EXECUTION COPY
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SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
dated as of June 15, 2000
among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANK OF AMERICA, N.A.
as the Agent
and
SWEETHEART CUP COMPANY INC.
as the Borrower
and
SWEETHEART HOLDINGS INC.
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT.............................................2
1.1 Definitions.........................................................2
1.2 Accounting Terms....................................................36
1.3 Interpretive Provisions.............................................36
ARTICLE 2 LOANS AND LETTERS OF CREDIT..................................................37
2.1 Total Facility......................................................37
2.2 Revolving Loans.....................................................37
2.3 Term Loan...........................................................43
2.4 Letters of Credit...................................................45
2.5 Assignment and Assumption by PNC....................................51
ARTICLE 3 INTEREST AND FEES............................................................54
3.1 Interest............................................................54
3.2 Conversion and Continuation Elections...............................55
3.3 Maximum Interest Rate...............................................56
3.4 Certain Fees........................................................56
3.5 Unused Line Fee.....................................................56
3.6 Letter of Credit Fee................................................57
3.7 Collateral Management Fee...........................................57
ARTICLE 4 PAYMENTS AND PREPAYMENTS.....................................................57
4.1 Revolving Loans.....................................................57
4.2 Termination of Facility.............................................58
4.3 Repayment of the Term Loans.........................................58
4.4 Voluntary Prepayments of the Term Loans.............................58
4.5 Mandatory Prepayments of the Term Loans.............................59
4.6 Payments by the Borrower............................................60
4.7 Payments as Revolving Loans.........................................61
4.8 Apportionment, Application and Reversal of Payments.................61
4.9 Indemnity for Returned Payments.....................................62
4.10 Agent's and Lenders' Books and Records; Monthly Statements..........62
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY.......................................63
5.1 Taxes...............................................................63
5.2 Illegality..........................................................64
5.3 Increased Costs and Reduction of Return.............................64
5.4 Funding Losses......................................................65
5.5 Inability to Determine Rates........................................66
5.6 Certificates of Lenders.............................................66
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5.7 Survival............................................................66
ARTICLE 6 COLLATERAL...................................................................66
6.1 Grant of Security Interest..........................................66
6.2 Perfection and Protection of Security Interest......................70
6.3 Location of Collateral..............................................71
6.4 Title to, Liens on, and Sale and Use of Collateral..................72
6.5 Appraisals..........................................................72
6.6 Access and Examination; Confidentiality.............................72
6.7 Collateral Reporting................................................74
6.8 Accounts............................................................74
6.9 Collection of Accounts; Payments....................................76
6.10 Inventory; Perpetual Inventory......................................77
6.11 Equipment...........................................................77
6.12 Assigned Contracts..................................................79
6.13 Documents, Instruments, and Chattel Paper...........................79
6.14 Right to Cure.......................................................80
6.15 Power of Attorney...................................................80
6.16 The Agent's and Lenders' Rights, Duties and Liabilities.............81
6.17 Intercreditor Agreement.............................................81
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES............................81
7.1 Books and Records...................................................81
7.2 Financial Information...............................................81
7.3 Notices to the Lenders..............................................84
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS.......................................87
8.1 Authorization, Validity, and Enforceability of this Agreement
and the other Transaction Documents...............................87
8.2 Validity and Priority of Security Interest..........................88
8.3 Organization and Qualification......................................88
8.4 Corporate Name; Prior Transactions..................................88
8.5 Subsidiaries and Affiliates.........................................88
8.6 Financial Statements and Projections................................88
8.7 Capitalization......................................................89
8.8 Solvency............................................................89
8.9 Debt................................................................89
8.10 Distributions.......................................................89
8.11 Title to Property...................................................89
8.12 Real Estate; Leases.................................................90
8.13 Proprietary Rights..................................................90
8.14 Trade Names.........................................................90
8.15 Litigation..........................................................90
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8.16 Restrictive Agreements..............................................90
8.17 Labor Disputes......................................................91
8.18 Environmental Laws..................................................91
8.19 No Violation of Law.................................................92
8.20 No Default..........................................................92
8.21 ERISA Compliance....................................................92
8.22 Taxes...............................................................93
8.23 Regulated Entities..................................................93
8.24 Use of Proceeds; Margin Regulations.................................93
8.25 Copyrights, Patents, Trademarks and Licenses, etc...................93
8.26 No Material Adverse Change..........................................94
8.27 Full Disclosure.....................................................94
8.28 Material Agreements.................................................94
8.29 Bank Accounts.......................................................94
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS...........................................95
9.1 Taxes and Other Obligations.........................................95
9.2 Corporate Existence and Good Standing...............................95
9.3 Compliance with Law and Agreements; Maintenance of Licenses.........95
9.4 Maintenance of Property.............................................96
9.5 Insurance...........................................................96
9.6 Condemnation........................................................97
9.7 Environmental Laws..................................................98
9.8 Compliance with ERISA...............................................98
9.9 Mergers, Consolidations or Sales....................................99
9.10 Distributions; Capital Change; Restricted Investments...............101
9.11 Transactions Affecting Collateral or Obligations....................104
9.12 Guaranties..........................................................104
9.13 Debt................................................................104
9.14 Prepayment..........................................................105
9.15 Transactions with Affiliates........................................105
9.16 Investment Banking and Finder's Fees................................106
9.17 Amendments of Senior Subordinated Notes and Other
Documents.........................................................106
9.18 Business Conducted..................................................107
9.19 Liens...............................................................107
9.20 Sale and Leaseback Transactions.....................................107
9.21 New Subsidiaries....................................................107
9.22 Fiscal Year.........................................................107
9.23 Capital Expenditures................................................107
9.24 [Reserved.].........................................................108
9.25 Minimum Availability................................................108
9.26 Fixed Charge Coverage Ratio.........................................108
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9.27 Use of Proceeds.....................................................108
9.28 Senior Indebtedness and Secured Sale/Leaseback Collateral...........109
9.29 Further Assurances..................................................109
ARTICLE 10 CONDITIONS OF LENDING........................................................109
10.1 Conditions Precedent to Making of Loans on the Original
