EXHIBIT 10.41
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AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
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XXX XXXX XX XXX XXXX COMMERCIAL CORPORATION
(AS LENDER AND AS AGENT)
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WITH
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WINCUP HOLDINGS, L.P.
WINCUP HOLDINGS, INC.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
and
RADNOR HOLDINGS CORPORATION
(BORROWERS)
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December 5, 1996
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TABLE OF CONTENTS
I. DEFINITIONS...................................................................... 1
1.1. Accounting Terms........................................................... 1
1.2. General Terms.............................................................. 1
1.3. Uniform Commercial Code Terms.............................................. 18
1.4. Certain Matters of Construction............................................ 18
II. ADVANCES, PAYMENTS............................................................... 18
2.1.............................................................................. 18
(b) Holdings Borrowing Base............................................... 19
(c) Acquisition Borrowing Base............................................ 20
(d) StyroChem Borrowing Base.............................................. 20
(e) Radnor Borrowing Base................................................. 21
(f) Discretionary Rights.................................................. 21
(g) Inventory Advances.................................................... 21
2.2. Procedure for Borrowing.................................................... 22
2.3. Disbursement of Advance Proceeds........................................... 24
2.4. Intentionally Omitted...................................................... 25
2.5. Maximum Advances; Repayment of Excess Advances............................. 25
2.6. Repayment of Advances...................................................... 25
2.7. Intentionally Omitted...................................................... 26
2.8. Statement of Account....................................................... 26
2.9. Letters of Credit.......................................................... 26
2.10. Issuance of Letters of Credit.............................................. 27
2.11. Requirements For Issuance of Letters of Credit............................. 27
2.12. Additional Payments........................................................ 29
2.13. Manner of Borrowing and Payment............................................ 29
III. INTEREST AND FEES................................................................ 32
3.1. Interest................................................................... 32
3.2. Letter of Credit Fees...................................................... 32
3.3. (a) Closing Fee........................................................... 33
(b) Facility Fee.......................................................... 33
(c) Agency Fee............................................................ 33
3.4. (a) Collateral Evaluation Fee............................................. 33
(b) Collateral Monitoring Fee............................................. 33
3.5. Computation of Interest and Fees........................................... 34
3.6. Maximum Charges............................................................ 34
3.7. Increased Costs............................................................ 34
3.8. Basis For Determining Interest Rate Inadequate or Unfair................... 35
3.9. Capital Adequacy........................................................... 36
IV. COLLATERAL: GENERAL TERMS....................................................... 36
4.1. Acknowledgement and Grant of Security Interests............................ 36
4.2. Perfection of Security Interest............................................ 37
4.3. Disposition of Collateral.................................................. 37
4.4. Preservation of Collateral................................................. 38
4.5. Ownership of Collateral.................................................... 38
4.6. Defense of Agent's and Lender's Interests.................................. 38
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4.7. Books and Records.......................................................... 39
4.8. Financial Disclosure....................................................... 39
4.9. Compliance with Laws....................................................... 40
4.10. Inspection of Premises..................................................... 40
4.11. Insurance.................................................................. 40
4.12. Failure to Pay Insurance................................................... 41
4.13. Payment of Taxes........................................................... 41
4.14. Payment of Leasehold Obligations........................................... 42
4.15. Receivables................................................................ 42
(a) Nature of Receivables................................................. 42
(b) Solvency of Customers................................................. 42
(c) Locations of Borrower................................................. 42
(d) Collection of Receivables............................................. 42
(e) Notification of Assignment of Receivables............................. 43
(f) Power of Agent to Act on Borrowers' Behalf............................ 43
(g) No Liability.......................................................... 44
(h) Establishment of a Lockbox Account, Dominion Account.................. 44
(i) Adjustments........................................................... 44
4.16. Inventory.................................................................. 44
4.17. Maintenance of Equipment................................................... 44
4.18. Exculpation of Liability................................................... 45
4.19. Environmental Matters...................................................... 45
V. REPRESENTATIONS AND WARRANTIES................................................... 46
5.1. Authority.................................................................. 46
5.2. Formation and Qualification................................................ 46
5.3. Survival of Representations and Warranties................................. 47
5.4. Tax Returns................................................................ 47
5.5. Financial Statements....................................................... 47
5.6. Corporate Name............................................................. 48
5.7. O.S.H.A. and Environmental Compliance...................................... 48
5.8. Solvency; No Litigation, Violation, Indebtedness or Default................ 49
5.9. Patents, Trademarks, Copyrights and Licenses............................... 50
5.10. Licenses and Permits....................................................... 51
5.11. Default of Indebtedness.................................................... 51
5.12. No Default................................................................. 51
5.13. No Burdensome Restrictions................................................. 51
5.14. No Labor Disputes.......................................................... 51
5.15. Margin Regulations......................................................... 51
5.16. Investment Company Act..................................................... 51
5.17. Disclosure................................................................. 51
5.18. Delivery of Acquisition Agreement.......................................... 52
5.19. Swaps...................................................................... 52
5.20. Conflicting Agreements..................................................... 52
5.21. Application of Certain Laws and Regulations................................ 52
5.22. Business and Property of Borrower.......................................... 52
5.23. Acquisition................................................................ 52
VI. AFFIRMATIVE COVENANTS............................................................ 53
6.1. Payment of Fees............................................................ 53
6.2. Conduct of Business and Maintenance of Existence and Assets................ 53
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6.3. Violations.................................................................. 53
6.4. Government Receivables...................................................... 53
6.5. Net Worth................................................................... 54
6.6. Current Ratio............................................................... 54
6.7. Fixed Charge Coverage....................................................... 54
6.8. Interest Coverage........................................................... 54
6.9. Net Income.................................................................. 54
6.10. Execution of Supplemental Instruments....................................... 54
6.11. Payment of Indebtedness..................................................... 54
6.12. Standards of Financial Statements........................................... 54
6.13. Exercise of Rights.......................................................... 55
VII. NEGATIVE COVENANTS................................................................ 55
7.1. Merger, Consolidation, Acquisition and Sale of Assets....................... 55
7.2. Creation of Liens........................................................... 55
7.3. Guarantees.................................................................. 55
7.4. Investments................................................................. 55
7.5. Loans....................................................................... 56
7.6. Capital Expenditures........................................................ 56
7.7. Dividends................................................................... 56
7.8. Indebtedness................................................................ 58
7.9. Nature of Business.......................................................... 58
7.10. Transactions with Affiliates................................................ 58
7.11. Leases...................................................................... 58
7.12. Subsidiaries................................................................ 58
7.13. Fiscal Year and Accounting Changes.......................................... 59
7.14. Pledge of Credit............................................................ 59
7.15. Amendment of Agreement of Limited Partnership, Etc......................... 59
7.16. Compliance with ERISA....................................................... 59
7.17. Senior Notes................................................................ 60
7.18. Intentionally Omitted....................................................... 60
7.19. Intentionally Omitted....................................................... 60
7.20. Prepayment of Indebtedness.................................................. 60
VIII. CONDITIONS PRECEDENT.............................................................. 60
8.1. Conditions to Initial Advances.............................................. 60
(a) Notes.................................................................. 60
(b) Filings, Registrations and Recordings.................................. 60
(c) Proceedings of Borrowers............................................... 60
(d) Incumbency Certificates of Borrowers................................... 61
(e) Certificates........................................................... 61
(f) Good Standing Certificates............................................. 61
(g) Legal Opinion.......................................................... 61
(h) No Litigation.......................................................... 61
(i) Financial Condition Opinions........................................... 61
(j) Collateral Examination................................................. 62
(k) Fees................................................................... 62
(l) Pro Forma Financial Statements......................................... 62
(m) Other Documents........................................................ 62
(n) Other Documents........................................................ 62
(o) Insurance.............................................................. 62
(p) Environmental Reports.................................................. 62
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(q) Payment Instructions.................................................. 62
(r) Blocked Accounts...................................................... 62
(s) Consents.............................................................. 63
(t) No Material Adverse Change............................................ 63
(u) Leasehold Agreements.................................................. 63
(v) Contract Review....................................................... 63
(w) Closing Certificate................................................... 63
(x) Borrowing Base........................................................ 63
(y) Compliance............................................................ 63
(z) Agreements............................................................ 64
(aa) Acquisition........................................................... 64
8.2. Conditions to Each Advance................................................. 64
(a) Representations and Warranties........................................ 64
(b) No Default............................................................ 64
(c) Maximum Advances...................................................... 64
IX. INFORMATION AND GENERAL PARTNER.................................................. 65
9.1. Disclosure of Material Matters............................................. 65
9.2. Schedules.................................................................. 65
9.3. Intentionally Omitted...................................................... 65
9.4. Litigation................................................................. 65
9.5. Material Occurrences....................................................... 66
9.6. Government Receivables..................................................... 66
9.7. Annual Financial Statements................................................ 66
9.8. Quarterly Financial Statements............................................. 67
9.9. Monthly Financial Statements............................................... 67
9.10. Other Reports.............................................................. 67
9.11. Additional Information..................................................... 67
9.12. Projected Operating Budget................................................. 68
9.13. Intentionally Omitted...................................................... 68
9.14. Notice of Suits, Adverse Events............................................ 68
9.15. ERISA Notices and Requests................................................. 68
9.16. Additional Documents....................................................... 69
X. EVENTS OF DEFAULT................................................................ 69
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT....................................... 72
11.1. Rights and Remedies........................................................ 72
11.2. Agent's Discretion......................................................... 73
11.3. Setoff..................................................................... 74
11.4. Rights and Remedies not Exclusive.......................................... 74
11.5. Actions in Concert......................................................... 74
XII. WAIVERS AND JUDICIAL PROCEEDINGS................................................. 74
12.1. Waiver of Notice........................................................... 74
12.2. Delay...................................................................... 74
12.3. Jury Waiver................................................................ 74
XIII. EFFECTIVE DATE AND TERMINATION................................................... 75
13.1. Term....................................................................... 75
13.2. Termination................................................................ 75
XIV. REGARDING AGENT.................................................................. 76
14.1. Appointment................................................................ 76
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14.2. Nature of Duties.......................................................... 76
14.3. Lack of Reliance on Agent and Resignation................................. 77
14.4. Certain Rights of Agent................................................... 77
14.5. Reliance.................................................................. 78
14.6. Notice of Default......................................................... 78
14.7. Indemnification........................................................... 78
14.8. Agent in its Individual Capacity.......................................... 78
14.9. Delivery of Documents..................................................... 79
14.10. Borrowers' Undertaking to Agent........................................... 79
XIV. MISCELLANEOUS.................................................................... 79
15.1. Governing Law............................................................. 79
15.2. Entire Understanding...................................................... 79
15.3. Successors and Assigns; Participations; New Lenders....................... 81
15.4. Application of Payments................................................... 82
15.5. Indemnity................................................................. 82
15.6. Notice.................................................................... 83
15.7. Survival.................................................................. 84
15.8. Severability.............................................................. 84
15.9. Expenses.................................................................. 84
15.10. Injunctive Relief......................................................... 84
15.11. Consequential Damages..................................................... 85
15.12. Captions.................................................................. 85
15.13. Construction.............................................................. 85
XVI. BORROWING AGENCY................................................................. 85
16.1. Borrowing Agency Provisions............................................... 85
16.2. Waiver of Subrogation..................................................... 86
XVII. CROSS-GUARANTY................................................................... 86
17.1. Cross Guaranty............................................................ 86
17.2. Contribution with Respect to Guaranty Obligations......................... 86
17.3. Obligations Absolute...................................................... 87
17.4. Waiver.................................................................... 88
17.5. Recovery.................................................................. 89
17.6. Liability Cumulative...................................................... 89
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EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.9 - Form of Letter of Credit and Security Agreement
Exhibit 5.5(b) - Financial Projections
Exhibit 8.1(i) - Form of Officers' Certificate
Exhibit 15.3 - Form of Commitment Transfer Supplement
SCHEDULES
Schedule 1.2 - Permitted Encumbrances
Schedule 4.5 - Locations of Equipment and Inventory
Schedule 4.15 - Location of Borrowers' Executive Offices
Schedule 4.20 - Financing Statements
Schedule 5.2(a) - Formation and Qualification
Schedule 5.2(b) - Subsidiaries
Schedule 5.4 - Federal Tax Identification Numbers
Schedule 5.6 - Corporate Names
Schedule 5.8(b) - Pending Litigation
Schedule 5.8(d) - Multiemployer Plans
Schedule 5.9 - Licenses, Trademarks, Patents, Copyrights,
Source Code Escrow Agreements
Schedule 5.10 - Licenses and Permits
Schedule 5.14 - Labor Disputes
Schedule 7.3 - Guarantees
Schedule 8.1(y) - Compliance Certificate
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AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
Amended and Restated Revolving Credit and Security Agreement dated as
of December 5, 1996 between WINCUP HOLDINGS, L.P. ("Wincup"), WINCUP HOLDINGS,
INC. ("Holdings"), SP ACQUISITION CO. ("Acquisition"), STYROCHEM INTERNATIONAL,
INC. ("StyroChem") and RADNOR HOLDINGS CORPORATION ("Radnor") (Wincup, Holdings,
Acquisition, StyroChem and Radnor each, a "Borrower" and jointly and severally,
the "Borrowers") the undersigned financial institutions and such financial
institutions which become a party hereto pursuant to Section 15.3 (collectively,
the "Lenders" and individually a "Lender") and THE BANK OF NEW YORK COMMERCIAL
CORPORATION ("BNYCC"), a corporation organized under the laws of the State of
New York, as administrative and collateral agent for the Lenders (BNYCC, in such
capacity, the "Agent").
B A C K G R O U N D
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Wincup and Holdings entered into a Revolving Credit, Term Loan and
Security Agreement dated as of January 22, 1996 (as same may have been amended,
modified or supplemented, the "Existing Loan Agreement"). By execution of this
Agreement, Wincup, Holdings, Agent and Lenders wish to add certain entities as
Borrowers and to amend and restate the Existing Loan Agreement on the terms and
conditions hereinafter set forth.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Wincup, Holdings, Acquisition, StyroChem, Radnor, Agent and Lenders
hereby agree as follows:
I. DEFINITIONS.
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1.1. Accounting Terms. As used in this Agreement or any certificate,
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report, note or other document made or delivered pursuant to this Agreement,
accounting terms not defined in Section 1.2 or elsewhere in this Agreement and
accounting terms partly defined in Section 1.2 to the extent not defined, shall
have the respective meanings given to them under GAAP; provided, however,
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whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP applied in preparation of the audited
financial statements of Borrowers on a consolidated basis for the fiscal period
ended June 30, 1996.
1.2. General Terms. For purposes of this Agreement the following
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terms shall have the following meanings:
"Acquisition" shall mean SP Acquisition Co., a corporation
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organized and existing under the laws of the State of Delaware.
"Acquisition Agreement" shall mean the Stock Purchase Agreement
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including all exhibits and schedules thereto dated as of October 28, 1996 among
Xxxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxxxxx Charitable Trust, Xxxxx River Paper
Company, Inc., Grupo Industrial Hermes, S.A. de C.V., X.X. Xxxxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxx X. Xxxxxxxxx Trust, Xxxxxxxx X. Xxxxxxxxx Trust, Xxxxxxx X.
Xxxxxxxxx Trust, JMC Family Investment Ltd. Partnership and Xxxxxxx X. Xxxxxxxx
(collectively, "Sellers") as sellers and Radnor as buyer.
"Acquisition Formula Amount" shall have the meaning set forth in
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Section 2.1(c) hereof.
"Acquisition Inventory Advance Rate" shall have the meaning set
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forth in Section 2.1(c) hereof.
"Acquisition Receivables Advance Rate" shall have the meaning set
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forth in Section 2.1(c) hereof.
"Advances" shall mean and include the Revolving Advances and the
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Letters of Credit.
"Advance Rates" shall mean collectively, the Wincup Advance
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Rates, Holdings Advance Rates, Acquisition Advance Rates, StyroChem Advance
Rates and Radnor Advance Rates.
"Affiliate" of any Person shall mean (a) any Person (other than a
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Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a partner,
shareholder, director or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 5% or more of the securities having ordinary voting power
for the election of directors of such Person, or (y) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Alternate Base Rate" shall mean, for any day, a rate per
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annum equal to the higher of (i) the Prime Rate in effect on such day and (ii)
the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Authority" shall have the meaning set forth in Section 4.19(d).
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"Average Monthly Eurodollar Rate" shall mean, as to any one month
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Interest Period, the average one month LIBOR as published in the Wall Street
Journal over the course of such one month Interest Period.
"Bank" shall mean The Bank of New York.
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"Blocked Accounts" shall have the meaning set forth in Section
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4.15(h).
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"Borrower" or "Borrowers" shall have the meaning set forth in the
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preamble to this Agreement and shall include all permitted successors and
assigns of such Persons.
"Borrowers on a consolidated basis" shall mean the
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consolidation in accordance with GAAP of the accounts or other items of
Borrowers.
"Borrowing Agent" shall mean Radnor.
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"Business Day" shall mean with respect to Eurodollar Rate Loans,
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any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New York,
New York and with respect to all other loans, any day other than a day on which
commercial banks in New York or Baltimore, Maryland are authorized or required
by law to close.
"CERCLA" shall mean the Comprehensive Environmental Response,
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Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S)(S)9601 et seq.
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"Change of Control" shall mean (a) the occurrence of any event
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(whether in one or more transactions) which results in a transfer of control of
any Borrower to a Person who is not an Original Owner or an Affiliate of an
Original Owner or (b) any merger or consolidation of or with any Borrower or
sale or transfer of all or substantially all of the property or assets of any
Borrower with or to a Person that is not a Borrower hereunder. For purposes of
this definition, "control of Borrower" shall mean the power, direct or indirect,
(x) to vote 50% or more of the securities having ordinary voting power for the
election of directors of any Borrower or (y) to direct or cause the direction of
the management and policies of Borrower, by contract or otherwise.
"Change of Ownership" shall mean any transfer (whether in one
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or more transactions) of ownership of (a) 45% or more of the partnership
interests of Wincup held by any Partner to any Person other than a transfer of
Radnor's limited partnership interest in Wincup to Holdings or (b) 50% or more
of the common stock of any Borrower (including for the purposes of the
calculation of percentage ownership, any shares of common stock into which any
capital stock of any Borrower held by any Original Owner is convertible or for
which any such shares of the capital stock of any Borrower or of any other
Person may be exchanged and any shares of common stock issuable to its Parent
upon exercise of any warrants, options or similar rights which may at the time
of calculation be held by such Original Owners) to a Person who is neither (at
the time of such transfer) an Original Owner nor an Affiliate of an Original
Owner or (b) any merger, consolidation or sale of substantially all of the
property or assets of any Borrower with or to a Person that is not a Borrower
hereunder.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
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other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value
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added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including, without
limitation, the PBGC or any environmental agency or superfund), upon the
Collateral, any Borrower or any of its Affiliates.
