Agent establishing that each foregin Subsidiary is duly
incorporated, existing, and in good standing in the state or
province of its incorporation and its principal place of business.
(b) Organization & Authority documents. The Borrower and Wis have
furnished to the Agent certified copies of each such entity's
articles or certificate of incorporation, its bylaws, the
resolutions of its board of directors that authorizes it to enter
into and perform its obligations under the Loan Documents, and an
incumbency certificate that (1) names the representatives who are
authorized to execute documents and, in the case of the Borrower,
to request loans and extensions of credit under the Loan
Documents and (2) contains a specimen of each such
representative's signature. On or before 12/31/97, each foreign
Subsidiary will deliver such organization and authority documents
to the Agent. The Lenders may continue to rely on such
organization and authority documents until revoked or modified by
a similar document.
(c) Financial Statements & Business Plan. The Borrower and each
Subsidiary has each furnished to the Agent certified copies of its
annual financial statements for each of the preceding three fiscal
years -- or the period of its existence if it has been in existence
less than three years--and its business plan for the 1998 fiscal
year.
(d) Representations and Warranties. The representations and warranties
of the Borrower and the Subsidiaries in this Agreement are true,
complete and correct in all significant respects.
(e) Loan Documents. The Borrower and the Subsidiaries have executed this
Agreement, the Borrower has issued the Line of Credit Note(s) and
the Swingline Note, the Borrower has executed the Security
Agreement, and
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each Guarantor has executed the Guaranty and the Security
Agreement. The Borrower has paid the facility fee agreed to in a
private letter agreement between the Borrower and USB.
(f) Perfection of Security Interests. The Agent has filed the Financing
Statements and has confirmed the first priority of such security
interests subject only to the security interests that were granted
under the 1992 credit documents and that will be terminated upon
such filing and priority confirmation.
If it is necessary to replace the existing intercreditor and agency
agreement, the Agent will enter into a new intercreditor and agency
agreement with Wachovia, the Borrower, and Wis, under which the
Agent will acknowledge that Wachovia will share with the Lenders in
the Collateral on a pari passu basis and that the Agent will act as
the collateral agent for both the Lenders and Wachovia.
(g) Legal Opinion. The Borrower's counsel (who must be reasonably
acceptable to the Agent) have rendered an opinion to the Agent for
the Lenders that covers the following points as of the date of this
Agreement.(1)
(1) The Borrower has been duly incorporated, organized, and
qualified to do business in Delaware and Oregon. Wis has been
duly incorporated, organized, and qualified to do business in
Delaware, Wisconsin, and Pennsylvania.
(2) The Borrower and Wis have been authorized to execute the Loan
Documents to which it is a party and the representative or
representatives signing and delivering the documents for each
such party has or have been authorized to take such action.
(3) To the knowledge of the opinion giver, neither the Borrower
nor Wis is the subject of any litigation or governmental
proceeding that is pending or overtly threatened in writing
but not disclosed by the Borrower to the Agent in writing.
(4) To the knowledge of the opinion giver, neither the execution
of the Loan Documents nor the performance by the Borrower and
Wis of their obligations under such documents violates any
applicable law or order or breaches or will result in an event
of default under any material contract to which the Borrower
or Wis is a party.
(h) No Change in Circumstances. In the opinion of the Agent, there has
been no material adverse change in the financial condition, business
operations, or business prospects of the Borrower, any Subsidiary,
or the Collateral since the date of the Borrower's application for
the credit facilities being provided under this Agreement.
--------
(1) The Borrower also will provide a similar opinion for each of its foreign
Subsidiaries when requested by the Agent.
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14
(i) Legal Matters. All other legal matters relating to the Borrower, the
Subsidiaries, the Collateral, and the Loan Documents are
satisfactory to the Agent's lawyer.
4. The Credit Facilities.
(a) Line of Credit.
(1) Commitment. Subject to the continuing compliance by the
Borrower and the Subsidiaries with the terms and conditions of
this Agreement, each Lender commits (promises) to make
Advances to the Borrower under this Agreement from time to
time in an aggregate amount that does not exceed such Lender's
Share of $75 million or the Availability. Notwithstanding any
other term or condition, no Lender is obligated to make an
Advance to the Borrower when or if (1) an uncured event of
default or prospective default then exists or (2) the
requested Advance plus all Advances and Swingline Loans then
outstanding will exceed $75 million. Each Lender's commitment
to fund Advances will automatically expire on the Expiry Date
unless such commitment is renewed or extended by the written
agreement of the Borrower and such Lender.
(2) Nature of Commitment. Each Lender's individual commitment is
separate and distinct from the individual commitments of the
other Lenders. The amount of each Lender's commitment will be
stated opposite its signature at the end of this Agreement or
in the supplement making such Lender a party to this
Agreement. No Lender will be liable for the failure of another
party to this Agreement to perform such other party's
obligations under this Agreement.
(3) Revolving Nature. The Line of Credit is revolving in nature.
Accordingly, the Borrower may borrow (that is, obtain an
Advance) at any time and from time to time until the Expiry
Date as long as there is Availability at that time and the
Borrower satisfies the requirements of this Agreement for such
a borrowing. Also, the Borrower may repay Advances at any time
without penalty or premium except for Yield Maintenance Charge
that is payable in connection with prepayment of LIBOR
Advances.
(4) Use of Proceeds. The Borrower may use Advances only for
general corporate purposes such as working capital financing,
debt repayment, and acquisitions permitted under this
Agreement. The first Advance must be used to pay and discharge
or acquire the Borrower's outstanding debt under the line of
credit provided under 1992 credit documents. An agreed amount
of the Line of Credit may be used to purchase securities
issued by Corporation X (as identified in a private letter
agreement between the Borrower and USB) if the Borrower owns
51% of the outstanding voting securities of Corporation X
after such purchase.
-14-
15
(5) Restrictions on LIBOR Advances. Each LIBOR Advance will be in
the minimum amount of $1 million and in multiples of $100,000
in excess of the minimum amount. The Borrower may not have
more than eight separate LIBOR Advances outstanding at any one
time. The Borrower may not select a LIBOR Interest Period that
extends beyond the Expiry Date and may not select the LIBOR as
the applicable interest rate when a default or prospective
default exists. LIBOR Advances may be repaid or renewed only
on the last day of a LIBOR Interest Period.
(6) Notice of Borrowing. The Borrower must request each Advance by
giving a Notice of Borrowing signed by an authorized
representative to the Agent not later than 8 a.m. on the
banking day of a Prime Rate Advance and not later than 8 a.m.
on the third banking day before the banking day on which a
LIBOR Advance is to be made or renewed. The Notice of
Borrowing must specify the date upon which the intended
Advance is to be made, the amount of the Advance, the interest
rate option to be applicable and, if the LIBOR has been
selected, the LIBOR Interest Period.
(7) Oral Requests. In exigent circumstances, the Borrower may
request an Advance orally but any such oral request must be
confirmed in writing within 24 hours or such Advance will be
due and payable on the Agent's demand.
(8) Reliance on Notice of Borrowing. Each Lender will be entitled
to immediately match fund upon receipt by the Agent of a
Notice of Borrowing. The Agent will be entitled to fund all or
any part of an Advance based on a Notice of Borrowing and
without first receiving funds from the Lenders.
(9) Revoking Notice of Borrowing. The Borrower may revoke a Notice
of Borrowing before the Advance is funded as long as the
Borrower pays all reasonable costs and expenses (including the
Yield Maintenance Charge in the case of a LIBOR Advance)
incurred by each Lender in reliance on such Notice of
Borrowing.
(10) Notice to the Lenders; Funding by Lenders. The Agent will
promptly deliver a copy of the Notice of Borrowing to each
Lender and each Lender will wire transfer its Share of the
Advance requested in the Notice of Borrowing to the Agent in
time for the Agent to fund the requested Advance on the date
requested. Any Lender who fails to fund its Share of an
Advance in a timely manner will pay the Agent interest at the
Federal Funds Rate plus -1/2 of 1% per annum from the due date
of such funding until the funding actually occurs.
(11) Funding. The Agent will deposit each Advance into the
Borrower's general corporate checking account.
(12) Interest. The Borrower will pay interest on all outstanding
Advances at either the Prime Rate plus the margin applicable
under the Pricing
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Matrix or, if properly selected by the Borrower in the Notice
of Borrowing and then available, the LIBOR plus the margin
applicable under the Pricing Matrix. The Borrower will pay
interest at the Default Rate from the date of an event of
default until the default is cured or all debts of the
Borrower to the Lenders are repaid. As an illustration, if the
Borrower's consolidated Leverage Ratio as of the end of a
quarter is equal to or more than .50 but less than .80, then
the Borrower will pay a Commitment Fee of 18.75 BPS, an Unused
Fee of 6.25 BPS and a LIBOR Margin of 50 BPS during the next
quarter.
(13) Notes; Promise of Repayment. The Borrower will issue a Credit
Line Note to each Lender in the amount of such Lender's
individual commitment and will repay Advances, plus interest
and costs, in accordance with the terms of such note.
(b) Swingline Facility.