Closing Date......................................................109
10.2 Conditions Precedent to Each Loan...................................112
10.3 Conditions Precedent to Effectiveness of Amendment and
Restatement and Making of Loans on Closing Date...................112
ARTICLE 11 DEFAULT; REMEDIES............................................................115
11.1 Events of Default...................................................115
11.2 Remedies............................................................118
ARTICLE 12 TERM AND TERMINATION.........................................................120
12.1 Term and Termination................................................120
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..................120
13.1 No Waivers; Cumulative Remedies.....................................120
13.2 Amendments and Waivers..............................................121
13.3 Assignments; Participations.........................................122
ARTICLE 14 THE AGENT....................................................................124
14.1 Appointment and Authorization.......................................124
14.2 Delegation of Duties................................................124
14.3 Liability of Agent..................................................124
14.4 Reliance by Agent...................................................125
14.5 Notice of Default...................................................125
14.6 Credit Decision.....................................................125
14.7 Indemnification.....................................................126
14.8 Agent in Individual Capacity........................................126
14.9 Successor Agent.....................................................127
14.10 Withholding Tax.....................................................127
14.11 [Reserved.].........................................................128
14.12 Collateral Matters..................................................128
14.13 Restrictions on Actions by Lenders; Sharing of Payments.............129
14.14 Agency for Perfection...............................................130
14.15 Payments by Agent to Lenders........................................130
14.16 Concerning the Collateral and the Related Loan Documents............131
14.17 Field Audit and Examination Reports; Disclaimer by Lenders..........131
14.18 Relation Among Lenders..............................................131
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ARTICLE 15 MISCELLANEOUS................................................................132
15.1 Cumulative Remedies; No Prior Recourse to Collateral................132
15.2 Severability........................................................132
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver............................................................132
15.4 WAIVER OF JURY TRIAL................................................133
15.5 Survival of Representations and Warranties..........................134
15.6 Other Security and Guaranties.......................................134
15.7 Fees and Expenses...................................................134
15.8 Notices.............................................................135
15.9 Waiver of Notices...................................................136
15.10 Binding Effect......................................................136
15.11 Indemnity of the Agent and the Lenders by the Borrower..............136
15.12 Limitation of Liability.............................................137
15.13 Final Agreement.....................................................137
15.14 Counterparts........................................................137
15.15 Captions............................................................138
15.16 Right of Setoff.....................................................138
15.17 Credit Agreement and Conflicts......................................138
15.18 Intercreditor Agreement.............................................138
15.20 Ratification and Confirmation.......................................139
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EXHIBITS AND SCHEDULES
----------------------
EXHIBITS
--------
EXHIBIT A - FORM OF THE TERM LOAN NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - [RESERVED]
EXHIBIT E - FORM OF NOTICE OF BORROWING
EXHIBIT F - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT H - FORM OF STOCKHOLDER SUBORDINATED NOTE
EXHIBIT I - FORM OF LILY INTERCOMPANY NOTE
SCHEDULES
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SCHEDULE 1.1A ASSIGNED CONTRACTS
SCHEDULE 1.1B CREDIT AGREEMENT TERM LOAN EQUIPMENT COLLATERAL
SCHEDULE 6.3 LOCATION OF COLLATERAL
SCHEDULE 8.3 ORGANIZATION AND QUALIFICATION
SCHEDULE 8.5 SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.12 REAL ESTATE; LEASES
SCHEDULE 8.13 PROPRIETARY RIGHTS
SCHEDULE 8.14 TRADE NAMES
SCHEDULE 8.15 LITIGATION
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SCHEDULE 8.17 LABOR DISPUTES
SCHEDULE 8.18 ENVIRONMENTAL LAW
SCHEDULE 8.21 ERISA
SCHEDULE 8.28 MATERIAL AGREEMENTS
SCHEDULE 8.29 BANK ACCOUNTS
SCHEDULE 9.13 EXISTING DEBT
SCHEDULE 9.19 EXISTING LIENS
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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Second Amended and Restated Loan and Security Agreement, dated as of June
15, 2000, among the financial institutions listed on the signature pages hereof
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), Bank of America, N.A., a national banking
association (together with any successor, "BofA") and successor-in-interest to
BankAmerica Business Credit, Inc. ("BABC") with an office at Forty Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as agent for the Lenders (in its capacity as
agent, together with any successor agent, the "Agent"), Sweetheart Cup Company
Inc., a Delaware corporation, with offices at 00000 Xxxxxxxxxxxx Xxxx, Xxxxxx
Xxxxx, Xxxxxxxx 00000 (the "Borrower"), and Sweetheart Holdings Inc., a Delaware
corporation, with offices at 00000 Xxxxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxx
00000 ("Parent").
W I T N E S S E T H
-------------------
WHEREAS, the Borrower and Parent were parties to a certain Credit
Agreement, dated as of August 30, 1993, by and among the Borrower, Parent, the
banks and other financial institutions party thereto and Bankers Trust Company,
as agent, as amended by a First Amendment, dated as of July 22, 1994, a Second
Amendment To Credit Agreement, dated as of September 6, 1996, a Third Amendment
To Credit Agreement, dated as of June 17, 1997, and a Fourth Amendment and
Consent To Credit Agreement, dated as of September 29, 1997 (as so amended, the
"Original Credit Agreement");
WHEREAS, the Borrower had requested BABC to make available to the Borrower
a revolving line of credit for loans and letters of credit in an amount not to
exceed $135,000,000 and which extensions of credit the Borrower was to use for
its working capital needs and general business purposes;
WHEREAS, BABC agreed to make available to the Borrower a revolving credit
facility upon certain terms and conditions;
WHEREAS, in connection with the aforesaid revolving credit facility
requested by the Borrower from BABC, effective as of October 24, 1997, BABC
purchased from the banks and other financial institutions party to the Original
Credit Agreement all of such banks' and other financial institutions' right,
title and interest in and to the Original Credit Agreement and the documents and
instruments executed and delivered in connection therewith (with certain
exceptions), all pursuant to a certain Assignment and Assumption Agreement (the
"Bank Assignment Agreement"), dated as of October 24, 1997, among BABC, the
banks and other
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financial institutions party to the Original Credit Agreement, the agent and
collateral agent under the Original Credit Agreement, the Borrower and Parent;
WHEREAS, the Borrower, Parent and BABC amended and restated the Original
Credit Agreement in its entirety to provide for the aforesaid revolving credit
facility requested by the Borrower from BABC, all pursuant to a certain Amended
and Restated Loan and Security Agreement, dated as of October 24, 1997, among
BABC, as the sole lender thereunder, BABC, as Agent, the Borrower and Parent (as
heretofore amended, the "Existing Loan and Security Agreement");
WHEREAS, the Borrower desires (i) to redeem all of its Senior Secured Notes
(as hereinafter defined) with the proceeds of a sale/leaseback arrangement to be
entered into by the Borrower with respect to certain of its Equipment (as
hereinafter defined) and (ii) that the Lenders provide to the Borrower a
$25,000,000 term loan facility and extend the scheduled termination date of the
revolving credit facility provided under the Existing Loan and Security
Agreement; and
WHEREAS, the Borrower, Parent, the Lenders and the Agent desire to amend
and restate the Existing Loan and Security Agreement in its entirety in the
manner hereinafter set forth to, among other things, reflect such redemption,
sale/leaseback arrangement, term loan facility and extension of the aforesaid
revolving credit facility.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Borrower, Parent, the Lenders and
the Agent hereby agree that the Existing Loan and Security Agreement shall be,
and hereby is, amended and restated in its entirety as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
--------------------------------
1.1 Definitions . As used herein:
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"Accounts" means all of the Borrower's now owned or hereafter acquired
or arising accounts, and any other rights to payment for the sale or lease of
goods or rendition of services, whether or not they have been earned by
performance.