"Code" shall mean the Internal Revenue Code of 1986, as amended
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from time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
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(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
(d) all of each Borrower's right, title and interest in
and to (i) all merchandise returned or rejected by Customers, relating to or
securing any of the Receivables; (ii) all of each Borrower's rights with respect
to Inventory as a consignor, a consignee, an unpaid vendor, mechanic, artisan,
or other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower
from any Customer relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing this Agreement; (v) all of each
Borrower's contract rights, rights of payment which have been earned under a
contract right, instruments, documents, chattel paper, warehouse receipts,
deposit accounts, money and securities; (vi) if and when obtained by any
Borrower, all real and personal property of third parties in which such Borrower
has been granted a lien or security interest as security for the payment or
enforcement of Receivables; and (vii) any other goods, personal property or real
property now owned or hereafter acquired in which any Borrower has expressly
granted a security interest or may in the future grant a security interest to
Agent for the ratable benefit of the Lenders hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between Agent and any
Borrower;
(e) all of each Borrower's ledger sheets, ledger cards,
files, correspondence, records, books of account, business papers, computers,
computer software (whether owned by any Borrower or in which it has an
interest), computer programs, tapes, disks and documents relating to (a), (b),
(c) or (d) of this Paragraph; and
(f) all proceeds and products of (a), (b), (c), (d) and (e)
in whatever form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments
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for the payment of money, chattel paper, security agreements, documents, eminent
domain proceeds, condemnation proceeds and tort claim proceeds.
"Commitment Percentage" of any Lender shall mean the percentage
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set forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 15.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the
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form of Exhibit 15.3 hereto, properly completed and otherwise in form and
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substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Contribution Agreements" shall mean collectively, (i) the
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Agreement made as of October 31, 0000 xxxxxxx Xxxxxxxx xxx Xxxxx Xxxxx, (xx) the
Capital Contribution Agreement made as of the Initial Closing Date, between
Holdings and Wincup and (iii) the Capital Contribution Agreement made as of the
Initial Closing Date between Xxxxx River and Wincup.
"Consents" shall mean all filings and all licenses, permits,
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consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
Borrower's business, including, without limitation, any Consents required under
all applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving Interest
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Rate or the Default Rate.
"Controlled Group" shall mean all members of a controlled group
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of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Current Assets" at a particular date, shall mean all cash, cash
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equivalents, accounts and inventory of Borrowers on a consolidated basis and all
other items which would, in conformity with GAAP, be included under current
assets on a balance sheet of Borrowers on a consolidated basis as at such date;
provided, however, that such amounts shall not include (a) any amounts for any
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Indebtedness owing by an Affiliate of any Borrower, unless such Indebtedness
arose in connection with the sale of goods or rendition of services in the
ordinary course of business and would otherwise constitute current assets in
conformity with GAAP, (b) any shares of stock issued by an Affiliate of any
Borrower, or (c) the cash surrender value of any life insurance policy.
"Current Liabilities" at a particular date, shall mean all
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amounts which would, in conformity with GAAP, be included under current
liabilities on a balance sheet of Borrowers on a consolidated
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basis as at such date, but in any event including, without limitation, the
amounts of (a) all Indebtedness of any Borrower payable on demand, or, at the
option of the Person to whom such Indebtedness is owed, not more than twelve
(12) months after such date, (b) any payments in respect of any Indebtedness of
any Borrower (whether installment, serial maturity, sinking fund payment or
otherwise) required to be made not more than twelve (12) months after such date,
(c) all reserves in respect of liabilities or Indebtedness payable on demand or,
at the option of the Person to whom such Indebtedness is owed, not more than
twelve (12) months after such date, the validity of which is not contested at
such date, and (d) all accruals for federal or other taxes measured by income
payable within a twelve (12) month period.
"Customer" shall mean and include the account debtor with
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respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with any
Borrower, pursuant to which any Borrower is to deliver any personal property or
perform any services.
"Debt Payments" shall mean and include all cash actually
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expended by Borrowers to make (a) interest payments on any Indebtedness, plus,
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(b) scheduled principal payments on all Indebtedness.
"Default" shall mean an event which, with the giving of notice or
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passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1
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hereof.
"Depository Accounts" shall have the meaning set forth in Section
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4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c)
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hereof.
"Dollars" and the sign "$" shall mean lawful money of the United
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States of America.
"Domestic Rate Loan" shall mean any Advance that bears interest
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based upon the Alternate Base Rate.
"EBITDA" shall mean the net income of Borrowers on a consolidated
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basis plus interest expense, taxes, depreciation and amortization deducted in
calculating net income for such period.
"Effective Date" shall mean December 5, 1996 or such other date
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as may be agreed to by the parties hereto.
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"Eligible Inventory" shall mean and include Inventory excluding
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work in process, with respect to each Borrower, valued at the lower of cost or
market value, determined on a first-in-first-out basis, which is not, in Agent's
opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole
discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem appropriate including, without limitation,
whether the Inventory is subject to a perfected, first priority security
interest in favor of Agent for the ratable benefit of the Lenders and whether
the Inventory conforms to all standards imposed by any governmental agency,
division or department thereof which has regulatory authority over such goods or
the use or sale thereof.
"Eligible Receivables" shall mean and include, with respect to
--------------------
each Borrower, each Receivable arising in the ordinary course of such Borrower's
business and which Agent, in its sole credit judgment, shall deem to be an
Eligible Receivable, based on such considerations as Agent may from time to time
deem appropriate. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent's first priority perfected security interest for
the ratable benefit of the Lenders and no other Lien other than Permitted
Encumbrances, and is evidenced by an invoice, xxxx of lading or other
documentary evidence satisfactory to Agent. In addition, no Receivable shall be
an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an Affiliate
of any Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date;
(c) twenty-five percent (25%) or more of the Receivables from
the Customer are not deemed Eligible Receivables hereunder. Such percentage may,
in Agent's sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
-7-
(f) the sale is to a Customer outside the continental United
States of America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole discretion;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection of
such Receivable is insecure or that such Receivable may not be paid by reason of
the Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless the applicable
Borrower effectuates an assignment of its right to payment of such Receivable to
Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise
-- --- -- ---
complied with other applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by the applicable Borrower and
accepted by the Customer or the Receivable otherwise does not represent a final
sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset, deduction, defense,
dispute, or counterclaim to the extent of such offset, deduction, defense,
dispute or counterclaim, the Customer is also a creditor or supplier of a
Borrower or the Receivable is contingent in any respect or for any reason;
(m) the applicable Borrower has made any agreement with a
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(n) shipment of the merchandise or the rendition of services has
not been completed;
(o) any return, rejection or repossession of the merchandise has
occurred;
(p) such Receivable is not payable to a Borrower; or
-8-
(q) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in
-----------------------
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
------------------
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of
---------
such Borrower's goods (excluding Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation, all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or
accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Escrow Agreement" shall mean the Environmental Escrow Agreement
----------------
dated this date among Radnor, Xxxxxxx Xxxxxxxxxx and Xxxxx, Xxxxxx & Heckscher,
as escrow agent.
"Eurodollar Rate Loan" shall mean an Advance at any time that
--------------------
bears interest based on the Eurodollar Rate or the Average Monthly Eurodollar
Rate.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for
---------------
the then current Interest Period relating thereto the rate per annum (such
Eurodollar Rate to be adjusted to the next higher 1/100 of one (1%) percent)
equal to the quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus
the aggregate of the rates (expressed as a decimal) of reserve requirements
current on the day that is two Business Days prior to the beginning of the
Interest Period (including without limitation basic, supplemental, marginal and
emergency reserves) under any regulation promulgated by the Board of Governors
of the Federal Reserve System (or any other governmental authority having
jurisdiction over the Bank) as in effect from time to time, dealing with reserve
requirements prescribed for Eurocurrency funding including any reserve
requirements with respect to "Eurocurrency liabilities" under Regulation D of
the Board of Governors of the Federal Reserve System.
"Event of Default" shall mean the occurrence and continuance of
----------------
any of the events set forth in Article X hereof.
-9-
"Federal Funds Rate" shall mean, for any day, the weighted
------------------
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of recognized
standing selected by the Bank.
"Fixed Charge Coverage" for any period shall mean the ratio for
---------------------
any period of (1) EBITDA to (2) (a) all Debt Payments plus (b) capital
expenditures actually made plus (c) cash payments of taxes.
"Formula Amount" individually, shall mean each of the Wincup
--------------
Formula Amount, the Holdings Formula Amount, the Acquisition Formula Amount, the
StyroChem Formula Amount and the Radnor Formula Amount and collectively shall
mean each of the foregoing in the aggregate.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
"General Intangibles" shall mean and include as to each
-------------------
of such Borrower's general intangibles, whether now owned or hereafter acquired
including, without limitation, all choses in action, causes of action, corporate
or other business records, inventions, designs, patents, patent applications,
equipment formulations, manufacturing procedures, quality control procedures,
trademarks, service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to such Borrower to secure payment of any of
the Receivables by a Customer, all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any
-----------------
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"Hazardous Discharge" shall have the meaning set forth in Section
-------------------
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any
-------------------
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated byphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA or any other
------
-10-
applicable Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
----------------
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Holdings" shall mean Wincup Holdings, Inc., a corporation
--------
organized under the laws of the State of Delaware.
"Holdings Formula Amount" shall have the meaning set forth in
-----------------------
Section 2.1(b) hereof.
"Holdings Inventory Advance Rate" shall have the meaning set
-------------------------------
forth in Section 2.1(b) hereof.
"Holdings Receivables Advance Rate" shall have the meaning set
---------------------------------
forth in Section 2.1(b) hereof.
"Indebtedness" of a Person at a particular date shall mean all
------------
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness
of such Person resulting from the acquisition by such Person of any assets
subject to any Lien shall be deemed, for the purposes hereof, to be the
equivalent of the creation, assumption and incurring of the indebtedness secured
thereby, whether or not actually so created, assumed or incurred.
"Indenture" shall mean the Indenture dated as of December 5, 1996
---------
between Radnor, as issuer, Wincup, Holdings, Acquisition and StyroChem as
guarantors and First Union National Bank, as trustee.
"Initial Closing Date" shall mean January 22, 1996 or such other
--------------------
date as may be agreed to by the parties hereto.
"Interest Coverage" for any period shall mean the ratio of (1)
-----------------
EBITDA to (2) Total Interest.
"Interest Period" shall mean the period provided for any
---------------
Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Borrower all of
---------
such Borrower's now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be
-11-
furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in such
Borrower's business or used in selling or furnishing such goods, merchandise and
other personal property, and all documents of title or other documents
representing them.
"Inventory Advance Rate" shall mean, singularly and collectively,
----------------------
the Wincup Inventory Advance Rate, Holdings Inventory Advance Rate, Acquisition
Inventory Advance Rate, StyroChem Inventory Advance Rate and the Radnor
Inventory Advance Rate.
"Xxxxx River" shall mean Xxxxx River Paper Company, Inc.
-----------
"Lender" and "Lenders" shall have the meaning ascribed to such
------ -------
term in the Preamble, each Purchasing Lender and shall include each person which
is a transferee, successor or assign of any Lender or any Purchasing Lender.
"Letters of Credit" shall have the meaning set forth in Section
-----------------
2.9.
"Letter of Credit Fees" shall have the meaning set forth in
---------------------
Section 3.2.
"LIBOR" shall mean for any Eurodollar Rate Loan for the then
-----
current Interest Period relating thereto, the rate per annum quoted by the Bank
two (2) Business Days prior to the first day of such Interest Period for the
offering by the Bank to prime commercial banks in the London interbank
Eurodollar market of Dollar deposits in immediately available funds for a period
equal to such Interest Period and in an amount equal to the amount of such
Eurodollar Rate Loan.
"Lien" shall mean any mortgage, deed of trust, pledge,
----
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect
-----------------------
on (a) the condition, operations, assets, business or prospects of the
applicable Person or Persons, (b) any Borrower's ability to pay the Obligations
in accordance with the terms thereof, (c) the value of the Collateral, the Liens
on the Collateral or the priority of any such Lien, or (d) the practical
realization of the benefits of Agent and Lenders' rights and remedies under this
Agreement and the Other Documents, all as determined by the Required
-12-
Lenders in the good faith exercise of their sole and absolute discretion.
"Maximum Loan Amount" shall mean $30,000,000.
-------------------
"Monthly Advances" shall have the meaning set forth in Section
----------------
3.1 hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
------------------
in Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" at a particular date, shall mean the aggregate
---------
amount of all assets of Borrowers on a consolidated basis as may properly be
classified as such in accordance with GAAP consistently applied and such other
assets as are properly classified as "intangible assets", less (b) the aggregate
amount of all Indebtedness of Borrowers on a consolidated basis.
"Notes" shall mean collectively, the Revolving Credit Notes.
-----
"Obligations" shall mean and include any and all of each
-----------
Borrower's Indebtedness and/or liabilities to Agent or any of the Lenders or any
corporation that directly or indirectly controls or is controlled by or is under
common control with any Lender of every kind, nature and description, direct or
indirect, secured or unsecured, joint, several, joint and several, absolute or
contingent, due or to become due, now existing or hereafter arising, contractual
or tortious, liquidated or unliquidated under this Agreement or under any Other
Document and all obligations of any Borrower to Agent or the Lenders to perform
acts or refrain from taking any action under this Agreement or any Other
Document.
"Other Documents" shall mean the Notes, the Questionnaire and
---------------
any and all other agreements, instruments and documents, including, without
limitation, guaranties, pledges, powers of attorney, consents, and all other
writings heretofore, now or hereafter executed and/or delivered by any Borrower
to Agent or any Lender in respect of the transactions contemplated by this
Agreement.
"Parent" shall mean with respect to any Person, a corporation
------
or other entity owning, directly or indirectly at least 50% of the shares of
stock or other ownership interests having ordinary voting power to elect a
majority of the directors of the Person, or other Persons performing similar
functions for any such Person.
"Participant" shall mean each Person who shall be granted the
-----------
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"Partners" shall mean Holdings and Radnor.
--------
-13-
"Payment Office" shall mean initially 1290 Avenue of the
--------------
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; thereafter, such other office of Agent, if
any, which it may designate by notice to Borrowing Agent and each Lender to be
the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent
----------------------
for the ratable benefit of the Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; provided, that, the Lien shall have no effect on the
-------- ----
priority of the Liens in favor of Agent for the ratable benefit of the Lenders
or the value of the assets in which Agent has such a Lien and a stay of
enforcement of any such Lien for the ratable benefit of the Lenders shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5; (d) deposits or pledges to secure obligations under worker's compensation,
social security or similar laws, or under unemployment insurance; (e) deposits
or pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of any
Borrower's business; (f) judgment Liens that have been stayed or bonded and
mechanics', worker's, materialmen's or other like Liens arising in the ordinary
course of any Borrower's business with respect to obligations which are not due
or which are being contested in good faith by the applicable Borrower; (g) Liens
placed upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that (x) any such lien shall not encumber any other
property of any Borrower and (y) the aggregate amount of Indebtedness secured by
such Liens incurred as a result of such purchases during any fiscal year shall
not exceed the amount provided for in Section 7.6; and (g) Liens disclosed on
Schedule 1.2.
------------
"Person" shall mean any individual, sole proprietorship,
------
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
----
Section 3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Prepayment Date" shall have the meaning set forth in Section
---------------
13.1 hereof.
-14-
"Prime Rate" shall mean the prime commercial lending rate of
----------
the Bank as publicly announced to be in effect from time to time, such rate to
be adjusted automatically, without notice, on the effective date of any change
in such rate. This rate of interest is determined from time to time by the Bank
as a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by the Bank to any particular class or
category of customers of the Bank.
"Pro Forma Balance Sheet" shall have the meaning set forth in
-----------------------
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth
------------------------------
in Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b)
-----------
hereof.
"Purchasing Lender" shall have the meaning set forth in Section
-----------------
15.3 hereof.
"Questionnaire" shall mean the Documentation Information
-------------
Questionnaire and the responses thereto provided by Borrowers and delivered to
Agent and/or its counsel.
"Radnor" shall mean Radnor Holdings Corporation, a corporation
------
organized and existing under the laws of the State of Delaware.
"Radnor Formula Amount" shall have the meaning set forth in
---------------------
Section 2.1(e).
"Radnor Inventory Advance Rate" shall have the meaning set forth
-----------------------------
in Section 2.1(e) hereof.
"Radnor Receivables Advance Rate" shall have the meaning set
-------------------------------
forth in Section 2.1(e) hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
----
U.S.C. (S)(S) 6901 et seq., as same may be amended from time to time.
------
"Receivables" shall mean and include as to each Borrower all of
-----------
such Borrower's accounts, contract rights, instruments (including those
evidencing indebtedness among Borrowers and its Affiliates), documents, chattel
paper, general intangibles relating to accounts, drafts and acceptances, and all
other forms of obligations owing to such Borrower arising out of or in
connection with the sale or lease of Inventory or the rendition of services, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to the Agent for the ratable benefit of the Lenders hereunder.
-15-
"Receivables Advance Rate" shall mean, singularly and
------------------------
collectively, the Wincup Receivable Advance Rate, Holdings Receivable Advance
Rate, Acquisition Receivable Advance Rate, StyroChem Receivable Advance Rate and
the Radnor Receivable Advance Rate.
"Related Person" shall mean as to any Person, any other Person
--------------
which, together with such Person, is treated as a single employer under Section
414(c) of the Code.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
-------
hereof.
"Reportable Event" shall mean a reportable event described in
----------------
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty one
----------------
percent (51%) of the Advances or if no Advances are outstanding, fifty one
percent (51%) of the Commitment Percentages.
"Revolving Advances" shall mean Advances made other than Letters
------------------
of Credit.
"Revolving Credit Notes" shall mean the promissory notes referred
----------------------
to in Section 2.1 hereof.
"Revolving Interest Rate" shall mean an interest rate per annum
-----------------------
equal to (a) the sum of the Alternate Base Rate plus one quarter of one percent
(.25%) with respect to Domestic Rate Loans, (b) the sum of the Eurodollar Rate
plus one and three quarters percent (1.75%) with respect to Eurodollar Rate
Loans (other than Eurodollar Rate Loans made pursuant to Section 2.2(h) hereof)
or (c) the sum of the Average Monthly Eurodollar Rate plus one and three
quarters percent (1.75%) with respect to Eurodollar Rate Loans made pursuant to
Section 2.2(h) hereof..
"Settlement Date" shall mean the Effective Date and thereafter
---------------
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Senior Notes" shall mean the 10% Senior Notes due 2003 issued by
------------
Radnor pursuant to the Indenture in conjunction with the Transactions and any
notes issued in exchange or substitution therefor.
"StyroChem" shall mean StyroChem International, Inc., a
---------
corporation organized and existing under the laws of the State of Texas.
"StyroChem Formula Amount" shall have the meaning set forth in
------------------------
Section 2.1(d).
"StyroChem Inventory Advance Rate" shall have the meaning set
--------------------------------
forth in Section 2.1(d) hereof.
-16-
"StyroChem Receivables Advance Rate" shall have the meaning set
----------------------------------
forth in Section 2.1(d) hereof.
"Subsidiary" shall mean a corporation or other entity of whose
----------
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Term" shall mean the Effective Date through January 22, 2001.
----
"Termination Event" shall mean (i) a Reportable Event with
-----------------
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of either
Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan
during a plan year in which such entity was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of either Borrower or any member of the Controlled Group
from a Multiemployer Plan.
"Total Interest" for any period shall mean the accrued and unpaid
--------------
interest obligations of Borrowers on a consolidated basis with respect to its
outstanding Indebtedness during such period.
"Toxic Substance" shall mean and include any material present
---------------
on any real property owned by any Borrower or any leasehold interests of any
Borrower which has been shown to have significant adverse effect on human health
or which is subject to regulation under the Toxic Substances Control Act (TSCA),
15 U.S.C. (S)(S) 2601 et seq., applicable state law, or any other applicable
------
Federal or state laws now in force or hereafter enacted relating to toxic
substances. "Toxic substance" includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Transferee" shall have the meaning set forth in Section 15.3(b)
----------
hereof.
