Exhibit 10.14
AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 23, 1999
between TREX COMPANY, LLC, a Delaware limited liability company,
and FIRST UNION NATIONAL BANK,
a national banking association.
RECITALS
WHEREAS, the Borrower and the Bank entered into a Credit Agreement dated as
of December 10, 1996, as amended from time to time (the "Original Credit
Agreement") pursuant to which the Bank made available to the Borrower a
revolving line of credit;
WHEREAS, the Borrower and the Bank have agreed to the terms of a term loan
facility to be made available by the Bank to the Borrower;
WHEREAS, the Borrower, as of the date hereof, owns all of the issued and
outstanding capital stock of TREX COMPANY, INC., a Delaware corporation;
WHEREAS, TREX COMPANY, INC. proposes to make an initial public offering
(the "IPO") of its common stock;
WHEREAS, in order to facilitate the IPO, the Borrower, TREX COMPANY, INC.
and the members of the Borrower intend to complete a series of transactions
(collectively, the "Reorganization") prior to the IPO in which, among other
things, (i) the holders of Class B Units will convert such units into Class A
Units; (ii) the Borrower will repurchase Class A Units from certain of its
members, (iii) all of the Borrower's members except Mobil Oil Corporation will
exchange their limited liability company interests in the Borrower for common
stock of TREX COMPANY, INC., (iv) Mobil Oil Corporation will exchange its
limited liability company interest in the Borrower for a promissory note of TREX
COMPANY, INC. payable on the IPO closing date, (v) the Borrower will make a
special cash distribution to each holder of its Class A Units, which will
initially be evidenced in part by a promissory note of the Borrower, will be
funded in part from IPO proceeds and in part from Revolving Loans and will
consist in part of a return of such holder's capital in the Borrower and in part
of an amount equal to the previously recognized and undistributed taxable income
of the Borrower on which such holder has paid or will pay income tax, and (vi)
the Borrower's common stock in TREX COMPANY, INC. will be canceled; and
WHEREAS, upon consummation of the Reorganization, TREX COMPANY, INC. will
own all of the issued and outstanding limited liability company interests in the
Borrower and will operate the Borrower as its wholly-owned subsidiary; and
WHEREAS, the Borrower and the Bank have agreed to amend and restate the
Original Credit Agreement to incorporate the terms of the revolving line of
credit and the term loan facility.
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NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Bank agree to amend, restate and replace the
Original Credit Agreement as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. All capitalized terms used in this Agreement or
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in any Appendix, Schedule or Exhibit hereto which are not otherwise defined
herein or therein shall have the respective meanings set forth in the Appendix
attached hereto identified as the Definitions Appendix. The Definitions
Appendix is incorporated herein by reference in its entirety and is a part of
this Agreement to the same extent as if it had been set forth in this Section
1.01 in full.
Section 1.02 Accounting Terms and Determinations. Unless otherwise
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specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles in the United States of America as in
effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Bank.
ARTICLE II
THE CREDIT
Section 2.01 Commitment to Lend.
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(a) Revolving Commitment. The Bank agrees, on the terms and conditions set
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forth in this Agreement, to make Revolving Loans to the Borrower from time to
time during the Revolving Credit Period in amounts such that the aggregate
principal amount of Revolving Loans at any one time outstanding will not exceed
the lesser of (i) the Revolving Commitment and (ii) the Borrowing Base. Within
the foregoing limit, the Borrower may borrow, prepay and reborrow Revolving
Loans at any time during the Revolving Credit Period.
(b) Term Commitment. The Bank agrees, on the terms and conditions set
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forth in this Agreement, to make Term Loans to the Borrower from time to time
during the Term Loan Period in amounts such that the aggregate principal amount
of Term Loans will not exceed the Term Commitment. This commitment to make Term
Loans is not revolving in nature, and any Term Loans repaid may not be
reborrowed.
Section 2.02 Methods of Borrowing.
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(a) Notice of Borrowing. Except as otherwise provided in this Section, the
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Borrower may, with the approval of the Bank, give the Bank notice substantially
in the form of Exhibit A hereto (a "Notice of Borrowing") not later than 12:00
P.M. (local time in Winchester, Virginia) on the date of each requested Loan,
specifying the date of such Loan and the amount of such Loan.
(b) Cash Management Services. The Borrower subscribes to the Bank's cash
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management services and such services are applicable to the Revolving Loans.
The terms of such services, as set forth in the Services Agreement, shall
control the manner in which funds are transferred between the Operating Account
and the Revolving Loans for credit or debit to the Revolving Loans.
(c) Overdrafts in Other Accounts. The Bank may, at its option, pay any
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Item which will cause any deposit account maintained by the Borrower with the
Bank to become overdrawn, and such payment shall be deemed a Revolving Loan
hereunder.
Section 2.03 Funding of Loans. The Bank shall disburse the proceeds of
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each Loan made pursuant to Section 2.02 as follows:
(a) The proceeds of each Loan under Section 2.02(a) shall be made available
by the Bank to the Borrower in Federal or other funds immediately available at
the Bank's address referred to in Section 8.01.
(b) The proceeds of each Loan under Section 2.02(b) or (c) shall be
disbursed by the Bank by way of direct payment of the relevant Item or by way of
deposit to the Operating Account pursuant to the Services Agreement, as the case
may be.
Section 2.04 Note.
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(a) Evidence of Loans. The Revolving Loans and the Term Loans shall each be
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evidenced by a single Note payable to the order of the Bank in an amount equal
to the Revolving Commitment and the Term Commitment, respectively.
(b) Records of Amounts Due. The Bank shall record the date and amount of
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each Loan made by it and the date and amount of each payment of principal made
by the Borrower with respect thereto, and may, if the Bank so elects in
connection with any transfer or enforcement of each Note, endorse on the
schedule forming a part thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding; provided that the
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failure of the Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under such Note. The Bank is
hereby irrevocably authorized by the Borrower so to endorse each Note and to
attach to and make a part of such Note a continuation of any such schedule as
and when required. The Bank shall send the Borrower a copy of any endorsements
and continuations so made.
Section 2.05 Interest Rate.
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(a) LIBOR Market Index-Based Rate. Each Loan shall bear interest on the
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outstanding principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the applicable LIBOR
Market Index-Based Rate for such day. Such interest shall be payable for each
month in arrears on the first day of the immediately succeeding calendar month.
"LIBOR Market Index-Based Rate" shall be the rate per annum equal to
the LIBOR Market Index Rate plus two percent (2.0%) as that rate may change from
day to day. "LIBOR Market Index Rate", for any day, is the rate for 1 month
U.S. dollar deposits as reported on Telerate page 3750 as of 11:00 a.m., London
time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or if not so reported, then as
determined by the Bank from another recognized source or interbank quotation).
(b) Overdue Amounts. Any overdue principal of or interest on any Loan
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shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the LIBOR Market Index-Based Rate
applicable to such Loan on such day.
Section 2.06 Fees.
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(a) Unused Commitment Fee. The Borrower shall pay to the Bank an unused
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commitment fee (the "Commitment Fee") for each day at a rate per annum equal to
the product of (i) 12.5 basis points multiplied by (ii) the excess of the
Revolving Commitment over the aggregate amount of the Revolving Loans on such
day. Such unused commitment fee shall accrue from and including the Effective
Date to but excluding the Termination Date (or earlier date of termination of
the Revolving Commitment in its entirety) and shall be payable quarterly in
arrears on each Quarterly Date and on the Termination Date.
(b) Audit Fee. The Borrower shall pay an audit fee, not to exceed
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$3,500.00, for each audit permitted to be made pursuant to Section 5.06.
Section 2.07 Adjustments of Commitment.
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(a) Optional Termination or Reductions of Revolving Commitment. The
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Borrower may, upon at least three Business Days' notice to the Bank, (i)
terminate the Revolving Commitment at any time, if no Revolving Loans are
outstanding at such time or (ii) reduce from time to time the amount of the
Revolving Commitment in excess of the aggregate outstanding principal amount of
the Revolving Loans. If the Revolving Commitment is terminated in its entirety,
all accrued fees shall be payable on the effective date of such termination.
(b) Optional Extension of Commitment.
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(i) The Bank may elect, by notice to the Borrower not less than 15
days and not more than 45 days prior to May 31, 2000 or the first
anniversary of an Extension Date (as applicable, an "Anniversary Date"), to
extend the Revolving Credit Period until the second anniversary of such
Anniversary Date (each of the first and subsequent Anniversary Dates on
which the Revolving Credit Period is extended hereunder being referred to
herein as an "Extension Date"). Failure by the Bank to notify the Borrower
of such election within the above time period shall be deemed to constitute
an election by the Bank not to extend the Revolving Credit Period.
(ii) If the Bank shall have elected to extend the Revolving Credit
Period as provided in this Section 2.07(b), then the Revolving Credit
Period shall continue until the second anniversary of the Extension Date in
effect, and the term "Termination Date", as used herein, shall mean such
second anniversary.
Section 2.08 Maturity and Repayment of Loans.
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(a) Maturity of Termination Date. Each Revolving Loan shall mature, and
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the principal amount thereof shall be due and payable, on the Termination Date.
(b) Mandatory Prepayments of Revolving Loans Exceeding Borrowing Base. If
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on any day the aggregate outstanding principal amount of all Revolving Loans
exceeds the Borrowing Base, the Borrower shall prepay, and there shall become
due and payable, on such date the principal amount of the Revolving Loans equal
to such excess, together with interest thereon to the date of repayment.
(c) Mandatory Repayments from Operating Account.