(1) Commitment. Subject to the continuing compliance of the
Borrower and the Subsidiaries with the terms and conditions of
this Agreement, USB commits to make Swingline Loans to the
Borrower under this Agreement from time to time in an
aggregate amount that does not exceed the lesser of (a) $10
million or (b) Availability. Outstanding Swingline Loans count
toward determining Availability.
(2) Revolving Nature. The Swingline Facility is revolving in
nature. As a consequence, the Borrower may borrow and repay at
any time and from time to time without penalty or premium
subject to the terms and conditions of this Agreement and the
Swingline Note. The first Swingline Loan must be used to pay
and discharge any swingline loan outstanding under the
swingline provided under the 1992 credit documents.
(3) Note; Promise of Repayment. The Borrower promises and agrees
to issue the Swingline Note to USB and to repay all Swingline
Loans, plus interest and costs, to USB in accordance with the
terms of such note. Each Swingline Loan will be made at an
interest rate and fee and for a term agreed to by the Borrower
and USB at the time of such loan.
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(c) General
(1) Disbursement of Proceeds; Payments.
(A) All disbursements, payments, and recoveries will be made
in immediately available U. S. dollars. All payments and
recoveries on the Line of Credit will be made to the
Lenders in accordance with their Shares.
(B) Any payment received by the Agent after 10 a.m. will be
deemed to have been made on the next following banking
day and interest will accrue to that day.
(C) In the event that the date specified for payment is
not a banking day, then interest will accrue to and
the payment will be made on the next following
banking day; provided, however, that if the loan is a
LIBOR Advance and the next banking day following the
maturity of a LIBOR Interest Period is in the
following calendar month, then payment will be due on
the last banking day which precedes the last day of
the LIBOR Interest Period. All payments will be
applied, to the extent amounts are due, to costs,
fees, accrued interest, and then principal.
(D) The Borrower will give the Agent notice of its intention
to make any payment by 9 a.m. at least one banking day
in advance of the banking day upon which the payment is
made.
(2) Yield Maintenance Charge. The Borrower may prepay a LIBOR
Advance only upon three days' prior written notice and upon
payment of the Yield Maintenance Charge related thereto.
(3) Terminating LIBOR. The LIBOR interest rate is made available
to the Borrower under this Agreement on the assumption that
there will continue to be an active interbank market in
Eurodollars. If that match-funding market ceases to exist or
if it otherwise becomes illegal or impractical for a Lender to
fund LIBOR Advances with reference to this source of funds or
if a Lender determines that the pricing being quoted on the
interbank offered rate markets for Eurodollars no longer
adequately reflects such Lender's true cost of funds, then the
LIBOR option provided by such Lender will be unavailable to
the Borrower immediately upon notice to the Borrower and any
Notice of Borrowing will be deemed withdrawn. Absent notice to
the contrary from the Borrower, it will be deemed to have
requested an Advance or renewal of any outstanding LIBOR
Advance as a Prime Rate Advance in the same amount.
(4) Increased Costs. In the event that any introduction of or
change in any law, order, or interpretation, guideline, policy
or directive (whether or not having the force of law) by any
governmental unit or central
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bank that requires a Lender to increase its reserves or
regulatory capital, to pay taxes, duties, or other charges, or
changes the basis of taxation of the payments to a Lender by
the Borrower (other than overall corporate income taxes) in
connection with the Advances or Swingline Loans, and such
increase in reserves or regulatory capital or taxes have the
effect of increasing the costs of the Lender (or its parent
organization) and thereby reducing its margin of profit
hereunder, then the Borrower will reimburse to the Lender (or
its parent organization) on demand all such increased costs as
estimated in writing with reasonable particularity by the
Lender.
(5) Mitigation. Each Lender agrees that as promptly as practicable
after it becomes aware of the occurrence or existence of an
event that would give rise to a claim of illegality,
impracticality, or increased cost, it will use reasonable
efforts to make, fund, or maintain the affected loans (or
relevant part thereof) through another lending or booking
office if that action will avoid such illegality or
impracticality or materially reduce the additional cost to the
Borrower.
(6) Replacing Affected Lender. The Borrower reserves the right to
repay all outstanding loans and extensions of credit made by a
Lender who is unable to make Advances at the LIBOR or who has
incurred additional costs that are to reimbursed by the
Borrower under subpart (4) above and to replace that Lender
with another lender who is able to make Advances at the LIBOR
plus the LIBOR Margin and who is willing to become a party to
this Agreement.
(7) Reducing Amount of Line of Credit. The Borrower will have the
right at any time upon three days' advance written notice to
the Lenders to irrevocably terminate in whole or to reduce the
unused portion of the Line of Credit in the minimum amount of
$5 million and in multiples of $500,000 above the minimum
amount.
(8) Fees. The Borrower will pay the Commitment Fee and the Unused
Fee quarterly in arrears on the last banking day of each
quarter. The Borrower will pay the Late Payment Fee when and
if payable.
(9) Special Purpose Corporation Funding. Each Lender will have the
right at any time and from time to time to cause a special
purpose funding vehicle ("SPC") to fund all or part of its
individual commitment. Nothing in the foregoing sentence will
constitute an assignment to the SPC, obligate the SPC to make
any Advance or Swingline Loan, or relieve the Lender of the
duty to fund Advances and Swingline Loans. When requested by
the Lender, the Borrower will sign a designation agreement in
the form provided by the SPC that entitles the SPC to fund
Advances and Swingline Loans and to receive repayment of such
Advances and Swingline Loans, including related interest,
fees, and costs.
The Borrower may continue to deal directly and solely with the
Lender even though such Lender's Share of an Advance or USB's
duty to
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make a Swingline Loan was funded through an SPC. Each Lender
will be conclusively presumed to have made arrangements with
the SPC regarding relative rights, remedies, and duties. No
SPC will be a party to this Agreement. All rights, remedies,
and duties of an SPC will be derived from the rights,
remedies, and duties of the Lender using such SPC. No SPC will
have any direct rights or remedies, including voting rights,
as a Lender under this Agreement. Each arrangement between a
Lender and its SPC will prohibit the SPC from disclosing any
non-public information about the Borrower or the Subsidiaries
that it obtains through a Lender under this Agreement.
The Agent, any Lender using an SPC, and the Borrower and the
Subsidiaries agree that they will not attempt directly or
indirectly to recover any payment made to an SPC under this
Agreement as a preference or fraudulent transfer in any action
or proceeding, including an insolvency proceeding, against the
Borrower or otherwise. To the fullest extent allowed by law,
the Agent, the Lender using an SPC, the Borrower and the
Subsidiaries agree to indemnify, defend, and hold harmless the
SPC from any loss, cost, damage, or expense, including
attorney fees, costs, and disbursements, that results from
recovery of such payments if such party caused the recovery
action or proceeding to be commenced. This indemnity will
survive the termination of this Agreement.
5. Guaranty; Negative Pledge; Pledge of Subsidiary Stock.
(a) Guaranty. Each Subsidiary will execute a Guaranty and thereby
become a Guarantor unless the effect of such Subsidiary doing so
will be to trigger substantial income tax liability for the
Borrower as dividend income under Section 956 of the Internal
Revenue Code. Each Subsidiary will execute a Security Agreement
unless the effect of such Subsidiary doing so will be to trigger
substantial income tax liability for the Borrower as dividend
income under Section 956 of the Internal Revenue Code.
(b) Negative Pledge. Each Subsidiary who cannot execute a Guaranty
or Security Agreement promises that it will not transfer any
significant or essential part of its property to any third party,
including the grant of a security interest or allowing a lien or
other claim to be charged against such property, or incur any
additional debts or liabilities in any significant amount unless
such transfer or incurrence of additional debt occurs in the
ordinary course of business, is permitted by this Agreement, or
has been approved in advance by the Agent. Each Subsidiary who
cannot execute a Guaranty or Security Agreement hereby
subordinates each and every claim and securities entitlement, and
all rights and remedies related thereto, that it may have against
the Borrower and against any other Subsidiaries to the claims and
related rights and remedies of the Lenders against the Borrower
and any other Subsidiaries to ensure that the claims of the
Lenders are completely discharged through payment before it
receives any payment, dividend, distribution, or other transfer
on account of its claims and securities entitlements.
-19-
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(c) Subsidiary Stock. The Borrower pledges to the Agent the stock of
each direct Subsidiary and the securities entitlements, voting
rights, distributions, and certificates related thereto (the
"Pledged Stock") as additional security for performance of the
Borrower's obligations under the Loan Documents to the full
extent that the Borrower may do so without triggering substantial
income tax liability for the Borrower as dividend income under
Section 956 of the Internal Revenue Code. Prior to the
Borrower's default under this Agreement, the Borrower may
exercise all ordinary rights and entitlements with respect to the
Pledged Stock but will not vote any Pledged Stock to approve any
corporate acquisition, merger, share exchange, sale of assets,
dissolution, business combination, or insolvency proceeding
involving a Subsidiary without the Agent's prior written
consent. The Borrower will deliver the certificates representing
the Pledged Stock and related stock powers in blank to the
Agent. Upon the Borrower's default under this Agreement, only
the Agent may exercise any rights and entitlements with respect
to the Pledged Stock and the Agent may, upon 30 days' prior
written notice to the Borrower, dispose of any or all of the
Pledged Stock in one or more private or public sales pursuant to
UCC Article 9.