"Transactions" shall have the meaning set forth in Section 5.5
------------
hereof.
"Undrawn Availability" at a particular date shall mean an
--------------------
amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum
Loan Amount, minus (b) the sum of (i) the outstanding
-----
-17-
amount of Advances plus (ii) all amounts due and owing to Borrowers' trade
creditors which are outstanding more than sixty (60) days past the due date
therefor.
"Week" shall mean the time period commencing with a Wednesday and
----
ending on the following Tuesday.
"Wincup" shall mean Wincup Holdings, L.P., a limited partnership
------
organized under the laws of the State of Delaware.
"Wincup Formula Amount" shall have the meaning set forth in
---------------------
Section 2.1(a) hereof.
"Wincup Inventory Advance Rate" shall have the meaning set forth
-----------------------------
in Section 2.1(a) hereof.
"Wincup Receivables Advance Rate" shall have the meaning set
-------------------------------
forth in Section 2.1(a) hereof.
"Working Capital" at a particular date, shall mean the excess,
---------------
if any, of Current Assets over Current Liabilities at such date.
1.3. Uniform Commercial Code Terms. All terms used herein and defined
-----------------------------
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
1.4. Certain Matters of Construction. The terms "herein", "hereof" and
-------------------------------
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
---- -----
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any
instruments or agreements to which Agent is a party, including, without
limitation, references to any of the Other Documents shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
II. ADVANCES, PAYMENTS.
------------------
2.1. (a) Wincup Borrowing Base. Subject to the terms and conditions
---------------------
set forth in this Agreement, each Lender, severally and not jointly, agrees to
make Revolving Advances to Wincup in accordance with the procedures provided for
herein in an aggregate amount outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum Loan Amount
minus the sum of (1) outstanding Advances made to or for the benefit of
-----
Holdings, Acquisition, StyroChem and Radnor and (2) the undrawn amount of
outstanding Letters of Credit issued on behalf of Wincup, or (y) the sum of:
-18-
(i) up to 85%, subject to the provisions of Section 2.1(f)
hereof ("Wincup Receivables Advance Rate"), of Eligible Receivables of Wincup,
plus
----
(ii) up to 60%, subject to the provisions of Section 2.1(f)
and Section 2.1(g) hereof ("Wincup Inventory Advance Rate"), of Eligible
Inventory of Wincup (the Wincup Receivables Advance Rate and the Wincup
Inventory Advance Rate shall be referred to, collectively, as the "Wincup
Advance Rates"), minus
-----
(iii) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, minus
-----
(iv) the undrawn or unreimbursed amount of outstanding
Letters of Credit issued on behalf of Wincup.
The amounts derived from (x) the sum of Sections 2.1(a)(y)(i) plus
----
2.1(a)(y)(ii) minus (y) the amount of Section 2.1(a)(y)(iii) at any time and
-----
from time to time shall be referred to as the "Wincup Formula Amount".
(b) Holdings Borrowing Base. Subject to the terms and conditions set
-----------------------
forth in this Agreement, each Lender, severally and not jointly, agrees to make
Revolving Advances to Holdings in accordance with the procedures provided for
herein in an aggregate amount outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum Loan Amount
minus the sum of (1) outstanding Advances made to or for the benefit of Wincup,
-----
Acquisition, StyroChem and Radnor and (2) the undrawn amount of outstanding
Letters of Credit issued on behalf of Holdings or (y) the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(f)
hereof ("Holdings Receivables Advance Rate"), of Eligible Receivables of
Holdings, plus
----
(ii) up to 60%, subject to the provisions of Section 2.1(f)
and Section 2.1(g) hereof ("Holdings Inventory Advance Rate"), of Eligible
Inventory of Holdings (the Holdings Receivables Advance Rate and the Holdings
Inventory Advance Rate shall be referred to, collectively, as the "Holdings
Advance Rates"), minus
-----
(iii) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, minus
-----
(iv) the undrawn or unreimbursed amount of outstanding
Letters of Credit issued on behalf of Holdings.
The sum of the amounts derived from (x) the sum of Sections
2.1(b)(y)(i) plus 2.1(b)(y)(ii) minus (y) the amount of Section 2.1(b)(y)(iii)
---- -----
at any time and from time to time shall be referred to as the "Holdings Formula
Amount".
-19-
(c) Acquisition Borrowing Base. Subject to the terms and conditions
--------------------------
set forth in this Agreement, each Lender, jointly and not severally, agrees to
make Revolving Advances to Acquisition in accordance with the procedures
provided for herein in an aggregate amount outstanding at any time not greater
than such Lender's Commitment Percentage of the lesser of (x) the Maximum Loan
Amount minus the sum of (1) outstanding Advances made to or for the benefit of
-----
Wincup, Holdings, StyroChem and Radnor and (2) the undrawn amount of outstanding
Letters of Credit issued on behalf of Acquisition or (y) the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(f)
hereof ("Acquisition Receivables Advance Rate"), of Eligible Receivables of
Acquisition, plus
----
(ii) up to 60%, subject to the provisions of Section 2.1(f) and
Section 2.1(g) hereof ("Acquisition Inventory Advance Rate"), of Eligible
Inventory of Acquisition (the Acquisition Receivables Advance Rate and the
Acquisition Inventory Advance Rate shall be referred to, collectively, as the
"Acquisition Advance Rates"), minus
-----
(iii) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, minus
-----
(iv) the undrawn or unreimbursed amount of outstanding
Letters of Credit issued on behalf of Acquisition.
The sum of the amounts derived from (x) the sum of Sections 2.1(c)(y)(i)
plus 2.1(c)(y)(ii) minus (y) the amount of Section 2.1(c)(y)(iii) at any time
---- -----
and from time to time shall be referred to as the "Acquisition Formula Amount".
(d) StyroChem Borrowing Base. Subject to the terms and conditions set
------------------------
forth in this Agreement, each Lender, severally and not jointly, agrees to make
Revolving Advances to StyroChem in accordance with the procedures provided for
herein in an aggregate amount outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum Loan Amount
minus the sum of (1) outstanding Advances made to or for the benefit of Wincup,
-----
Holdings, Acquisition and Radnor and (2) the undrawn amount of outstanding
Letters of Credit issued on behalf of StyroChem or (y) the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(f)
hereof ("StyroChem Receivables Advance Rate"), of Eligible Receivables of
StyroChem, plus
----
(ii) up to 60%, subject to the provisions of Section 2.1(f) and
Section 2.1(g) hereof ("StyroChem Inventory Advance Rate"), of Eligible
Inventory of StyroChem, minus
-----
-20-
(iii) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, minus
-----
(iv) the undrawn or unreimbursed amount of outstanding
Letters of Credit issued on behalf of StyroChem.
The sum of the amounts derived from (x) the sum of Sections 2.1(d)(y)(i)
plus 2.1(d)(y)(ii) minus (y) the amount of Section 2.1(d)(y)(iii) at any time
---- -----
and from time to time shall be referred to as the "StyroChem Formula Amount".
(e) Radnor Borrowing Base. Subject to the terms and conditions set
---------------------
forth in this Agreement, each Lender, severally and not jointly, agrees to make
Revolving Advances to Radnor in accordance with the procedures provided for
herein in an aggregate amount outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum Loan Amount
minus the sum of (1) outstanding Advances made to or for the benefit of Wincup,
-----
Holdings, Acquisition and StyroChem and (2) the undrawn amount of outstanding
Letters of Credit issued on behalf of Radnor or (y) the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(f)
hereof ("Radnor Receivables Advance Rate"), of Eligible Receivables of Radnor,
plus
----
(ii) up to 60%, subject to the provisions of Section 2.1(f) and
Section 2.1(g) hereof ("Radnor Inventory Advance Rate"), of Eligible Inventory
of Radnor, minus
-----
(iii) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, minus
-----
(iv) the undrawn or unreimbursed amount of outstanding
Letters of Credit issued on behalf of Radnor.
The sum of the amounts derived from (x) the sum of Sections 2.1(d)(y)(i)
plus 2.1(d)(y)(ii) minus (y) the amount of Section 2.1(d)(y)(iii) at any time
---- -----
and from time to time shall be referred to as the "Radnor Formula Amount".
(f) Discretionary Rights. The Advance Rates may be increased or with
--------------------
the consent of the Required Lenders, decreased by Agent at any time and from
time to time in the exercise of its reasonable discretion. Borrowers consent to
any such increases or decreases and acknowledge that decreasing the Advance
Rates or increasing the reserves may limit or restrict Advances requested by any
Borrower.
(g) Inventory Advances. In no event shall the aggregate Advances with
------------------
respect to Inventory of Borrowers outstanding at any time pursuant to Section
2.1(a)(ii), Section 2.1(b)(ii),
-21-
Section 2.1(c)(ii), Section 2.1(d)(ii) and Section 2.1(e)(ii) exceed $15,000,000
in the aggregate.
2.2. Procedure for Borrowing.
-----------------------
(a) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 11:00 a.m. on a Business Day of a Borrower's request to incur, on that
day, an Advance hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or any Lender, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the
date such payment is due, in the amount required to pay in full such interest,
fee, charge or Obligation under this Agreement or any other agreement with Agent
or any Lender, and such request shall be irrevocable. Any request for an Advance
shall be deemed reduced automatically and without notice so as not to be in
excess of, after giving effect to the requested Advance, an amount which would
cause the aggregate amount of all Advances to be greater than the lesser of (1)
for Wincup, (i) the Maximum Loan Amount minus outstanding Advances made to
-----
Holdings, Acquisition, StyroChem and Radnor or (ii) the Wincup Formula Amount,
(2) for Holdings, (i) the Maximum Loan Amount minus outstanding Advances made to
-----
Wincup, Acquisition, StyroChem and Radnor or (ii) the Holdings Formula Amount,
(3) for Acquisition, (i) the Maximum Loan Amount minus outstanding Advances made
-----
to Wincup, Holdings, StyroChem and Radnor or (ii) the Acquisition Formula
Amount, (4) for StyroChem, (i) the Maximum Loan Amount minus outstanding
Advances made to Wincup, Holdings, Acquisition and Radnor or (ii) the StyroChem
Formula Amount and (5) for Radnor, (i) the Maximum Loan Amount minus outstanding
-----
Advances made to Wincup, Holdings, Acquisition and StyroChem or (ii) the Radnor
Formula Amount.
(b) Notwithstanding the provisions of (a) above, in the event any
Borrower desires to obtain a Eurodollar Rate Loan, it shall give Agent at least
three (3) Business Days' prior written notice; specifying (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the amount on the date
of such Advance to be borrowed, which amount shall be an integral multiple of
$1,000,000, and (iii) the duration of the first Interest Period therefor.
Interest Periods for Eurodollar Loans shall be for one (1), two (2), three (3)
or six (6) months. There shall not be outstanding more than five (5) Eurodollar
Rate Loans, in the aggregate.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence
on the date such Eurodollar Rate Loan is made and shall end on such date as a
Borrower may elect as set forth in (b)(iii) above provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall be the next preceding or succeeding Business
Day as is Bank's custom in the market to which such Eurodollar Rate Loan
relates;
-22-
(ii) no Interest Period shall end after the last day of the
Term; and
(iii) any Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period is to end, shall (subject to clause (i) above) end on the
last day of such calendar month.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan or Domestic
Rate Loan convert any such loan into a loan of another type in the same
aggregate principal amount provided that any conversion of a Eurodollar Rate
Loan shall be made only on the last Business Day of the then current Interest
Period applicable to such Eurodollar Rate Loan. If Borrower desires to convert
a loan, Borrowing Agent shall give the Agent not less than three (3) Business
Days' prior written notice, specifying the date of such conversion, the loans to
be converted and if the conversion is from a Domestic Rate Loan to any other
type of loan, the duration of the first Interest Period therefor.
(e) Borrowers may prepay the Advances in accordance with the
provisions of Section 13.1 upon payment of the early termination fee set forth
in Section 13.1 with accrued interest on the principal being prepaid to the date
of such repayment. In the event that any prepayment of a Eurodollar Rate Loan
is required or permitted on a date other than the last Business Day of the then
current Interest Period with respect thereto Borrowers shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
any Lender may sustain or incur as a consequence of any prepayment or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including (but not limited to) any interest payable
-23-
by Agent or any Lender to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder.
(g) Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of any Lender to make Eurodollar Rate
Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected
Eurodollar Rate Loans are then outstanding, promptly upon request from Agent,
either pay all such affected Eurodollar Rate Loans or convert such affected
Eurodollar Rate Loans into loans of another type. If any such payment or
conversion of any Eurodollar Rate Loan is made on a day that is not applicable
to such Eurodollar Rate Loan, Borrowers shall pay such Lender, upon such
Lender's request, such amount or amounts as may be necessary to compensate such
Lender for any loss or expense sustained or incurred by such Lender in respect
of such Eurodollar Rate Loan as a result of such payment or conversion,
including (but not limited to) any interest or other amounts payable by such
Lender to lenders of funds obtained by such Lender in order to make or maintain
such Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent to Borrower shall be
conclusive absent manifest error; provided, each Lender shall use its best
efforts to minimize or avoid any such additional payment.
(h) Anything in Section 2.2(b) to the contrary notwithstanding,
any Borrower may obtain a Eurodollar Rate Loan upon at least three (3) Business
Days' prior written notice for an Interest Period of one month with interest on
such Eurodollar Rate Loans to be charged at the Average Monthly Eurodollar Rate.
Borrowing Agent shall specifically provide in the prior written notice that
interest is to be charged at the Average Monthly Eurodollar Rate; otherwise,
interest shall be charged at the Eurodollar Rate for Eurodollar Rate Loans
having an Interest Period of one month.
2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed
--------------------------------
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or any of the
Lenders, shall be charged to the applicable Borrower's account on Agent's books.
During the Term, Borrowers may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested on behalf of any
Borrower or deemed to have been requested by such Borrower under Section 2.2(a)
hereof shall, with respect to requested Revolving Advances to the extent the
Lenders make such Revolving Advances, be made available to such Borrower on the
day so requested by way of credit to such Borrower's operating account at the
Bank, or such
-24-
other bank as Borrowing Agent may designate following notification to Agent, in
federal funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested, be disbursed to Agent to be applied to
the outstanding Obligations giving rise to such deemed request.
2.4. Intentionally Omitted.
---------------------
2.5. Maximum Advances; Repayment of Excess Advances. The aggregate
----------------------------------------------
balance of Revolving Advances outstanding at any time to Borrowers shall not
exceed the lesser of (a) Maximum Loan Amount less outstanding Letters of Credit
or (b) the Formula Amount. The aggregate balance of Advances outstanding at any
time either (a) to Wincup in excess of the lesser of the (i) Wincup Formula
Amount as at such time, or (ii) Maximum Loan Amount minus the outstanding
-----
Advances made to or for the benefit of Holdings, Acquisition, StyroChem and
Radnor or (b) to or for the benefit of Holdings, in excess of the lesser of (i)
Holdings Formula Amount as at such time, or (ii) Maximum Loan Amount minus the
-----
outstanding Advances made to or for the benefit of Wincup, Acquisition,
StyroChem and Radnor or (c) to Acquisition in excess of the lesser of the (i)
Acquisition Formula Amount as at such time, or (ii) Maximum Loan Amount minus
-----
the outstanding Advances made to or for the benefit of Wincup, Holdings,
StyroChem and Radnor or (d) to StyroChem in excess of the lesser of the (i)
StyroChem Formula Amount as at such time, or (ii) Maximum Loan Amount minus the
-----
outstanding Advances made to or for the benefit of Wincup, Holdings, Acquisition
and Radnor or (e) to Radnor in excess of the lesser of the (i) Radnor Formula
Amount as at such time, or (ii) Maximum Loan Amount minus the outstanding
-----
Advances made to or for the benefit of Wincup, Holdings, Acquisition and
StyroChem shall be immediately due and payable without the necessity of any
demand, at the place designated by Agent, whether or not a Default or Event of
Default has occurred hereunder.
2.6. Repayment of Advances.
---------------------
(a) The Advances shall be due and payable in full on the last day
of the Term subject to earlier prepayment as herein provided.
(b) Borrowers recognize that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit a Borrower's account
as of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after receipt by Agent of good funds with respect to such items
of payment. Agent is not, however, required to credit any Borrower's account for
the amount of any item of payment which is unsatisfactory to Agent and Agent may
charge such Borrower's account for the amount of any item of payment which is
returned to Agent unpaid.
-25-
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging the
applicable Borrower's account or by making Advances as provided in Section 2.2
hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7. Intentionally Omitted.
---------------------
2.8. Statement of Account. Agent shall maintain, in accordance with
--------------------
its customary procedures, a loan account in the name of each Borrower in which
shall be recorded the date and amount of each Advance made by Lenders and the
date and amount of each payment in respect thereof; provided, however, the
-------- -------
failure by Agent to record the date and amount of any Advance shall not
adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing
Agent a statement showing the accounting for the Advances made, payments made or
credited in respect thereof, and other transactions between Lenders and each
Borrower, during such month. The monthly statements shall be deemed correct and
binding upon Borrowers in the absence of manifest error and shall constitute an
account stated between Lenders and Borrowers unless Agent receives a written
statement of a Borrower's specific exceptions thereto within thirty (30) days
after such statement is received by Borrowing Agent. The records of Agent with
respect to the loan account shall be prima facie evidence of the amounts of
----- -----
Advances and other charges thereto and of payments applicable thereto, absent
manifest error.
2.9. Letters of Credit. (a) Subject to the terms and conditions
-----------------
hereof, Agent shall issue or cause the issuance of standby and documentary
letters of credit for Wincup and StyroChem ("Letters of Credit") provided,
--------
however, that Agent will not be required to issue or cause to be issued Letters
-------
of Credit (i) for Wincup to the extent that the face amount of such Letters of
Credit would then cause the outstanding Advances to Wincup (with the requested
Letter of Credit being deemed to be outstanding for purposes of this
calculation) to exceed the lesser of (A) the Maximum Loan Amount minus
-----
outstanding Advances to or for the benefit of Holdings, Acquisition, StyroChem
and Radnor or (B) the Wincup Formula Amount or (ii) for StyroChem to the extent
that the face amount of such Letters of Credit would then cause the outstanding
Advances to StyroChem (with the requested Letter of Credit being deemed to be
outstanding for purposes of this calculation) to exceed the lesser of (A) the
Maximum Loan Amount minus outstanding Advances to or for the benefit of Wincup,
-----
Holdings, Acquisition and Radnor or (B) the StyroChem Formula Amount.
-26-
(b) The maximum amount of outstanding (i) Letters of Credit that
are standby letters of credit hereunder shall not exceed $5,000,000 in the
aggregate at any time and (ii) Letters of Credit that are documentary letters of
credits hereunder shall not exceed $1,000,000 in the aggregate at any time.
(c) All disbursements or payments related to Letters of Credit
shall be deemed to be Revolving Advances and shall bear interest at the
Revolving Interest Rate for Domestic Rate Loans (unless and until converted to a
Eurodollar Rate Loan); and to the extent not drawn upon, Letters of Credit that
have not been drawn upon shall not bear interest. Letters of Credit shall be
subject to the terms and conditions set forth in the Application and Agreement
for Letter of Credit attached hereto as Exhibit 2.9.