2
"Adjusted Net Earnings from Operations" means, with respect to any
period of time, the Borrower's net income after provision for income taxes for
such period of time, as determined in accordance with GAAP and reported on the
Financial Statements for such period, excluding any and all of the following
included in such net income: (a) gain or loss arising from the sale of any
capital assets; provided that notwithstanding the foregoing, for purposes of
testing the Fixed Charge Coverage Ratio for any Test Period ending on or after
June 30, 1998, any gain arising from the sale of any capital assets (other than
Credit Agreement Collateral and Secured Sale/Leaseback Collateral) of Parent or
any of its Subsidiaries permitted under Section 9.9 may be included in such net
income if all of the net cash proceeds of such sale have been reinvested in any
business of Parent or the Borrower permitted under Section 9.18; (b) gain or
loss arising from any write-up or non-cash charge from the write-down,
respectively, in the book value of any asset; (c) earnings of any corporation,
substantially all the assets of which have been acquired by the Borrower in any
manner, to the extent realized by such other corporation prior to the date of
acquisition; (d) earnings of any business entity in which the Borrower has an
ownership interest unless (and only to the extent) such earnings shall actually
have been received by the Borrower in the form of cash distributions; (e)
earnings of any Person to which assets of the Borrower shall have been sold,
transferred or disposed of, or into which the Borrower shall have been merged,
or which has been a party with the Borrower to any consolidation or other form
of reorganization, prior to the date of such transaction; (f) non-cash gain or
non-cash loss arising from the acquisition of debt or equity securities of the
Borrower or from cancellation or forgiveness of Debt of the Borrower; and (g)
non-cash gain or non-cash loss arising from (i) extraordinary items, as
determined in accordance with GAAP, and any non-recurring transaction or (ii)
from any increase or decrease in calculating the termination liability for the
Lily-Tulip, Inc. Salary Retirement Plan resulting from a change in the interest
rate reset annually by the PBGC in determining the amounts necessary to
annuitize such liability. For purposes of the Fixed Charge Coverage Ratio test
set forth in Section 9.26, (i) Adjusted Net Earnings From Operations shall not
include the one-time costs and expenses arising from (x) the transactions
contemplated by the Existing Loan and Security Agreement on the Original Closing
Date or in connection with the Divestiture or the sales permitted by Sections
9.9(iv) and (v)(C) or (y) with respect to Test Periods ending on or before March
31, 1998, the transfer and management of the Double Sided Poly (DSP) Cold Cup
conversion program, (ii) with respect to Test Periods ending on or before March
31, 1998, any charge of the Borrower with respect to plant closings,
consolidations and the transfer and management of the Double Sided Poly (DSP)
Cold Cup conversion program after the Original Closing Date and related employee
severance shall constitute an expense of the Borrower when such charge is
actually paid in cash by the Borrower and not when such charge is accrued on the
books and records of the Borrower and (iii) with respect to Test Periods ending
on or after June 30, 1998, any charge of the Borrower with respect to employee
severance resulting from early termination of employees of the Borrower shall
constitute an expense of the Borrower when such charge is actually paid in cash
by the Borrower and not when such charge is accrued on the books and records of
the Borrower.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns,
3
directly or indirectly, five percent (5%) or more of the outstanding equity
interest of such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise. For
purposes of this Agreement and the other Loan Documents, BofA shall not be
considered an Affiliate of Parent or any of its Subsidiaries by virtue of BofA's
passive investment in one or more funds managed by American Industrial Partners,
L.P. or any of its Affiliates.
"Agent" means BofA, solely in its capacity as agent for the Lenders,
and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent-Related Persons" means the Agent and any successor agent
appointed pursuant to Section 14.9, together with their respective Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agent's Liens" means the Liens granted to the Agent, for the ratable
benefit of the Lenders, BofA and the Agent, pursuant to this Agreement and the
other Loan Documents.
"Agreement" means the Existing Loan and Security Agreement, as amended
and restated hereby. "Anniversary Date" means each anniversary of the Closing
Date.
"Anticipated Replacement Amount" means, with respect to any
Replacement Election, the amount specified in the Replacement Notice delivered
by the Borrower in connection therewith as the amount of the net after tax
proceeds from the related sale or other disposition of assets referred to in
clause (iii) of the first sentence of Section 4.5(b) that the Borrower intends
to use to purchase replacement Equipment in accordance with such clause (iii).
"Applicable Margin" means:
(i) with respect to Base Rate Revolving Loans and all other Obligations
(other than LIBOR Revolving Loans, Base Rate Term Loans and LIBOR Term
Loans), 0.25%;
(ii) with respect to LIBOR Revolving Loans, 2.00%;
(iii) with respect to Base Rate Term Loans, 0.50%; and
(iv) with respect to LIBOR Term Loans, 2.50%.
"Asset Transfer Documents" means, collectively, (i) the Asset Sale
Agreement and Asset Distribution Agreement each dated as of October 6, 1993
(collectively, the "Asset
4
Transfer Agreements") between Parent and the Borrower; (ii) any deed or
conveyance for Real Estate required pursuant to the Asset Transfer Agreements;
(iii) any xxxx of sale for equipment and machines or other assignment and
assumption agreements delivered pursuant to the Asset Transfer Agreements; (iv)
the wrap-around note dated as at October 6, 1993 given as part of the
consideration by Parent to the Borrower in connection with the foregoing; (v)
the Manufacturing Agreement dated as of October 6, 1993 between Parent and the
Borrower; (vi) the Patent/Know-How License Agreement dated as of October 6, 1993
between Parent and the Borrower granting to Parent certain intellectual property
rights for manufacturing process required pursuant to the Asset Transfer
Agreements; and (vii) the Acknowledgment of Distribution Assignment and
Assumption Agreement dated as of October 6, 1993 between Parent and the
Borrower.
"Assigned Contracts" means, collectively, all of the Borrower's rights
and remedies under, and all moneys and claims for money due or to become due to
the Borrower under those contracts set forth on Schedule 1.1A, and any other
material contracts, and any and all amendments, supplements, extensions, and
renewals thereof including, without limitation, all rights and claims of the
Borrower now or hereafter existing: (i) under any insurance, indemnities,
warranties, and guarantees provided for or arising out of or in connection with
any of the foregoing agreements; (ii) for any damages arising out of or for
breach or default under or in connection with any of the foregoing contracts;
(iii) to all other amounts from time to time paid or payable under or in
connection with any of the foregoing agreements; or (iv) to exercise or enforce
any and all covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in Section
13.3(a).
"Assignment of Contract As Collateral Security" means the Assignment
of Contract As Collateral Security by the Borrower in favor of the Agent with
respect to the Sherwood Stock Purchase Agreement.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel engaged by the Agent,
the reasonable allocated cost of internal legal services of the Agent and all
reasonable expenses and disbursements of internal counsel of the Agent.