6. Covenants.
(a) Affirmative Covenants. Until the Borrower has been paid and
discharged its obligations to USB under the Loan Documents and the
commitments of the Lenders under this Agreement have expired or been
terminated, the Borrower promises and agrees that:
(1) Preserving Existence. The Borrower and each Subsidiary will
preserve its legal status and its material franchise, permits,
and governmental approvals, pay all fees and charges in
connection therewith, and perform all actions required
thereunder except for fees, charges, and actions being
contested in good faith, by appropriate means and with an
adequate reserve being maintained for payment in the event of
an adverse outcome.
(2) Compliance with Law and Order. The Borrower and each
Subsidiary will comply in all material respects with all laws
and orders applicable to it or its assets specifically
including, but not limited to, environmental laws, the Fair
Labor Standards Act, and the Employee Retirement Income
Security Act of 1974, as amended, if noncompliance may have a
Material Adverse Effect.
(3) Conducting Business. The Borrower and each Subsidiary will
conduct its business and affairs in the ordinary course of
business without material change in nature or emphasis.
(4) Insurance. The Borrower and each Subsidiary will obtain and
maintain with responsible carriers at its expense such
workers' compensation, fire with extended coverage
endorsement, public liability and property damage, business
interruption, and such other insurance in such coverage
amounts, deductibles and terms as may be consistent with
industry practices and as may be reasonably
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acceptable to the Lenders, and will provide evidence of such
insurance and payment of premiums to the Lenders on an annual
basis.
(5) Performance of Obligations to Lenders. The Borrower and each
Subsidiary will pay and perform when due (subject to
applicable grace periods) its obligations to the Lenders under
the Loan Documents.
(6) Performance of Other Obligations. The Borrower and each
Subsidiary will pay and perform when due all material
obligations owed by it to all third parties except for those
obligations being contested by it in good faith, by
appropriate means and with an adequate reserve being
maintained for payment in the event of an outcome adverse to
it.
(7) Records. The Borrower and each Subsidiary will keep accurate
and complete records and documents, including accounting and
financial records, relating to its assets and liabilities,
income and expense, cash flows, changes in equity, management
and employees, production, marketing, operations, performance,
and earnings.
(8) Tax Returns and Taxes. The Borrower and each Subsidiary will
file all tax returns required by law to be filed and pay all
taxes when due except for those taxes being contested by it in
good faith, by appropriate means and with an adequate reserve
being maintained for payment in the event of an outcome
adverse to it.
(9) Subsidiary Execution of Documents. The Borrower will cause the
Subsidiaries to execute this Agreement, each new Subsidiary to
execute a supplement to this Agreement in which such
Subsidiary agrees to perform and be bound by the terms and
conditions of this Agreement, and each Guarantor to execute
the Guaranty and the Security Agreement.
(10) Financial Statements. The Borrower will deliver to the Agent
and directly to each Lender:
(A) quarterly internally-prepared, consolidated and
consolidating financial statements within 45 days
following the end of the first three fiscal quarters for
the preceding quarter, and
(B) annual consolidated and consolidating financial
statements within 90 days following the end of each
fiscal year, audited by certified public accountants
selected by the Borrower and reasonably satisfactory to
the Agent, and accompanied by (i) copies of the
unqualified audit opinion and, if requested by the
Agent, management letters issued by the auditors and
(ii) the certificate of the auditors addressed to the
Agent that states that the auditors, after reviewing the
audited financial statements and this Agreement, are not
aware of any default by the Borrower or any Subsidiary
under this Agreement or
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specifying such events of default with reasonable
particularity. The auditors will be under no obligation
to go beyond the bounds of generally accepted auditing
procedures for the purpose of certifying the financial
statements.
(11) Additional Information; Compliance Certificates. The Borrower
and each Subsidiary will deliver to the Agent and directly to
each Lender:
(A) such additional information as to the financial
condition, business operations, business opportunities,
assets, or organization, management, or ownership of the
Borrower or any Subsidiary within a reasonable time
after being requested in writing by the Agent,
(B) reports listing the nature, amount, value, location, and
aging of the inventory and the receivables included in
the Collateral, including account debtor information, if
requested by the Agent,
(C) notice of any default or prospective default by the
Borrower or any Subsidiary under this Agreement and of
any material adverse change in the financial condition,
management, property, or business operations of the
Borrower or any Subsidiary promptly after senior
management of the Borrower becomes aware of such event,
and
(D) the following:
(i) periodic (and not less than annual) reports of all
pending and threatened claims, litigation, and
governmental proceedings against the Borrower or
any Subsidiary that if adversely determined would
more likely than not involve an aggregate
liability of more than $1,000,000, and
(ii) compliance certificates with the interim and
annual financial statements that are signed by
a duly authorized representative of the
Borrower and set forth in reasonable detail the
Borrower's calculations showing whether or not
the Borrower and the Subsidiaries are in
compliance with the financial covenants and
either (A) certifies that there is no default
or prospective default as of the date of the
certificate to the knowledge of the
representative or (B) specifies with reasonable
particularity any events of default or
prospective default then existing and known to
the representative and outlines the Borrower's
plan for cure thereof.
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(12) Inspection Rights. The Borrower and each Subsidiary will allow
the Lenders to take the following action at any and all
reasonable times:
(A) Inspect the records (specifically including financial
statement information) and documents of the Borrower and
each Subsidiary.
(B) Discuss such records and documents with accounting
employees and outside accountants at any time. All such
persons are hereby authorized to discuss such matters
with the Lenders and to provide such additional records
and information as may be reasonably requested by the
Lenders in connection therewith. The Lenders will give
prior notice to the Borrower of the intention to discuss
such matters with outside accountants so as to provide
the opportunity to the Borrower and the relevant
Subsidiary to be present at such discussions.
(C) Upon prior notice to the Borrower (unless the Borrower
is in default) verify inventory and receivables
information directly with third parties.
(D) Inspect the facilities of the Borrower and each
Subsidiary.
(b) Financial Covenants. The Borrower and the Subsidiaries promise to
maintain as of the end of each annual and interim financial
accounting period on a consolidated basis:
(1) Tangible Net Worth of at least $160 million as of the end of
the 1997 fiscal year, increasing by 50% of quarterly net
income thereafter, with no adjustment for losses.
(2) An Interest Coverage Ratio of at least 3.00 to 1.
(3) A Leverage Ratio of no more than 1.00 to 1.
(c) Negative Covenants. Until the Borrower has been paid and discharged
its obligations to the Lenders under the Loan Documents and the
commitments of the Lenders have expired or been terminated, the
Borrower promises and agrees none of the following things will be
done without the prior written consent of the Agent:
(1) Transfers. Neither the Borrower nor any Subsidiary will
directly or indirectly transfer any essential part of or
interest in its assets or more than five percent of its assets
to any third party, including the grant of any security
interest or the imposition of any lien, except for (A) sales
of inventory in the ordinary course of business, (B) sales of
surplus or obsolete equipment for reasonably equivalent value,
(C) collection of accounts in the ordinary course of business,
(D) the existing trust deed lien and security interest against
the Halsey mill (the Borrower's pulp processing mill at 00000
Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxx) to
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secure repayment of a loan from the Oregon Department of
Energy, (E) the liens permitted on the attached schedule of
permitted liens.
(2) Business Combinations. Neither the Borrower nor any Subsidiary
will directly or indirectly merge, issue or exchange shares as
part of a business combination, consolidate, or otherwise
engage in any other type of business combination with any
third party other than mergers and other consolidations in
which the Borrower or a Subsidiary is the surviving entity and
no default or prospective default occurs in connection with or
as a result of the merger or consolidation.
(3) Loans. Neither the Borrower nor any Subsidiary will directly
or indirectly make any additional loan or extend credit to any
unrelated third party except for providing ordinary trade
terms to creditworthy customers and making investments in
short term, investment grade money market instruments, in
accordance with the Borrower's usual and customary treasury
management practices.
(4) Distributions. Neither the Borrower nor any Subsidiary will
directly or indirectly issue any additional securities or make
any distribution except for dividends that are (A) permitted
by law, (B) will not result in a violation of the financial
covenants, and (C) are made at a time when no material default
or prospective material default exists under this Agreement.
(5) Preferences. Neither the Borrower nor any Subsidiary will
directly or indirectly prefer its owners or creditors to the
Lenders.
(6) Purchases. Neither the Borrower nor any Subsidiary will
directly or indirectly purchase or otherwise acquire a
significant equity interest any third party except for the
purchase of the securities of Corporation X mentioned above.
(7) Debts. Neither the Borrower nor any Subsidiary will become
liable for any additional debts or liabilities for borrowed
money, except for (A) trade debt incurred in the ordinary
course of business, (B) intercompany transactions, (C) its
existing and future debts and liabilities to the Lenders under
this Agreement, and (D) an amount not to exceed $10 million in
the aggregate.
(8) Margin Stock. Neither the Borrower nor any Subsidiary will
directly or indirectly apply any part of the proceeds of any
loan or extensions of credit under this Agreement to purchase
or carry any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, or
any regulations, interpretations or rulings.
(9) No Ceasing Business. Neither the Borrower nor any Subsidiary
will directly or indirectly cease, reduce, or substantially
change the nature or size of its business operations.