-----------
2.10. Issuance of Letters of Credit.
-----------------------------
(a) Borrowing Agent on behalf of Wincup or StyroChem may request
Agent to issue or cause the issuance of a Letter of Credit by delivering to
Agent at the Payment Office, Agent's standard form of Letter of Credit and
Security Agreement together with Bank's standard form of Letter of Credit
Application (collectively, the "Letter of Credit Application") completed to the
satisfaction of Agent; and, such other certificates, documents and other papers
and information as Agent may reasonably request.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date not later than twelve (12) months
after such Letter of Credit's date of issuance and in no event later than the
last day of the Term. Each Letter of Credit Application and each Letter of
Credit shall be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
and any amendments or revision thereof and, to the extent not inconsistent
therewith, the laws of the State of New York.
2.11. Requirements For Issuance of Letters of Credit.
----------------------------------------------
(a) In connection with the issuance of any Letter of Credit,
Borrowers shall indemnify, save and hold Agent and each Lender harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent and any Lender, and expenses and reasonable attorneys' fees incurred by
Agent or any Lender arising out of, or in connection with, any Letter of Credit
to be issued or created for a Borrower. Borrowers shall be bound by Agent's or
any issuing or accepting bank's regulations and good faith interpretations of
any Letter of Credit issued or created for its account, although this
interpretation may be different from its own;, and, neither Agent nor any
Lender, the bank which opened the Letter of Credit, nor any of its
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those
-27-
contained in any Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit, except for
Agent's or any Lender's or such correspondents' willful misconduct or gross (not
mere) negligence.
(b) Borrowing Agent shall authorize and direct any bank which issues a
Letter of Credit to name the applicable Borrower as the "Account Party" therein
and to deliver to Agent all instruments, documents, and other writings and
property received by the bank pursuant to the Letter of Credit and to accept and
rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit, the application therefor or any
acceptance therefor.
(c) In connection with all Letters of Credit issued or caused to be
issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority, (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign such Borrower's name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct or gross (not mere)
negligence. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount equal to
the product of such Lender's Commitment Percentage times the aggregate amount of
all disbursements made with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in each Revolving Advance made
as a consequence of such disbursement. In the event that at the time a
disbursement is made the unpaid balance of Revolving Advances exceeds or would
exceed, with the making of such disbursement, the lesser of the Maximum Loan
Amount or the Formula Amount, and such disbursement is not reimbursed by
Borrowers within two (2) Business Days, Agent shall promptly notify each Lender
and upon Agent's demand each Lender shall pay to Agent such Lender's
proportionate share of such unreimbursed disbursement together with such
Lender's proportionate share of Agent's unreimbursed costs and expenses relating
to such unreimbursed disbursement. Upon receipt by Agent of a repayment from
Borrowers of any amount disbursed by Agent for which Agent had already been
reimbursed by the Lenders, Agent shall deliver to each of the Lenders that
Lender's pro rata share of such repayment. Each Lender's participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue Letters of Credit hereunder;
(B) no Letter of
-28-
Credit issued hereunder remains outstanding and uncancelled or (C) all Persons
(other than Borrowers) have been fully reimbursed for all payments made under or
relating to Letters of Credit.
2.12. Additional Payments. Any sums expended by Agent or any Lender due
-------------------
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to such Borrower's account as a Revolving Advance and added to the
Obligations, provided Agent shall promptly thereafter provide to Borrowing Agent
a copy of documentation supporting such charges.
2.13. Manner of Borrowing and Payment.
-------------------------------
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of the Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of the Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by Borrowers on account of
principal, interest and fees shall be made without set-off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.13(a) and (b) hereof, commencing with the first Business Day
following the Effective Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrowers on account of Revolving Advances
shall be applied first to those Revolving Advances made by Agent. On or before
1:00 P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Effective Date, Agent and the Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week
(if any), then each Lender shall provide Agent with funds in an amount equal to
its Commitment Percentage of the difference between (w) such Revolving Advances
and (x) such repayments and (II) if the aggregate amount of repayments applied
to outstanding Revolving Advances during such Week exceeds the aggregate amount
of new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its Commitment Percentage of the
difference between (y) such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Contract Rate on outstanding Advances which it has funded.
-29-
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or any Transferee (a "benefitted Lender") shall at
any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Advances, or shall provide such other Lender with the benefits of
any such Collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the Lenders; provided, however, that
-------- -------
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. Each Lender so purchasing a portion of another Lender's Advances may
exercise all rights of payment (including, without limitation, rights of set-
off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrowers a corresponding amount. Agent will promptly notify
Borrowing Agent of its receipt of any such notice from a Lender. If such amount
is made available to Agent on a date after a Settlement Date, such Lender shall
pay to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount
becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the domestic rate per annum then applicable to Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent's
-------- -------
right to such recovery shall not prejudice or otherwise adversely affect any
Borrower's rights (if any) against such Lender.
-30-
(f) Notwithstanding anything to the contrary contained herein, in the
event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its Commitment
Percentage of any Advance or (y) notifies either Agent or Borrowers that it does
not intend to make available its Commitment Percentage of any Advance (if the
actual refusal would constitute a breach by such Lender of its obligations under
this Agreement) (each, a "Lender Default"), all rights and obligations hereunder
of such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.13(f) while such Lender Default remains in effect.
(i) Revolving Advances shall be allocated pro rata among
--- ----
Lenders (the "Non-Defaulting Lenders") which are not Defaulting Lenders in
accordance with their respective Commitment Percentages, and no Commitment
Percentage of any Lender or any pro rata share of any Revolving Advances
--- ----
required to be advanced by any Lender shall be increased as a result of such
Lender Default. Amounts received in respect of principal of Advances shall be
applied to reduce Advances of each Lender pro rata based on the aggregate of the
--- ----
outstanding Advances of all Lenders at the time of such application; provided
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Lender that is not a Defaulting Lender exceeds such Lender's Commitment
Percentage of all Advances then outstanding.
(ii) Lenders shall participate in Letters of Credit on the basis
of their respective pro rata shares, and no participation or reimbursement
--- ----
obligation of any Lender shall be increased as a result of a failure of any
Defaulting Lender to reimburse Agent with respect to any amounts drawn on or
otherwise payable with respect to any Letters of Credit (the amount that any
such Defaulting Lender has failed to reimburse is hereinafter referred to as
such Defaulting Lender's "Unreimbursed Amount"). Until such Defaulting Lender
has reimbursed Agent for any Unreimbursed Amount owed by it, all payments and
other amounts received from any source with respect to the Obligations or
otherwise under or in connection with this Agreement (including any letter of
credit fees) which would otherwise be payable to such Defaulting Lender will
instead be paid to Agent for application to such Unreimbursed Amount until such
Unreimbursed Amount has been paid in full. A Defaulting Lender shall not be
entitled to receive any portion of the letter of credit fees or any other fees
payable in connection with this Agreement, or any indemnity arising from its
agreement to make Revolving Advances and/or participate in Letters of Credit
hereunder.
(iii) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement or the Other Documents. All amendments,
waivers and other modifications of this
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Agreement and the Other Documents may be made without regard to a Defaulting
Lender and, solely for purposes of the definition of "Required Lenders", a
Defaulting Lender shall be deemed not to be a Lender and not to have Advances
outstanding.
(iv) Other than as expressly set forth in this Section 2.13(f),
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.13(f) shall be deemed to release any Defaulting Lender from its
obligations under this Agreement or the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(v) In the event a Defaulting Lender retroactively cures, to
the satisfaction of Agent, the breach which caused such Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
-----------------
3.1. Interest. Interest on Advances shall be payable in arrears on the
--------
last day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar
Rate Loans with an Interest Period in excess of three months, at the earlier of
(a) the last day of each three month period from the date of the commencement of
such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest
charges shall be computed on the actual principal of Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to the applicable
Contract Rate. Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate with
respect to Domestic Rate Loans shall be similarly changed without notice or
demand of any kind by an amount equal to the amount of such change in the
Alternate Base Rate during the time such change or changes remain in effect.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the Obligations shall bear interest at the applicable
Revolving Interest Rate plus two (2%) percent per annum (the "Default Rate").
3.2. Letter of Credit Fees.
---------------------
Borrowers shall pay Agent (i) for the ratable benefit of the
Lenders for issuing or causing the issuance of a Standby Letter of Credit, a fee
computed at a rate per annum of one and three quarters percent (1.75%) on the
outstanding amount thereof from time to time, (ii) for the ratable benefit of
the Lenders for issuing or causing the issuance of a Documentary Letter of
Credit, a fee computed at a rate per annum of one and one half percent (1.50%)
and
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(iii) Bank's other customary charges payable in connection with Letters of
Credit as in effect from time to time (which charges shall be furnished to
Borrowers by Agent upon request). Such fees and charges shall be payable in the
case of any Letter of Credit, on its opening monthly thereafter in advance and
upon each increase in the outstanding amount thereof. Any such charge in effect
at the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in Bank's prevailing charges
for that type of transaction. All Letter of Credit Fees payable hereunder shall
be deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason.
3.3. (a) Closing Fee. Upon the execution of this Agreement, Borrower
-----------
shall pay to Agent for the ratable benefit of the Lenders a closing fee of
$30,000.
(b) Facility Fee. If, for any month during the Term, the average
------------
daily unpaid balance of the Revolving Advances for each day of such month plus
outstanding Letters of Credit does not equal the Maximum Loan Amount, then
Borrower shall pay to Agent for the ratable benefit of the Lenders a fee at a
rate equal to .375% per annum on the amount by which the Maximum Loan Amount
exceeds such average daily unpaid balance plus outstanding Letters of Credit.
Such fee shall be payable to Agent in arrears on the last day of each month and
on the last day of the Term.
(c) Agency Fee. Borrower shall pay to Agent (for the sole
----------
benefit of Agent) an agency fee of $90,000 per annum payable to Agent on January
22, 1997 and on each January 22 thereafter during the Term. The agency fee shall
be deemed earned in full on the date when same is due and payable hereunder and
shall not be subject to rebate or proration upon termination of this Agreement
for any reason.
3.4. (a) Collateral Evaluation Fee. Borrower shall pay to Agent (for
-------------------------
the sole benefit of Agent) a collateral evaluation fee equal to $2,500 per month
payable on the first day of each month commencing on the first day of the month
following the Effective Date and on the first day of each month thereafter
during the Term. The collateral evaluation fee shall be deemed earned in full
on the date when same is due and payable hereunder and shall not be subject to
rebate or proration upon termination of this Agreement for any reason.
(b) Collateral Monitoring Fee. Borrower shall pay to Agent (for
-------------------------
the sole benefit of Agent) on the first day of each month following any month in
which Agent performs any collateral monitoring - namely any field examination,
collateral analysis or other business analysis, the need for which is to be
determined by Agent and which monitoring is undertaken by Agent or for Agent's
benefit - a collateral monitoring fee in an amount equal to $600 per day for
each person performing such monitoring, plus all costs and disbursements
incurred by Agent in the performance of such examination or analysis.
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In addition, Borrowers agree to pay to NationsBank, N.A. (for so long as it is a
Lender hereunder) such collateral monitoring fee on the same terms and
conditions set forth above with respect to one collateral monitoring field
examination per year provided that Borrowers' obligation to make such payment to
NationsBank, N.A. shall not exceed $5,000 per year.
3.5. Computation of Interest and Fees. Interest and fees hereunder
--------------------------------
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
3.6. Maximum Charges. In no event whatsoever shall interest and other
---------------
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Agent or any Lender has
received interest and other charges hereunder in excess of the highest rate
permissible hereto, such excess amount shall be first applied to any unpaid
principal balance owed by Borrowers, and if the then remaining excess amount is
greater than the previously unpaid principal balance, the Lenders shall promptly
refund such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.
3.7. Increased Costs. In the event that any applicable law, treaty or
---------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Rate Loan or change the basis of
taxation of payments to Agent or any Lender of principal, fees, interest or any
other amount payable hereunder or under any Other Documents (except for changes
in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
-34-
(c) impose on Agent or any Lender or the London interbank Eurodollar
market any other condition with respect to this Agreement, any Other Documents
or any Eurodollar Rate Loan;
and the result of any of the foregoing is to increase the cost to Agent or
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be , provided that the
foregoing shall not apply to increased costs which are reflected in the
Alternate Base Rate or the Eurodollar Rate, as the case may be. Agent or such
Lender shall certify the amount of such additional cost or reduced amount to
Borrowing Agent, and such certification shall be conclusive absent manifest
error.
3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the
--------------------------------------------------------
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan;
Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, the Lenders shall have
-35-
no obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and no Borrower shall have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.
3.9. Capital Adequacy.
----------------
(a) In the event that Agent or any Lender shall have determined that
any applicable law, rule, regulation or guideline regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Agent or any
Lender (for purposes of this Section 3.9, the term "Lender" shall include Agent
or any Lender and any corporation or bank controlling Agent or any Lender) and
the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Agent or any Lender's capital as a consequence of its
obligations hereunder to a level below that which Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrowers shall pay upon demand to Agent or such Lender such
additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Agent or such Lender may use
any reasonable averaging or attribution methods. The protection of this Section
3.9 shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the applicable law,
regulation or condition.
(b) A certificate of Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate Agent or such Lender with respect to
Section 3.9(a) hereof when delivered to Borrowers shall be conclusive absent
manifest error.
IV. COLLATERAL: GENERAL TERMS
--------------------------
4.1. Acknowledgement and Grant of Security Interests.
-----------------------------------------------
(a) Each Borrower hereby acknowledges, confirms and agrees that Agent
for the ratable benefit of Lenders has and shall continue to have a lien upon
and security interest in all Collateral heretofore granted to Agent pursuant to
the Existing Loan Agreement to secure the Obligations, and, to the extent not
otherwise granted thereunder or under the Other Documents or otherwise granted
to or held by Agent, Borrowers hereby pledge and assign to Agent for the ratable
benefit of Lenders and grant to Agent for the ratable benefit
-36-
of Lenders a continuing security interest to secure the Obligations in, all of
the Collateral, wherever located, whether in any Borrower's possession or in the
possession and control of a third party for any Borrower's or Agent's or any
Lender's account. All of each Borrower's ledger sheets, files, records, books
of account, business papers and documents relating to the Collateral shall,
until delivered to or removed by Agent, be kept by such Borrower in trust for
Agent for the ratable benefit of Lenders.
(b) The liens and security interests of Agent for the ratable benefit
of Lenders in the Collateral shall be deemed to be continuously perfected from
the earliest date of the granting of such liens and security interests, whether
hereunder, under the Other Documents, or under the Existing Loan Agreement.
4.2. Perfection of Security Interest. Each Borrower shall take all
-------------------------------
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest for the ratable benefit of the Lenders in the
Collateral or to enable Agent to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to (i) immediately
discharging all Liens other than Permitted Encumbrances, (ii) obtaining
landlords' or mortgagees' lien waivers, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping
or marking, in such manner as Agent may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, (iv) entering into warehousing, lockbox and
other custodial arrangements satisfactory to Agent, and (v) executing and
delivering financing statements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to the Required
Lenders, relating to the creation, validity, perfection, maintenance or
continuation of Agent's security interest for the ratable benefit of the Lenders
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to file financing statements covering the Collateral signed by Agent
instead of Borrower in accordance with Section 9-402(2) of the Uniform
Commercial Code as adopted in the State of New York. All charges, expenses and
fees Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrower's account as a Revolving Advance and added
to the Obligations, or, at the Agent's option, shall be paid to Agent for the
ratable benefit of the Lenders immediately upon demand.
4.3. Disposition of Collateral. Each Borrower will safeguard and
-------------------------
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business and (b) the disposition or transfer of obsolete
and worn-out Equipment or Equipment no longer useful in the ordinary course of
business during any fiscal year having an aggregate fair market value of not
more than $250,000.
-37-
4.4. Preservation of Collateral. Following the occurrence and during
--------------------------
the continuance of an Event of Default, in addition to the rights and remedies
set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as
Agent deems necessary to protect Agent's and Lenders' interest in and to
preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b)
may employ and maintain at any Borrower's premises a custodian who shall have
full authority to do all acts necessary to protect Agent's and Lenders'
interests in the Collateral; (c) may lease warehouse facilities to which Agent
may move all or part of the Collateral; (d) may use any Borrower's owned or
leased lifts, hoists, trucks and other facilities or equipment for handling or
removing the Collateral; and (e) shall have, and is hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any Borrower's owned or leased property. Each Borrower
and General Partner shall cooperate fully with all of Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to the Borrowers' accounts as a Revolving Advance in such manner as Agent deems
appropriate and added to the Obligations.
4.5. Ownership of Collateral. With respect to the Collateral, at the
-----------------------
time the Collateral becomes subject to Agent's security interest for its benefit
and for the ratable benefit of the Lenders: (a) each Borrower shall be the sole
owner of and fully authorized and able to sell, transfer, pledge and/or grant a
first security interest in each and every item of the Collateral to Agent for
its benefit and for the ratable benefit of the Lenders; and, except for
Permitted Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Borrower that appear on such documents and agreements shall be genuine
and each Borrower shall have full capacity to execute same; and (d) each
Borrower's Inventory shall be located as set forth on Schedule 4.5 and shall not
------------
be removed from such location(s) without the prior written consent of Agent
except with respect to the sale of Inventory in the ordinary course of business.
4.6. Defense of Agent's and Lender's Interests. Until (a) payment and
-----------------------------------------
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's and Lenders' interests in the Collateral shall continue in
full force and effect. During such period no Borrower shall, without Required
Lenders' prior written consent, pledge, sell (except Inventory in the ordinary
course of business), assign, transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered in any way except for Permitted
Encumbrances, any part of the Collateral. Each Borrower shall defend Agent and
Lenders' interests in the Collateral against any and all persons whatsoever. At
any time following the occurrence
-38-
and during the continuance of an Event of Default and a demand by Agent for
payment of all Obligations, Agent shall have the right to take possession of the
indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, Borrowers shall, upon demand, assemble it in the
best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and the
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law. Each
Borrower shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest for its
benefit and for the ratable benefit of the Lenders to deliver same to Agent
and/or subject to Agent's order and if they shall come into any Borrower's
possession, they, and each of them, shall be held by Borrower in trust as
Agent's trustee, and such Borrower, as the case may be, will immediately deliver
them to Agent in their original form together with any necessary endorsement.
4.7. Books and Records. Each Borrower (a) shall keep proper books of
-----------------
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables as the case may be, advances
and investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance with,
or as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers.
4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes
--------------------
and directs all accountants and auditors employed by Borrowers at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any
Borrower's financial statements, trial balances or other accounting records of
any sort in the accountant's or auditor's possession, and to disclose to Agent
and each Lender any information such accountants may have concerning any
Borrower's financial status and business operations. Each Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to Borrowers, whether
made by a Borrower or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from Borrowers, as the case may
be, prior to obtaining such information or materials from such accountants or
such authorities.
-39-
4.9. Compliance with Laws. Each Borrower shall comply in all material
--------------------
respects with all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official applicable to the Collateral or any
part thereof or to the operation of such Borrower's business the non-compliance
with which could have a Material Adverse Effect on such Borrower. Each Borrower
may, however, contest or dispute any acts, rules, regulations, orders and
directions of those bodies or officials in any reasonable manner, provided that
any related lien is inchoate or stayed and sufficient reserves are established
to the reasonable satisfaction of the Lenders to protect Agent's Lien on or
security interest in the Collateral. The Collateral at all times shall be
maintained in accordance with the requirements of all insurance carriers which
provide insurance with respect to the Collateral so that such insurance shall
remain in full force and effect.
4.10. Inspection of Premises. At all reasonable times Agent and each
----------------------
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from any Borrower's books, records, audits, correspondence
and all other papers relating to the Collateral and the operation of their
respective businesses. Agent, any Lender and their agents may enter upon any
Borrower's premises at any time during business hours and at any other
reasonable time, and from time to time without prior notice, for the purpose of
inspecting the Collateral and any and all records pertaining thereto and the
operation of their respective businesses.