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(i) Deposits of Proceeds to Operating Account. The Borrower shall
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instruct all Account Debtors and other Persons obligated in respect of
Accounts and other Collateral to make all payments in respect of the
Accounts or other Collateral directly to the Bank (by instructing that such
payments be remitted to a post office box which shall be in the name of the
Borrower but under the control of the Bank). Except as provided in Section
3.04 of the Security Agreement, all such payments made to the Bank shall be
deposited in the Operating Account. In addition to the foregoing, the
Borrower agrees that if the proceeds of any Collateral (including the
payments made in respect of Accounts) shall be received by it, the Borrower
shall, unless Section 3.04 of the Security Agreement shall require
otherwise, as promptly as possible deposit such proceeds to the Operating
Account. Until so deposited, all such proceeds shall be held in trust by
the Borrower for and as the property of the Bank and shall not be
commingled with any other funds or property of the Borrower. The Borrower
hereby irrevocably authorizes and empowers the Bank, its officers,
employees and authorized agents to endorse and sign its name on all checks,
drafts, money orders or other media of payment so delivered, and such
endorsements or assignments shall, for all purposes, be deemed to have been
made by the Borrower prior to any endorsement or assignment thereof by the
Bank. The Bank may use any convenient or customary means for the purpose
of collecting such checks, drafts, money orders or other media of payment.
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(ii) Cash Management Services. The Revolving Loans shall be repaid as
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set forth in the Services Agreement, and consistent with Section 2.02(b) of
this Agreement.
(d) Term Loans. The unpaid principal balance of the Term Loans on August
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31, 1999 shall be payable in consecutive monthly payments on the first day of
each month, beginning October 1, 1999, equal to the quotient of the amount of
such unpaid principal balance on August 31, 1999 divided by 60; provided,
however, that the entire unpaid principal balance of the Term Loans and all
accrued interest thereon shall be due and payable in full on April 1, 2000.
(e) Optional Prepayments of Loans. The Borrower may upon at least one
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Business Day's notice to the Bank, prepay any Loan, in whole at any time, or
from time to time in part, without penalty, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment. The
notice of prepayment delivered by the Borrower to the Bank shall not be
revocable by the Borrower following its receipt by the Bank. Any prepayment of
the Term Loans shall be applied to the Term Loans in the inverse order of their
maturities.
Section 2.09 General Provisions as to Payments. The Borrower shall make
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each payment of principal of and interest on the Loans and fees hereunder not
later than 12:00 Noon (local time in Winchester, Virginia) on the date when due,
without set-off, counterclaim or other deduction, in Federal or other funds
immediately available to the Bank at its address referred to in Section 8.01 or
such other location as designated by the Bank. Whenever any payment of
principal of, or interest on, the Loans or of fees shall be due on a day which
is not a Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
Section 2.10 Computation of Interest and Fees. Interest on Loans
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hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
ARTICLE III
CONDITIONS
Section 3.01 Conditions to Closing. The obligation of the Bank to make
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the first Loan hereunder is subject to the satisfaction of the following
conditions:
(a) Effectiveness. This Agreement shall have become effective in accordance
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with Section 9.08.
(b) Notes. On or prior to the Closing Date, the Bank shall have received a
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duly executed Revolving Note and Term Note dated on or before the Closing Date
complying with the provisions of Section 2.04.
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(c) Other Loan Documents. Each of the Loan Documents to be executed on or
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before the Closing Date shall be in form and substance reasonably satisfactory
to the Bank and shall have been duly executed and delivered to the Bank by each
of the parties thereto.
(d) Adverse Change, etc. On the Closing Date, nothing shall have occurred
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(and the Bank shall not have become aware of any facts or conditions not
previously known) which has, or could reasonably be expected to have, a Material
Adverse Effect.
(e) Officer's Certificate. The Bank shall have received a certificate
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dated the Closing Date signed on behalf of the Borrower by the Chairman of the
Board, the President, any Vice President or the Treasurer of the Borrower
stating that (x) on the Closing Date and after giving effect to the Loan being
made on the Closing Date, no Default or Event of Default shall have occurred and
be continuing and (y) to the best knowledge and belief of such officer, the
representations and warranties of the Borrower contained in the Loan Documents
are true and correct on and as of the Closing Date.
(f) Opinion of Borrower's Counsel. On the Closing Date, the Bank shall
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have received from counsel to the Borrower an opinion addressed to the Bank,
dated the Closing Date, substantially in the form of Exhibit C hereto and
covering such additional matters incident to the transactions contemplated
hereby as the Bank may reasonably request.
(g) Company Proceedings. On the Closing Date, the Bank shall have received
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(i) a copy of the Borrower's Certificate of Formation, as amended, certified by
the Secretary of the State of Delaware and dated as of a recent date prior to
the Closing Date; (ii) a certificate of the Secretary of the State of Delaware
and each other state in which the Borrower is qualified as a foreign limited
liability company to do business, dated as of a recent date prior to the Closing
Date, as to the good standing of the Borrower; (iii) a copy of the Borrower's
Limited Liability Company Agreement, including all amendments thereto; and (iv)
a certificate of the appropriate officer or other authorized person of the
Borrower dated the Closing Date and certifying (A) that the documents referred
to in clause (iii) above have not been amended since the date of said
certificate, (B) that attached thereto is a true, correct and complete copy of
resolutions adopted by the managers of the Borrower authorizing the execution,
delivery and performance of the Credit Agreement, the Notes and the Security
Agreement and each other document delivered in connection herewith or therewith
and that said resolutions have not been amended and are in full force and effect
on the date of such certificate, (C) as to the incumbency and specimen
signatures of each officer or other authorized person of the Borrower executing
this Agreement, the Notes and the Security Agreement or any other document
delivered in connection herewith or therewith and (D) certifying as to the names
and respective jurisdictions of organization of all Subsidiaries of the Borrower
existing on the Closing Date.
All company and legal proceedings and instruments and agreements
relating to the transactions contemplated by this Agreement or in any other
document delivered in connection therewith shall be satisfactory in form and
substance to the Bank and its counsel, and the Bank shall have received all
information and copies of all documents and papers, including records of company
proceedings, governmental approvals, good standing certificates and bring-down
telegrams, if any, which the Bank reasonably may have requested in connection
therewith,
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such documents and papers where appropriate to be certified by proper company or
governmental authorities.
(h) Perfection of Security Interests; Search Reports. On or prior to the
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Closing Date, the Bank shall have received:
(i) a Perfection Certificate of the Borrower, substantially in the
form of Exhibit A to the Security Agreement;
(ii) appropriate Financing Statements (Form UCC-1 or such other
financing statements or similar notices as shall be required by local law)
fully executed for filing under the Uniform Commercial Code or other
applicable local law of each jurisdiction in which the filing of a
financing statement or giving of notice may be required, or reasonably
requested by the Bank, to perfect the security interests purported to be
created by the Loan Documents;
(iii) copies of reports from Xxxxxxxx-Xxxx Financial Services or
other independent search service reasonably satisfactory to the Bank
listing all effective financing statements that name the Borrower (under
its present name and any previous name and, if requested by the Bank, under
any trade names) as debtor or seller that are filed in the jurisdictions
referred to in clause (i) above, together with copies of such other
financing statements (none of which shall cover the Collateral except to
the extent evidencing Permitted Liens or for which the Bank shall have
received termination statements (Form UCC-3) or such other termination
statements as shall be required by local law) fully executed for filing;
and
(iv) evidence of the completion of all other filings and recordings
of, or with respect to, the Loan Documents as may be necessary or, in the
opinion of the Bank, desirable to perfect the security interests intended
to be created by the Loan Documents.
(i) Closing Date Borrowing Base Certificate. On the Closing Date, the
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Borrower shall have delivered to the Bank its initial Borrowing Base Certificate
meeting the requirements of Section 5.01(f).
(j) Payment of Fees. All reasonable costs, fees and expenses due to the
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Bank on or before the Closing Date (including, without limitation, legal fees
and expenses) shall have been paid.
(k) Counsel Fees. The Bank shall have received payment from the Borrower
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of the reasonable fees and expenses of McGuire, Woods, Battle & Xxxxxx, LLP
described in Section 8.03 which are billed through the Closing Date.
(l) CIGNA Agreements. The Bank shall have received a certificate of the
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appropriate officer or other authorized person of the Borrower dated the Closing
Date and certifying (A) that attached thereto are true, correct and complete
copies of the CIGNA Agreements, and (B) that the documents referred to in clause
(A) above have not been amended since the date of said
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certificate. Furthermore, the Bank shall have received a fully executed
amendment to the Securities Purchase Agreement amending certain provisions of
the Securities Purchase Agreement which would otherwise be breached by the
execution and delivery of the Loan Documents.
The Bank shall promptly notify the Borrower of the Closing Date, and
such notice shall be conclusive and binding on all parties hereto. The
documents referred to in this Section shall be delivered to the Bank no later
than the Closing Date. The certificates and opinion referred to in this Section
shall be dated the Closing Date.
Section 3.02 Conditions to All Loans. The obligation of the Bank to make
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each Loan is subject to the satisfaction of the following conditions:
(i) the fact that the Closing Date shall have occurred;
(ii) with respect to each Revolving Loan, the fact that, immediately
after the making of such Loan, the aggregate outstanding principal amount
of all Revolving Loans shall not exceed the lesser of (A) the Revolving
Commitment and (B) the Borrowing Base;
(iii) with respect to each Term Loan, the fact that, immediately
after the making of such Loan, the aggregate principal amount of all Term
Loans made shall not exceed the Term Commitment.
(iv) the fact that, immediately before and after the making of such
Loan, no Default shall have occurred and be continuing;
(v) the fact that the representations and warranties of the Borrower
contained in this Agreement shall be true on and as of the date of such
Loan; and
(vi) (A) the Bank shall in good faith have determined that its
prospect of receiving payment in full of the Obligations then outstanding
or its ability to exercise its rights and remedies hereunder and under the
other Loan Documents have not been impaired, (B) no event or condition
shall have occurred since the Effective Date which has or could reasonably
be expected to have a Material Adverse Effect or (C) the Bank shall not
reasonably suspect that one or more Events of Default have occurred and is
continuing.