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7. Indemnity
(a) Indemnity. The Borrower and the Guarantors will indemnify, defend
(with counsel selected by the indemnified party) and hold harmless
the Agent and each Lender from and against all claims, causes of
action, loss, liability, cost or expense (including damages,
penalties, fines, attorney fees, and court costs), asserted against
or incurred by such indemnified party that relates to or arise out
of this Agreement or any other Loan Document, any failure of the
Borrower or a Subsidiary to perform its obligations under the Loan
Documents, any misrepresentation or omission, or the use or intended
use of the proceeds of a loan or extension of credit made under this
Agreement, except for any portion thereof resulting from the
indemnified party's gross negligence or willful misconduct.
(b) Notice. If any third party threatens to commence or commences any
action or other proceeding against an indemnified party, that party
will promptly notify the Borrower in writing of such threat or
commencement, any intended settlement of such action or proceeding,
and the entry of all orders and judgments entered therein. Except as
provided for herein, no indemnity obligation with respect to any
such action will become due and payable until the action is settled
in accordance with the preceding sentence or a final non-appealable
judgment has been entered. The Borrower will have the right to (1)
veto any proposed settlement as long as the Borrower provides
adequate assurance through insurance coverage, cash deposits, or
otherwise that any judgment that might thereafter be entered against
the indemnified party will be promptly satisfied and (2) with the
consent of the indemnified party (which will not be unreasonably
withheld) settle any such claim on such terms as the Borrower may
determine.
(c) Durable Nature. This indemnity will survive the satisfaction or
discharge of the claims of the Lenders against the Borrower and the
Subsidiaries under the Loan Documents by payment, bankruptcy
discharge, or otherwise.
8. Default.
TIME IS OF THE ESSENCE. The Borrower will be in default under the Loan
Documents if any of the following events occur:
(a) Credit Limit; Availability. Advances and Swingline Loans exceed the
maximum amount of the applicable credit facility at any time and the
Borrower fails to repay the excess amount immediately upon the
Agent's request.
(b) Payment Failure. The Borrower fails to repay an Advance or Swingline
Loan when due or fails to make any other interest payment or
reimbursement under the Loan Documents within two days following the
due date.
(c) Misrepresentation. The Borrower or any Subsidiary intentionally
makes an untrue statement of any material fact to the Lenders or
omits to state a
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26
material fact necessary in order to make the statements made, in
light of the circumstances under which they are made not misleading
on the date made.
(d) Improper Use of Proceeds. The Borrower uses a loan or extension of
credit under this Agreement for a purpose or purposes not specified
in this Agreement unless otherwise approved by the Agent.
(e) Negative Covenants. The Borrower or a Subsidiary violates any
negative covenant of the Loan Documents.
(f) Financial Covenants. The Borrower and the Subsidiaries fail to
comply with the financial covenants except if such noncompliance is
solely the result of a change in GAAP after the date of this
Agreement.
(g) Financial Statements. The Borrower or any Subsidiary fails to
deliver financial statements, certificates, notices, or other
financial information when and as required by this Agreement.
(h) Other Contract Breach. The Borrower or any Subsidiary is in material
breach of or default under any other contract with or instrument
payable to the Agent or a Lender, or is in breach of or default
under any other contract with or instrument payable to any third
party for borrowed money involving an aggregate principal amount in
excess of $1,000,000, such breach or default will continue after the
applicable grace period, if any, specified in such contract or
instrument, and the effect of such breach or default is to
accelerate, or to permit the acceleration of, the maturity of the
debt.
(i) Affirmative Covenants. The Borrower or any Subsidiary fails to
comply with any other affirmative covenant under the Loan
Documents within 30 days following the date such compliance is
demanded in writing by the Agent or, if such compliance cannot be
completed within that 30-day period, that entity fails to
substantially commence compliance within that 30-day period and
then to complete such compliance as soon as possible thereafter
but in no event later than 90 days after such compliance is
demanded.
(j) Action by Governmental Unit. The Borrower or any Subsidiary is
enjoined, restrained or otherwise prohibited by a governmental unit
from conducting all or any substantial or essential part of its
legal affairs or business operations.
(k) Insolvency. The Borrower or any Subsidiary becomes insolvent,
commences a voluntary insolvency proceeding or having become the
subject of an involuntary insolvency proceeding, fails to have the
involuntary proceeding dismissed, withdrawn or stayed within 90 days
of commencement.
(l) Change in Control. A significant number of the directors or officers
of the Borrower or any Subsidiary resign or are removed or a
significant number of shares of the Borrower or any Subsidiary are
transferred to persons who are not now shareholders of such party.
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(m) Material Adverse Change. In the good faith opinion of the Agent,
there has been a material adverse change in the financial condition,
property, business operations, or business prospects of the Borrower
or any Subsidiary that will jeopardize the prospects for repayment
when due of the loans and extensions of credit being made under this
Agreement.
(n) Judgments. A final judgment is entered against the Borrower or any
the Borrower subsidiary for the payment of more than $1 million in
the aggregate and is not covered by insurance or satisfied or
appealed (and with the filing of such appeal bonds as are necessary
to stay execution pending the appeal) within 30 days following
entry, or all or a substantial part of the property of the Borrower
is attached, seized, made subject to writ or warrant or is levied on
or comes into the possession or control or a receiver, trustee,
custodian or assignee for the benefit of creditors.
(o) Bad Faith. The existence of any illegal act, collusion or bad faith
by or with the acquiescence of the Borrower or any Subsidiary in the
performance of such party's obligations under this Agreement.
(p) Validity Contest. The Borrower, any Subsidiary, or any third party
contests the validity or enforceability of any of the Loan Documents
or of the obligations of the Borrower or any Subsidiary thereunder.
9. Remedies
(a) General.
(1) The Agent may suspend the duties of the Lenders to make
further loans or extensions of credit under this Agreement,
including those of USB under the Swingline, and may make the
LIBOR option unavailable for any new loans or extensions of
credit upon and during the continuation of any prospective
default or default.
(2) The Agent may cancel the duties of the Lenders to make further
loans or extensions of credit under this Agreement, including
those of USB under the Swingline, may make the LIBOR option
unavailable for any new loans or extensions of credit, and may
accelerate the due date of all loans and extensions of credit
made under this Agreement (make payment of all principal,
interest, fees and costs immediately due and payable), without
further notice or demand upon the occurrence of a default and
its continuation beyond any applicable notice or cure period.
Acceleration of the due date will be automatic upon the
commencement of insolvency proceedings.
(3) The Lenders may collect the overdue payments or the
accelerated balance of the loans and extensions of credit made
under this Agreement at such times and in such order as the
Lenders may select.
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(4) The Agent may foreclose the Lenders' security interest in the
Collateral in one or more proceedings and in any order
selected by the Agent.
(5) All rights and remedies provided by law, equity, and contract
are cumulative.
(6) The Borrower and the Subsidiaries consent to the jurisdiction
and venue of the circuit court of the state of Oregon for
Multnomah County (Portland) and of any federal court located
in the state of Oregon for any proceeding arising out of the
Loan Documents.
(b) Offset Rights. Without limiting the generality of the foregoing, the
Borrower and each Subsidiary expressly grants to the Agent and to
each Lender the right to set off their debts and liabilities to the
Borrower and the Subsidiaries against the debts and liabilities of
the Borrower and any Subsidiary to the Agent and the Lenders without
notice or demand upon the occurrence and continuance of a default.
The Borrower will be notified of any set off promptly following the
taking of such action.
(c) Waiver of Jury Trial. Each Lender, the Agent, the Borrower, and each
Subsidiary hereby waives the right to trial by jury in any action or
proceeding relating to any claim, offset, defense, or counterclaim,
whether in contract or tort, at law or in equity, arising out of or
relating to the Loan Documents.
(d) Costs. The prevailing party in the trial or appeal of any civil
action, arbitration, or other adversary proceeding relating to any
Loan Document will be entitled to the award of a reasonable attorney
fee in addition to costs and disbursements.
10. Administrative Agent. The following terms and conditions will become
effective when and if there is a Lender (a lender party to this Agreement)
who is not USB.
(a) Appointment. The Borrower, the Subsidiaries, and the Lenders appoint
USB as their agent and attorney-in-fact for the limited purpose of
performing administrative functions under this Agreement.
(b) Lending Decision. By executing a supplement to this Agreement, each
Lender will confirm that its decision to lend money and extend
credit to the Borrower and the Subsidiaries is and will continue to
be based on its own independent investigation and determination as
to the creditworthiness of such parties. Each Lender disclaims
reliance on any information heretofore provided by the Agent.
(c) Action. As to any matters (other than those matters listed
below that require the consent or approval of all of the
Lenders) that require the consent or approval of the Agent,
the Agent will act or refrain from acting upon the
instructions of the "Lender Majority," two or more Lenders who
have individual commitments that total at least 66.67% of the
Line of Credit. The Agent will be fully protected in acting
or refraining from acting. The Agent will
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not be required to exercise any discretion or take any action not
expressly provided for by this Agreement or take any action contrary
to applicable law.