4.11. Insurance. Each Borrower shall bear the full risk of any loss of
---------
any nature whatsoever with respect to the Collateral. At Borrowers' own cost
and expense in amounts and with carriers acceptable to Agent, each Borrower
shall (a) keep all insurable properties and properties in which it has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, and for
such amounts, as is customary in the case of companies engaged in similar
businesses including, without limitation, business interruption insurance;, (b)
maintain a bond in such amounts as is customary in the case of companies engaged
in similar businesses insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrowers
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which it is engaged in business; (e) furnish Agent with (i) copies of all
policies and evidence of the maintenance of such policies by the renewal thereof
at least thirty (30) days before any expiration date, and (ii) appropriate loss
payable endorsements in form and substance satisfactory to Agent, naming Agent
as a co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a), and (b) above, and providing (A)
that all proceeds thereunder in
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excess of $100,000 shall be payable to Agent for the ratable benefit of the
Lenders, (B) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy, and (C) that such
policy and loss payable clauses may not be cancelled, amended or terminated
unless at least thirty (30) days' prior written notice is given to Agent. In
the event of any loss thereunder, the carriers named therein hereby are directed
by Agent or any Borrower to make payment for such loss in excess of $100,000 to
Agent and not to a Borrower and Agent jointly. If any insurance losses are paid
by check, draft or other instrument payable to a Borrower and Agent jointly,
Agent may endorse such Borrower's name thereon and do such other things as Agent
may deem advisable to reduce the same to cash. Agent is hereby authorized to
adjust and compromise claims under insurance coverage referred to in clauses (a)
and (b) above. All loss recoveries received by Agent upon any such insurance
may be applied to the Obligations, in such order as Agent in its sole discretion
shall determine; provided, upon any Borrower's request such proceeds shall be
--------
disbursed to such Borrower for the restoration of damaged property if such
proceeds together with other amounts provided by such Borrower are sufficient to
fully restore such property to its condition prior to the casualty loss. Any
surplus shall be paid by Agent to Borrowers or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Borrowers, to Agent,
on demand.
4.12. Failure to Pay Insurance. If any Borrower shall fail to obtain
------------------------
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor for such
Borrower's account, and charge such Borrower's account therefor and such
expenses so paid shall be part of the Obligations, provided Agent shall promptly
thereafter provide to such Borrower documentation supporting such charges.
4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes,
----------------
assessments and other Charges lawfully levied or assessed upon any Borrower or
any of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Borrower and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or Lender's opinion, may possibly create a valid Lien on the Collateral,
Agent may without notice to such Borrower pay the taxes, assessments or other
Charges and Borrowers hereby indemnify and hold Agent and each Lender harmless
in respect thereof. The amount of any payment by Agent under this Section 4.13
shall be charged to the applicable Borrower's accounts as a Revolving Advance
and added to the Obligations and, until a Borrower shall furnish Agent with an
indemnity therefor (or supply Agent with evidence satisfactory to Agent that due
provision for the payment thereof has been made), Agent may hold without
interest any balance standing to any
-41-
Borrower's credit and Agent shall retain its security interest in any and all
Collateral held by Agent.
4.14. Payment of Leasehold Obligations. Each Borrower shall at all
--------------------------------
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request, will provide evidence of having done so.
4.15. Receivables.
-----------
(a) Nature of Receivables. Each of the Receivables shall be a bona
---------------------
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of such Borrower, or work, labor or services theretofore
rendered by Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with such Borrower's standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer, to the best of Borrowers'
---------------------
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Borrower who are not solvent such
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) Locations of Borrowers. Each Borrower's chief executive office
----------------------
and the office at which each maintains its books and records pertaining to
Receivables is the address set forth on Schedule 4.15(c) hereto. Until written
----------------
notice is given to Agent by Borrowing Agent of any other office at which it
keeps its records pertaining to Receivables all such records shall be kept at
such offices.
(d) Collection of Receivables. Until a Borrower's authority to do so
-------------------------
is terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default), Borrower will, at their sole
cost and expense, but on Agent's behalf and for Agent's account, collect as
Agent's property and in trust for Agent all amounts received on Receivables, and
shall not commingle such collections with its respective funds or use the same
except to pay Obligations. Each Borrower shall, upon request, deliver to Agent
or the Blocked Account in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
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(e) Notification of Assignment of Receivables. At any time following
-----------------------------------------
the occurrence and during the continuance of an Event of Default or a Default,
Agent shall have the right to send notice of the assignment of, and Agent's
security interest in, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Receivables, take possession of
the Collateral, or both, for the ratable benefit of the Lenders. Agent's actual
collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, may be charged to Borrower's
accounts and added to the Obligations.
(f) Power of Agent to Act on Borrowers' Behalf. Agent shall have the
------------------------------------------
right to receive, endorse, assign and/or deliver in the name of Agent, or any
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as its respective attorney
with power (A) at any time following the occurrence and during the continuance
of an Event of Default hereunder (i) to endorse its name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign its name on any invoice or xxxx of lading relating to
any of the Receivables, drafts against Customers or assignments of Receivables;
(iii) to demand payment of the Receivables; (iv) to enforce payment of the
Receivables by legal proceedings or otherwise; (v) to exercise all of its rights
and remedies with respect to the collection of the Receivables and any other
Collateral; (vi) to settle, adjust, compromise, extend or renew the Receivables;
(vii) to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (viii) to prepare, file and sign its name on a proof of claim in
bankruptcy or similar document against any Customer; (ix) to prepare, file and
sign its name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables; and (B) at any time (i) to
send verifications of Receivables to any Customer; (ii) to sign its name on all
financing statements or any other documents or instruments deemed necessary or
appropriate by Agent to preserve, protect, or perfect Agent's interest in the
Collateral and to file same; (iii) to do all other acts and things necessary to
carry out this Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for any
acts of omission or commission nor for any error of judgment or mistake of fact
or of law, unless done maliciously or with gross (not mere) negligence; this
power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following the occurrence
and during the continuance of an Event of Default, to change the address for
delivery of mail addressed to any Borrower to such address as Agent may
designate.
-43-
(g) No Liability. Neither Agent nor any Lender shall, under any
------------
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence and during the
continuance of an Event of Default Agent may, without notice or consent from any
Borrower, xxx upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. Agent is authorized and empowered to accept
following the occurrence and during the continuance of an Event of Default the
return of the goods represented by any of the Receivables, without notice to or
consent by any Borrower, all without discharging or in any way affecting the
Obligations hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All
----------------------------------------------------
proceeds of Collateral shall, at the direction of Agent, be deposited by
Borrowers into a lockbox account, dominion account or such other "blocked
account" ("Blocked Accounts") as Agent may require pursuant to an arrangement
with such bank(s) as may be selected by Borrowers and be acceptable to Agent.
Borrowers shall issue to any such bank, an irrevocable letter of instruction
directing said bank to transfer such funds so deposited to Agent, either to any
account maintained by Agent at said bank or by wire transfer to appropriate
account(s) of Agent. All funds deposited in such "blocked account" shall
immediately become the property of Agent, and Borrowers shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Agent assumes no responsibility for such "blocked account"
arrangement including, without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
Alternatively, Agent may establish depository accounts ("Depository Accounts")
in the name of Agent at a bank or banks for the deposit of such funds and
Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) Adjustments. No Borrower will, without Agent's consent,
-----------
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any material returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of such Borrower, as the case may be.
4.16. Inventory. All Inventory has been, and will be, produced by
---------
Borrowers with the Federal Fair Labor Standards Act of 1938, as amended, and all
rules, regulations and orders thereunder.
4.17. Maintenance of Equipment. The Equipment shall be maintained in
------------------------
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs
-44-
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved. No Borrower shall use or operate
the Equipment in violation of any law, statute, ordinance, code, rule or
regulation.
4.18. Exculpation of Liability. Nothing herein contained shall be
------------------------
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof,
unless such shortage, discrepancy, damage, loss or destruction results from the
gross (not mere) negligence or willful misconduct of Agent or Lenders. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any Borrower's obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by any Borrower of any of the terms
and conditions thereof.
4.19. Environmental Matters. (a) Borrowers will ensure that all real
---------------------
property owned or occupied by Borrowers remains in compliance in all material
respects with all Environmental Laws and they will not place or permit to be
placed any Hazardous Substances on any such property except as not prohibited by
applicable law or appropriate governmental authorities.
(b) Borrowers will establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.
(c) Promptly upon the written request of Agent from time to
time, Borrowers shall provide Agent, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within any real
property owned or occupied by a Borrower. Any report or investigation of such
Hazardous Discharge proposed and acceptable to an appropriate Authority that is
charged to oversee the clean-up of such Hazardous Discharge shall be acceptable
to Agent. If such estimates, individually or in the aggregate, exceed $100,000,
Agent shall have the right to require Borrowers to post a bond, letter of credit
or other security reasonably satisfactory to Agent to secure payment of these
costs and expenses.
(d) Borrowers shall defend and indemnify Agent and the Lenders
and hold Agent, the Lenders and their respective employees, agents, directors
and officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or the
-45-
Lenders under or on account of any Environmental Laws, including, without
limitation, the assertion of any lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances, whether or not the same
originates or emerges from any real property owned or occupied by a Borrower or
any contiguous real estate, except to the extent such loss, liability, damage
and expense is attributable to any Hazardous Discharge resulting from actions on
the part of Agent or any Lender. Borrowers' obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
any real property owned or occupied by a Borrower, whether or not any federal,
state, or local environmental agency has taken or threatened any action in
connection with the presence of any Hazardous Substances. Borrowers'
obligations and the indemnifications hereunder shall survive the termination of
this Agreement.
(e) For purposes of Sections 4.19 and 5.7, all references to any
real property owned or occupied by a Borrower shall be deemed to include all of
Borrower's right, title and interest in and to its owned and leased premises.
4.20. Except as respects the financing statements filed by Agent and
the financing statements described on Schedule 4.20, no financing statement
-------------
covering any of the Collateral or any proceeds thereof is on file in any public
office.
V. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each Borrower represents and warrants as follows:
5.1. Authority. It has full power, authority and legal right to enter
---------
into this Agreement and the Other Documents and perform its respective
Obligations hereunder and thereunder. The execution, delivery and performance
hereof and of the Other Documents (a) are within its respective partnership and
corporate powers, have been duly authorized, are not in contravention of law or
the terms of any Borrower's certificate or agreement of limited partnership, by-
laws, certificate of incorporation or other applicable documents relating to the
formation or conduct of its respective business or of any material agreement or
undertaking to which it is a party or by which it is bound, and (b) will not
conflict with nor result in any breach in any of the provisions of or constitute
a default under or result in the creation of any Lien except Permitted
Encumbrances upon any of its respective assets under the provisions of any
agreement, charter document, instrument, by-law, or other instrument to which it
or its property is a party or by which it may be bound.
5.2. Formation and Qualification. (a) Each is duly formed and in good
---------------------------
standing under the laws of its state of incorporation or formation and is
qualified to do business and is in good standing in the states listed on
Schedule 5.2(a) which constitute all states in which qualification and good
---------------
standing are necessary for each to conduct its business and own its property and
where the failure to so
-46-
qualify could have a Material Adverse Effect. Each Borrower has delivered to
Agent true and complete copies of its certificate of limited partnership,
agreement of limited partnership, certificate of incorporation and/or by-laws
and each will promptly notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of Borrowers are listed on Schedule
--------
5.2(b).
-------
5.3. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties of each Borrower contained in this Agreement and the Other
Documents shall be true at the time of the execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
5.4. Tax Returns. Each Borrower's federal tax identification number is
set forth on Schedule 5.4. Borrowers have each filed all federal, state and
------------
local tax returns and other reports it is required by law to file and has paid
all taxes, assessments, fees and other governmental charges that are due and
payable. The provision for taxes on the books of Borrowers are adequate for all
years not closed by applicable statutes, and for its current fiscal year, and no
Borrower has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.
5.5. Financial Statements.
--------------------
(a) The pro forma balance sheet of Borrowers on a consolidated
basis (the "Pro Forma Balance Sheet") furnished to Agent and the Lenders on the
Effective Date reflects the consummation of the transactions contemplated by the
Acquisition Agreement, the Indenture and under this Agreement (the
"Transactions") and are accurate, complete and correct and fairly reflect in all
material respects the financial condition of Borrowers on a consolidated basis
as of the Effective Date after giving effect to the Transactions, and have been
prepared in accordance with GAAP, consistently applied. The Pro Forma Balance
Sheet has been certified as accurate, complete and correct in all material
respects by the Chief Financial Officer of Radnor. All financial statements
referred to in this subsection 5.5(a), including the related schedules and notes
thereto, have been prepared, in accordance with GAAP, except as may be disclosed
in such financial statements.
(b) The twelve-month cash flow projections of Borrowers and
their projected balance sheets as of the Effective Date, copies of which have
been previously submitted to Agent and the Lenders (the "Projections") were
prepared by the Chief Financial Officer of each Borrower, are based on
underlying assumptions which provide a reasonable basis for the projections
contained therein and reflect such Borrower's judgment based on present
circumstances of the most likely set of conditions and course of action for the
-47-
projected period. The Projections together with the Pro Forma Balance Sheet of
Borrowers on a consolidated basis, are referred to as the "Pro Forma Financial
Statements".
(c) The balance sheets of each Borrower as of September 30,
1996, and the related statements of income, changes in stockholder's equity, and
changes in cash flow for the period ended on such date, which have been
delivered to Agent, have been prepared in accordance with GAAP, consistently
applied and present fairly the financial position of each Borrower at such date
and the results of their operations for such period. Since September 30, 1996
there has been no change in the condition, financial or otherwise, of any
Borrower as shown on the balance sheets as of such date, except changes in the
ordinary course of business, none of which individually or in the aggregate has
caused a Material Adverse Effect.
5.6. Corporate Name. No Borrower has been known by any other corporate
--------------
name in the past five years and does not sell Inventory under any other name
except as set forth on Schedule 5.6, nor has any Borrower been the surviving
------------
entity of a merger or consolidation or acquired all or substantially all of the
assets of any Person during the preceding five (5) years, except for (i) the
acquisition of certain assets of Wincup pursuant to the Contribution Agreements,
(ii) the acquisition of stock of Acquisition pursuant to the Acquisition
Agreement and (iii) the acquisition by Radnor of the limited partnership
interest of Xxxxx River in Wincup.
5.7. O.S.H.A. and Environmental Compliance.
-------------------------------------
Except as disclosed in the Phase I and Phase II environmental
reports prepared by Dames & Xxxxx and Conestoga Rovers & Associates and
delivered to Agent on or before the Effective Date:
(a) Each Borrower has duly complied in all material respects
with, and the facilities, business, assets, property and leaseholds of each are
in compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental Protection Act, RCRA and
all other Environmental Laws; there have been no outstanding citations, notices
or orders of material non-compliance issued to Borrower or relating to its
business, assets, property, leaseholds or equipment under any such laws, rules
or regulations.
(b) Each Borrower has been issued all required federal, state
and local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any Borrower's premises; (i) there are no
underground storage tanks or polychlorinated biphenyls on any Borrower's
premises; (ii) none of Borrower's premises have ever been used as a treatment,
storage or
-48-
disposal facility of Hazardous Waste; and (iii) no Hazardous Substances are
present on any Borrower's premises, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of any Borrower or its tenants.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
-----------------------------------------------------------
(a) After giving effect to the Transactions, each Borrower will
be solvent, able to pay its respective debts as they mature, have capital
sufficient to carry on its respective business and all businesses in which it is
about to engage, and (i) as of the Effective Date, the fair present saleable
value of its assets, calculated on a going concern basis, is in excess of the
amount of its liabilities and (ii) subsequent to the Effective Date, the fair
saleable value of its assets (calculated on a going concern basis) will be in
excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b) or the Pro Forma
---------------
Financial Statements, no Borrower has (i) any pending or threatened litigation,
arbitration, actions or proceedings which involve the possibility of having a
Material Adverse Effect on such Borrower or on its ability to perform this
Agreement, and (ii) any liabilities nor indebtedness other than the Obligations.
(c) No Borrower is in violation of any applicable statute,
regulation or ordinance in any respect which could have a Material Adverse
Effect on such Borrower and no Borrower is in violation of any order of any
court, governmental authority or arbitration board or tribunal which could have
a Material Adverse Effect on such Borrower.
(d) No Borrower nor any member of the Controlled Group maintains
or contributes to any Plan other than those listed on Schedule 5.8(d) hereto.
---------------
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of
-49-
the accrued benefits and other liabilities of such Plan and no Borrower nor any
member of the Controlled Group knows of any facts or circumstances which would
materially change the value of such assets and accrued benefits and other
liabilities, (vi) no Borrower nor any member of the Controlled Group has
breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan, (vii) no Borrower nor any member of a Controlled
Group has incurred any liability for any excise tax arising under Section 4972
or 4980B of the Code, and no fact exists which could give rise to any such
liability, (viii) no Borrower nor any member of the Controlled Group nor any
fiduciary of, nor any trustee to, any Plan, has engaged in a "prohibited
transaction" described in Section 406 of the ERISA or Section 4975 of the Code
nor taken any action which would constitute or result in a Termination Event
with respect to any such Plan which is subject to ERISA, (ix) Borrower and each
member of the Controlled Group has made all contributions due and payable with
respect to each Plan, (x) there exists no event described in Section 4043(b) of
ERISA, for which the thirty (30) day notice period contained in 29 CFR (S)2615.3
has not been waived, (xi) no Borrower nor any member of the Controlled Group has
any fiduciary responsibility for investments with respect to any plan existing
for the benefit of persons other than employees or former employees of Borrowers
and any member of the Controlled Group, and (xii) no Borrower nor any member of
the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent
--------------------------------------------
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Borrower are
set forth on Schedule 5.9, are valid and have been duly registered or filed with
------------
all appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such material
patent, trademark, copyright, design rights tradename, trade secret or license
and Borrower is not aware of any grounds for any challenge, except as set forth
in Schedule 5.9 hereto. Each patent, patent application, patent license,
------------
trademark, trademark application, trademark license, service xxxx, service xxxx
application, service xxxx license, copyright, copyright application and
copyright license owned or held by any Borrower and all trade secrets used by
any Borrower consist of original material or property developed by such Borrower
or was lawfully acquired by such Borrower from the proper and lawful owner
thereof. Each of such items has been maintained so as to preserve the value
thereof from the date of creation or acquisition thereof. With respect to all
software used by any Borrower, such Borrower is in possession of all source and
object codes related to each piece of software or is the beneficiary of a source
code escrow agreement, each such source code escrow agreement being listed on
Schedule 5.9 hereto.
------------
-50-
5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each
-------------------- -------------
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could have a Material
Adverse Effect.
5.11. Default of Indebtedness. No Borrower is in default in the payment
-----------------------
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12. No Default. No Borrower is in default in the payment or
----------
performance of any of its material contractual obligations and no Default has
occurred.
5.13. No Burdensome Restrictions. No Borrower is party to any contract
--------------------------
or agreement the performance of which could have a Material Adverse Effect. No
Borrower has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.
5.14. No Labor Disputes. No Borrower is involved in any labor dispute;
-----------------
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.
-------------
5.15. Margin Regulations. No Borrower is engaged, nor will either of
------------------
them engage, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U or Regulation G of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the
proceeds of any Advance will be used for "purchasing" or "carrying" "margin
stock" as defined in Regulation U of such Board of Governors.