Each Loan hereunder shall be deemed to be a representation and warranty by the
Borrower on the date of such Loan as to the facts specified in clauses (iv) and
(v) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
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Section 4.01 Existence and Power. The Borrower is a limited liability
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company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has all powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. Each of the Subsidiaries is duly organized, validly
existing and in good standing under the laws of the state of its organization
and has all powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted. Each
of the Borrower and the Subsidiaries is duly qualified as a foreign entity,
licensed and in good standing in each jurisdiction where qualification or
licensing is required by the nature of its business or the character and
location of its property, business or customers and in which the failure to so
qualify or be licensed, as the case may be, in the aggregate, could have a
Material Adverse Effect.
Section 4.02 Company and Governmental Authorization; No Contravention.
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The execution, delivery and performance by the Borrower of the Loan Documents to
which it is a party are within the limited liability company powers of the
Borrower, have been duly authorized by all necessary company action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (except for any such action or filing as shall have been taken or made
and that is in full force and effect from and after the Closing Date) and do not
contravene, or constitute (with or without the giving of notice or lapse of time
or both) a default under, any provision of applicable law or of the
organizational documents of the Borrower or any Subsidiary or of any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting the Borrower or any Subsidiary or result in the creation or imposition
of any Lien on any asset of the Borrower or any of its Subsidiaries.
Section 4.03 Binding Effect. Each Loan Document other than the Notes to
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which the Borrower is a party constitutes a valid and binding agreement of the
Borrower and each Note, when executed and delivered in accordance with this
Agreement, will constitute a valid and binding obligation of the Borrower, in
each case enforceable against the Borrower in accordance with its terms except
in each case as such enforceability may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by equitable principles
of general applicability (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 4.04 Financial Condition.
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(a) [Intentionally deleted].
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(b) Interim Financial Statements. The unaudited consolidated balance sheet
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of the Borrower and its Consolidated Subsidiaries as of December 31, 1998 and
the related unaudited consolidated income statements for the month then ended,
copies of which have been delivered to the Bank, fairly present, in conformity
with generally accepted accounting principles applied on a basis consistent with
the audited financial statements for the fiscal year ended December 31, 1997,
the consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of
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such date and their consolidated results of operations and changes in financial
position for such 12 month period (subject to normal year-end audit
adjustments).
(c) Material Adverse Change. Since December 31, 1998 there has been no
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material adverse change in condition (financial or otherwise), results of
operations, properties, assets, business or prospects of the Borrower or of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
Section 4.05 Litigation. Except as set forth on Schedule 4.05, there is
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no material action, suit, proceeding or investigation pending against, or to the
knowledge of the Borrower threatened against, contemplated or affecting, the
Borrower or any of its Subsidiaries before any court, arbitrator or any
governmental body, agency or official which has, or could reasonably be expected
to have, a Material Adverse Effect, or which in any manner draws into question
the validity or enforceability of this Agreement or the Notes, and there is no
basis known to the Borrower or any of its Subsidiaries for any such action,
suit, proceeding or investigation.
Section 4.06 Regulation U; Use of Proceeds. The Borrower and its
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Subsidiaries do not own any "margin stock" as such term is defined in Regulation
U. The proceeds of the Loans will be used by the Borrower only for the purposes
set forth in Section 5.16 hereof.
Section 4.07 Regulatory Restrictions on Borrowing. Neither the Borrower
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nor any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or
otherwise subject to any regulatory scheme which restricts its ability to incur
debt.
Section 4.08 Subsidiaries. Part I of Schedule 4.08 (as such Schedule may
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be supplemented by a writing delivered by the Borrower to the Bank from time to
time after the Effective Date) hereto lists each Subsidiary of the Borrower (and
the direct and indirect ownership interests of the Borrower therein), in each
case existing on the Effective Date and, if applicable, upon completion of the
Reorganization. Except as set forth on Part I of such Schedule 4.08, each such
Subsidiary existing on the date hereof is, and, in the case of any additional
corporate Subsidiaries formed after the Effective Date, each of such additional
corporate Subsidiaries will be at each time that this representation is made or
deemed to be made after the Effective Date, a wholly-owned Subsidiary that is a
corporation duly incorporated, validly existing and, to the extent relevant in
such jurisdiction, in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. Except as listed on Part II of Schedule 4.08 (as
such Schedule may be supplemented by a writing delivered by the Borrower to the
Bank from time to time after the Effective Date), neither the Borrower nor any
of its Subsidiaries is engaged in any joint venture or partnership with any
other Person.
Section 4.09 Full Disclosure. All factual information (taken as a whole)
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furnished by or on behalf of the Borrower or any of its Subsidiaries in writing
to the Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is true and accurate in
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all material respects on the date as of which such information is dated or
certified and is not incomplete by omitting to state any material fact necessary
to make such information (taken as a whole) not misleading at such time in light
of the circumstances under which such information was provided. Except for
economic trends generally known to the public affecting generally the industry
in which the Borrower and its Subsidiaries conduct their business, the Borrower
has disclosed to the Bank in writing any and all facts which materially and
adversely affect or may materially and adversely affect (to the extent the
Borrower can now reasonably foresee), the business, operations or financial
condition of the Borrower and its Consolidated Subsidiaries, taken as a whole,
or the ability of the Borrower to perform its obligations under this Agreement.
Section 4.10 Tax Returns and Payments. Each of the Borrower and its
------------------------
Subsidiaries has filed all United States Federal income tax returns and all
other material tax returns, domestic and foreign, required to be filed by it and
has paid all taxes and assessments payable by it which have become due pursuant
to such returns or pursuant to any assessment received by the Borrower or any
Subsidiary, other than those not yet delinquent and except for those contested
in good faith. Each of the Borrower and its Subsidiaries has paid, or has
provided adequate reserves (in good faith judgment of the management of the
Borrower) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof.
Section 4.11 Compliance with ERISA. Each member of the ERISA Group has
---------------------
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
Section 4.12 Intellectual Property. Each of the Borrower and its
---------------------
Subsidiaries owns or possesses or holds under valid non-cancelable licenses all
Patents, Trademarks, service marks, trade names, copyrights, Licenses and other
intellectual property rights that are necessary for the operation of their
respective properties and businesses, and neither the Borrower nor any of its
Subsidiaries is in violation of any provision thereof. The Borrower and its
Subsidiaries conduct their business without infringement or claim of
infringement of any material license, patent, trademark, trade name, service
xxxx, copyright, trade secret or any other intellectual property right of others
and there is no infringement or, except as set forth on Schedule 4.12, claim of
infringement by others of any material license, patent, trademark, trade name,
service xxxx, copyright, trade secret or other intellectual property right of
the Borrower and its Subsidiaries.
Section 4.13 No Burdensome Restrictions. No contract, lease, agreement or
--------------------------
other instrument to which the Borrower or any of its Subsidiaries is a party or
by which any of its property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no
-12-
provision of applicable law or governmental regulation has had or is reasonably
expected to have a Material Adverse Effect.
Section 4.14 Environmental Matters. In the ordinary course of its
---------------------
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted at any such facility, any costs or liabilities in connection with off-
site disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
Section 4.15 Accounts. With respect to each Account, all records, papers
--------
and documents relating thereto (if any) are genuine and in all respects what
they purport to be, and all papers and documents (if any) relating thereto: (i)
represent legal, valid and binding obligations of the respective Account Debtor,
subject to adjustments customary in the business of the Borrower, with respect
to unpaid indebtedness incurred by such Account Debtor in respect of the
performance of labor or services or the sale or lease and delivery of the
merchandise listed therein, or both, (ii) are the only original writings
evidencing and embodying such obligation of the Account Debtor named therein
(other than copies created for general accounting purposes) and are in
compliance with all applicable federal, state and local laws and applicable laws
of any relevant foreign jurisdiction.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has any commitment to make
Revolving Loans or Term Loans hereunder or any Obligation remains unpaid:
Section 5.01 Information. The Borrower will deliver or cause to be
-----------
delivered to the Bank:
(a) Annual Financial Statements. As soon as available and in any event
---------------------------
within 90 days after the end of each fiscal year of the Borrower, a consolidated
and consolidating balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related consolidated and
consolidating statements of income, changes in members' equity and
-13-
cash flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in reasonable detail and
accompanied by an opinion thereon by Ernst & Young, LLP or other independent
public accountants reasonably satisfactory to the Bank, which opinion shall not
be qualified as to the scope of the audit and which shall state that such
consolidated financial statements present fairly the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of the date of
such financial statements and the results of their operations for the period
covered by such financial statements in conformity with generally accepted
accounting principles applied on a consistent basis (except for changes in the
application of which such accountants concur) and shall not contain any "going
concern" or like qualification or exception or qualification arising out of the
scope of the audit.
(b) Monthly Financial Statements. As soon as available and in any event
----------------------------
within 15 days after the end of each of the first eleven months of each fiscal
year of the Borrower a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal month (with all
supporting schedules) and the related consolidated statements of income, changes
in members' equity and cash flows of the Borrower and its Consolidated
Subsidiaries for such month, setting forth in each case in comparative form the
figures for the corresponding month of the Borrower's previous fiscal year, all
certified (subject to normal year-end audit adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief financial officer or chief accounting officer of the Borrower.
(c) Officer's Certificate. Simultaneously with the delivery of each set of
---------------------
financial statements referred to in subsections (a) and (b) above, a certificate
of the chief financial officer or chief accounting officer of the Borrower, (i)
if applicable, setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Sections 5.18 through 5.20, on the date of such financial statements, (ii)
setting forth in reasonable detail the business outlook and performance of the
Borrower and its Consolidated Subsidiaries as of the date of such certificate,
(iii) stating whether there exists on the date of such certificate any Default
and, if any Default then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto,
and (iv) stating whether, since the date of the most recent previous delivery of
financial statements pursuant to subsections (a) and (b) of this Section, there
has been any material adverse change in the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the Borrower
or of the Borrower and its Consolidated Subsidiaries, considered as a whole,
and, if so, the nature of such material adverse change.
(d) Accountant's Certificate. Simultaneously with the delivery of each set
------------------------
of financial statements referred to in subsection (a) above, a statement of the
firm of independent public accountants which reported on such statements (x)
whether anything has come to their attention to cause them to believe that any
Default existed on the date of such statements and (y) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to subsection (c) above.