(d) Unanimous Action. Notwithstanding any other term or condition of
this or any other Loan Document, the Agent may not without the prior
instruction of all of the Lenders (except any Lender in default of
its duty to make Advances) do any of the following things:
(1) modify interest rates or fees or extend the Expiry Date,
(2) release or reduce the liability of the Borrower or any
Guarantor,
(3) release any substantial or essential part of the Collateral,
or
(4) exercise any right or remedy upon the default of the Borrower
and the Subsidiaries (except to suspend the duties of the
Lenders to make Advances and the duty of USB to make Swingline
Loans).
(e) Duties. Neither the Agent nor any of its directors, officers,
agents, or employees will be liable for any action taken or omitted
to be taken by it or any of them in connection with this Agreement
except for its or their own gross negligence or willful misconduct.
The Agent:
(1) may treat the payee of any note as the holder thereof until
the Agent receives written notice from the payee of an
assignment,
(2) may consult with legal counsel, independent public accountants
and other experts selected by it and will not be liable for
any action taken or omitted in good faith by it in accordance
with the advice of such experts,
(3) makes no warranty or representation to any Lender and will not
be responsible to any Lender for any statements, warranties or
representation made by the Borrower or any Subsidiary in or in
connection with this Agreement,
(4) will not have any duty to ascertain or to inquire as to the
performance of any of the terms, covenants, or conditions of
this Agreement on the part of the Borrower or any Subsidiary
or as to the use of the proceeds or, unless the officers of
the Agent acting in their capacity as officers of the Agent on
the Borrower's account have actual knowledge thereof or have
been notified in writing thereof by a Lender, the existence or
possible existence of any default or any prospective default,
(5) will not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness,
effectiveness, or value of the Loan Documents, and
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(6) will not incur any liability under or with respect to the Loan
Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by facsimile, cable
or telex) believed by it to be genuine and signed or sent by
the proper party or parties or by acting upon any
representation or warranty of the Borrower made hereunder.
(f) The Agent will account for and remit to each Lender its Share of all
payments of principal, interest and fees (other than the Agent's
annual fee) received by the Agent from the Borrower and the
Subsidiaries.
(g) Dealings between the Agent and the Borrower. With respect to
any loans or extensions of credit made by USB to the Borrower
or the Subsidiaries, and the notes issued to it, USB will have
the same rights and powers under the Loan Documents as any
other Lender and may exercise the same as though it were not
the Agent. In addition, the Agent may accept deposits from,
lend money to, act and generally engage in any kind of business
with the Borrower, any Subsidiary, or any person which may do
business with such parties, all as if the Agent were not the
administrative agent hereunder and without any duty to account
therefor to the Lenders.
(h) Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Borrower) according to their Lender
Shares from and against all claims, causes of action, liabilities,
obligations, losses, damages, penalties, actions, judgments, costs,
expenses or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in any way
relating to the Loan Documents or any action taken or omitted by the
Agent under the Loan Documents except such as result from the
Agent's gross negligence or willful misconduct. Each Lender agrees
to reimburse the Agent promptly on demand for its Share of any
out-of-pocket expenses, including legal fees, incurred by the Agent
in connection with the administration or enforcement of or the
preservation of any rights under the Loan Documents (to the extent
that the Agent is not reimbursed for such expenses by the Borrower).
This includes legal fees incurred in connection with any litigation,
or appeal therefrom, pertaining to the Loan Documents, any loans or
extensions of credit thereunder, actions against the Guarantors, and
foreclosure against the Collateral.
(i) Annual Fee. The Agent may impose an annual fee for performing its
services as the administrative agent under this Agreement.
(j) Replacement Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. The Borrower
and the Lender Majority for cause may remove the Agent at any time.
Upon any such resignation or removal, the Lender Majority will have
the right and obligation to appoint a replacement with the consent
of the Borrower (such consent not to be unreasonably withheld). If
no replacement is appointed or if the replacement does not accept
the appointment within 30 days after the retiring Agent's notice of
resignation, the retiring or removed Agent may appoint a replacement
without the consent of the Lenders or the Borrower. The replacement
agent will be a bank, or any affiliate of such bank, having a
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combined capital and surplus of at least $100 million and which is
in substantial compliance with capital adequacy ratios as
established by such replacement's regulators.
Upon the acceptance of any appointment by a replacement agent, the
replacement agent will succeed to all the rights, powers,
privileges, and duties of the retiring/removed agent, and the
retiring/removed Agent will be discharged from its duties and
obligations as the Agent under the Loan Documents. After
resignation/removal, the provisions of this article will inure to
the benefit of the replaced Agent as to any actions taken or omitted
to be taken by it while it was the Agent.
11. Miscellaneous.
(a) Binding Successors. The Loan Documents will inure to the benefit of
and bind the Borrower, each Subsidiary, each Lender, the Agent, and
their respective successors and assigns. Neither the Borrower nor
any Subsidiary may assign its rights or delegate its obligations
under the Loan Documents.
(b) Participation; Assignment.
(1) Each Lender will be entitled to sell participation in the Loan
Documents and the credit facilities provided under the Loan
Documents without the consent of the Borrower but no such
participation will carry any voting rights.
(2) Each Lender also may partially assign its individual
commitment under the Line of Credit and its related rights
under the Loan Documents in minimum increments of $5 million
to one or more unaffiliated lenders with the prior written
consent of the Borrower and the Agent. The consent of the
Borrower and the Agent will not be unreasonably withheld,
delayed, or conditioned, but the Agent may charge a fee of
$3,500 for consent to any assignment. Any such assignment will
depend on the assignee accepting and agreeing in writing to
perform the assignor's rights and duties under the Loan
Documents and thereby becoming a Lender under this Agreement.
Upon receipt of such acceptance and agreement, the Borrower
then will issue new Line of Credit Notes to the assignor and
assignee that reflect the new Shares of such Lenders.
(c) Non-Waiver. No term or condition of the Loan Documents will be
deemed waived nor will the grounds for the claim of estoppel be
established by a course of performance, oral understanding, or other
circumstances.
(d) Communications. Whenever any communication is required by the terms
of the Loan Documents or by law, it will be deemed given when
delivered personally or by facsimile or on the third banking day
after it is mailed in a postage prepaid envelope addressed to the
intended recipient at the address specified on the signature pages
of this Agreement or such other address as a party may hereafter
specify by written notice to the other parties.
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(e) Costs. The Borrower will pay on demand all reasonable costs incurred
by the Agent in administering, modifying, and renewing the Loan
Documents, in administering this Agreement and the loans and
extensions of credit made under this Agreement, and in dealing with
regulatory matters relating to the credit facilities provided under
this Agreement.
The Borrower will pay on demand all reasonable costs incurred by the
Agent and the Lenders in recovery of the claims of the Lenders
against the Borrower and the Guarantors and in foreclosure against
the Collateral after a default and whether or not a civil action or
other proceeding is commenced.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and
all of which, taken together will constitute one and the same
contract.
(g) Confidentiality. The Agent and the Lenders will hold all non-public
information relating to the Borrower and the Subsidiaries obtained
under this Agreement in accordance with its customary procedures for
handling confidential information of this nature, except for (1)
disclosure to its counsel or to any agent or advisor acting on its
behalf in connection with the negotiation, execution, or performance
of the Loan Documents, (2) disclosure as reasonably required in
connection with a transfer to a prospective assignee or participant
(provided that any prospective transferee agrees in advance of any
disclosure to confidentiality obligations substantially similar to
those contained in this section), (3) disclosure as may be required
or requested by any governmental unit or representative thereof or
pursuant to legal process, and (4) any other disclosure with the
prior written consent of the Borrower. Prior to any disclosure by
the Agent or any Lender of such nonpublic information to a
governmental unit permitted under clause (3) (other than in
connection with an examination of the financial condition of a
Lender or its affiliates by any governmental unit), it will, if
permitted by applicable laws or judicial order, notify the Borrower
of such pending disclosure.
(h) Severability. If any term or condition of any Loan Document is
hereafter determined to be illegal or unenforceable, that term or
condition will be deemed deleted without invalidating the remaining
terms and conditions and, to the extent permitted by law, the
Borrower and each Subsidiary waives any provision of law that
renders any such term or condition illegal or unenforceable.
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(i) Statutory Warning. Under Oregon Law, most agreements, promises and
commitments made by a financial institution after October 3, 1989,
concerning loans and other credit extensions which are not for
personal, family or household purposes or secured solely by the
borrower's residence must be in writing, express consideration and
be signed by the financial institution to be enforceable.
U.S. Bank National Association, Xxxx & Xxxxxx, Inc.
By /s/ XXXXXX X. XXXXX By /s/ XXXXXX X. DAY
--------------------------- ----------------------------------
Xxxxxx X. Xxxxx Name: XXXXXX X. DAY
Vice President Title: SENIOR V.P. AND
CHIEF FINANCIAL OFFICER
Xxxx & Talbot, Wis., Inc.
By /s/ XXXXXX X. DAY
----------------------------------
Name: XXXXXX X. DAY
Title: SECRETARY AND TREASURER
Xxxx & Xxxxxx International, Ltd.
By /s/ XXXXXX X. DAY
----------------------------------
Name: XXXXXX X. DAY
Title: VICE PRESIDENT AND
SECRETARY
Xxxx & Talbot, Ltd.