5.16. Investment Company Act. No Borrower is an "investment company"
----------------------
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is either entity controlled by such a company.
5.17. Disclosure. No representation or warranty made by any Borrower
----------
in this Agreement or in any financial statement, report, certificate or any
other document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits
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to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to any Borrower or which reasonably
should be known to any Borrower which such Borrower has not disclosed to Agent
in writing with respect to the transactions contemplated by the Contribution
Agreements or this Agreement which could reasonably be expected to have a
Material Adverse Effect.
5.18. Delivery of Acquisition Agreement; Indenture. Agent and Lenders
--------------------------------------------
have received complete copies of the Acquisition Agreement and the Indenture
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any) and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof. None
of such documents and agreements has been amended or supplemented, nor have any
of the provisions thereof been waived, except pursuant to a written agreement or
instrument which has heretofore been delivered to Agent and Lenders.
5.19. Swaps. No Borrower is a party to, nor will it be a party to, any
-----
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.20. Conflicting Agreements. No provision of any mortgage, indenture,
----------------------
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations. No Borrower nor any
-------------------------------------------
Affiliate of any Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.22. Business and Property of Borrowers. Upon and after the Effective
----------------------------------
Date, Borrowers do not propose to engage in any business other than the
manufacture and/or distribution of polystyrene beads and disposable products
sold to or through the food service industry and activities necessary to conduct
the foregoing. On the Effective Date, each Borrower will own all the property
and possess all of the rights and Consents necessary for the conduct of its
business.
5.23. Acquisition. Each Borrower has acquired all of its assets and
-----------
property in accordance with all applicable statutes and laws, such property is
free and clear of all Liens other than Permitted Encumbrances.
-52-
VI. AFFIRMATIVE COVENANTS.
---------------------
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary
---------------
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge the accounts of Borrowers for all such fees and
expenses, provided Agent shall promptly thereafter provide Borrowing Agent with
copies of supporting documentation.
6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
-----------------------------------------------------------
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business; and (c) make all such reports and pay all
such franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States or any political
subdivision thereof.
6.3. Violations. Promptly notify Agent in writing of any violation of
----------
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which may have a Material Adverse
Effect on any Borrower.
6.4. Government Receivables. Take all steps necessary to protect
----------------------
Agent's and Lenders' interest in the Collateral under the Federal Assignment of
Claims Act or other applicable state or local statutes or ordinances and deliver
to Agent appropriately endorsed, any instrument or chattel paper connected with
any arising out of contracts between any Borrower and the United States, any
state or any department, agency or instrumentality of any of them.
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6.5. Net Worth. Maintain Net Worth in an amount not less than the
---------
amounts set forth below as of the dates set forth below:
Date Amount
---- ------
12-31-96 $6,000,000
12-31-97 $7,000,000
12-31-98 $8,000,000
12-31-99 $9,000,000
12-31-00 $10,000,000
6.6. Current Ratio. Maintain a ratio of Current Assets to Current
-------------
Liabilities of not less than 1.00 to 1.00 at the end of each fiscal quarter.
6.7. Fixed Charge Coverage. Maintain for each fiscal quarter of
---------------------
Borrower a Fixed Charge Coverage equal to or greater than 1.00 to 1.00 at the
end of each fiscal quarter.
6.8. Interest Coverage. Maintain for each fiscal quarter of Borrower
-----------------
an Interest Coverage equal to or greater than 1.25 to 1.00 at the end of each
fiscal quarter.
6.9. Net Income. Achieve net income (excluding non-cash extraordinary
----------
items) of at least $1 in each fiscal year.
6.10. Execution of Supplemental Instruments. Execute and deliver to
-------------------------------------
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.11. Payment of Indebtedness. Pay, discharge or otherwise satisfy at
-----------------------
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its material
obligations and liabilities of whatever nature, except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Agent and the Lenders.
6.12. Standards of Financial Statements. Cause all financial statements
---------------------------------
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
those to which GAAP is applicable to be complete and correct in all material
respects (subject, in the case of interim financial statements, to normal year-
end audit adjustments) and to be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein (except
as concurred in by such reporting accountants or officer, as the case may be,
and disclosed therein).
-54-
6.13. Exercise of Rights. Enforce all of its rights under the
------------------
Contribution Agreements, the Acquisition Agreement, the Escrow Agreement and all
documents executed in connection therewith including, but not limited to, all
indemnification rights and pursue all remedies available to it with diligence
and in good faith in connection with the enforcement of any such rights.
VII. NEGATIVE COVENANTS.
------------------
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
-----------------------------------------------------
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person (other than another Borrower) or acquire all or a
substantial portion of the assets or stock of any Person (other than another
Borrower) or permit any other Person (other than another Borrower) to
consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of all or any
material part of its properties or assets, except in the ordinary course of its
business.
7.2. Creation of Liens. Create or suffer to exist any Lien or transfer
-----------------
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3. Guarantees. Become liable upon the obligations of any Person by
----------
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3, and (b) the endorsement of checks in
------------
the ordinary course of business.
7.4. Investments. Purchase or acquire obligations or stock of, or any
-----------
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof; (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating); (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency; (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof; and (e) investments in one or more Subsidiaries in an aggregate
sum not to exceed the sum of (i) 50% of the cumulative net income of Borrowers
on a consolidated basis plus (ii) $3,000,000; provided, at the time of such
--------
investment (x) no Event of Default has occurred or would occur after giving
effect to
-55-
such payment and (y) and, if such investment is being made by StyroChem or
Wincup, after giving effect to such investment the difference between (1)
Undrawn Availability calculated solely with respect to the Borrower making such
investment and (2) the aggregate amount of such Borrower's accounts payable more
than sixty (60) days past due is more than $2,000,000.
7.5. Loans. Make advances, loans or extensions of credit to any
-----
Person, including without limitation, any Parent, Subsidiary or Affiliate except
with respect to (a) the extension of commercial trade credit in connection with
the sale of Inventory in the ordinary course of its business, (b) loans to its
employees in the ordinary course of business not to exceed the aggregate amount
of $100,000 at any time outstanding, (c) loans by Wincup to its Partners to
enable each to pay its respective Partner Tax Liability provided no such loan
--------
shall be made to any Partner if, after giving effect to such loan, the sum of
the loans to and any distributions made or being made to such Partner under
Section 7.7 for such Partner's Partner Tax Liability exceeds such Partner's
actual Partner Tax Liability for which such loans and distributions are being
made, (d) loans to another Borrower so long as (i) such loan or advance is
evidenced by a promissory note and such note is assigned to Agent as collateral
security for the Obligations and (ii) at the time of such loan no Event of
Default has occurred or would occur after giving effect to such loan or advance
and (e) loans to StyroChem International, Ltd. in an aggregate amount not to
exceed $4,000,000 at any time outstanding so long as (i) after giving effect to
any such loan or advance the difference between (x) Undrawn Availability
calculated solely with respect to the Borrower making such loan and (y) the
aggregate amount of such Borrower's accounts payable more than 60 days past due
is more than $2,000,000 and (ii) at the time of such loan no Event of Default
has occurred or would occur after giving effect to such loan or advance.
7.6. Capital Expenditures. Contract for, purchase or make any
--------------------
expenditure or commitments for fixed or capital assets (including capitalized
leases) in an amount in excess of the amounts set forth below for the fiscal
years set forth below:
Fiscal Year Ended Amount
------------------------------------
12-31-97 $9,000,000
12-31-98 6,000,000
12-31-99 6,000,000
12-31-00 6,000,000
7.7. Dividends; Distributions. Declare, pay or make any dividend or
------------------------
distributoin to any of its partners (whether general partners or limited
partners) or shareholders or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any of its capital stock or
partnership interests except, so long as (a) a notice of termination with regard
to this Agreement shall not be outstanding and (b) if Undrawn Availability is
less than $5,000,000 the purpose for such distribution shall be as set forth in
writing to Lenders at ten (10) days prior to such
-56-
distribution and such distribution shall in fact be used for such purpose: (i)
Wincup shall be permitted to make distributions to its Partners for any taxable
year in an amount equal to the federal, state and local income and franchise tax
liability attributable to taxable income of Wincup for such taxable year (after
giving full effect to deductions, credits, and losses of prior years similarly
attributable to Wincup or its operations assuming that such deductions, credits
and losses are available to such partners, regardless of whether such
deductions, credits and losses have otherwise been utilized by such Partners)
("Partner Tax Liability"), calculated for this purpose by assuming all of such
income (net of such deductions, and after offsetting such credits and losses of
prior years) is taxable at the maximum marginal federal and state combined tax
rate that is applicable for such taxable year to each Partner taking into
account the deductibility or creditability of any such tax against any other
such tax, and provided that such distributions may be made periodically with
respect to each taxable year on or before the times at which estimated and final
payments (including any payments required as a result of adjustments subsequent
to the filing of Wincup's tax return for such year) of the federal and state tax
to which such distributions relate would be required to be made by a calendar
year corporate taxpayer, so long as quarterly payments made on an estimated
basis are made on the basis of good faith estimates, and are, as soon as
practicable, reconciled to actual facts and information relating to Wincup's
financial results and any distribution in excess of that distribution which
would in fact have been necessary to satisfy the tax burden assumed, as
determined as a result of such reconciliation, is credited against the next
succeeding quarterly distribution to be made to that recipient, and any amount
in excess of the amount so credited against the next succeeding distribution in
excess of $1,000 is repaid promptly to Wincup if, at the time of and after
giving effect to any such distribution no Event of Default has occurred or would
occur; (ii) any Borrower shall be permitted to make distributions to any of its
Partners or shareholders who are Borrowers hereunder to enable Radnor to make
its regularly scheduled payments of interest on the Senior Notes if (x) the
aggregate amount of such distributions do not exceed the interest payments then
required to be paid by Radnor on the Senior Notes and (y) at the time of and
after giving effect to any such distribution no Event of Default has occurred or
would occur; and (iii) any Borrower shall be permitted to make distributions to
any of its Partners or shareholders for any purpose if (x) at the time of and
after giving effect to such distribution no Event of Default has occurred or
would occur, (y) in the event such distribution is made by Wincup, StyroChem or
another Borrower who has Revolving Advances outstanding hereunder in excess of
$2,000,000 at the time of such distribution, after giving effect to such
distribution the difference between (1) Undrawn Availability calculated solely
with respect to the Borrower making such payment and (2) the aggregate amount of
such Borrower's accounts payable more than 60 days past due is more than
$2,000,000 and (z) in the event such distribution is made by Radnor, after
giving effect to such distribution, the aggregate amount of all payments or
distributions made by Radnor during such fiscal year does not exceed 50% of the
net
-57-
income of Borrowers on a consolidated basis for the immediately preceding
fiscal year. In the event that any of the foregoing amounts referred to in
subclause (i) hereof are not repaid to Wincup in a timely manner by any Partner,
then Wincup may not pay or make any distribution with respect to or purchase,
redeem or retire, any partnership interest of Wincup held by such Partner until
such amounts are repaid. Notwithstanding the foregoing, no such distribution
shall be made to the Partners if, after giving effect to such distribution, the
sum of the distributions and any loans made or being made to such Partners under
Section 7.5 for the Partners' Tax Liability exceeds the Partners' actual Partner
Tax Liability for which such loans and distributions are being made.
7.8. Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness (exclusive of trade debt) except in respect of Indebtedness to
Lenders; Indebtedness incurred for capital expenditures permitted under Section
7.6 hereof; Indebtedness due under the Senior Notes; and (iv) Indebtedness in a
maximum aggregate amount outstanding not greater than $10,000,000.
Notwithstanding the foregoing, Borrowers may incur Indebtedness in excess of the
foregoing amounts if, after giving pro forma effect to the incurrence of such
Indebtedness, Interest Coverage Ratio for each of the four fiscal quarters most
recently ended would equal or exceed 2.0 to 1.0 if calculated as if such
Indebtedness was outstanding for the entire four quarter period.
7.9. Nature of Business. Substantially change the nature of the
------------------
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. Transactions with Affiliates. Directly or indirectly, purchase,
----------------------------
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions disclosed in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate.
7.11. Leases. Enter as lessee into any lease arrangement for real or
------
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $6,000,000 in any one fiscal year.
7.12. Subsidiaries.
------------
(a) Form any Subsidiary unless (A) (i) such Subsidiary expressly
joins in this Agreement as a borrower and becomes jointly and severally liable
for the obligations of Borrowers hereunder and under any other agreement between
Borrowers, Agent and Lenders and (ii) Agent shall have received all documents,
including legal
-58-
opinions, it may reasonably require to establish compliance with each
of the foregoing conditions or (B) such Subsidiary is formed pursuant to the
provisions of Section 7.4 hereof.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
----------------------------------
December 31 or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law.
7.14. Pledge of Credit. Now or hereafter pledge any Lender's credit on
----------------
any purchases or for any purpose
whatsoever or use any portion of any Advance in or for any business other than
Borrower's business as conducted on the date of this Agreement.
7.15. Amendment of Agreement of Limited Partnership, Etc. Amend, modify
--------------------------------------------------
or waive any material term or material provision of its Certificate of Limited
Partnership, Agreement of Limited Partnership, Certificate of Incorporation, By-
laws or the Senior Notes.
7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of
---------------------
the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(d); (ii) engage, or
---------------
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code; (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code; (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA; (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d); (vi) incur, or permit any
---------------
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify the Agent of the occurrence of
any Termination Event; (viii) fail to comply, or permit a member of the
Controlled Group to fail to comply, with the requirements of ERISA or the Code
or other applicable laws in respect of any Plan; (ix) fail to meet, or permit
any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.
-59-
7.17. Senior Notes. At any time, directly or indirectly, pay, prepay,
------------
repurchase, redeem, retire or otherwise acquire, or make any payment on account
of any principal of, interest on or premium payable in connection with the
repayment or redemption of the Senior Notes, except that Radnor may pay all
regularly scheduled payments of interest on the Senior Notes so long as no Event
of Default has occurred or would occur after giving effect to such payment.
7.18. Intentionally Omitted.
---------------------
7.19. Intentionally Omitted.
---------------------
7.20. Prepayment of Indebtedness. At any time, directly or indirectly,
--------------------------
prepay any Indebtedness (other than to Agent and the Lenders), or repurchase,
redeem, retire or otherwise acquire any Indebtedness of Borrower.
VIII. CONDITIONS PRECEDENT.
--------------------
8.1. Conditions to Initial Advances. The agreement of Lenders to make
------------------------------
the initial Advances requested to be made on the Effective Date is subject to
the satisfaction, or waiver by Required Lenders, immediately prior to or
concurrently with the making of such Advances, of the following conditions
precedent:
(a) Notes. Agent shall have received the Notes duly executed and
-----
delivered by an authorized officer of Borrowers;
(b) Filings, Registrations and Recordings. Each document
-------------------------------------
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent for its benefit and for the ratable benefit of the Lenders, a
perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and Agent shall
have received an acknowledgment copy, or other evidence satisfactory to it, of
each such filing, registration or recordation and satisfactory evidence of the
payment of any necessary fee, tax or expense relating thereto;
(c) Proceedings of Borrowers. Agent shall have received a copy of
------------------------
the resolutions in form and substance reasonably satisfactory to Agent, of the
Partners and the Board of Directors of Borrowers, as the case may be,
authorizing (i) the execution, delivery and performance of this Agreement, the
Notes, any related agreements, the Acquisition Agreement, the Senior Notes and
all documents executed in connection therewith (collectively the "Documents")
and (ii) the granting by Borrowers of the security interests in and liens upon
the Collateral in each case certified by the General Partner of Wincup and the
President of each other Borrower as of the Effective Date; and, such certificate
shall state
-60-
that the resolutions thereby certified have not been amended, modified, revoked
or rescinded as of the date of such certificate;
(d) Incumbency Certificates of Borrowers. Agent shall have
------------------------------------
received a certificate of the Secretary of each Borrower, dated the Effective
Date, as to the incumbency and signature of the officers of each Borrower
executing this Agreement, any certificate or other documents to be delivered by
it pursuant hereto, together with evidence of the incumbency of such officer;
(e) Certificates. Agent shall have received a copy of the
------------
Articles or Certificate of Incorporation, Certificate of Limited Partnership and
all amendments to each of the foregoing, certified by the Secretary of State or
other appropriate official of its jurisdiction of formation together with copies
of the by-laws, partnership agreements and shareholders agreements of each
Borrower, as applicable, certified as accurate and complete by the general
partner or secretary of each Borrower;
(f) Good Standing Certificates. Agent shall have received good
--------------------------
standing certificates for each Borrower dated not more than ten (10) days prior
to the Effective Date, issued by the Secretary of State or other appropriate
official of each Borrower's jurisdiction of formation and each jurisdiction
where the conduct of a Borrower's business activities or the ownership of its
properties necessitates qualification;
(g) Legal Opinion. Agent shall have received the executed legal
-------------
opinions of Xxxxx Xxxxxx & Heckscher and such other counsel as may be required
by the Lenders in form and substance satisfactory to the Lenders which shall
cover such matters incident to the transactions contemplated by this Agreement,
the Contribution Agreements, the Acquisition Agreement, the Notes, and related
agreements as Agent may reasonably require and Borrowers hereby authorize and
direct such counsel to deliver such opinions to Agent and the Lender;
(h) No Litigation. (i) No litigation, investigation or proceeding
-------------
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of the Agent, is
deemed material or (B) which if adversely determined, could, in the reasonable
opinion of the Agent, have a Material Adverse Effect on any Borrower; and (ii)
no injunction, writ, restraining order or other order of any nature materially
adverse to any Borrower or the conduct of its business or inconsistent with the
due consummation of the Transactions shall have been issued by any Governmental
Body;
(i) Financial Condition Opinions. Agent shall have received an
----------------------------
executed Officers' Certificate in the form of Exhibit 8.1(i).