"Availability" means, at any time: (a) the least of (i) the Maximum
Revolver Amount, (ii) the sum of (A) eighty-five percent (85%) of the Net Amount
of Eligible Accounts plus (B) the sum of (1) sixty percent (60%) of the value of
that portion of Eligible Inventory (other than Inventory consisting of or
related to cup making machines) constituting raw materials and work in process,
(2) sixty-five percent (65%) of the value of that portion of Eligible Inventory
(other than Inventory consisting of or related to cup making machines)
constituting finished goods and (3) twenty-five percent (25%) of the value of
that portion of Eligible Inventory consisting of or related to cup making
machines constituting raw materials and
5
finished goods; provided, that at no time shall the sum of outstanding Revolving
Loans based upon the value of Eligible Inventory exceed $100,000,000, or (iii)
the maximum amount which the Borrower is entitled to borrow pursuant to clause
(a) of the second paragraph of Section 4.09 of the indenture governing the
Borrower's Senior Subordinated Notes (which as of the Closing Date is 80% of the
Borrower's accounts not more than 60 days past due plus 50% of the Borrower's
inventory, each calculated in accordance with GAAP); minus (b) the sum of (i)
the unpaid balance of Revolving Loans at such time, (ii) the aggregate amount of
Pending Revolving Loans at such time, (iii) the aggregate undrawn amount of all
outstanding Letters of Credit, (iv) the aggregate amount of any unpaid
reimbursement obligations (unless included in clause (b)(iii) of this
definition) in respect of the Letters of Credit, (v) reserves for accrued
interest on the Obligations, (vi) the Environmental Compliance Reserve, (vii)
the Term Loan Reserve, (viii) any reserves established pursuant to Section
4.5(b), and (ix) all other reserves which the Agent in good xxxxx xxxxx
necessary in the exercise of its reasonable credit judgment to maintain with
respect to the Borrower's account and which are customary in scope and
application, in the assessment of the Agent, in the lending practices of the
Agent in effect from time to time, including, without limitation, reserves for
"special programs", inventory valuation reserves and reserves for any amounts
which the Agent or any Lender may be obligated to pay in the future for the
account of the Borrower.
"BABC" has the meaning specified in the introductory paragraph hereof.
"Bank Assignment Agreement" has the meaning specified in the recitals
to this Agreement.
"Bankruptcy Code" means Title 11 of the United States Code (11
X.X.X.xx. 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by BofA in Charlotte, North
Carolina, as its "prime rate" (the "prime rate" being a rate set by BofA based
upon various factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate). Any change
in the prime rate announced by BofA shall take effect at the opening of business
on the day specified in the public announcement of such change. Each Interest
Rate based upon the Base Rate shall be adjusted simultaneously with any change
in the Base Rate.
"Base Rate Loans" means, collectively, the Base Rate Revolving Loans
and the Base Rate Term Loans.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
6
"Base Rate Term Loan" means any portion of a Term Loan during any
period in which such portion bears interest based on the Base Rate.
"BofA" has the meaning specified in the introductory paragraph hereof.
"BofA Fees" has the meaning specified in Section 3.4.
"BofA Loan" and "BofA Loans" have the meanings specified in Section
2.2(h).
"Borrower" has the meaning specified in the introductory paragraph
hereof.
"Borrower Security Agreement" means the Amended and Restated Security
Agreement dated as of the Original Closing Date between the Borrower and the
Agent.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
or Term Loans made on the same day by the Lenders to the Borrower (or by BofA in
the case of a Borrowing funded by BofA Loans) or by the Agent in the case of a
Borrowing consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of the Borrower, substantially in the form of Exhibit B (or another form
reasonably acceptable to the Agent) setting forth the calculation of the
Availability, including a calculation of each component thereof, as of the close
of business no more than five (5) Business Days prior to the date of such
certificate (or with respect to the calculation of the Inventory component, a
calculation thereof as of the close of business on the date which is no earlier
than the earliest of (x) five (5) Business Days prior to the date of such
certificate and (y) the last day of the calendar month just ended), all in such
detail as shall be satisfactory to the Agent. All calculation of Availability in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Borrower and certified to the Agent; provided, that
the Agent shall have the right to review and adjust, in the exercise of its
reasonable credit judgment, any such calculation (1) to reflect its reasonable
estimate of declines in value of any of the Collateral described therein, and
(2) to the extent that such calculation is not in accordance with this
Agreement.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in Charlotte, North Carolina or Baltimore, Maryland are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or LIBOR
Rate Loans, any day that is a Business Day pursuant to clause (a) above and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
"Buyer" has the meaning specified in the defined term "Change of
Control".
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or
7
not having the force of law, in each case, regarding capital adequacy of any
bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments (whether or not paid) in
respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or offset items or in connection with a Capital Lease, in each
case, to the extent classified by GAAP as a capital expenditure.
"Capital Lease" means any lease of property by Parent or any of its
Subsidiaries which, in accordance with GAAP, is or should be reflected as a
capital lease on the balance sheet of such Person.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, contingent share issuances,
participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt
securities convertible into or exchangeable for such equity.
"Cash Equivalents" means those investments described in clauses (d),
(e), (f), (g) and (h) of the defined term "Restricted Investment" in this
Section 1.1.
"Change of Control" means the occurrence of any of the following
events:
(i) Neither American Industrial Partners Capital Fund, L.P., a
Delaware limited partnership ("AIP"), and/or SF Holdings Group, Inc., a
Delaware corporation (the "Buyer"), shall, separately or collectively, be
the record and Beneficial Owner (as defined below) of a majority in the
aggregate of the total voting power of the Voting Stock (as defined below)
of Parent, whether as a result of an issuance of securities of Parent, any
merger, consolidation, liquidation or dissolution of Parent, any direct or
indirect transfer of securities or otherwise; or
(ii) Neither AIP and/or the Buyer shall, separately or collectively,
have the right or ability, by voting power, contract or otherwise, to elect
or designate for election a majority of the Board of Directors (as defined
below) of Parent; or
(iii) Parent shall fail at any time to be the record and Beneficial
Owner of 100% of the outstanding equity interests of the Borrower; or
(iv) American Industrial Partners, L.P., a Delaware limited
partnership, ceases to be the sole general partner of AIP, but only if AIP
is the Beneficial Owner of any Voting Stock of Parent or Buyer; or
8
(v) There shall occur a "Change of Control" (as such term is defined
in the indenture governing the Senior Subordinated Notes); or
(vi) None of AIP, Xxxxxx Xxxxxx and/or any one or more trusts,
corporations, partnerships, limited liability companies or other entities
in which Xxxxxx Xxxxxx has a Beneficial Ownership interest of a majority in
the aggregate of the total voting power of such entity (each, a "Controlled
Entity") shall, separately or collectively, be the record and Beneficial
Owner of a majority in the aggregate of the total voting power of the
Voting Stock of the Buyer, whether as a result of an issuance of securities
of the Buyer, any merger, consolidation, liquidation or dissolution of the
Buyer, any direct or indirect transfer of securities or otherwise; or
(vii) None of AIP, Xxxxxx Xxxxxx and/or one or more Controlled
Entities shall, separately or collectively, have the right or ability, by
voting power, contract or otherwise, to elect or designate for election a
majority of the Board of Directors of the Buyer.
For purposes of this definition of "Change of Control", and the
definitions used within this definition (and only for such purposes), the
following terms have the following meanings:
"Beneficial Owner", and terms having similar import, means any direct
or indirect "beneficial owner", as such term is defined in Rules 13d-3 and 13d-5
under the Exchange Act.
"Board of Directors" means, with respect to any Person, such Person's
Board of Directors or any committee thereof duly authorized to act on behalf of
such Board of Directors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Collateral Agent" has the meaning set forth in the Intercreditor
Agreement.