By /s/ XXXXXX X. DAY
----------------------------------
Name: XXXXXX X. DAY
Title: VICE PRESIDENT
LENDERS: COMMITMENT AMOUNT:
U.S. Bank National Association $75,000,000
By /s/ XXXXXX X. XXXXX
---------------------------
Xxxxxx X. Xxxxx
Vice President
National Corporate Banking (PL-4)
000 XX Xxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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00
Xxxxxxx 0
Xxxxxxxx, Xxxxxx
December 15, 1997
GUARANTY
For value, each entity who signs this guaranty (the "Guarantor") unconditionally
guarantees that Xxxx & Xxxxxx, Inc., a Delaware corporation (the "Borrower"),
will pay its debts and perform its other obligations to the Lenders and the
Agent under the 1997 Loan Agreement dated December 15, 1997 (the "Loan
Agreement") among the Borrower, its Subsidiaries, and U.S. Bank National
Association ("USB"), when and as such payment and performance is due. The
Lenders are providing $75 million in loans and extensions of credit to the
Borrower and the Subsidiaries under the Loan Agreement. The Guarantor is a
subsidiary of the Borrower. The Guarantor anticipates receiving substantial
value and business benefit from the loans and extensions of credit being made to
the Borrower. The Guarantor's liability under this guaranty is joint, several,
and unconditional. This guaranty includes repayment of any loans and extensions
of credit that are made to the Borrower while the Borrower is insolvent or the
subject of insolvency proceedings.
This guaranty is one of payment and not merely of collection. Accordingly, the
Guarantor promises to pay and perform the Borrower's obligations to the Lenders
immediately if the Borrower is in default and when the Agent makes written
demand on the Guarantor for such payment and performance. If this guaranty is
executed after the Loan Agreement is executed and the Guarantor is not one of
the original parties to such agreement, the Guarantor promises to perform the
affirmative and negative covenants that each Subsidiary is obligated to perform
under the terms of the Loan Agreement.
The Guarantor irrevocably (1) consents to extensions of due dates, material
modifications of the Borrower's obligations, release of other guarantors, and
impairment of the value of an interest in any collateral without further notice
to or consent of the Guarantor, (2) waives acceptance, notice of acceptance, and
presentment (including notice of dishonor), and claims in recoupment, and (3)
waives defenses based on forbearance or delay, suretyship, impairment of
collateral, or discharge of the primary obligor in insolvency proceedings. The
Guarantor also waives all claims to contribution, subrogation, recourse, and
substitution to the extent necessary to avoid characterization of any payments
and transfers of property to a Lender or others as fraudulent transfers or
preferences.
In order to preserve the value of this guaranty, the Guarantor promises the
Lenders that the Guarantor will not grant a security interest in or allow a lien
to be charged against any material or essential part of or interest in its
property without the prior written consent of the Agent except for security
interests granted to the Lenders and purchase money security interests reserved
by vendors in connection with the ordinary course purchase of fixtures and
equipment.
Effective upon the Borrower's default but only so long as such default exists,
the Guarantor subordinates each and every claim and securities entitlement, and
all rights and remedies related thereto, that the Guarantor may have against the
Borrower and against any Subsidiary to the claims and related rights and
remedies of the Lenders against the Borrower and the Subsidiaries to ensure that
the claims of the Lenders are completely discharged through payment before the
Guarantor receives any payment,
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35
dividend, distribution, or other transfer on account of the Guarantor's claims
and securities entitlements.
The party who substantially prevails in the trial or appeal of any civil action,
arbitration proceeding, or insolvency (liquidation, reorganization or
receivership) claim or proceeding on any claim (including setoffs, defenses,
counterclaims and third-party claims) whether arising in tort or contract)
arising from or related to this guaranty, including Agent, will be entitled to
reasonable attorney fees in addition to its costs and disbursements.
The substantive provisions (that is, without regard for any choice of law
provisions which would make the law of another jurisdiction applicable) of
Oregon law and any applicable provisions of federal law will govern the
construction and enforcement of this guaranty. The Guarantor consents to
jurisdiction of any state or federal court sitting in Portland, Oregon, on any
action or proceeding involving this guaranty and/or any offsets, defenses or
counterclaims related to this guaranty.
This guaranty will bind and inure to the benefit of the respective successors
and assigns of the Guarantor, the Lenders, and the Agent, but the Guarantor will
not have the right by reason of this paragraph to assign its rights or delegate
its obligations under this guaranty without the prior written consent of the
Agent.
Under Oregon law, most agreements, promises and commitments made by a financial
institution after October 3, 1989, concerning loans and other credit extensions
which are not for personal, family or household purposes or secured solely by
the borrower's residence must be in writing, express consideration and be signed
by the financial institution to be enforceable.
XXXX & XXXXXX, WIS., INC.
By /s/ XXXXXX X. DAY
-------------------------------------
Name: XXXXXX X. DAY
Title: SECRETARY AND TREASURER
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36
Exhibit 2
$75,000,000 Portland, Oregon
December 15, 1997
LINE OF CREDIT NOTE
For value, Xxxx & Talbot, Inc., a Delaware corporation (the "Borrower"), whose
address is 0000 XX Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, promises to pay to the
order or assigns of U.S. Bank National Association (the "Lender") in care of
U.S. Bank National Association (the "Agent"), National Corporate Banking
Division, at 000 XX Xxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000 (or at such other address
as the Agent may hereafter specify in writing from time to time), the principal
amount of $75,000,000, or such greater or lesser amount as the Lender actually
loans to the Borrower under this note, plus interest, fees, and costs, as
provided for in this note. This note is issued under a Loan Agreement dated
December 15, 1997 (the "Loan Agreement"), and is a "Line of Credit Note." Each
loan and renewal of a loan made under this note is an "Advance."
1. Use of Proceeds. The Borrower will use each Advance only as permitted
by the Loan Agreement.
2. Fees.
(a) The Borrower will pay the Lender's Share of the Commitment Fee and
the Unused Fee when due under the Loan Agreement.
(b) The Borrower will pay the Late Payment Fee and Yield Maintenance Fee
when due under the Loan Agreement.
3. Availability. No Advance by the Lender will be greater than Lender's Share
of Availability on the date that the Advance is requested.
4. Expiry Date. The Expiry Date is April 15, 1999, unless extended by mutual
agreement of the Borrower and the Lender.
5. Principal Repayment. Each LIBOR Advance is due and payable at the end of
the LIBOR Interest Period. All Prime Rate Advances are due on the Expiry
Date if not repaid before that date.
6. Interest.
(a) Before default, interest on each Prime Rate Advance will accrue
at the prime rate per annum and interest on each LIBOR Advance
will accrue at the LIBOR per annum plus the margin per annum that
is applicable to such rates under the Pricing Matrix of the Loan
Agreement. The Borrower will pay interest on LIBOR Advances at
the end of each LIBOR Interest Period (or, if the LIBOR Interest
Period is more than three months, then on the first banking day
of each quarter that occurs during the LIBOR Interest Period) and
on Prime Rate Advances quarterly in arrears on the first banking
day of each quarter.
(b) After default under the Loan Agreement, interest will accrue at the
Default Rate(s) specified in the Loan Agreement until the default is
cured or the entire outstanding
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37
balance of this note is paid in full. Interest at the Default
Rate(s) is payable on the Lender's demand.
7. Costs. The party who substantially prevails in the trial or appeal of any
civil action, arbitration proceeding, or insolvency (liquidation,
reorganization or receivership) claim or proceeding on any claim
(including setoffs, defenses, counterclaims and third-party claims)
whether arising in tort or contract) arising from or related to this note
will be entitled to reasonable attorney fees in addition to its costs and
disbursements.
8. Waivers. The Borrower waives acceptance, presentment, delay, dishonor, and
notice of dishonor.
9. Governing Law; Jurisdiction. The substantive provisions (that is, without
regard for any choice of law provisions which would make the law of
another jurisdiction applicable) of Oregon law and any applicable
provisions of federal law will govern the construction and enforcement of
this note. The Borrower consents to jurisdiction of any state or federal
court sitting in Portland, Oregon, on any action or proceeding involving
this note and/or any offsets, defenses or counterclaims related to this
note.
10. Successors and Assigns. This note will bind and inure to the benefit of
the respective successors and assigns of the Borrower, the Lender, and the
Agent, but the Borrower will not have the right by reason of this
paragraph to assign its rights or delegate its obligations under this note
without the prior written consent of the Lender and the Agent.
11. Statutory Warning. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY A FINANCIAL INSTITUTION AFTER OCTOBER 3, 1989,
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL,
FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE
MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE FINANCIAL
INSTITUTION TO BE ENFORCEABLE.
XXXX & XXXXXX, INC.
By /s/ XXXXXX X. DAY
-------------------------------------
Name: XXXXXX X. DAY
Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
-2-
38
Exhibit 4
SECURITY AGREEMENT
This Security Agreement is dated as of December 15, 1997, and is between Xxxx &
Talbot, Inc., a Delaware corporation whose federal taxpayer identification
number, of "TIN" is 00-0000000 ("P&T"), Xxxx & Xxxxxx, Wis., Inc., a Delaware
corporation whose TIN is 000000000 ("Wis") (each being a "Debtor" and both being
the "Debtors") whose chief executive offices are at 0000 XX Xxxxx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000, U.S. Bank National Association ("USB"), whose address is
c/o National Corporate Banking (PL-4), 000 XX Xxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000
and telephone number is (000) 000-0000.