--------------
-61-
(j) Collateral Examination. Agent shall have completed Collateral
----------------------
examinations and received appraisals as shall be required by the Lenders with
respect to the Receivables, Inventory and General Intangibles the results of
which shall be satisfactory in form and substance to the Agent;
(k) Fees. Agent shall have received all fees payable to Agent and
----
to the Lenders on or prior to the Effective Date pursuant to Article III hereof;
(l) Pro Forma Financial Statements. Agent and Lenders shall have
------------------------------
received a copy of the Pro Forma Financial Statements which shall be
satisfactory in all respects to Lenders;
(m) Other Documents. Agent and Lenders shall have received final
---------------
executed copies of the Acquisition Agreement, the Senior Notes and the Indenture
and all related agreements, documents and instruments as in effect on the
Effective Date all of which shall be in form and substance satisfactory to Agent
and Lenders and shall provide, among other things, for such indemnifications and
consents as Agent or any Lender deems reasonably necessary and the transactions
contemplated by such documentation shall be consummated concurrently with the
making of the initial Advance;
(n) Other Documents. Agent shall have received the executed Other
---------------
Documents, each in form and substance satisfactory to Lenders;
(o) Insurance. Agent shall have received in form and substance
---------
satisfactory to Agent, certified copies of each Borrower's casualty insurance
policies evidencing coverage on all Collateral in such amounts, with such
carriers and covering such risks as is acceptable to Agent, together with loss
payable endorsements on Agent's standard form of loss payee endorsement naming
Agent as loss payee, and certified copies of each Borrower's liability insurance
policies, together with endorsements naming Agent as an additional or co-
insured;
(p) Environmental Reports. Agent shall have received in form and
---------------------
substance satisfactory to Agent and Lenders an environmental Phase I and Phase
II audits prepared by Dames & Xxxxx and Conestoga Rovers & Associates with
respect to all real property owned and/or leased by Borrowers;
(q) Payment Instructions. Agent shall have received written
--------------------
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(r) Blocked Accounts. Agent shall have received duly executed
----------------
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and all other proceeds of the Collateral;
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(s) Consents. Agent shall have received any and all Consents
--------
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(t) No Material Adverse Change. (i) since September 30, 1996, (a)
--------------------------
no material adverse change shall have occurred in the condition, financial or
otherwise, operations, properties or prospects of any Borrower, (b) no material
damage or destruction shall have occurred to any of the Collateral and no
material depreciation in the value thereof, (c) no material adverse deviation
shall have occurred from the forecasts and projections previously delivered to
Agent and (d) no event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect on any Borrower shall have occurred
and (ii) no representations made or information supplied to Agent or the Lenders
shall have been proven to be inaccurate or misleading in any material respect;
(u) Leasehold Agreements. Agent shall have received landlord,
--------------------
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased or owned by any Borrower at which Inventory is located;
(v) Contract Review. Agent shall have reviewed all material
---------------
contracts of each Borrower including, without limitation, leases, union
contracts, labor contracts, vendor supply contracts, license agreements and
distributorship agreements and such contracts and agreements shall be
satisfactory in all respects to Agent;
(w) Closing Certificate. Agent shall have received closing
-------------------
certificate signed by the Chief Financial Officer of Borrower dated as of the
date hereof, stating that (i) all representations and warranties made by each as
set forth in this Agreement and the other Documents are true and correct on and
as of such date, (ii) Borrowers are on such date in compliance with all the
terms and provisions set forth in this Agreement and the other Documents and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(x) Borrowing Base. Agent and Lenders shall have received
--------------
evidence from Borrowers that the aggregate amount of Eligible Receivables and
Eligible Inventory is sufficient in value and amount to support Revolving
Advances and Letters of Credit in the amount requested by Borrower on the
Effective Date and, so that after giving effect to the initial Advances
hereunder, Borrowers shall have Undrawn Availability of at least $3,000,000;
(y) Compliance. Agent shall have received evidence that (i)
----------
except as disclosed on Schedule 8.1(y) hereto Borrowers' operations comply, in
all respects deemed material by Agent, with all applicable environmental and
OSHA statutes and regulations, (ii) Borrowers' operations are not the subject of
any federal, state or local investigation, evaluation or remedial action which
require or
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necessitate an expenditure deemed material by Agent, all of which shall have
been confirmed by the Phase I and Phase II environmental reports of Dames &
Xxxxx delivered to Agent prior to closing.
(z) Agreements. Agent and Lenders shall have received copies of
----------
all agreements evidencing the obligations of any Borrower with respect to its
Indebtedness for borrowed money, which agreements shall be in form and substance
satisfactory to Agent and shall set forth the conditions on which (i) such
Borrower may make and the holder(s) of such indebtedness may receive payments
with respect thereto and (ii) the holder(s) of such indebtedness may accelerate
such obligations, commence any action against or otherwise exercise any rights
or enforce any remedies against such Borrower, which conditions shall be
satisfactory in form and substance to Agent in its discretion.
(aa) Acquisition. Agent and Lenders shall have received evidence
-----------
satisfactory to them that Borrower has acquired all of its assets in accordance
with all applicable laws and that such assets are free and clear of all Liens
other than Permitted Encumbrances.
8.2. Conditions to Each Advance. The agreement of Lenders to make any
--------------------------
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties made by Borrower and/or General Partner in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date
except as such representations and warranties are modified in a manner
consistent with this Agreement;
(b) No Default. No Event of Default or Default shall have
----------
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date and, in the case of the initial
Advance, after giving effect to the consummation of the transactions
contemplated by the Acquisition Agreement and the Senior Notes; provided,
--------
however that Lenders in their sole discretion, may continue to make Advances
-------
notwithstanding the existence of an Event of Default or Default and that any
Advances so made shall not be deemed a waiver of any such Event of Default or
Default; and
(c) Maximum Advances. In the case of any Revolving Advances
----------------
requested to be made or Letters of Credit to be issued, after giving effect
thereto, the aggregate Revolving Advances and
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outstanding Letters of Credit shall not exceed the maximum Revolving Advances
permitted under Section 2.1 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AND GENERAL PARTNER.
-------------------------------
Each Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning thereof,
------------------------------
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
any Borrower's reclamation or repossession of, or the return to any Borrower of,
a material amount of goods or claims or disputes asserted by any Customer or
other obligor.
9.2. Schedules. Deliver to Agent and if requested, the Lenders, on or
---------
before the fifteenth (15th) day of each month as and for the prior month (a)
accounts receivable ageings, (b) accounts payable schedules and (c) Inventory
reports for each Borrower; provided, if Undrawn Availability is less than (x)
--------
$4,000,000 with respect to all Borrowers or (y) $2,000,000 with respect to
StyroChem or Wincup, individually, Borrowers shall provide Agent with daily
reports of sales, collections, credits issued, debits or other adjustments made
by any Borrower with respect to Receivables. In addition, each Borrower will
deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right
to confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under this Section are to be
in form satisfactory to Agent and executed by each Borrower and delivered to
Agent from time to time solely for Agent's convenience in maintaining records of
the Collateral, and any Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.
9.3. Intentionally Omitted.
---------------------
9.4. Litigation. Promptly notify Agent and Lenders in writing of any
----------
litigation, suit or administrative proceeding affecting any Borrower, whether or
not the claim is covered by insurance, and of any suit or administrative
proceeding, which may have a Material Adverse Effect on any Borrower.
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9.5. Material Occurrences. Promptly notify Agent and Lenders in writing
--------------------
upon the occurrence of (a) any Event of Default or Default; (b) any event of
default or (c) any event which with the giving of notice or lapse of time, or
both, would constitute an event of default under the Senior Notes; (d) any
event, development or circumstance whereby any financial statements or other
reports furnished to Agent or any Lender fail in any material respect to present
fairly, in accordance with GAAP consistently applied, the financial condition or
operating results of any Borrower as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such deficiency
continued for two plan years and was not corrected as provided in Section 4971
of the Internal Revenue Code, could subject Borrower to a tax imposed by Section
4971 of the Internal Revenue Code; (f) each and every default by any Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (g) any other development in the business or affairs of any Borrower which
might reasonably be expected to be materially adverse; in each case describing
the nature thereof and the action such Borrower proposes to take with respect
thereto.
9.6. Government Receivables. Notify Agent immediately if any of the
----------------------
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of them.
9.7. Annual Financial Statements. Furnish Agent and the Lenders within
---------------------------
ninety (90) days after the end of each fiscal year of Borrowers, financial
statements of Borrowers on a consolidated basis including, but not limited to,
statements of income and partners' equity and cash flow from the beginning of
the current fiscal year to the end of such fiscal year and the balance sheet as
at the end of such fiscal year, all prepared in accordance with GAAP applied on
a basis consistent with prior practices, and in reasonable detail and reported
upon without qualification by an independent certified public accounting firm
selected by Borrower and satisfactory to Agent (the "Accountants"). The report
of such accounting firm shall be accompanied by a statement of such accounting
firm certifying that (i) they have caused this Agreement to be reviewed, (ii) in
making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default
or a Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof. In addition, the reports shall be
accompanied by a certificate of each Borrower's Chief Financial Officer which
shall state that, based on an examination sufficient to permit him to make an
informed
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statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by such Borrower with respect
to such event and, such certificate shall have appended thereto calculations
which set forth Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.8. Quarterly Financial Statements. Furnish Agent and Lenders within
------------------------------
thirty (30) days after the end of each fiscal quarter, an unaudited balance
sheet of Borrowers on a consolidated basis and unaudited statements of income
and partners' equity and cash flow reflecting results of operations from the
beginning of the fiscal year to the end of such quarter,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal year end adjustments. The reports shall
be accompanied by a certificate of each Borrower's Chief Financial Officer which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by such Borrower
with respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.9. Monthly Financial Statements. Furnish Agent and Lenders within
----------------------------
thirty (30) days after the end of each month, an unaudited balance sheet of
Borrowers on a consolidated basis and unaudited statements of income and
partners' equity and cash flow reflecting results of operations from the
beginning of the fiscal year to the end of such month and for such month,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal year end adjustments. The reports shall
be accompanied by a certificate of each Borrower's Chief Financial Officer which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by such Borrower
with respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.10. Other Reports. Furnish Agent and Lenders as soon as available, but
-------------
in any event within ten (10) days after the issuance thereof, (i) with copies of
such financial statements, reports and returns as Borrower shall send to its
partners and (ii) copies of all notices sent pursuant to the Senior Notes.
9.11. Additional Information. Furnish Agent and Lenders with such
----------------------
additional information as Agent and Lenders shall reasonably
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request in order to enable Agent and Lenders to determine whether the terms,
covenants, provisions and conditions of this Agreement and the Notes have been
complied with by Borrowers including, without limitation and without the
necessity of any request by Agent or any Lender, (a) copies of all environmental
audits and reviews, (b) at least thirty (30) days prior thereto, notice of any
Borrower's opening of any new office or place of business or any Borrower's
closing of any existing office or place of business, and (c) promptly upon
learning thereof, notice of any labor dispute to which any Borrower may become a
party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which any Borrower is a
party or by which any Borrower is bound.
9.12. Projected Operating Budget. Furnish Agent and Lenders, no later
--------------------------
than (x) sixty (60) days following the Effective Date and (y) thirty (30) days
prior to the beginning of each fiscal year commencing with fiscal year 1998, a
month by month projected operating budget and cash flow of Borrower for such
fiscal year (including an income statement for each month and a balance sheet as
at the end of the last month in each fiscal quarter), such projections to be
accompanied by a certificate signed by each Borrower's Chief Financial Officer
to the effect that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.
9.13. Intentionally Omitted.
---------------------
9.14. Notice of Suits, Adverse Events. Furnish Agent and Lenders with
-------------------------------
prompt notice of (i) any lapse or other termination of any Consent issued to
Borrowers by any Governmental Body or any other Person that is material to the
operation of any Borrower's business, (ii) any refusal by any Governmental Body
or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by any Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower, or if copies thereof are
requested by Agent or any Lender, and (iv) copies of any material notices and
other communications from any Governmental Body or Person which specifically
relate to any Borrower.
9.15. ERISA Notices and Requests. Furnish Agent and Lenders with
--------------------------
immediate written notice in the event that (i) any Borrower or any member of the
Controlled Group knows or has reason to know that a Termination Event has
occurred, together with a written statement describing such Termination Event
and the action, if any, which Borrower or member of the Controlled Group has
taken, is taking, or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, Department of Labor
or PBGC with respect thereto, (ii) Borrower, General Partner or any member of
the Controlled Group knows or has reason to know that a
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prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Internal Revenue Code) has occurred together with a written statement describing
such transaction and the action which such Borrower or any member of the
Controlled Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding waiver request has been filed with respect to any Plan together
with all communications received by Borrower, General Partner or any member of
the Controlled Group with respect to such request, (iv) any increase in the
benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which such Borrower or any member
of the Controlled Group was not previously contributing shall occur, (v) any
Borrower or any member of the Controlled Group shall receive from the PBGC a
notice of intention to terminate a Plan or to have a trustee appointed to
administer a Plan, together with copies of each such notice, (vi) any Borrower
or any member of the Controlled Group shall receive any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Internal Revenue Code,
together with copies of each such letter; (vii) any Borrower or any member of
the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with copies of each such notice; (viii) any
Borrower or any member of the Controlled Group shall fail to make a required
installment or any other required payment under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment; (ix) any
Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to Agent, upon request,
--------------------
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purpose
s, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
-----------------
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein or any Other Document when due;
10.2. any representation or warranty made or deemed made by any Borrower
in this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at
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any time in connection herewith or therewith shall prove to have been misleading
in any material respect on the date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information when
due or when requested, or (ii) permit the inspection of its books or records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property;
10.5. (i) a failure or neglect of any Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.7,
4.8, 4.9, 4.14, 4.17, 4.19, 6.1, 6.2, 6.3, and 6.9 hereof which is not cured
within thirty (30) days from the occurrence of such failure or neglect; or (ii)
failure or neglect of any Borrower to perform, keep or observe any other term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Borrower,
Agent and the Lenders after expiration of all applicable grace periods;
10.6. any judgment in excess of $100,000 is rendered against any Borrower
or judgment liens filed against any Borrower of judgments in excess of $400,000
in the aggregate are rendered against all Borrowers for an amount which within
thirty (30) days of such rendering or filing is not either satisfied, stayed or
discharged of record;
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within forty five (45)
days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
10.8. any Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9. any Subsidiary of any Borrower or any Guarantor, shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit
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of creditors, (iv) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within forty five (45) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. any change in the condition or affairs (financial or otherwise) of
any Borrower which in Agent's opinion impairs the Collateral or the ability of
any Borrower to perform its Obligations under this Agreement;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. an event of default has occurred and been declared under the
Senior Notes which default shall not have been cured or waived within any
applicable grace period;
10.13. a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which materially adversely affects
its condition, affairs or prospects (financial or otherwise) which default is
not cured within any applicable grace period;
10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Borrower, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or similar agreement;
10.15. any Change of Ownership or Change of Control shall have occurred;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Borrower, or Borrower shall so claim in
writing to Agent;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent, trademark or tradename of any
Borrower, the continuation of which is material to the continuation of any
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(c) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of any Borrower's
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement
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which is necessary or material to the operation of any Borrower's business shall
be revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement could reasonably be expected
to have a Material Adverse Effect on any Borrower;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body or the title and rights of any Borrower shall have become the
subject matter of litigation which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents;
10.19. the operations of any Borrower's manufacturing facilities are
interrupted at any time for more than fourteen (14) consecutive days, or if any
Borrower's manufacturing capacity is reduced by 25% as a result of such an
interruption of operations (other than permanent interruptions resulting from
planned closing of up to three (3) plants) unless such Borrower shall (i) be
entitled to receive for such period of interruption, proceeds of business
interruption insurance sufficient to assure that its per diem cash needs during
such period is at least equal to its average per diem cash needs for the
consecutive twelve (12) month period immediately preceding the initial date of
interruption and (ii) receive such proceeds in the amount described in clause
(i) preceding not later than thirty (30) days following the initial date of any
such interruption; provided, however, that notwithstanding the provisions of
clauses (i) and (ii) of this section, an Event of Default shall be deemed to
have occurred if any Borrower shall be receiving the proceeds of business
interruption insurance for a period of thirty (30) consecutive days; or
10.20. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Lender be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of the Required Lenders, could have a Material
Adverse Effect on any Borrower.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
------------------------------------------
11.1. Rights and Remedies. Upon the occurrence of (i) an Event of
-------------------
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and the
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances. Upon the occurrence of any
-72-
Event of Default, Agent may, and at the direction of the Required Lenders shall,
exercise any and all other rights and remedies provided for herein, under the
Uniform Commercial Code and at law or equity generally, including, without
limitation, the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any Borrower's premises or other premises without legal
process and without incurring liability to any Borrower therefor, and Agent may
thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrowers to make the Collateral available to
Agent at a convenient place. With or without having the Collateral at the time
or place of sale, Agent may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, as
Agent may elect. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrowing Agent at least five (5) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by each Borrower. In connection
with the exercise of the foregoing remedies, Agent is granted permission to use
(a) all of each Borrower's trademarks, trade styles, trade names, patents,
patent applications, licenses, franchises and other proprietary rights which are
used in connection with Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods without cost to Agent. The proceeds realized from the sale of any
Collateral shall be applied as follows: first, to the reasonable costs, expenses
and attorneys' fees and expenses incurred by Agent for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second, to interest due upon any of the Obligations; and, third, to
the principal of the Obligations. If any deficiency shall arise, each Borrower
shall remain liable to Agent and the Lenders therefor.
11.2. Agent's Discretion. Agent shall have the right in its sole
------------------
discretion, but with the consent of the Required Lenders to determine which
rights, Liens, security interests or remedies Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect
thereto and such determination will not in any way modify or affect any of
Agent's or Lenders' rights hereunder.
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11.3. Setoff. In addition to any other rights which Agent or any Lender
------
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any of Borrowers'
property held by Agent and such Lender or by the Bank to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The enumeration of the
---------------------------------
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5. Actions in Concert. Anything in this Agreement to the contrary
------------------
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including, without limitation, exercising any right of
set-off) without first obtaining the prior written consent of Agent and Required
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of the Agent and the Required Lenders.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
--------------------------------
12.1. Waiver of Notice. Each Borrower each hereby waives notice of non-
----------------
payment of any of the Receivables, demand, present ment, protest and notice
thereof with respect to any and all in struments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2. Delay. No delay or omission on Agent's or any Lender's part in
-----
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
-----------
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
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WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
------------------------------
13.1. Term. This Agreement, which shall inure to the benefit of and
----
shall be binding upon the respective successors and permitted assigns of each
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until the last day of the Term unless
sooner terminated as herein provided. Borrower may terminate this Agreement at
any time upon ninety (90) days' prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full and this Agreement
is terminated prior to the last day of the Term (the date of such prepayment
hereinafter referred to as the "Prepayment Date"), Borrower shall pay an early
termination fee to Agent for the ratable benefit of the Lenders in an amount
equal to (x) $1,500,000 if the Prepayment Date occurs from the Effective Date to
and including the date immediately preceding the first anniversary of the
Initial Closing Date, (y) $1,000,000 if the Prepayment Date occurs from the
first anniversary of the Initial Closing Date to and including the date
immediately preceding the second anniversary of the Initial Closing Date, and
(z) $500,000 if the Prepayment Date occurs on or after the second anniversary of
the Initial Closing Date to and including the date immediately preceding the
third anniversary of the Initial Closing Date. Notwithstanding the foregoing, if
any Lender shall enter into a recapitalization or refinancing arrangement with
Borrowers upon the termination of this Agreement, the aforementioned early
termination fee shall be reduced by an amount equal to such Lender's Commitment
Percentage of the applicable early termination fee and such Lender's ratable
portion of the remaining balance of the early termination fee shall be $0.
13.2. Termination. The termination of the Agreement shall not affect any
-----------
Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and the Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrowers have been paid or performed in full after the
termination of this Agreement or Borrowers have furnished Agent and the Lenders
with an indemnification satisfactory to Agent and the Lenders with respect
thereto. Accordingly, each Borrower waives any rights which it may have under
Section 9-404(1) of the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such UCC termination statements to Borrowers, or to file them
with any filing office,
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unless and until this Agreement shall have been terminated in accordance with
its terms and all Obligations paid in full in immediately available funds.
XIV. REGARDING AGENT.
---------------
14.1. Appointment. Each Lender hereby designates BNYCC to act as Agent
-----------
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
3.3(a)(i), 3.3(c), 3.4(a) and 3.4(b) charges and collections (without giving
effect to any collection days) received pursuant to this Agreement, for the
ratable benefit of Lenders. Agent may perform any of its duties hereunder by or
through its agents or employees. As to any matters not expressly provided for
by this Agreement (including without limitation, collection of the Notes) Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding; provided, however, that Agent shall not
-------- -------
be required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. Nature of Duties. Agent shall have no duties or responsibilities
----------------
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross negligence (but not mere
negligence) or willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Borrower or any
officer thereof contained in this Agreement, or in any of the Other Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
of the Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of any Borrower to perform its respective obligations
hereunder. Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Borrower or General Partner.