9
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.3, as such Commitment
may be adjusted from time to time in accordance with the next sentence and the
provisions of Section 13.3, and "Commitments" means, collectively, the aggregate
amount of the commitments of all of the Lenders. Effective immediately after the
making of the Term Loans, the Commitment of each Lender shall be permanently
reduced by the principal amount of the Term Loans funded by such Lender on the
Closing Date.
"Commodities Agreement" means any forward contract, futures contract,
option contract or similar agreement or arrangement, in each case intended to
protect the Persons entering into same from fluctuations in the price of, or
shortage of supply of, pulp, paper or paper products or any other materials used
in connection with any of the businesses of the Borrower or any of its
Subsidiaries permitted to be conducted under Section 9.18.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any hazardous constituent of any such substance or waste.
"Credit Agreement Collateral" has the meaning set forth in the
Intercreditor Agreement.
"Credit Agreement Term Loan Equipment Collateral" means all of the
Equipment described on Schedule 1.1B, and any and all additions, substitutions
and replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto or used or to be used in connection therewith, and all manuals,
drawings, instructions, warranties and rights with respect thereto; wherever any
of the foregoing is located.
"Credit Support" has the meaning specified in Section 2.4(a).
"Debt" means, without duplication, all indebtedness of Parent or any
of its Subsidiaries to any Person for borrowed money or as evidenced by notes,
bonds, debentures or similar instruments or documents or for the deferred and
unpaid purchase price of any property or business or any services (other than
trade payables and accrued expenses incurred in the ordinary course of
business), all obligations of Parent or any of its Subsidiaries under or with
respect to any letters of credit or guarantees or credit support therefor, all
obligations under any Interest Rate Protection or Other Hedging Agreement or
under any similar type of agreement and all obligations of Parent or any of its
Subsidiaries under Capital Leases, in each instance, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, and
including in any event and without in any way limiting the generality of the
foregoing: (i) all Obligations; (ii) all
10
obligations and liabilities of any Person secured by any Lien on the property of
Parent or any of its Subsidiaries, even though Parent or any such Subsidiary
shall not have assumed or become liable for the payment thereof; provided,
however, that all such obligations and liabilities which are limited in recourse
to such property shall be included in Debt only to the extent of the book value
of such property as would be shown on the face of a balance sheet of Parent or
such Subsidiary, as the case may be, prepared in accordance with GAAP; (iii) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by Parent or any of its Subsidiaries, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property; provided, however, that all such obligations and liabilities
which are limited in recourse to such property shall be included in Debt only to
the extent of the book value of such property as would be shown on the face of a
balance sheet of Parent or such Subsidiary, as the case may be, prepared in
accordance with GAAP; (iv) all obligations and liabilities under Guaranties; and
(v) all Disqualified Stock of Parent or any of its Subsidiaries.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all
times equal to the sum of (a) the otherwise applicable Interest Rate plus (b)
two percent (2%). Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, with respect to Letters of
Credit, the Default Rate shall mean an increase in the Letter of Credit Fee by
two percentage points.
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
"Demand Loans" means the demand loans made by certain of the Lenders
to the Borrower on May 15, 2000 in the aggregate principal amount of $12,411,088
pursuant to the letter agreement, dated May 12, 2000, among the Borrower,
Parent, such lenders and the Agent.
"Distribution" means, in respect of any corporation: (a) the payment
or making of any dividend or other distribution of property in respect of
capital stock (or any options or warrants for such stock) of such corporation,
other than distributions in capital stock (or any options or warrants for such
stock) which is not Disqualified Stock; or (b) the redemption or other
acquisition of any capital stock (or any options or warrants for such stock) of
such corporation, except in exchange for capital stock (or warrants or options
for such capital stock) which is not Disqualified Stock.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable (other than redeemable only for Capital
Stock of such Person which is not itself Disqualified
11
Stock) pursuant to a sinking fund obligation or otherwise, (ii) is convertible
or exchangeable for Debt (including, without limitation, Disqualified Stock) or
(iii) is redeemable at the option of the holder thereof, in whole or in part, in
each case on or prior to the first anniversary of the Stated Termination Date.
"Divestiture" means the proposed sale (in one or more transactions) by
the Borrower of its packaging division (which manufactures paper and plastic
containers for the refrigerated and frozen dessert industry) that satisfies the
following requirements:
(a) at the time of the consummation of each such sale transaction,
the Borrower shall receive gross cash proceeds with respect to the Accounts and
Inventory included as part of such transaction in an amount not less than the
then book value of all such Accounts and Inventory as shown on the face of a
balance sheet of the Borrower prepared in accordance with GAAP;
(b) neither Parent nor any of its Subsidiaries shall, with respect
to all such sale transactions, retain or assume aggregate liabilities for all
such sale transactions (including, without limitation, payables and indemnity
obligations) relating to the assets or business sold pursuant to such
transactions in excess of $15,000,000 (it being agreed that any such liabilities
shown on the face of a balance sheet of the Parent or any of its Subsidiaries,
as appropriate, or for which the amount thereof can be determined shall be
valued at the amount thereof as shown on the face of such balance sheet or as so
determined and the amount of any other liabilities shall be determined by a good
faith estimate of senior management of the Borrower); provided, however, any and
all such liabilities which are only to be paid by the Borrower out of a cash
escrow set up by the Borrower shall not be considered a liability for purposes
of this clause (b), but only to the extent of the amount of the cash escrow
therefor and only so long as the amount of such escrow is not counted as gross
cash proceeds of a sale transaction constituting part of the Divestiture unless
and until such cash which is the subject of such escrow is released to the
Borrower and the liability for which such cash has been escrowed is discharged;
(c) with respect to each such sale transaction and prior to the
consummation thereof, the Agent shall receive a pro forma Borrowing Base
Certificate immediately after giving effect to such transaction (including,
without limitation, as to the calculation of the Inventory component of such
certificate immediately after giving effect to such transaction) which indicates
an Availability level sufficient to comply with Section 9.25 as of such date of
determination; and
(d) with respect to each such sale transaction and prior to the
consummation thereof, the Agent shall receive a certificate from the chief
financial officer or treasurer of the Borrower (i) as to the gross cash proceeds
that the Borrower expects it can receive (as determined in the good faith
estimate of senior management of the Borrower) from the sale of the assets and
business of the Borrower's packaging division which the Borrower retains
immediately after giving effect to such sale transaction, (ii) that the
aggregate gross cash proceeds of such
12
transaction and all prior such transactions, together with the amount of the
gross cash proceeds estimated to be receivable by the Borrower from the sale of
the remaining assets and business of the Borrower's packaging division as
described in clause (i) above, shall be no less than $100,000,000, (iii) stating
that, to the best knowledge of the Borrower, the representations and warranties
made by the Borrower in the sale documentation with respect to such sale
transaction are and will be true and correct when made under such documentation,
provided, however, that notwithstanding that this representation and warranty
shall be made to the best knowledge of the Borrower, this representation and
warranty shall be deemed breached for purposes of this Agreement in the event
that the Borrower pays the buyer or buyers with respect to such sales in respect
of indemnity obligations for the breach of any such representations and
warranties an aggregate amount which, when aggregated with all liabilities
retained or assumed by Parent or its Subsidiaries which are included in the
$15,000,000 basket included in clause (b) above, exceeds $15,000,000 and (iv)
calculating the aggregate liabilities described in clause (b) above retained or
assumed by Parent and its Subsidiaries for such sale transaction and all other
such sale transactions (including, without limitation, any assumptions made in
estimating liabilities).