(e) Borrowing Base Certificate. Upon receipt of a notice from the Bank
--------------------------
that a Loan has been made, a Borrowing Base Certificate executed by the chief
financial officer or chief accounting officer of the Borrower setting forth the
Borrowing Base as of the date of receipt of
-14-
said notice. Once a Loan has been made, the Borrower shall submit a Borrowing
Base Certificate at least monthly, within 15 days after the end of each calendar
month, until such time as the outstanding principal balance of the Loans has
been reduced to Zero Dollars ($0.00) and such balance has been maintained for
thirty (30) consecutive days, and shall resume in accordance herewith upon the
next following Loan.
(f) Accounts Receivables Agings. As soon as available and in any event
---------------------------
within 15 days after the end of each calendar month:
(A) a report listing all Accounts of the Borrower as of the last
Business Day of such month, which report shall include the amount and
age of each Account, the name and mailing address of each Account
Debtor and such other information as the Bank may reasonably require
in order to verify the Eligible Accounts, all in reasonable detail and
in form reasonably satisfactory to the Bank;
(B) a report listing all Inventory of the Borrower as of the last
Business Day of such month, which shall include the cost and location
thereof and such other information as the Bank may reasonably require
in order to verify the Eligible Inventory, all in reasonable detail
and in form reasonably satisfactory to the Bank; and
(C) a report listing all accounts payable of the Borrower in
reasonable detail and in form reasonably satisfactory to the Bank.
(g) Default. Forthwith upon the occurrence of any Default, a certificate
-------
of the chief financial officer or chief accounting officer of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto.
(h) Litigation. As soon as reasonably practicable after obtaining
----------
knowledge of the commencement of, or of a material threat of the commencement
of, an action, suit, proceeding or investigation against the Borrower or any of
its Subsidiaries which could materially adversely affect the condition
(financial or otherwise), results of operations, properties, assets, business or
prospects of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or could otherwise have a Material Adverse Effect or which in any manner
questions the validity of this Agreement or any of the other transactions
contemplated hereby or thereby, an explanation of the nature of such pending or
threatened action, suit, proceeding or investigation and such additional
information as may be reasonably requested by the Bank.
(i) Auditors' Management Letters. Promptly upon receipt thereof, copies of
----------------------------
each report submitted to the Borrower or any of its Consolidated Subsidiaries by
independent public accountants in connection with any annual, interim or special
audit made by them of the books of the Borrower or any of its Consolidated
Subsidiaries including, without limitation, each report submitted to the
Borrower or any of its Consolidated Subsidiaries concerning its accounting
practices and systems and any final comment letter submitted by such accountants
to management in connection with the annual audit of the Borrower and its
Consolidated Subsidiaries.
-15-
(j) [Intentionally deleted.]
---------------------
(k) ERISA Matters. If and when any member of the ERISA Group (i) gives or
-------------
is required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial officer or the
chief accounting officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take.
(l) Environmental Matters. Promptly, upon receipt of any complaint, order,
---------------------
citation, notice or other written communication from any Person with respect to,
or upon the Borrower's obtaining knowledge of, (A) the existence or alleged
existence of a violation of any applicable Environmental Law in connection with
any property now or previously owned, leased or operated by the Borrower or any
of its Subsidiaries, (B) any release on such property or any part thereof in a
quantity that is reportable under any applicable Environmental Law and (C) any
pending or threatened proceeding for the termination, suspension or non-renewal
of any permit required under any applicable Environmental Law, in each such case
under clause (A), (B) or (C) in which there is a reasonable likelihood of an
adverse decision or determination which could result in a Material Adverse
Effect.
(m) Other Information. From time to time such additional financial or
-----------------
other information regarding the condition (financial or otherwise), results of
operations, properties, assets, business or prospects of the Borrower or any of
its Subsidiaries as the Bank may reasonably request.
Section 5.02 Payment of Obligations. The Borrower will pay and discharge,
----------------------
and will cause each of its Subsidiaries to pay and discharge, as the same shall
become due and payable, (i) all their respective obligations and liabilities,
including all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, in any such case, if
unpaid, might by law give rise to a Lien upon any of their properties or assets
and (ii) all lawful
-16-
taxes, assessments and charges or levies made upon their properties or assets,
by any governmental body, agency or official, except where any of the items in
clause (i) or (ii) of this Section 5.02 may be diligently contested in good
faith by appropriate proceedings and the Borrower or such Subsidiary shall have
set aside on its books, if required under generally accepted accounting
principles, appropriate reserves for the accrual of any such items.
Section 5.03 Maintenance of Property; Insurance.
----------------------------------
(a) Maintenance of Properties. The Borrower will keep, and will cause each
-------------------------
of its Subsidiaries to keep, all property useful and necessary in their
respective businesses in good working order and condition, subject to ordinary
wear and tear.
(b) Insurance. The Borrower will maintain, and will cause each of its
---------
Subsidiaries to maintain, insurance with financially sound and responsible
companies in such amounts (and with such risk retentions) and against such risks
as is usually carried by owners of similar businesses and properties in the same
general areas in which the Borrower and its Subsidiaries operate. The Borrower
will deliver to the Bank upon request from time to time full information as to
the insurance carried.
Section 5.04 Conduct of Business and Maintenance of Existence. The
------------------------------------------------
Borrower will continue, and will cause each of its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries, and will preserve, renew and keep in full force and effect,
and will cause each of its Subsidiaries to preserve, renew and keep in full
force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section 5.04 shall prohibit the
--------
Reorganization.
Section 5.05 Compliance with Laws. The Borrower will comply, and will
--------------------
cause each of its Subsidiaries to comply, with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws, ERISA and the rules and regulations
thereunder) except (i) where the necessity of compliance therewith is contested
in good faith by appropriate proceedings or (ii) where noncompliance could not
reasonably be expected to have a Material Adverse Effect.
Section 5.06 Accounting: Inspection of Property, Books and Records. The
-----------------------------------------------------
Borrower will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities, will maintain, and will cause each of its Subsidiaries to maintain,
their respective fiscal reporting periods on the present basis and will permit,
and will cause each of its Subsidiaries to permit, representatives of the Bank
to visit and inspect any of their respective properties, to examine and make
copies from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired, but in no event less than one year since the most recent
examination, unless a Default has occurred. Notwithstanding the above, the
Borrower shall be permitted to make adjustments
-17-
to its books of record and accounts as may be required or as may be requested by
an audit or outside review, so long as the purpose of such adjustment is to
bring said books or accounts into conformity with generally accepted accounting
principles.
Section 5.07 Collection of Accounts. The Borrower shall use its best
----------------------
efforts to cause to be collected from each Account Debtor, as and when due, any
and all amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account. The Borrower may rescind or cancel any indebtedness or
obligation evidenced by any Account, modify, make adjustments to, extend, renew,
compromise or settle any material dispute, claim, suit or legal proceeding
relating to or sell or assign any Account, or interest therein, provided that
--------
the Borrower obtains the written consent of the Bank prior to doing any of the
foregoing (which consent shall not be unreasonably or untimely withheld or
delayed) Notwithstanding the foregoing, subject to the rights of the Bank under
the Loan Documents, unless a Default or an Event of Default shall have occurred
and be continuing, the Borrower may allow in the ordinary course of business as
adjustments to amounts owing under its Accounts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
balance, which the Borrower finds appropriate in accordance with sound business
judgment and (ii) a refund or credit due as a result of discounts, over-xxxxxxxx
and miscellaneous credits, all in accordance with the Borrower's ordinary course
of business consistent with its historical collection practices. The reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
of collection, whether incurred by the Borrower or the Bank, shall be borne by
the Borrower. Upon the sale or assignment of any Account as allowed by this
Section 5.07, the Bank will (as soon as reasonably practicable after receipt of
notice from the Borrower requesting the same but at the expense of the Borrower)
send the Borrower, for each jurisdiction in which a UCC financing statement is
on file to perfect the security interests granted to the Bank hereunder, a
termination statement to the effect that the Bank no longer claims a security
interest under such financing statement.
Section 5.08 Notification to Account Debtors. Upon the occurrence of a
-------------------------------
Default or an Event of Default, at the Bank's option, and upon notification by
the Bank to do so, the Borrower will promptly notify (and the Borrower hereby
authorizes the Bank so to notify) each Account Debtor in respect of any Account
that such Account has been assigned to the Bank and that any payments due or to
become due in respect of such Account are to be made directly to the Bank.
Section 5.09 Restriction on Liens. The Borrower will not, and will not
--------------------
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any Collateral, or sell any Collateral subject to
an understanding or agreement, contingent or otherwise, to repurchase such
Collateral (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the Uniform
Commercial Code as in effect in any applicable jurisdiction or any other similar
notice of Lien under any similar recording or notice statute; provided that the
provisions of this Section 5.09 shall not prevent the creation, incurrence,
assumption or existence of the following (with such Liens described below being
herein referred to as "Permitted Liens"):
-18-
(i) Liens created by the Loan Documents;
(ii) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established; and
(iii) Liens imposed by law securing the charges, claims, demands or
levies of carriers, warehousemen, mechanics and other like persons which
were incurred in the ordinary course of business which (A) do not in the
aggregate materially detract from the value of the property or assets
subject to such Lien or materially impair the use thereof in the operation
of the business of the Borrower or any Subsidiary or (B) are being
contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or assets
subject to such lien.
Section 5.10 Limitation on Guarantees. Neither the Borrower nor any of
------------------------
its Subsidiaries shall Guarantee any Debt of any Person or Persons in excess of
$100,000.00 in the aggregate at any time.
Section 5.11 [Intentionally deleted].