Recitals
A. The Debtors and the Secured Party are also parties to a 1997 Loan
Agreement dated as of December 15, 1997 (the "Loan Agreement"), under
which USB and other Lenders will provide up to $75 million of loans and
extensions of credit to P&T and its Subsidiaries.
B. One of the conditions to providing the above-described credit facilities
is that the Debtors create and assist USB in perfecting a security
interest in the Collateral (as defined below) to secure payment and
performance of the obligations of the Debtors to the lenders under the
Loan Agreement (the "Lenders"). USB is the agent for the Lenders under the
Loan Agreement (the "Agent").
NOW, THEREFORE, for value, the current receipt and reasonable equivalence of
which are hereby acknowledged, it is agreed that:
1. Grant of Security Interest. Each Debtor hereby pledges, assigns, and
grants a security interest under Article 9 of the Uniform Commercial
Code (the "UCC") to the Agent in and to all of its
present and after-acquired inventory (including supplies, materials,
work in progress, finished goods, and returned and repossessed
goods) and receivables (accounts, chattel paper, documents,
instruments, distributions on account of investment property,
deposit accounts into which proceeds have been deposited, rights to
proceeds of written letters of credit, and all entitlements and
things in action related thereto) of the Borrower and the Guarantors
and all records and documents related thereto (the "Collateral")(1),
----------
(1) Notwithstanding any other term or condition of this Security Agreement,
the Collateral will not include any property of the Debtors that cannot be
assigned or encumbered under any existing agreement with any third party,
including an Indenture dated 6/2/93 with Chemical Trust Company of
California as Trustee, a Loan Agreement dated 6/10/93, with the State of
Oregon, Department of Energy, and an Asset Purchase Agreement dated
12/11/95 with Paragon Trade Brands, Inc. et al., to the extent that any
such restriction is enforceable under applicable law.
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to secure payment and performance of the obligations of the Debtors to the
Agent and the Lenders under the Loan Agreement and this Security Agreement
of every kind and nature, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, or equitable, and all
extensions, renewals, and modifications thereof (the "Secured
Obligations").
2. Perfection.
(a) Each Debtor will execute and deliver to the Agent all of the
financing statements that the Agent requires to perfect, amend,
continue, clarify, and reperfect the Agent's security interest in
the Collateral ("Financing Statements").
(b) The parties intend for the existing financing statements, which have
already been filed to perfect the security interests granted to the
Agent in the 1996 Security Agreements, to continue in effect with
respect to the security interests granted in this Security
Agreement.
(c) The Agent may require each Debtor to endorse with recourse and
deliver to the Agent the originals of all chattel paper,
instruments, and documents that are included in the Collateral in
order to perfect the Agent's security interest in such items of the
Collateral.
(d) The original or a photocopy of this Security Agreement without the
original signature of each Debtor may be filed as a Financing
Statement or a continuation statement either by personal delivery or
by facsimile machine.
3. Limited Power of Attorney. To the full extent allowed by law, each Debtor
appoints the Agent as its attorney in fact, coupled with an interest, and
agent for the limited purpose of executing and filing Financing Statements
which are necessary, in the Agent's reasonable judgment, to perfect,
continue, and/or re-perfect the Agent's security interest in the
Collateral or any item thereof or interest therein.
4. Notice of Post-Perfection Changes. Each Debtor will immediately notify the
Agent of:
(a) Any change in the name of such Debtor or such Debtor's use of an
assumed business or trade name;
(b) The relocation of such Debtor's chief executive office to a state
other than Oregon; and
(c) Any transfer (other than ordinary course sales of finished goods
inventory) of material or essential amounts of inventory into any
states other than Oregon, Washington, Wyoming, South Dakota,
Wisconsin, or Pennsylvania;
so that the Agent may continue the perfection of the Agent's security
interest in all appropriate locations.
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5. Inspection and Verification Rights. Each Debtor will keep accurate records
and documents (as defined in the Loan Agreement) relating to the
Collateral at its principal business office and at the chief executive
offices in Portland, Oregon. The Agent will have the unconditional right
at all times and upon prior notice to the Debtors to:
(a) Inspect the Collateral, including the records and documents
related thereto;
(b) Make copies of the records and documents;
(c) After notice to the Debtors (unless they are in default), verify
orally and in writing directly with third parties, including account
debtors, the accuracy of any information provided by either Debtor
with respect to the Collateral;
(d) If the Debtors are in default, determine through employees, agents,
or independent contractors the value of the Collateral at the
expense of the Debtors no more than once per calendar year and as
reasonably prudent at any time after an event of default and before
any cure of such default;
(e) Enter upon any premises owned, leased, or otherwise controlled by
either Debtor for the foregoing purposes.
(f) Each Debtor promises and agrees to provide to the Agent access to
the Collateral and to provide any office space (including
computer hardware, operating systems, and software and access to
safes and other areas of safekeeping) that is reasonably
necessary for the exercise of the foregoing rights. Each Debtor
grants to the Agent an easement over all premises owned, leased,
or otherwise controlled by such Debtor for the purpose of
inspecting and valuing the Collateral and, following any default,
repossessing, storing, preparing for disposition, and disposing
of the Collateral. Each Debtor authorizes and instructs all
third parties who have information relating to the Collateral
(such as customers, account debtors, obligors, government
agencies, employees, and outside accountants) to provide any and
all information and documents relating to the Collateral to the
Agent upon the Agent's written request provided that the Agent
has given the Debtors prior notice in writing of its intention to
ask for such information.
6. Covenants. Without thereby limiting any covenant contained in the Loan
Agreement and subject to the right to contest third-party obligations in
good faith and by appropriate means, each Debtor promises and agrees to:
(a) Keep all tangible items of the Collateral insured against loss or
damage in accordance with industry practices and prudent business
judgment;
(b) Pay all taxes, assessments, and similar charges ("taxes") levied
against the Collateral as and when the same become due and payable
except as otherwise provided in the Loan Agreement;
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(c) Pay all amounts when due which, if not so paid, may become the
subject of a lien against the Collateral which might have or gain
priority over the Agent's security interest (a "lien claim");
(d) Provide to the Agent upon request evidence of insurance coverage and
the payment of taxes and lien claims; and
(e) Indemnify, defend, and hold harmless the Agent and the Lenders
against all claims, loss, liability, cost, or expense asserted
against or incurred by the Agent or the Lenders by reason of either
Debtor's failure to provide a perfected, first-priority security
interest in any item or items of the Collateral or the breach or
default of either Debtor under the Loan Agreement or this Security
Agreement.
(f) Each Debtor hereby authorizes the Agent to pay the premiums for
insurance, taxes, and the principal, interest, fees, and costs
constituting lien claims if such Debtor does not do so in a
timely manner (unless such Debtor is then contesting such
obligation in good faith and by appropriate means) and the Agent
reasonable believes such payment is necessary for the protection
of the Collateral and/or the Agent's security interest in the
Collateral (a "security protection advance"). Each Debtor
promises and agrees to reimburse the Agent on demand for any
security protection advance made by the Agent and to pay interest
thereon at the Agent's publicly announced prime rate plus 2% per
annum from the date of the advance until the date of
reimbursement.
7. Consent to Transfers. The Agent consents to:
(a) The sale of finished goods inventory for reasonably equivalent value
for cash or on ordinary trade terms in the ordinary course of
business;
(b) The collection of accounts in the ordinary course of business;
(c) The good faith compromise of accounts and disputes regarding
defective or nonconforming goods and to returns and rebates in
connection therewith; and
(d) The replacement (including sale or exchange) of obsolete or worn-out
fixtures and equipment in the ordinary course of business.
8. Collection of Accounts. Each Debtor will use its best efforts to collect
amounts due on receivables in the ordinary course of business. Each Debtor
will not sell or assign any receivables to any third party or to any
Lender without the Agent's prior written consent.
9. Default. TIME IS OF THE ESSENCE. The Debtors will be in default under this
Security Agreement if there is a default under the Loan Agreement or
either Debtor fails to perform any promise contained in this Security
Agreement within 30 days after such performance is due, or if such
performance cannot be completed within such period, to substantially start
to perform within such period and thereafter diligently complete such
performance.
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10. Remedies. Upon default and without further notice or demand other than as
provided in the Loan Agreement, the Agent may:
(a) Notify account debtors and obligors of the Agent's security interest
and to demand payment directly from the account debtors and obligors
to the Agent whether or not either Debtor then disputes the default
or the Agent's right to collect such payments;
(b) Require each Debtor to assemble the Collateral and make it available
to the Agent at a place to be designated by the Agent which is
reasonably convenient to the Agent and the Debtors;
(c) Take possession of the Collateral either directly or through a
receiver appointed by the circuit court in which any substantial or
essential part of the Collateral is located without the necessity of
making any showing under the rules of civil procedure as to
entitlement to provisional relief and to improve, operate, maintain,
lease, sell, contract rights, and otherwise dispose of the
Collateral;
(d) Collect the revenue and proceeds of the Collateral;
(e) Hold, sell, lease or otherwise dispose of all or any part of the
Collateral in its then condition or following any commercially
reasonable preparation or processing; and
(f) Apply the proceeds, after payment of costs, charges and expenses, to
amounts due on prior liens and security interests and then to
amounts due to the Lenders under the Loan Documents.