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" mean dollars in the lawful currency of the United
States.
"Domestic Subsidiary" means any Subsidiary which is organized under
the laws of any state of the United States or the District of Columbia.
"EBITDA" means, with respect to any period of time, the total of the
following for the Borrower as determined in accordance with GAAP, each
calculated for such period of time: Adjusted Net Earnings from Operations plus,
to the extent included in the calculation of Adjusted Net Earnings from
Operations, the sum of (a) income tax expense; (b) interest expense paid or
payable in cash, net of cash interest income; (c) amortization and depreciation
expense; (d) other non-cash charges; and (e) operating lease expense in excess
of $20,000,000 (for any period of time which is less than a four consecutive
fiscal quarter period, such amount shall be prorated for such shorter period).
"Eligible Accounts" means all Accounts of the Borrower which the
Agent, in good faith in the exercise of its reasonable commercial discretion and
based upon criteria which, in the assessment of the Agent, are customary in the
lending practices of the Agent in effect from time to time, determines to be
Eligible Accounts. Without limiting the discretion of the Agent to establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account:
13
(a) with respect to which more than ninety days have elapsed since
the date of the original invoice therefor or it is more than sixty days past due
(for any Accounts owing by Xxxxx, with respect to which more than forty-five
days have elapsed since the date of the original invoice therefor or it is more
than fifteen days past due);
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in Section 6.8 are not or have ceased to be
complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason;
(d) which represents a progress billing (as hereinafter defined)
or as to which the Borrower has extended the time for payment without the
consent of the Agent; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon the Borrower's completion of any further performance under
the contract or agreement;
(e) as to which any one or more of the following events has
occurred with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if fifty percent (50%) (ten percent (10%) with respect to
Xxxxx) or more of the aggregate Dollar amount of outstanding Accounts owed at
such time by the Account Debtor thereon is classified as ineligible under the
criteria set forth in clauses (a) and/or (u);
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States; or (ii) is not organized under the
laws of the United States
14
or any state thereof; or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof; except to the extent that such Account is secured or
payable by a letter of credit reasonably satisfactory to the Agent;
(h) owed by an Account Debtor which is an Affiliate or employee of
the Borrower; provided that the Agent may, in its sole discretion, consider
Accounts owing by Xxxxx not to be ineligible pursuant to this clause (h) , and,
without limiting such discretion or the Agent's right to impose additional
and/or different conditions therefor, the following shall in any event be
satisfied as conditions thereto: (1) not greater than $3,000,000 in the
aggregate at any one time of all Accounts owing by Xxxxx shall be considered
Eligible Accounts, (2) the pricing, other terms of sale for the goods giving
rise to such Accounts and the terms for such Accounts shall be no less favorable
to the Borrower than would be obtained by the Borrower in a comparable
arm's-length transaction with a third party which is not an Affiliate with a
financial condition similar to that of Xxxxx and with sales volume of goods
purchased from the Borrower similar to that of Xxxxx, (3) any audit by or on
behalf of the Agent of the Borrower or its property may, in the Agent's
discretion, include a review of the Borrower's invoicing to Xxxxx on all
purchases by Xxxxx from the Borrower, (4) not later than ten (10) days after the
end of each month, the Agent shall have received a certificate from Xxxxx
certifying, in such detail as the Agent shall reasonably request, the undrawn
availability under Xxxxx'x revolving credit facility as of the last day of such
month (such undrawn availability to be acceptable to the Agent), (5) not later
than ninety (90) days after the end of each fiscal year of Xxxxx, the Agent
shall have received the consolidated audited balance sheet, statement of income
and expense, cash flow and of stockholder's equity for Xxxxx and its
Subsidiaries for such fiscal year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous fiscal year, all
in reasonable detail, fairly presenting in all material respects the financial
position and the results of operations of Xxxxx and its consolidated
Subsidiaries as at the date thereof and for its fiscal year then ended, and
prepared in accordance with GAAP (such statements to be satisfactory to the
Agent and to be examined in accordance with generally accepted auditing
standards by, accompanied by a report thereon unqualified as to scope of,
independent certified public accountants reasonably satisfactory to the Agent)
and (6) not later than forty-five (45) days after the close of each fiscal
quarter of Xxxxx other than the fourth quarter of a fiscal year of Xxxxx, a
consolidated unaudited balance sheet of Xxxxx and its consolidated Subsidiaries
as at the end of such quarter, and a consolidated unaudited statement of income
and expense and statement of cash flows for Xxxxx and its Subsidiaries for such
quarter, all in reasonable detail, fairly presenting in all material respects
the financial position and results of operations of Xxxxx and its Subsidiaries
as at the date thereof and for such periods, prepared in accordance with GAAP
consistent with the audited financial statements required to be delivered
pursuant to clause (5) above (except for the absence of footnotes and subject to
normal year-end adjustments) and otherwise satisfactory to the Agent, together
with a certificate signed by Xxxxx'x chief financial officer or treasurer that
all such statements have been prepared in accordance with GAAP and present
fairly in all material respects (except for the absence of
15
footnotes and subject to normal year-end adjustments) Xxxxx'x financial position
as at the dates thereof and its results of operations for the periods then
ended;
(i) except as provided in (k) below, as to which either the
perfection, enforceability, or validity of the Agent's Lien in such Account, or
the Agent's right or ability to obtain direct payment to the Agent of the
proceeds of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;
(j) which is owed by an Account Debtor to which the Borrower is
indebted in any way, or which is subject to any right of setoff or recoupment by
the Account Debtor, unless the Account Debtor has entered into an agreement
reasonably acceptable to the Agent to waive setoff rights; or if the Account
Debtor thereon has disputed liability or made any claim with respect to any
other Account due from such Account Debtor; but in each such case only to the
extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) which is owed by the government of the United States of
America, or any department, agency, public corporation, or other instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. ss. 3727 et seq.), and any other steps necessary to perfect the Agent's
Lien therein, have been complied with to the Agent's satisfaction with respect
to such Account;
(l) which is owed by any state, municipality, or other political
subdivision of the United States of America, or any department, agency, public
corporation, or other instrumentality thereof and as to which the Agent
determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis (other than for damage);
(n) which is evidenced by a promissory note or other instrument or
by chattel paper;
(o) if the Agent believes, in good faith in the exercise of its
reasonable judgment (based upon such factors that, in the assessment of the
Agent, are customary in the lending practices of the Agent in effect from time
to time), that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or similar
report in order to permit the Borrower to seek judicial enforcement in such
State of payment of such Account, unless the Borrower has qualified to do
business in such state or has filed a Notice of Business Activities
16
Report or equivalent report for the then current year or such failure to file
and inability to seek judicial enforcement is capable of being remedied without
any material delay or material cost;
(q) which arises out of a sale not made in the ordinary course of
the Borrower's business;
(r) as to which the goods giving rise to such Account have not
been shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the Borrower, and, if
applicable, accepted by the Account Debtor, or the Account Debtor revokes its
acceptance of such goods or services;
(s) which is owed by an Account Debtor (other than Perseco or an
Account Debtor that is rated 5a1 or better by Dun & Bradstreet) that is
obligated to the Borrower respecting Accounts the aggregate unpaid balance of
which exceeds the lesser of (i) $10,000,000 and (ii) ten percent (10%) of the
aggregate unpaid balance of all Accounts owed to the Borrower at such time by
all of the Borrower's Account Debtors, but only to the extent of such excess;
(t) which arises out of a contract or order which, by its terms,
forbids, restricts or makes void or unenforceable the granting of a Lien by the
Borrower to the Agent with respect to such Account;
(u) which is a "short pay" account (but only with respect to
that portion of the Account which is "short pay"); or
(v) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account by reason
of any of the foregoing exclusions or any failure to meet any other eligibility
criteria established by the Agent in good faith in the exercise of its
reasonable commercial discretion (based upon such factors that, in the
assessment of the Agent, are customary in the lending practices of the Agent in
effect from time to time) then such Account shall promptly be excluded from the
calculation of Eligible Accounts.