The duties of Agent as respects the Advances to any Borrower shall be mechanical
and administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship
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in respect of any Lender; and nothing in this Agreement, expressed or implied,
is intended to or shall be so construed as to impose upon Agent any obligations
in respect of this Agreement except as expressly set forth herein.
14.3. Lack of Reliance on Agent and Resignation. Independently and
-----------------------------------------
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
Borrowers. Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by
Borrower pursuant to the terms hereof. Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement or any Other
Document, or of the financial condition of each Borrower, or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes, the Other Documents or
the financial condition of each Borrower, or the existence of any Event of
Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowers and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and
duties of Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent. After any Agent's resignation as Agent, the provisions of
this Article XIV shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request instructions
-----------------------
from Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting
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hereunder in accordance with the instructions of the Required Lenders.
14.5. Reliance. Agent shall be entitled to rely, and shall be fully
--------
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6. Notice of Default. Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or any
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be directed by the Required Lenders;
provided, that, unless and until Agent shall have received such directions,
-------- ----
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of Lenders.
14.7. Indemnification. To the extent Agent is not reimbursed and
---------------
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided that, Lenders shall not be liable for any portion
-------- ----
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's
willful misconduct or gross (not mere) negligence.
14.8. Agent in its Individual Capacity. With respect to the obligation
--------------------------------
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
Borrowers as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in
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connection with this Agreement or otherwise without having to account for the
same to Lenders.
14.9. Delivery of Documents. To the extent Agent receives documents and
---------------------
information from any Borrower pursuant to the terms of this Agreement, Agent
will promptly furnish such documents and information to Lenders.
14.10. Borrowers' Undertaking to Agent. Without prejudice to their
-------------------------------
respective obligations to the Lenders under the other provisions of this
Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time
to time on demand all amounts from time to time due and payable by it for the
account of Agent or the Lenders or any of them pursuant to this Agreement to the
extent not already paid. Any payment made pursuant to any such demand shall pro
---
tanto satisfy Borrowers' obligations to make payments for the account of the
-----
Lenders or the relevant one or more of them pursuant to this Agreement.
XIV. MISCELLANEOUS.
-------------
15.1. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, each Borrower each accepts for itself
and in connection with its properties, generally and unconditionally, the non-
exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 15.6. Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of the Agent to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by any
--------------------
Borrower against the Agent or Lenders involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state
court located in the City of New York, State of New York.
15.2. Entire Understanding. (a) This Agreement and the documents
--------------------
executed concurrently herewith contain the entire understanding between
Borrowers, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the
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subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing, signed by each Borrower's, Agent's and each Lender's respective
officers. Neither this Agreement nor any portion or provisions hereof may be
changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and each Borrower may, subject to the provisions of this
Section 15.2 (b), from time to time enter into written supplemental agreements
to this Agreement, the Notes or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of the Lenders, Agent or any Borrower
thereunder or the conditions, provisions or terms thereof or waiving any Event
of Default thereunder, but only to the extent specified in such written
agreements; provided, however, that no such supplemental agreement shall, (x)
-------- -------
amend Sections 6.5, 6.6, 6.7, 6.8 and 7.6 without the consent of 67% of the
Lenders or (y) without the consent of all the Lenders:
(i) increase or decrease the Commitment Percentage of any
Lender or the Maximum Loan Amount or the Advance Rates.
(ii) extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrowers to Agent or Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 15.2(b).
(iv) release any Collateral during any calendar year having an
aggregate value in excess of $100,000.
(v) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each of the Lenders and
shall be binding upon Borrowers, the Lenders and Agent and all future holders of
the Obligations. In the case of any waiver, Borrowers, Agent and the Lenders
shall be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.
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15.3. Successors and Assigns; Participations; New Lenders.
---------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit
of Borrowers, Agent, each Lender, all future holders of the Notes and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and Required Lenders.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrowers shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to the Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrowers be required to pay any such amount arising from the
same circumstances and with respect to the same Advances or other Obligations
payable hereunder to both such Lender and such Transferee. Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this Agreement and the Other Documents to one or more additional
banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender,
the transferor Lender, and Agent and delivered to Agent for recording provided
no Purchasing Lender shall be sold an aggregate commitment of less than
$5,000,000. Upon such execution, delivery, acceptance and recording, from and
after the transfer effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Commitment Percentage as
set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Commitment Transfer Supplement creating a
novation for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising
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from the purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender under this Agreement and the Other
Documents. Each Borrower hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Each Borrower shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and each Borrower, Agent and Lenders may treat each Person
whose name is recorded in the Register as the owner of the Advance recorded
therein for the purposes of this Agreement. The Register shall be available for
inspection by Borrowers, or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$2500 payable by the applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Each Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Borrowers which has been delivered to such Lender by or on behalf of any
Borrower pursuant to this Agreement or in connection with such Lender's credit
evaluation of Borrowers.
15.4. Application of Payments. Agent shall have the continuing and
-----------------------
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that
any Borrower makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
15.5. Indemnity. Each Borrower shall indemnify Agent and each Lender and
---------
their officers, employees and agents from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against Agent or any Lender in any litigation, proceeding or
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investigation instituted or conducted by any governmental agency or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement, whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the willful misconduct or gross
(not mere) negligence of the party being indemnified.
15.6. Notice. Any notice or request hereunder may be given to any
------
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with telephone communication
to a duly authorized officer of the recipient confirming its receipt as
subsequently confirmed by registered or certified mail. Any notice or other
communication required or permitted pursuant to this Agreement shall be deemed
given (a) when personally delivered to any officer of the party to whom it is
addressed, (b) on the earlier of actual receipt thereof or three (3) days
following posting thereof by certified or registered mail, postage prepaid, or
(c) upon actual receipt thereof when sent by a recognized overnight delivery
service or (d) upon actual receipt thereof when sent by telecopier to the number
set forth below with telephone communication confirming receipt and subsequently
confirmed by registered, certified or overnight mail to the address set forth
below, in each case addressed to each party at its address set forth below or at
such other address as has been furnished in writing by a party to the other by
like notice:
(A) If to Agent or The Bank of New York
BNYCC at: Commercial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Peak
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(B) If to a Lender other than Agent, as specified on the signature pages
hereof
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(C) If to a Borrower: c/o Radnor Holdings Corporation
Three Radnor Corporate Center
Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copies to: Xxxxx Xxxxxx & Heckscher
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
15.7. Survival. The obligations of Borrowers under Sections 2.2(f),
--------
3.7, 3.8, 3.9, 14.7 and 15.5 shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.
15.8. Severability. If any part of this Agreement is contrary to,
------------
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
15.9. Expenses. All costs and expenses including, without limitation,
--------
reasonable attorneys' fees and disbursements incurred by Agent, any Lender and
Agent on behalf of the Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all related agreements,
documents and instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent's or any Lender's transactions with any Borrower, or (e) in connection
with any advice given to Agent or any Lender with respect to its rights and
obligations under this Agreement and all related agreements, may be charged to
Borrowers' accounts and shall be part of the Obligations.
15.10. Injunctive Relief. Each Borrower recognizes that, in the event
-----------------
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent and the Lenders; therefore, Agent and each Lender, if Agent or
such Lender so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving that actual damages are
not an adequate remedy.
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15.11. Consequential Damages. Neither Agent nor Lenders nor any agent or
---------------------
attorney for any of them shall be liable to any Borrower for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
15.12 Captions. The captions at various places in this Agreement are
--------
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.11. Counterparts; Telecopied Signatures. This Agreement may be
-----------------------------------
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
15.13. Construction. The parties acknowledge that each party and its
------------
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
XVI. BORROWING AGENCY.
----------------
16.1. Borrowing Agency Provisions.
---------------------------
(a) Each Borrower hereby irrevocably designates Borrowing Agent to
be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party.
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(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted to
Agent or any Lender to any Borrower, failure of Agent or any Lender to give any
Borrower notice of borrowing or any other notice, any failure of Agent or any
Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
16.2. Waiver of Subrogation. Each Borrower expressly waives any and all
---------------------
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
XVII. CROSS-GUARANTY.
--------------
17.1. Cross Guaranty. Each Borrower hereby acknowledges and agrees that
--------------
such Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to each other Borrower, Agent and Lenders the full
and prompt payment of, all Obligations owed or hereafter owing by each other
Borrower. Each Borrower further agrees to pay all costs and expenses including,
without limitation, all court costs and reasonable attorneys' and paralegals'
fees and expenses, paid or incurred by Lender in endeavoring to collect all or
any part of the Obligations from, or in prosecuting any action against, such
Borrower or any other guarantor of all or any part of the Obligations.
17.2. Contribution with Respect to Guaranty Obligations.
-------------------------------------------------
(a) To the extent that any Borrower shall make a payment under
this Section 17 of all or any of the Obligations for which such Borrower is not
primarily liable (a "Guarantor Payment") which, taking into account all other
Guarantor Payments then previously or concurrently made by the other Borrower,
exceeds the amount which such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment
in the same proportion that such Borrower's "Allocable Amount" (as defined
below) (in effect immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of all of the Borrowers in effect immediately prior
to the making of such
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Guarantor Payment, then such Borrower shall be entitled to receive contribution
----
and indemnification payments from, and be reimbursed by, the other Borrower for
the amount of such excess, pro rata based upon their respective Allocable
--- ----
Amounts in effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
--------- ------
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this Section 17 without rendering such claim
voidable or avoidable under Section 548 of chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This subsection 17.2 is intended only to define the relative
rights of the Borrowers and nothing set forth in this subsection 17.2 is
intended to or shall impair the obligations of the Borrowers, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement, and nothing contained in this
subsection 17.2 shall limit the liability of any Borrower to pay the Obligations
for which it is primarily liable.
(d) The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets of any Borrower to which
such contribution and indemnification is owing.
17.3. Obligations Absolute. The liability of each Borrower to Agent and
--------------------
Lenders hereunder shall not be affected or impaired by any of the following: (a)
the validity or enforceability of the Obligations or any part thereof, or of the
Note or other instrument or document evidencing all or any part of the
Obligations, (b) the absence of any attempt to collect the Obligations from a
Borrower or any other guarantor or other action to enforce the same, (c) any
acceptance of collateral security, guarantors, accommodation parties or sureties
for any or all Obligations; (d) one or more extensions or renewals of
Obligations (whether or not for longer than the original period) or any
modification of the interest rates, fees, maturities or principal amount of, or
other contractual terms applicable to any Obligations; (e) any waiver or
indulgence granted to a Borrower, any delay or lack of diligence in the
enforcement of Obligations, or any failure to institute proceedings, file a
claim, give any required notices or otherwise protect any Obligations; (f) any
full or partial release of, compromise or settlement with, or agreement not to
xxx a Borrower or any guarantor or other person liable in respect of any
Obligations; (g) any release, surrender, cancellation or other discharge of any
evidence of any of the Obligations or the acceptance of any instrument in
renewal or substitution therefore; (h) any failure to obtain collateral security
(including rights of setoff) for any of the Obligations, or to obtain or
maintain the proper or sufficient creation and perfection thereof, or to
establish the priority thereof, or to preserve, protect, insure care for,
exercise or enforce any collateral security; (i) any collection, sale, lease or
disposition of, or any other foreclosure or enforcement of or
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realization on, any collateral security; (j) any assignment, pledge or other
transfer of any of the Obligations or any evidence thereof; (k) any manner,
order or method of application of any payments or credits upon any of the
Obligations; (l) Agent's or any Lender's election, in any case or proceedings
under the Bankruptcy Code of the application of Section 1111(b)(2) thereof,
(xiii) any borrowing or grant of a Lien by a Borrower as debtor in possession
under Section 364 of the Bankruptcy Code and (m) the disallowance under the
Bankruptcy Code of all or any portion of Agent's or such Lender's claim for
repayment of the Obligations. Each Borrower hereby waives any and all legal and
equitable defenses and discharges available to a surety guarantor, or
accommodation co-obligor.
Each Borrower hereby assumes responsibility for keeping itself informed
of the financial condition of the other Borrower, and any and all endorsers and
other guarantors of any agreement, instrument or document evidencing or security
all or any part of the Obligations and of all other circumstances bearing upon
the risk of nonpayment of the Obligations or any part thereof that diligent
inquiry would reveal, and each Borrower hereby agrees that neither Agent nor any
Lender shall have any duty to advise such Borrower of information regarding such
condition or any such circumstances. Each Borrower hereby acknowledges
familiarity with the other Borrower's financial condition and has not relied on
any statements by Agent or Lenders in obtaining such information. In the event
Agent or any Lender, in its sole discretion, undertakes at any time or from time
to time to provide any such information to a Borrower, it shall not be under any
obligation (i) to undertake any investigation with respect thereto, (ii) to
disclose any information which, pursuant to accepted or reasonable credit
practices, Agent wishes to maintain confidential or (iii) to make any other or
future disclosures of such information, or any other information, to such
Borrower.
17.4. Waiver. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, AGENT OR ANY
------
LENDER MAY, AT ITS SOLE ELECTION, PROCEED DIRECTLY, WITHOUT NOTICE, AGAINST A
BORROWER TO COLLECT AND RECOVER ALL OR ANY PART OF THE OBLIGATIONS WITHOUT FIRST
PROCEEDING AGAINST THE OTHER BORROWER, ANY OTHER GUARANTOR, OR ANY COLLATERAL
FOR THE OBLIGATIONS.
EACH BORROWER ALSO WAIVES ALL SETOFFS AND COUNTERCLAIMS AND ALL
PRESENTMENTS, DEMANDS FOR PERFORMANCE, NOTICES OF NONPERFORMANCE, PROTESTS,
NOTICES OF PROTEST, NOTICES OF DISHONOR, AND NOTICES OF ACCEPTANCE OF THIS
GUARANTY. EACH BORROWER FURTHER WAIVES ALL NOTICES OF THE EXISTENCE, CREATION
OR INCURRING OF NEW OR ADDITIONAL INDEBTEDNESS, ARISING EITHER FROM ADDITIONAL
LOANS EXTENDED TO THE OTHER BORROWERS OR OTHERWISE, AND EXCEPT FOR NOTICES
EXPRESSLY REQUIRED HEREUNDER, ALSO WAIVES ALL NOTICES THAT THE PRINCIPAL AMOUNT,
OR ANY PORTION THEREOF, OR ANY INTEREST ON ANY AGREEMENT, INSTRUMENT OR DOCUMENT
EVIDENCING OR SECURING ALL OR ANY PART OF THE OBLIGATIONS IS DUE, NOTICES OF ANY
AND ALL PROCEEDINGS TO COLLECT FROM THE MAKER, ANY ENDORSER OR ANY OTHER
GUARANTOR OF ALL OR ANY PART OF THE OBLIGATIONS, OR FROM ANY OTHER PERSON, AND
TO THE EXTENT PERMITTED BY LAW, NOTICES OF EXCHANGE, SALE, SURRENDER OR OTHER
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HANDLING OF ANY COLLATERAL GIVEN TO AGENT AND LENDERS TO SECURE PAYMENT OF THE
OBLIGATIONS.
17.5. Recovery. Each Borrower agrees that, to the extent that the other
--------
Borrower makes a payment or payments to Agent or any Lender, or receives any
proceeds of Collateral, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to such other Borrower, its estate, trustee, receiver
or any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the
Obligations or the part thereof which has been paid, reduced or satisfied by
such amount shall be reinstated and continued in full force and effect as of the
date such initial payment, reduction or satisfaction occurred, and this cross
guaranty shall continue to be in existence and full force and effect,
irrespective of whether any evidence of the Obligations has been surrendered or
cancelled.
17.6. Liability Cumulative. The liability of the Borrowers under this
--------------------
Section 17 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the Other Documents
to which such Borrower is a party or in respect of any Obligations or obligation
of the other Borrower, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.
Each of the parties has signed this Agreement as of the day and year
first above written.
WINCUP HOLDINGS, L.P.
By: WinCup Holdings, Inc.,
its General Partner
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its: President
---------------------------------
3 Radnor Corporate Center, Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
-------------------------------------
Address
WINCUP HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its: President
---------------------------------
3 Radnor Corporate Center, Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
-------------------------------------
Address
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SP ACQUISITION CO.
By: [SIGNATURE APPEARS HERE]
--------------------------------
Its: President
-------------------------------
3 Radnor Corporate Center,
Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
-----------------------------------
Address
STYROCHEM INTERNATIONAL, INC.
By: [SIGNATURE APPEARS HERE]
--------------------------------
Its: President
-------------------------------
3 Radnor Corporate Center,
Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
-----------------------------------
Address
RADNOR HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
--------------------------------
Its: President
-------------------------------
3 Radnor Corporate Center,
Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
-----------------------------------
Address
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, as Lender and as Agent
By: [SIGNATURE APPEARS HERE]
-------------------------------
Its: Vice President
------------------------------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 50%
NATIONSBANK, N.A., as Lender
By: [SIGNATURE APPEARS HERE]
--------------------------------
Its: Vice President
-------------------------------
-----------------------------------
Address
Commitment Percentage: 50%
-00-
XXXXX XX XXXXXXXXXXXX )
) ss.
COUNTY OF PHILADELPHIA)
On this 5th day of December, 1996, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that he is
the President of WinCup Holdings, Inc., a Corporation which is the general
partner of WinCup Holdings, L.P., the partnership described in and which
executed the foregoing instrument; that he had authority to sign the same and he
acknowledged to me that he executed the same as the act and deed of said
partnership for the use and purposes therein mentioned and that he signed his
name thereto by order of the Board of Directors of WinCup Holdings, Inc.
[SIGNATURE APPEARS HERE]
---------------------------------
NOTARY PUBLIC
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF PHILADELPHIA)
On this 5th day of December, 1996, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that he is
the President of WinCup Holdings, L.P, the corporation described in and which
executed the foregoing instrument and that he signed his name thereto by order
of the board of directors of said corporation.
[SIGNATURE APPEARS HERE]
---------------------------------
NOTARY PUBLIC
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF PHILADELPHIA)
On this 5th day of December, 1996, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that he is
the President of SP Acquisition Co., the corporation described in and which
executed the foregoing instrument and that he signed his name thereto by order
of the board of directors of said corporation.
[SIGNATURE APPEARS HERE]
---------------------------------
NOTARY PUBLIC
-00-
XXXXX XX XXXXXXXXXXXX )
) ss.
COUNTY OF PHILADELPHIA)
On this 5th day of December, 1996, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that he is
the President of StyroChem International, Inc, the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
[SIGNATURE APPEARS HERE]
------------------------------
NOTARY PUBLIC
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF PHILADELPHIA)
On this 5th day of December, 1996, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that he is
the President of Radnor Holdings, Inc., the corporation described in and which
executed the foregoing instrument and that he signed his name thereto by order
of the board of directors of said corporation.
[SIGNATURE APPEARS HERE]
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 5th day of December, 1996, before me personally came
Xxxx X. Peak, to me known, who, being by me duly sworn, did depose
and say that he is the Vice President of The Bank of New York Commercial
Corporation, the corporation described in and which executed the foregoing
instrument and that he signed his name thereto by order of the board of
directors of said corporation.
[SIGNATURE APPEARS HERE]
------------------------------
NOTARY PUBLIC
-00-
XXXXX XX XXXXXXXX )
) ss.
COUNTY OF BALTIMORE )
On this 5th day of December, 1996, before me personally came Xxxxxx X.
Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that she
is the Vice President of Nations Bank N.A., the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
[SIGNATURE APPEARS HERE]
------------------------------
NOTARY PUBLIC
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(EXHIBITS AND SCHEDULES OMITTED)