-----------------------
Section 5.12 Consolidations, Mergers and Sales of Assets. Neither the
-------------------------------------------
Borrower nor any Subsidiary will (i) consolidate or merge with or into any other
Person or (ii) sell, lease or otherwise transfer, directly or indirectly, all or
substantially all of the assets of the Borrower or such Subsidiary to any other
Person or Persons; provided that so long as no Default shall have occurred after
--------
giving effect thereto, (A) a Subsidiary may merge into the Borrower if the
Borrower is the surviving entity, and (B) the Borrower or any Subsidiary may
merge into or consolidate with another Person if the Borrower or such
Subsidiary, as the case may be, is the entity surviving such merger or
consolidation.
Section 5.13 Investments: Asset Acquisitions.
-------------------------------
(a) Investments. Neither the Borrower nor any Subsidiary will hold, make
-----------
or acquire any Investment in any Person, except:
(i) the Borrower and any Subsidiary may invest in cash and Cash
Equivalents;
(ii) the Borrower and any Subsidiary may acquire and hold receivables
owing to them, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
(iii) the Borrower and any Subsidiary may acquire and own investments
(including Debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
-19-
(iv) the Borrower and any Subsidiary may make loans and advances to
any employees in the ordinary course of business, provided such loans and
advances do not exceed at any time, in the aggregate, $250,000; and
(v) the Borrower may issue promissory notes evidencing the Class A
Distribution.
(b) Acquisitions. The Borrower will not, and will not permit any of its
------------
Subsidiaries to, enter into any Acquisition transaction except:
(i) the Borrower and any Subsidiary may acquire assets in the ordinary
course of business for fair consideration;
(ii) the Borrower and any Subsidiary may enter into any Acquisition
transaction with respect to which the purchase price consists of capital
stock of the acquiring Person; and
(iii) the Borrower and any Subsidiary may enter into any other
Acquisition transaction, but only to the extent (A) the purchase price
(including any assumption of liabilities in connection therewith, but
excluding any portion of the purchase price for any such Acquisition
consisting of capital stock or other securities of the purchaser) of all
such Acquisitions occurring during any fiscal year of the Borrower does not
exceed $5,000,000.00 and (B) after giving effect on a pro forma basis to
such Acquisition (including but not limited to any Debt to be incurred or
assumed by the purchaser in connection therewith), no Default would exist
hereunder.
Section 5.14 Payments, etc. The Borrower will not, and will not permit
--------------
any of its Subsidiaries to, make any distribution, dividend, payment or delivery
of property or cash to its members as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any membership
or other interests or shares of any class of its capital stock now or hereafter
outstanding (or any warrants for or options or stock appreciation rights in
respect of any of such shares), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise acquire for
consideration any membership interest in the Borrower or any shares of capital
stock or other interest in any other Subsidiary, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock), except that:
(i) any Subsidiary of the Borrower may pay dividends to the Borrower;
(ii) provided no Default shall have occurred and be continuing or
would exist as a result thereof, before the Reorganization is completed and
the IPO is closed, the Borrower may pay Tax Distributions (as defined in
Section 3.3(1)(i) of the Operating Agreement);
-20-
(iii) provided no Default shall have occurred and be continuing or
would exist as a result thereof, the Borrower may make the Class A
Distribution; and
(iv) the Borrower may pay any other dividends or distributions if,
after giving effect on a pro forma basis to such payment (A) no Default
would exist, and (B) the ratio of Total Consolidated Debt to Total
Consolidated Capitalization, as a percentage, would not exceed 50%.
Section 5.15 Use of Proceeds. The proceeds of the Revolving Loans made
---------------
under this Agreement will be used by the Borrower for permanent working capital
financing of the Borrower's accounts receivable and inventory and/or for the
Class A Distribution. The proceeds of the Term Loans made under this Agreement
will be used by the Borrower to purchase equipment. No such use of the proceeds
for general corporate purposes will be, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any "margin
stock" within the meaning of Regulation U.
Section 5.16 Transactions with Other Persons. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, enter into any agreement with any
Person whereby any of them shall agree to any restriction on the right of the
Borrower or any of its Subsidiaries to amend or waive any of the provisions of
this Agreement or any other Loan Document.
Section 5.17 Limitations on Debt. The Borrower will not at any time
-------------------
(other than the period, beginning no later than June 1, 1999, of six Business
Days following completion of the Reorganization) permit the ratio of Total
Consolidated Debt to Total Consolidated Capitalization, as a percentage, to
exceed the correlative percentage set forth below for the period indicated:
Maximum
Period Percentage
------ ----------
Closing Date through May 31, 1999 82%
June 1, 1999 through November 30, 1999 75%
December 1, 1999 through August 31, 2000 72%
September 1, 2000 through June 30, 2001 60%
July 1, 2001 and thereafter 50%
Section 5.18 Fixed Charge Coverage Ratio. The Borrower will not, as of
---------------------------
the end of any fiscal quarter on or after the end of the fiscal quarter ending
March 31, 1999, permit the Fixed Charge Coverage Ratio to be less than 2.5:1.0.
Section 5.19 Limitation on Operating Leases. The Borrower will not, and
------------------------------
will not cause any Subsidiary to, enter into any operating lease at any time if
the pro forma Fixed Charge Coverage Ratio after giving effect to such operating
lease during the most recent period used to determine compliance under Section
5.18 would be less than 2.5:1.0.
-21-
Section 5.20 Year 2000 Compatibility. The Borrower and its Subsidiaries
-----------------------
shall take all action necessary to assure that the computer based systems of the
Borrower and its Subsidiaries are able to operate and effectively process data
including dates on or after January 1, 2000. At the request of the Bank, the
Borrower shall provide the Bank reasonable assurance reasonably acceptable to
the Bank of the year 2000 compatibility of the Borrower and its Subsidiaries.
Section 5.21 Independence of Covenants. All covenants contained herein
-------------------------
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that such action or condition
would be permitted by an exception to, or otherwise be within the limitations of
another covenant shall not avoid the occurrence of a Default if such action is
taken or condition exists.
ARTICLE VI
DEFAULTS
Section 6.01 Events of Default. If one or more of the following events
-----------------
("Events of Default") shall have occurred and be continuing:
(i) the Borrower shall fail to pay, within 5 days after the date when
due, any principal, interest, fee, or any other amount payable hereunder or
under the Notes;
(ii) the Borrower shall fail to observe or perform any covenant
contained in Article V (other than those contained in Sections 5.01 through
5.03);
(iii) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clauses
(i) or (ii) above) for 30 days after notice thereof has been given to the
Borrower by the Bank;
(iv) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement
or other document delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made;
(v) the Borrower or any Subsidiary shall fail to make any payment or
perform any collateralization obligation in respect of any Material
Financial Obligations when due or within any applicable grace period;
(vi) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt of the Borrower or any
Subsidiary or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such Material Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof;
(vii) the Borrower or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its
-22-
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action to authorize
any of the foregoing;
(viii) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 90 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal Bankruptcy laws as now or
hereafter in effect;
(ix) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could reasonably be expected to cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $25,000;
(x) one or more judgments or orders for the payment of money in excess
of $25,000 in the aggregate shall be rendered against the Borrower or any
Subsidiary of the Borrower and such judgments or orders shall continue
unsatisfied and unstayed for a period of 30 days; or
(xi) a Change of Control shall have occurred;
then, and in every such event, while such event is continuing, the Bank may (A)
by notice to the Borrower terminate the Commitment and it shall thereupon
terminate, and (B) by notice to the Borrower declare the Loans (together with
accrued interest thereon) to be, and the Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind (except as set forth in clause (A) above), all of which are hereby
waived by the Borrower; provided that in the case of any Default or any Event of
--------
Default specified in clause 6.1(vii) or 6.1(viii) above with respect to the
Borrower, without any notice to the Borrower or any other act by the Bank, the
commitment to make Revolving Loans and Term Loans shall
-23-
thereupon terminate and the Loans (together with accrued interest and accrued
and unpaid fees thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
Section 7.01 [Intentionally deleted].
-----------------------
Section 7.02 Illegality. If, on or after the date of this Agreement, the
----------
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall make it
unlawful or impossible for the Bank to make, maintain or fund Loans and the Bank
shall so notify the Borrower, until the Bank notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, each Loan then
outstanding which bears interest at the LIBOR Market Index-Based Rate shall be
converted immediately to a Base Rate Loan and all new Loans shall be Base Rate
Loans.
Section 7.03 [Intentionally deleted].
-----------------------
Section 7.04 Base Rate Loans Substituted for Affected LIBOR Market Index-
------------------------------------------------------------
Based Loans. Upon the occurrence of any event or condition set forth in Section
-----------
7.02, each Loan then outstanding which bears interest at the LIBOR Market Index-
Based Rate shall be converted immediately to a Base Rate Loan and all new Loans
shall be Base Rate Loans. If the Bank notifies the Borrower that the
circumstances giving rise to such change in interest rate no longer apply, the
principal amount of each such Base Rate Loan shall cease immediately to
constitute a Base Rate Loan and shall thereafter bear interest in accordance
with Section 2.05(a).
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices. Unless otherwise specified herein, all notices,
-------
requests and other communications to a party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party: (i) at its address, facsimile number or telex
number set forth on the signature pages hereof, or (ii) at such other address,
facsimile number or telex number as such party may hereafter specify for the
purpose of communication hereunder by notice to the other party hereto. Each
such notice, request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answer back is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and
-24-
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails, certified mail, return receipt
requested, with appropriate first class postage prepaid, addressed as specified
in this Section or (iv) if given by any other means, when delivered at the
address specified in this Section 8.01. Rejection or refusal to accept, or the
inability to deliver because of a changed address of which no notice was given
shall not affect the validity of notice given in accordance with this Section.
Section 8.02 No Waivers. No failure by either party to exercise, no
----------
course of dealing with respect to, and no delay in exercising any right, power
or privilege hereunder or under the Notes shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided herein shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 8.03 Expenses. The Borrower shall pay (i) all reasonable out-of-
--------
pocket expenses of the Bank, including reasonable fees and disbursements of
special and local counsel for the Bank, in connection with the preparation and
administration of this Agreement and the other Loan Documents, any waiver or
consent thereunder or any amendment thereof or any Default or alleged Default
thereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Bank, including (without duplication) the reasonable
fees and disbursements of outside counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.