"Eligible Inventory" means Inventory, valued at the lower of cost (on
a FIFO basis) or market, that constitutes raw materials consisting of (x) jumbo
paper rolls, virgin resin, regrinds or resin material reconverted to pellet form
or (y) aluminum or steel rods (with respect to the manufacture of cup making
machines only), work in process (other than with respect to cup making machines)
and finished goods and that, unless the Agent in its sole discretion elects, (a)
is not, in the Agent's reasonable good faith opinion (based upon such factors
that, in the assessment of the Agent, are customary in the lending practices of
the Agent in effect from time to time), obsolete, slow moving, defective or
unmerchantable; (b) is located at premises owned by the Borrower or on premises
otherwise reasonably acceptable to the Agent, provided,
17
however, that, with respect to Inventory located on any premises leased to the
Borrower, unless the Borrower shall have delivered to the Agent a written
waiver, duly executed on behalf of the appropriate landlord and in form and
substance reasonably acceptable to the Agent, of all Liens which the landlord
for such premises may be entitled to assert against such Inventory the Agent
may, in its sole discretion, establish a reserve against Availability therefor
in an amount up to the aggregate of three months rent payable with respect to
such leased premises plus any rent payable with respect to such leased premises
which is then due and payable; (c) upon which the Agent for the benefit of the
Lenders has a first priority perfected security interest; (d) is not spare
parts, packaging and shipping materials, supplies, xxxx-and-hold Inventory or
defective Inventory, or Inventory delivered to the Borrower on consignment or
Inventory in transit; and (e) the Agent, in good faith in the exercise of its
reasonable commercial discretion, deems eligible as the basis for Revolving
Loans based on such collateral and credit criteria as the Agent may from time to
time establish and which are customary in scope and application, in the
assessment of the Agent, in the lending practices of the Agent in effect from
time to time. If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.
"Environmental Compliance Reserve" means any reserves which the Agent,
after the Original Closing Date, establishes from time to time for amounts that
are reasonably likely to be expended by the Borrower in order for the Borrower
and its operations and property (a) to comply with any notice from a
Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent and the Lenders pursuant to Section 9.7, in each instance
under clause (a) or (b), for which non-compliance (or the remediation thereof)
may impose or result in an Environmental Lien in any Accounts, Inventory or
other Credit Agreement Collateral which will have priority over the Agent's
Liens therein; provided that no such reserves shall be established by the Agent
to the extent that (i) the Agent shall have determined, in its reasonable
commercial judgment, that the Borrower has the financial ability to pay for any
such compliance or remediation and has sufficient Availability therefor as well
as for its other working capital needs and to satisfy Section 9.25, in each
instance, on a prospective basis through the estimated time of completion of
such compliance or remediation and (ii) the Borrower shall have delivered a
certificate to the Agent certifying as to the Borrower having such financial
ability and Availability with appropriate projections in detail reasonably
satisfactory to the Agent supporting such certification by the Borrower (such
certificate and projections to be updated and delivered to the Agent quarterly
until the completion of such compliance or remediation).
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
relating to environmental, health or safety matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred
18
by such Governmental Authority in response to, a Release or threatened Release
of a Contaminant into the environment.
"Equipment" means all of the Borrower's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including motor vehicles with
respect to which a certificate of title has been issued, aircraft, dies, tools,
jigs, and office equipment, as well as all of such types of property leased by
the Borrower (including, without limitation, pursuant to the Secured
Sale/Leaseback Arrangements) and all of the Borrower's rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower or Parent within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower, Parent or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower, Parent
or any ERISA Affiliate from a Multi-employer Plan or notification that a
Multi-employer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multi-employer Plan; (e) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan; or (f) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower, Parent or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"Excluded Sale/Leaseback Assets"has the meaning specified in the
Intercreditor Agreement.
19
"Existing Debt" has the meaning specified in Section 9.13.
"Existing Liens" has the meaning specified in clause (i) of the
defined term "Permitted Liens" in this Section 1.1.
"Existing Loan and Security Agreement" has the meaning specified in
the recitals to this Agreement.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" means the Fee Letter, dated the Closing Date, between the
Borrower and BofA with respect to the fees referred to therein.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Section 8.6 or any other financial
statements required to be given to the Lenders pursuant to this Agreement.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
September 24, 2000.
"Fixed Assets" means Equipment and Real Estate of the Borrower or
Parent.
"Fixed Charge Component" means, with respect to any period of time,
the following for the Borrower as determined in accordance with GAAP, each
calculated for such period of time: the sum of (i) cash interest expense, net of
cash interest income, (ii) cash income tax expense, (iii) the aggregate amount
of Capital Expenditures made by the Borrower during such period (other than
Capital Expenditures financed by the Borrower), (iv) the aggregate amount of all
cash payments of principal on Debt made by the Borrower during such period
(other than (x) under any of the Loan Documents, the Original Credit Agreement
and other Credit Documents (as defined in the Original Credit Agreement) or (y)
with respect to the Senior Secured Notes), (v) the aggregate amount of all cash
payments of principal on the Term Loans
20
made by the Borrower during such period and (vi) operating lease expense in
excess of $20,000,000 (for any period of time which is less than a four
consecutive fiscal quarter period, such amount shall be prorated for such
shorter period).
"Fixed Charge Coverage Ratio" means, at any date of determination, the
ratio of (i) EBITDA for the Test Period most recently ended (taken as one
accounting period) and ending on such date to (ii) the Fixed Charge Component
for such Test Period (taken as one accounting period).
"Xxxxx" means The Xxxxx Group, Inc.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the Original
Closing Date and subject to Section 1.2.