(g) Each Debtor agrees that a letter delivered to it at least 30 days
before a public or private sale or other disposition is reasonable
notification of such sale or disposition. Each Debtor acknowledges
that payments by account debtors and obligors to the Agent, rather
than to such Debtor, following default will constitute satisfaction
of the debt of the account debtor or obligor to such Debtor to the
extent of the payment.
(h) Any receiver appointed may be an employee of the Agent and may serve
as receiver without bond and without fee except for reimbursement of
actual expenses. The Agent may advance such funds as are necessary
or convenient to such repossession, operation, and management and
any such advances, plus interest at the Agent's publicly announced
prime rate plus 2% per annum, will be included in the Secured
Obligations.
(i) All rights and remedies of the Agent under this Security Agreement
and under applicable laws and regulations are cumulative and not
exclusive. The commencement or partial exercise of any such right or
remedy shall not preclude the Agent from the exercise of any other
right or remedy until the Secured Obligations are fully paid and
performed. Those rights specifically
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include the right of offset against any obligations owed by the
Agent or any Lender to either Debtor against the Secured
Obligations.
(j) Each Debtor waives and assigns to the Agent all marshaling,
integration and similar claims intended to restrict the rights and
remedies of the Agent following default. Each Debtor hereby waives
and assigns to the Agent any and all claims that foreclosure against
the Collateral amounts to a fraudulent transfer. Each Debtor
acknowledges that the possibility that the Collateral at the time of
foreclosure may have a value in excess of the Secured Obligations
should not impair the bargained-for rights and remedies of the
Agent.
11. Reimbursement of Costs and Expenses. Each Debtor will reimburse the Agent
on demand for the reasonable and necessary costs and expenses incurred by
the Agent in connection with:
(a) Perfecting the security interest in the Collateral and confirming
such perfection and the priority of the security interest;
(b) Inspecting and evaluating the Collateral (as limited above but
otherwise including the cost of any third-party inspections and
appraisals): and
(c) Repossessing, storing, preparing for disposition, and disposing of
the Collateral;
(d) Enforcing and collecting the Secured Obligations, including
reasonable attorney fees, whether or not a civil action or similar
proceeding (including arbitration and insolvency proceedings) is
filed or appealed,
such costs and expenses being part of the Secured Obligations.
12. Miscellaneous.
(a) This Security Agreement will bind and inure to the benefit of the
respective successors and assigns of each Debtor, the Agent, and the
Lenders (including participants), but no Debtor will have no right
to assign any of its rights or delegate any of its obligations under
this Security Agreement without the Agent's prior written consent.
(b) Each Debtor hereby consents to the jurisdiction of any state or
federal court sitting in Portland, Oregon, with respect to any claim
(including setoffs, defenses, counterclaims and third-party claims
whether arising in tort or contract) arising from or related to this
Security Agreement and hereby waives any claim that such a forum is
inconvenient or that there is a more convenient forum.
(c) Certain terms and conditions of the Loan Agreement are also
applicable to this Security Agreement.
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13. Statutory Warnings.
(a) Under Oregon law, most agreements, promises and commitments made by
a financial institution after October 3, 1989, concerning loans and
other credit extensions which are not for personal, family or
household purposes or secured solely by Each Debtor's residence must
be in writing, express consideration and be signed by the financial
institution to be enforceable.
(b) Unless the Debtors provide the Agent with evidence of the insurance
coverage that is required by this Security Agreement, the Agent may
purchase such insurance to protect the Agent's security interest.
Such insurance may, but need not, also protect the Debtors'
interest. If the Collateral becomes damaged, the insurance purchased
by the Agent may not pay any claim that a Debtor may make or any
claim made against a Debtor.
The Debtors will be responsible for the cost of the insurance
purchased by the Agent and the Agent may add such cost to the
Secured Obligations without any prior request for reimbursement of
such amount. When added to the Secured Obligations, interest will
accrue and be payable thereon at the Agent's prime rate plus 2% per
annum. The effective date of coverage may be the date when the
Debtors' coverage lapsed or the Debtors fails to provide proof of
coverage.
The cost of the insurance purchased by the Agent may be considerably
more expensive than the insurance coverage that the Debtors can
obtain and such insurance coverage may not satisfy any need for
property damage coverage or any mandatory liability insurance
requirements imposed by applicable law.
Either Debtor may require the Agent to cancel the Agent's insurance
by providing evidence that the Debtors have obtained the required
insurance coverage elsewhere.
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Neither the Agent nor any of the Banks has any duty to either
Debtor, a Guarantor, or anyone else to obtain insurance coverage if
the Debtors fail to do so. It is agreed that the risk of an
uninsured loss is allocated to the Debtors and such loss will not
reduce or otherwise affect either Debtor's liability for payment and
performance of the Secured Obligations.
U.S. Bank National Association, Xxxx & Xxxxxx, Inc.
By /s/ XXXXXX X. XXXXX By /s/ XXXXXX X. DAY
-------------------------- -------------------------------------
Xxxxxx X. Xxxxx Name: XXXXXX X. DAY
Vice President Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Xxxx & Talbot, Wis., Inc.
By /s/ XXXXXX X. DAY
-------------------------------------
Name: XXXXXX X. DAY
Title: SECRETARY AND TREASURER
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Exhibit 5
$10,000,000 Portland, Oregon
December 15, 1997
SWINGLINE NOTE
For value, Xxxx & Xxxxxx, Inc., a Delaware corporation (the "Borrower"), whose
address is 0000 XX Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, promises to pay to the
order or assigns of U.S. Bank National Association ("USB"), c/o National
Corporate Banking Division, at 000 XX Xxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000 (or at
such other address as USB may hereafter specify in writing from time to time),
the principal amount of $10,000,000, or such greater or lesser amount as USB
actually loans to the Borrower under this note, plus interest, fees, and costs,
as provided for in this note. This note is issued under a 1997 Loan Agreement
dated December 15, 1997 (the "Loan Agreement"), among the Borrower, its
Subsidiaries, and USB. This note is the "Swingline Note" and each loan made
under this note is a "Swingline Loan."
1. Use of Proceeds. The Borrower will use each loan made under this note only
for balancing the daily cash position of the Borrower and the
Subsidiaries.
2. Fees. The Borrower will pay the Late Payment Fee specified by the Loan
Agreement when due.
3. Availability. No loan under this note will be greater than the lesser of:
(a) The difference between (1) $10,000,000 and (2) the aggregate
principal amount of all Swingline Loans then outstanding.
(b) Availability on the date that the loan is requested.
4. Expiry Date. The Borrower's opportunity to borrow under this note will
expire on the Expiry Date (April 15, 1999) unless extended by mutual
agreement of the Borrower and USB.
5. Principal Repayment. Each loan made under this note will be due and
payable at the end of the interest period agreed to by the Borrower and
USB at the time the loan is made. No interest period will be longer than
seven days or will extend beyond the Expiry Date.
6. Interest.
(a) Before default, interest on each loan made under this note will
accrue at the interest rate agreed to by the Borrower and USB at the
time that the loan is made. Unless otherwise agreed, the Borrower
will pay interest monthly in arrears on the first banking day of
each month. USB uses a 360-day denominator to calculate interest at
any rate.
(b) After default, interest will accrue at the Default Rate specified in
the Loan Agreement until the default is cured or the entire
outstanding balance of this note is paid in full. Interest at the
default rate is payable on USB's demand.
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7. Costs. The party who substantially prevails in the trial or appeal of any
civil action, arbitration proceeding, or insolvency (liquidation,
reorganization or receivership) claim or proceeding on any claim
(including setoffs, defenses, counterclaims and third-party claims)
whether arising in tort or contract) arising from or related to this note
will be entitled to reasonable attorney fees in addition to its costs and
disbursements.
8. Waivers. The Borrower waives acceptance, presentment, delay, dishonor, and
notice of dishonor.
9. Governing Law; Jurisdiction. The substantive provisions (that is, without
regard for any choice of law provisions which would make the law of
another jurisdiction applicable) of Oregon law and any applicable
provisions of federal law will govern the construction and enforcement of
this note. The Borrower consents to jurisdiction of any state or federal
court sitting in Portland, Oregon, on any action or proceeding involving
this note and/or any offsets, defenses or counterclaims related to this
note.
10. Successors and Assigns. This note will bind and inure to the benefit of
the respective successors and assigns of the Borrower and USB, but the
Borrower will not have the right by reason of this paragraph to assign its
rights or delegate its obligations under this note without USB's prior
written consent.
11. Statutory Warning. Under Oregon law, most agreements, promises and
commitments made by a financial institution after October 3, 1989,
concerning loans and other credit extensions which are not for personal,
family or household purposes or secured solely by the borrower's residence
must be in writing, express consideration and be signed by the financial
institution to be enforceable.
XXXX & TALBOT, INC.
By /s/ XXXXXX X. DAY
-------------------------------------
Name: XXXXXX X. DAY
Title: SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
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