Section 8.04 Amendments and Waivers. Any provision of this Agreement or
----------------------
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the Bank.
Section 8.05 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of the Bank.
Section 8.06 Governing Law. This Agreement and the Notes shall be
-------------
governed by and construed in accordance with the laws of the Commonwealth of
Virginia.
Section 8.07 Arbitration: Submission to Jurisdiction.
---------------------------------------
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of,
or relating to the Loan Documents between the parties hereto (a "Dispute") shall
be resolved by binding arbitration conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and the Federal Arbitration Act.
Disputes may include, without limitation, tort claims, counterclaims, disputes
as to whether a matter is subject to arbitration, claims brought as class
actions, or claims arising from documents executed in the future. A judgment
upon the award may be entered in any court
-25-
having jurisdiction. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to swap agreements.
(b) All arbitration hearings shall be conducted in the city in which
the office of the Bank set forth on the signature page hereof is located. A
hearing shall begin within 90 days of demand for arbitration and all hearings
shall be concluded within 120 days of demand for arbitration. These time
limitations may not be extended unless a party shows cause for extension and
then for no more than a total of 60 days. The expedited procedures set forth in
Rule 51 et seq. of the Arbitration Rules shall be applicable to claims of less
than $1,000,000. Arbitrators shall be licensed attorneys selected from the
Commercial Financial Dispute Arbitration Panel of the AAA. The parties do not
waive applicable Federal or state substantive law except as provided herein.
(c) Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by self-
help to exercise or prosecute the following remedies, as applicable: (i) all
rights to foreclose against any real or personal property or other security by
exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to the parties' entitlement to such remedies is
a Dispute.
(d) Each party agrees that it shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waives any right
or claim to punitive or exemplary damages it may have now or which may arise in
the future in connection with any Dispute, whether the Dispute is resolved by
arbitration or judicially.
(e) The parties acknowledge that by agreeing to binding arbitration
they have irrevocably waived any right they may have to a jury trial with regard
to a Dispute.
Section 8.08 Counterparts; Integration; Effectiveness. This Agreement may
----------------------------------------
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. Each of this Agreement, the Notes and the other Loan Documents
shall be deemed to incorporate the other of said documents by reference and all
of said documents shall constitute the entire agreement and understanding among
the parties hereto and supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Bank of counterparts hereof
signed by each of the parties hereto.
Section 8.09 Confidentiality. The Bank agrees to hold all non-public
---------------
information obtained pursuant to the requirements of this Agreement in
accordance with its customary procedure for handling confidential information of
this nature and in accordance with safe and
-26-
sound banking practices, provided that nothing herein shall prevent the Bank
--------
from disclosing such information (i) to any other Person if reasonably
incidental to the administration of the Loans, (ii) upon the order of any court
or administrative agency, (iii) upon the request or demand of any regulatory
agency or authority, (iv) which had been publicly disclosed other than as a
result of a disclosure by the Bank prohibited by this Agreement, (v) in
connection with any litigation to which the Bank or its subsidiaries or parent
may be a party, (vi) to the extent necessary in connection with the exercise of
any remedy hereunder and (vii) to the Bank's legal counsel and independent
auditors.
Section 8.10 Severability; Modification. If any provision hereof is
--------------------------
invalid or unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions hereof shall remain in full force and
effect in such jurisdiction; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provisions in any other jurisdiction.
-27-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TREX COMPANY, LLC
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx, Chief Executive Officer
FIRST UNION NATIONAL BANK
Commercial Banking
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000 By: /s/ B. Xxxxx Xxxxxx
------------------------------------------
B. Xxxxx Xxxxxx, Vice PresidentFirst Union
-28-
EXHIBIT A
Form of Notice of Borrowing
_______________, ____
First Union National Bank
Commercial Finance Division
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn:
----------------------
Ladies and Gentlemen:
This notice shall constitute a "Notice of Borrowing" pursuant to Section
2.02(a) of the Amended and Restated Credit Agreement dated as of ____________,
1999 (the "Credit Agreement") between TREX COMPANY, LLC (the "Borrower") and
First Union National Bank (the "Bank"). Capitalized terms not otherwise
defined herein have the meanings ascribed to them in the Credit Agreement.
The date of the Loan will be ______ , _______
The principal amount of the Loan will be $________
Transfer Instructions:
[Insert appropriate delivery instructions, which shall include bank and
account number].
TREX COMPANY, LLC
By:
Name:
Title:
EXHIBIT B-1
Form of Note
Roanoke, Virginia
_______________, 1999
For value received, TREX COMPANY, LLC, a Delaware limited liability company
(the "Borrower"), promises to pay to the order of FIRST UNION NATIONAL BANK (the
"Bank") the unpaid principal amount of each Revolving Loan made by the Bank to
the Borrower pursuant to the Credit Agreement referred to below on the maturity
date provided for in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in accordance with the provisions of the
Credit Agreement.
All Loans made by the Bank and all repayments of the principal thereof
shall be recorded by the Bank and, if the Bank so elects in connection with any
transfer or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each Revolving Loan then outstanding shall be
endorsed by the Bank on the schedule attached to and made a part hereof,
provided that the failure of the Bank to make any such recordation or
--------
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is the Revolving Note referred to in the Amended and Restated
Credit Agreement dated as of the date hereof between the Borrower and the Bank
(as the same may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the mandatory and
optional prepayment hereof and the acceleration of the maturity hereof.
TREX COMPANY, LLC
By:
------------------------------
Name:
Title:
EXHIBIT B-2
Form of Note
Roanoke, Virginia
_______________, 1999
For value received, TREX COMPANY, LLC, a Delaware limited liability company
(the "Borrower"), promises to pay to the order of FIRST UNION NATIONAL BANK (the
"Bank") the unpaid principal amount of each Term Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on the maturity date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in accordance with the provisions of the Credit
Agreement.
All Loans made by the Bank and all repayments of the principal thereof
shall be recorded by the Bank and, if the Bank so elects in connection with any
transfer or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each Term Loan then outstanding shall be endorsed by
the Bank on the schedule attached to and made a part hereof, provided that the
--------
failure of the Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the Credit Agreement.
This note is the Term Note referred to in the Amended and Restated Credit
Agreement dated as of the date hereof between the Borrower and the Bank (as the
same may be amended from time to time, the "Credit Agreement"). Terms defined
in the Credit Agreement are used herein with the same meanings. Reference is
made to the Credit Agreement for provisions for the mandatory and optional
prepayment hereof and the acceleration of the maturity hereof.
TREX COMPANY, LLC
By:
-------------------------------
Name:
Title:
Definitions Appendix
--------------------
The definitions set forth in this Definitions Appendix are incorporated by
reference into Section 1.01 of the Amended and Restated Credit Agreement dated
as of March 23, 1999 between TREX COMPANY, LLC and First Union National
Bank (as the same may be amended, modified or supplemented from time to time,
the "Credit Agreement"). Reference in this Definitions Appendix to "this
Agreement", "herein", "hereof", "hereunder" and to any Article or Section shall
be interpreted to mean the Credit Agreement and the referenced Article or
Section, including this Definitions Appendix.
Definitions
-----------
"A/R Turnover" means, as of the last day of any calendar month, the
aggregate Net Unpaid Balance of all Eligible Accounts as of said day, divided by
the Net Monthly Sales for said month, multiplied by 30, the result to be
expressed as a number of days.
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Borrower, and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to the Borrower arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be characterized
as an account, contract right or general intangible under the Uniform Commercial
Code in effect in any jurisdiction) and all of the Borrower's rights in, to and
under all purchase orders for goods, services or other property, and all of the
Borrower's rights to any goods, services or other property represented by any of
the foregoing (including returned or repossessed goods and unpaid seller's
rights of rescission, replevin, reclamation and rights to stoppage in transit)
and all monies due to or to become due to the Borrower under all contracts for
the sale, lease or exchange of goods or other property and/or the performance of
services by it (whether or not yet earned by performance on the part of the
Borrower), in each case whether now in existence or hereafter arising or
acquired including, without limitation, the right to receive the proceeds of
said purchase orders and contracts and all collateral security and guarantees of
any kind given by any Person with respect to any of the foregoing.
"Account Debtor" means, with respect to any Account, any Person obligated
to make payment thereunder, including, without limitation, any account debtor
thereon.
"Acquisition," by any Person (herein called the "Acquiror"), means any
transaction involving the purchase, lease or other acquisition by such Acquiror
of any or all of the capital stock or assets of another Person that, for
purposes of preparing a statement of cash flows for such Acquiror prepared in
accordance with GAAP, would be considered "investing activity."
"Adjusted Consolidated Net Income" means, with reference to any period, the
net income (or loss) of the Borrower and its Subsidiaries for such period (taken
as a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between
the Borrower and its Subsidiaries and all other items required to be eliminated
in the course of the preparation of consolidated financial statements of the
Borrower and its Subsidiaries in accordance with GAAP, provided that there shall
--------
be excluded:
(i) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Borrower or
a Subsidiary, and the income (or loss) of any Person, substantially all of
the assets of which have been acquired in any manner, realized by such
other Person prior to the date of acquisition,
(ii) the income (or loss) of any Person (other than a Subsidiary) in
which the Borrower or any Subsidiary has an ownership interest, except to
the extent that any such income has been actually received by the Borrower
or such Subsidiary in the form of cash dividends or similar cash
distributions,
(iii) the undistributed earnings of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary,
(iv) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued
during such period,
(v) any aggregate net gain (but not any aggregate net loss) during
such period arising from the sale, conversion, exchange or other
disposition of capital assets (such term to include, without limitation,
(A) all non-current assets and, without duplication, (B) the following,
whether or not current: all fixed assets, whether tangible or intangible,
all inventory sold in conjunction with the disposition of fixed assets, and
all securities),
(vi) any gains resulting from any write-up of any assets (but not any
loss resulting from any write-down of any assets),
(vii) any net gain from the collection of the proceeds of life
insurance policies,
(viii) any gain arising from the acquisition of any security, or the
extinguishment, under GAAP, of any Debt, of the Borrower or any
Subsidiary,
(ix) any net income or gain (but not any loss) during such period from
(A) any change in accounting principles in accordance with GAAP, (B) any
prior period adjustments resulting from any change in accounting principles
in accordance with GAAP, (C) any extraordinary items, or (D) any
discontinued operation or the disposition thereof,
(x) any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of the investment in
such Subsidiary,
(xi) in the case of a successor to the Borrower by consolidation or
merger or as a transferee of its assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets, and
(xii) any portion of such net income that cannot be freely converted
into United States Dollars.
"Advance Rate Percentage" means, for any calendar month, (i) 90%, if the
A/R Turnover for the immediately preceding calendar month was 25 days or less
and (ii) 80%, if the A/R Turnover for the immediately preceding calendar month
was more than 25 days.
"Affiliate" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "Controlling Person") or (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Credit Agreement, as it may be
amended, modified or supplemented from time to time.
"Bank" means First Union National Bank, a national banking association, and
its successors and assigns.
"Base Rate" means for any day, the Prime Rate for such day adjusted by the
Variance.
"Base Rate Loan" means a Loan which bears interest at the Base Rate.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means TREX COMPANY, LLC, a Delaware limited liability company,
and its successors.
"Borrowing Base" means at any date the sum of (i) the Advance Rate
Percentage multiplied by the aggregate Net Unpaid Balance of all Eligible
Accounts and (ii) the lesser of (A) $5,000,000 or (B) 60% of the value of all
Eligible Inventory.
"Borrowing Base Certificate" means a certificate of the Borrower in a form
satisfactory to the Bank containing a computation of the Borrowing Base.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the Commonwealth of Virginia are authorized by law to
close.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligations" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Cash Equivalents" means (i) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States of any agency
thereof, (ii) commercial paper rated in the highest grade by a nationally
recognized credit rating agency or (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of the United States
or any state thereof and has capital, surplus and undivided profits aggregating
at least $250,000,000; provided, in each case that such investment matures
--------
within one year from the date of acquisition thereof by the Borrower.
"Change of Control" means any event or condition, a result of which is that
(i) Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X.
Ferrari cease, as a group, to own beneficially (A) before the completion of the
Reorganization, at least (1) a majority of the outstanding Class A Units; or (2)
40% of the issued Class A Units and Class B Units of the Borrower on a fully
diluted basis; or (B) after the completion of the Reorganization, at least 30%
of the voting common stock of TREX COMPANY, INC.; or (ii) after the completion
of the Reorganization, TREX COMPANY, INC. ceases to own beneficially all of the
membership interests in the Borrower.
"CIGNA Agreements" means (i) that certain Members' Agreement dated as of
August 29, 1996 among the Borrower and each of the "Purchasers" and "Management
Holders" (as defined therein); (ii) that certain Limited Liability Company
Agreement dated August 29, 1996 among the members of the Borrower; and (iii) the
Securities Purchase Agreements; as said agreements exist on the Effective Date
and which have been previously delivered to the Bank.
"Class A Distribution" means the special cash distribution by the Borrower
to each holder of its Class A Units in connection with the Reorganization.
"Class A Units" has the meaning set forth in the Operating Agreement.
"Class B Units" has the meaning set forth in the Operating Agreement.
"Closing Date" means the date, not later than March 15, 1999, on which the
Bank determines that the conditions specified in or pursuant to Section 3.01
have been satisfied.
"Collateral" means all right, title and interest of the Borrower in the
following, whether now owned or existing or hereafter acquired, created or
arising, whether tangible or intangible, and regardless of where located (except
only as to Equipment, which, by definition, is located in the Commonwealth of
Virginia) :
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) the Collateral Accounts, all cash deposited therein from time to
time, the Liquid Investments made pursuant to Section 3.04 of the Security
Agreement and other monies and property (including deposit accounts) of any
kind of the Borrower maintained with or in the possession or under the
control of the Bank;
(v) all books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of the Borrower pertaining to any of the Collateral;
and
(vi) all Proceeds of all or any of the Collateral described in clauses
(i) through (iv), above.
"Collateral Accounts" means the Cash Proceeds Account, the Operating
Account and the Insurance Account.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Income Available for Fixed Charges" means, with respect to
any period, Adjusted Consolidated Net Income for such period plus all amounts
deducted in the computation thereof on account of (i) Fixed Charges, (ii)
charges for depreciation and amortization for such period, (iii) charges for
management fees paid during such period, (iv) taxes imposed on or measured by
income or excess profits, (v) any prepayment penalty paid in connection with
that certain Securities Purchase Agreement dated as of August 29, 1996 between
the Borrower and each of the "Purchasers" (as defined therein), and (vi)
deferred income taxes resulting from the Reorganization.
"Consolidated Net Worth" means, as of the date of determination,
(i) the total assets of the Borrower and its Subsidiaries which would
be shown as assets on a consolidated balance sheet of the Borrower and its
Subsidiaries as of such time prepared in accordance with GAAP, after eliminating
all amounts properly attributable to minority interests, if any, in the stock
and surplus of Subsidiaries, minus
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(ii) the total liabilities of the Borrower and its Subsidiaries which
would be shown as liabilities on a consolidated balance sheet of the
Borrower and its Subsidiaries as of such time prepared in accordance with
GAAP.
"Consolidated Subsidiary" means with respect to any Person at any date any
Subsidiary of such Person or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date in accordance with GAAP.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable arising in the ordinary course of
business), (iv) all obligations of such Person as lessee under Capital Leases,
(v) all obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or substantially
similar securities or property, (vi) all non-contingent obligations (and, for
purposes of Section 5.09 and the definitions of Material Debt and Material
Financial Obligations, all contingent obligations) of such Person to reimburse
any bank or other person in respect of amounts paid under a letter of credit,
bankers' acceptance or similar instrument, (vii) all obligations of others
secured by a Lien on any asset of such Person, whether or not such obligation is
assumed by such Person and (viii) all obligations of others Guaranteed by such
Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Dollars" and the sign "$" means lawful money of the United States of
America.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 8.08.
"Eligible Accounts" means all billed Accounts for goods delivered or
services rendered owing to the Borrower as the Bank, in its reasonable
discretion, shall from time to time elect to consider Eligible Accounts for
purposes of the Credit Agreement. Without limiting the discretion of the Bank
to consider any such accounts not to be Eligible Accounts, and by way of example
only of the types of accounts that the Bank may consider not to be Eligible
Accounts, the Bank may consider the following classes of accounts not to be
Eligible Accounts:
(i) Accounts arising out of sales that are not in the ordinary course
of the business of the Borrower;
(ii) Accounts on terms other than those normal or customary in the
business of the Borrower;
(iii) Accounts owing from any person that is an Affiliate of the
Borrower;
(iv) Accounts which are outstanding more than 70 days past the
original invoice date with respect thereto;
(v) Accounts of any Account Debtor if 50% or more of the Accounts of
such Account Debtor are more than 70 days past original invoice date;
(vi) Accounts the liability for which has been disputed by the Account
Debtor;
(vii) Accounts owing from any Person that shall take or be the
subject of any action or proceeding of the type described in Section
6.01(vii) or (viii) hereof;
(viii) Accounts owing from any Person that is also a supplier to or
creditor of the Borrower;
(ix) Accounts arising out of sales to Account Debtors outside the
United States, unless the account is (A) fully backed by an irrevocable
letter of credit containing terms acceptable to the Bank issued by a
financial institution satisfactory to the Bank or (B)on terms acceptable to
the Bank;
(x) Accounts arising out of sales on a xxxx-and-hold, guaranteed sale,
sale-and- return, sale on approval or consignment basis or subject to any
right of return, set-off or charge-back;
(xi) Accounts owing from an Account Debtor that is an agency,
department or instrumentality of the United States or any state
governmental authority in the United States unless the Borrower shall have
satisfied the requirements of the Assignment of Claims Act of 1940, as
amended, and any similar state legislation in respect thereof and the Bank
is satisfied as to the absence of set-offs, counterclaims and other
defenses to payment on the part of the United States or such state
governmental authority;
(xii) Accounts representing xxxxxxxx in excess of costs and earnings
and retainage;
(xiii) Accounts in respect of which the Security Agreement does not
or has ceased to create a valid and perfected first priority Lien in favor
of the Bank, subject only to Permitted Liens; and
(xiv) any other Accounts, the validity, collectibility or amount of
which is determined in good faith by the Borrower or the Bank to be
doubtful.
"Eligible Inventory" means all Inventory of the Borrower consisting of
finished goods, to be valued at the lower of cost or fair market value, as to
which the Bank has a first priority perfected security interest subject only to
Permitted Liens, of a kind usually and customarily sold by the Borrower and
which is not, because of damage, age, unmerchantability, obsolescence or any
other condition or circumstance, materially impaired in condition, value or
marketability in the good faith opinion of the Bank or the Borrower.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Borrower, located in the Commonwealth of Virginia, and
shall also mean and include, without limitation, all vehicles, machinery, tools,
furniture, furnishings, office equipment and trade fixtures now owned or
hereafter acquired by the Borrower, located in the Commonwealth of Virginia.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" has the meaning set forth in Section 6.01.
"Fixed Charge Coverage Ratio" means, at any time, the ratio of (i)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to, such
time to (ii) Fixed Charges for such period.
"Fixed Charges" means, with respect to any period and without duplication,
the sum of (i) Interest Charges for such period and (ii) Lease Rentals for such
period.
"GAAP" means, generally accepted accounting principles as in effect from
time to time in the United States of America.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided that the term
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Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics.
"Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Borrower and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Borrower and its Subsidiaries in accordance with
GAAP); (i) all interest in respect of Debt of the Borrower and its Subsidiaries
(including imputed interest on Capital Lease Obligations) deducted in
determining Adjusted Consolidated Net Income for such period, together with all
interest capitalized or deferred during such period, and (ii) all debt discount
and expense (other than in respect of the Notes) amortized or required to be
amortized in the determination of Adjusted Consolidated Net Income for such
period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Inventory" means all "inventory" (as defined in the UCC) now owned or
hereafter acquired by the Borrower, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"Investment" means any investment in any Person, whether by means of share
purchase, capital contribution, loan, time deposit or otherwise.
"IPO" has the meaning set forth in the recitals to this Agreement.
"Item" means any "item" as defined in Section 4-104 of the UCC, and shall
also mean and include checks, drafts, money orders or other media of payment.
"Lease Rentals" means, with respect to any period, the sum of the rental
and other obligations required to be paid during such period by the Borrower or
any Subsidiary as lessee under all leases of real or personal property (other
than Capital Leases), excluding any amount required to be paid by the lessee
(whether or not therein designated as rental or additional rental) on account of
maintenance or repairs, insurance, taxes, assessments, water rates and similar
charges, provided that, if at the date of determination, any such rental or
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other obligations (or portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease, the amount of such
obligations (or such portion thereof) (i) shall be assumed to be equal to the
amount of such obligations for the period of 12 consecutive calendar months
immediately preceding the date of determination or (ii) if the related lease was
not in effect during such preceding 12-month period, shall be the amount
estimated by the chief financial officer or chief accounting officer of the
Borrower on a reasonable basis and in good faith.
"LIBOR Market Index-Based Rate" has the meaning set forth in Section
2.05(a).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.
"Loans" means the Revolving Loans and the Term Loans made pursuant to
Section 2.01.
"Loan Documents" means this Agreement, the Notes and the Security
Agreement, collectively, and "Loan Document" means any of them.
"Material Adverse Effect" means (i) any material adverse effect upon the
condition (financial or otherwise), results of operations, properties, assets,
business or prospects of the Borrower or of the Borrower and its Consolidated
Subsidiaries, taken as a whole; (ii) a material adverse effect on the ability of
the Borrower to consummate the transactions contemplated hereby to occur on the
Closing Date; (iii) a material adverse effect on the ability of the Borrower to
perform its obligations under this Agreement and the Notes or (iv) a material
adverse effect on the rights and remedies of the Bank under this Agreement and
the Notes.
"Material Debt" means Debt (other than the Notes) of the Borrower and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal or face amount exceeding $100,000.
"Material Financial Obligations" means a principal or face amount of Debt
and/or payment obligations in respect of Derivatives Obligations of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, exceeding in the aggregate $100,000.
"Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $25,000.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Monthly Sales" means, for any calendar month, the Borrower's gross
sales for said month, less returns, allowances and discounts, and other
adjustments.
"Net Unpaid Balance" means at any date the unpaid balance of an Eligible
Account at such date not including any unearned finance charges, late payment
charges or other charges, or any extension, service or collection fees in
respect thereof.
"Notes" means the Revolving Note and the Term Note.
"Notice of Borrowing" means a Notice of Borrowing (as defined in Section
2.02(a)).
"Obligations" means:
(i) all principal of and interest (including, without limitation, any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Borrower,
whether or not allowed or allowable as a claim in any such proceeding) on any
loan, fees payable or reimbursement obligation under, or any note issued
pursuant to, this Agreement or any other Loan Document;
(ii) all other amounts now or hereafter payable by the Borrower and
all other obligations or liabilities now existing or hereafter arising or
incurred (including, without limitation, any amounts which accrue after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on the part of the
Borrower pursuant to this Agreement or any other Loan Document;
(iii) all Derivatives Obligations (including, without limitation, any
amounts which accrue after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of
the Borrower, whether or not allowed or allowable as a claim in any such
proceeding) of the Borrower to the Bank;
(iv) all other indebtedness, obligations and liabilities of the
Borrower to the Bank, now existing or hereafter arising or incurred,
whether or not evidenced by notes or other instruments, and whether such
indebtedness, obligations and liabilities are direct or indirect, fixed or
contingent, liquidated or unliquidated, due or to become due, secured or
unsecured, joint, several or joint and several, related or unrelated to the
Loans, similar or
dissimilar to the indebtedness arising out of or in connection with this
Agreement or of the same or a different class of indebtedness as the
indebtedness arising out of or in connection with this Agreement,
including, without limitation, any overdrafts in any deposit accounts
maintained by the Borrower with the Bank, all obligations of the Borrower
with respect to letters of credit, if any, issued by the Bank for the
account of the Borrower any indebtedness of the Borrower that is purchased
by or assigned to the Bank;
together in each case with all renewals, modifications, consolidations or
extensions thereof.
"Operating Account" means the demand deposit account maintained with the
Bank by the Borrower on which the Borrower draws checks to pay its operating
expenses, which account is linked to the cash management services provided by
the Bank to the Borrower pursuant to the Services Agreement.
"Operating Agreement" means that certain Limited Liability Company
Agreement of the Borrower dated August 29, 1996, as amended, among all of the
members of the Borrower.
"Parent" means, with respect to the Bank, any Person controlling the Bank.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Perfection Certificate" means a certificate of each of the Borrower and
Guarantor, substantially in the form of Exhibit A to the Security Agreement,
completed and supplemented with the schedules and attachments contemplated
thereby to the satisfaction of the Bank, and duly executed by the chief
executive officer, president or chief financial officer of the Borrower and the
chief executive officer of the Guarantor, respectively.
"Permitted Liens" means the Security Interests and the other Liens on the
Collateral permitted to be created, to be assumed or to exist pursuant to
Section 5.09.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate announced by the Bank from time to time as its
Prime Rate, as such rate may change from time to time with changes to occur on
the date the Bank's Prime Rate changes. The Bank's Prime Rate is one of several
interest rate bases used by the Bank. The
Bank lends at rates above and below the Bank's Prime Rate, and the Borrower
acknowledges that the Bank's Prime Rate is not represented or intended to be the
lowest or most favorable rate of interest offered by the Bank.
"Proceeds" means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of or other realization upon or
payment for the use of, Collateral, including (without limitation) all claims of
the Borrower against third parties for loss of, damage to or destruction of, or
for proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or requisition
payments with respect to any Collateral, in each case whether now existing or
hereafter arising.
"Quarterly Date" means the first Business Day of each January, April, July
and October.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Reorganization" has the meaning set forth in the recitals to this
Agreement.
"Revolving Commitment" means $10,000,000.00, as such amount may be
increased or decreased pursuant to this Agreement.
"Revolving Credit Period" means the period from and including the Closing
Date to but not including the Termination Date.
"Revolving Loan" means a loan made pursuant to Section 2.01(a).
"Revolving Note" means a promissory note of the Borrower, substantially in
the form of Exhibit B-1 hereto, evidencing the obligation of the Borrower to
repay the Revolving Loans.
"Securities Purchase Agreements" means those certain Securities Purchase
Agreements dated as of August 29, 1996, as amended as of March 1, 1997 and as of
December 15, 1997, between the Borrower and the Purchasers (as defined therein)
and as further amended from time to time.
"Security Agreement" means the Amended and Restated Security Agreement
between the Borrower and the Bank, as it may be amended, modified or
supplemented from time to time.
"Services Agreement" means the description of the Sweep Plus Service
provided by the Bank to the Borrower, the terms of which are hereby incorporated
in this Agreement by reference.
"Subordinated Debt" of any Person means all Debt which (i) bears interest
at rates not greater than such Person shall reasonably determine to be the
prevailing market rate, at the time such Subordinated Debt is issued, for
interest on comparable subordinated debt issued by comparable issuers, (ii) is
subordinated in right of payment to such Person's indebtedness,
obligations and liabilities to the Bank under the Loan Documents pursuant to
payment and subordination provisions satisfactory in form and substance to the
Bank and (iii) is issued pursuant to loan documents having covenants and events
of default that are satisfactory in form and substance to the Bank but that in
no event are less favorable, including with respect to rights of acceleration,
to the Borrower than the terms hereof.
"Subsidiary" means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Term Commitment" means $7,500,000.
"Term Loan" means a loan made pursuant to Section 2.01(b).
"Term Loan Period" means the period from and including the Closing Date to
but not including August 31, 1999.
"Term Note" means a promissory note of the Borrower, substantially in the
form of Exhibit B-2 hereto, evidencing the obligation of the Borrower to repay
the Term Loans.
"Termination Date" means May 31, 2001, as said date may be extended
pursuant to Section 2.07(b).
"Total Consolidated Debt" means, as of the date of determination, the total
of all Debt of the Borrower and its Subsidiaries outstanding on such date, after
eliminating all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Borrower and its
Subsidiaries in accordance with GAAP.
"Total Consolidated Capitalization" means, as of any date of determination
with respect to the Borrower, the sum of Total Consolidated Debt and
Consolidated Net Worth.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the Commonwealth of Virginia; provided that if by reason of mandatory provisions
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of law, for matters pertaining only to the perfection or the effect of
perfection or non-perfection of the Security Interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Virginia, " UCC " means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the PBGC or
any other Person under Title IV of ERISA.
"United States" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"Variance" means a rate per annum (which may be a negative number) above or
below the Base Rate which the Bank, in its sole discretion, determines is
appropriate to adjust the Base Rate in order that the interest rate on the Loans
converted to Base Rate Loans in accordance with Section 7.04 of this Agreement
will be comparable to the LIBOR Market Index-Based Rate.
Usage
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The following rules of construction and usage shall be applicable to any
instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings when
used in any instrument governed hereby and in any certificate or other document
made or delivered pursuant thereto unless otherwise defined therein.
(b) The words "hereof", "herein", "hereunder" and words of similar import
when used in an instrument refer to such instrument as a whole and not to any
particular provision or subdivision thereof; references in any instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(c) The definitions contained in this Appendix are equally applicable to
both the singular and plural forms of such terms and to the masculine as well as
to the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to below or in
any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