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications,
trademarks, service marks, trade names, trade secrets, goodwill, copyrights,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, any funds which may become due to the Borrower in connection with
the termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to the Borrower from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which the Borrower is
beneficiary, and any letter of credit, guarantee, claim, security interest or
other security held by or granted to the Borrower.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations of
such Person which in any manner directly or indirectly guarantee or assure, or
in effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other
21
Person (the "guaranteed obligations"), or assure or in effect assure the holder
of the guaranteed obligations against loss in respect thereof, including,
without limitation, any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed obligations or any
property constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to the Borrower from, which are due from the Borrower to,
or which otherwise arise from any transaction by the Borrower with, any
Affiliate.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the Closing Date by and among State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee/lessor, the Credit Agent (as
defined in the Intercreditor Agreement) and the Collateral Agent, and
acknowledged by the Borrower and the Parent.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1.
"Interest Rate Protection or Other Hedging Agreement" means one or
more (i) interest rate protection agreements (including, without limitation,
swaps, caps, floors, collars and similar agreements), (ii) foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against the fluctuations in currency
22
values and/or (iii) other types of hedging agreements from time to time entered
into by Parent or any of its Subsidiaries with BofA, any Lender or a syndicate
of financial institutions organized by BofA or any such Lender or an affiliate
of BofA or such Lender.
"Inventory" means all of the Borrower's now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, other materials and supplies of any kind, nature or description which
are or might be consumed in the Borrower's business or used in connection with
the packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of title or
other documents representing them.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 7.2(f), the
projections of the Borrower's financial condition, results of operations, and
cash flow, for each of Fiscal Years 2000 through and including 2004 and
delivered to the Agent prior to the Closing Date; and (b) thereafter, the
projections most recently received by the Agent pursuant to Section 7.2(f).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and BofA to the extent of any BofA Loan outstanding;
provided that no such Agent Advance or BofA Loan shall be taken into account in
determining any Lender's Pro Rata Share.
"Letter of Credit" means a letter of credit issued or caused to be
issued for the account of the Borrower pursuant to Section 2.4.
"Letter of Credit Fee" has the meaning specified in Section 3.6.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan
having an Interest Period of one, two or three months, the last day of the
Interest Period applicable to such loan and, with respect to a LIBOR Rate Loan
having an Interest Period of six months, the date which occurs three months
after the initial date of such Interest Period, each of the dates which occur
one and two months after the end of such third month and the last day of such
Interest Period.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR
Rate Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/1000th of 1.0%) determined by the Agent as
follows:
23
LIBOR Rate = LIBOR
--------------------------------------
1.00 - Eurodollar Reserve Percentage
where:
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the Federal Reserve Board
for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum (rounded upward to the
next 1/16th of 1%) notified to the Agent by BofA as the rate of interest at
which dollar deposits in the approximate amount of the Loan to be made or
continued as, or converted into, a LIBOR Rate Loan and having a maturity
comparable to such Interest Period would be offered by BofA's applicable lending
office to major banks in the London eurodollar market at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such Interest
Period.
"LIBOR Rate Loans" means, collectively, the LIBOR Revolving Loans and
the LIBOR Term Loans.
"LIBOR Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"LIBOR Term Loan" means any portion of a Term Loan during any period
in which such portion bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including without
limitation, a security interest, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; and (b) to the extent
not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting real property.
24
"Lily Credit Facility" means the Term and Revolving Credit Facilities
Agreement, dated as of June 15, 1998, among Lily Cup, the financial institutions
party thereto and General Electric Capital Canada Inc., as lender, as amended,
modified or supplemented from time to time pursuant to the terms thereof, and
any other document or instrument entered into by Lily Cup in connection
therewith.
"Lily Cup" means Lily Cups, Inc., a Canadian corporation and a
Subsidiary of the Borrower.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Term Loan Notes, the Fee
Letter, the Borrower Security Agreement, the Trademark, Patent and Copyright
Agreements, the Assignment of Contract As Collateral Security, the Mortgages,
the Parent Guaranty, the Parent Security Agreement, the Pledge Agreement, the
Parent Pledge Agreement, the Intercreditor Agreement, the Bank Assignment
Agreement, all other Credit Documents (as defined in the Original Credit
Agreement) to the extent assigned to BABC or the Agent pursuant to or as
contemplated by the Bank Assignment Agreement and any other agreements,
instruments and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise executed and/or delivered in connection with the
Obligations, the Collateral or any other aspect of the financing transactions by
or with the Lenders and/or the Agent contemplated by this Agreement.
"Loans" means, collectively, all loans and advances provided for in
Article 2.
"Majority Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 50% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 50% of the aggregate principal amount of
the Loans then outstanding.
"Management Services Agreement" means the Second Restated Management
Services Agreement, dated as of March 12, 1998, by and among American Industrial
Partners Management Company, Inc., the Borrower, Parent and Buyer.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or financial
condition of Parent and the Borrower taken as a whole or a material portion of
the Collateral; (b) an impairment of the ability of the Borrower or Parent to
perform any material obligation under any Loan Document; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Borrower or Parent of any Loan Document; provided, however, that
solely for purposes of Section 11.1(m), "Material Adverse Effect" means the
occurrence of any of the following: (i) in
25
any calendar year the Borrower loses a customer the sales to whom for the
immediately preceding calendar year accounted for 10% or more of the Borrower's
total sales volume for such immediately preceding year; (ii) the Borrower is at
any time required to purchase 10% or more of its raw materials on a cash on
delivery or cash in advance basis as the result of one or more vendor's
unwillingness to extend credit to the Borrower; (iii) the Borrower or Parent
shall suffer a labor strike, walkout, work stoppage or similar labor dispute
which affects, without duplication, 10% or more of the combined workforce of
Borrower and Parent, (iv) within a 60 day time period, $5,000,000 or more of
Inventory (valued at the lower of cost or market) shall be subject to a product
recall or similar product defect occurrence, (v) any of the President, Chief
Executive Officer, Chief Financial Officer or Chief Operating Officer of the
Borrower is convicted of a criminal offense; (vi) the loss of production of 10%
or more of Inventory for a period of greater than 5 consecutive days due to
either or both of equipment failure or labor strike, stoppage, walkout or other
labor related reason; (vii) a "force majeure event" occurs which negatively
impacts 10% or more of the Borrower's revenues, which loss of revenues is not
fully covered by insurance; or (viii) the Borrower or Parent is unable to
acquire DSP equipment consistent with projections previously given to (and
accepted by ) the Agent as a result of suppliers' inability or refusal to
provide such equipment to the Borrower or Parent.
"Maximum Revolver Amount" means $135,000,000.
"Mortgages" means: (a) each Mortgage, Security Agreement, and
Assignment of Leases and Rents (or similar agreement) entered into or to be
entered into by the Borrower or Parent in favor of the Agent and delivered to
the Agent; and (b) all other real property mortgages, leasehold mortgages,
assignments of leases, mortgage deeds, deeds of trust, deeds to secure debt,
security agreements, and other similar instruments entered into or to be entered
into which provide the Agent a lien, for the benefit of the Agent and the
Lenders, on or other interest in any portion of any Premises, any Real Estate or
any other real property in which Parent or any of its Subsidiaries has an
interest or which relate to any such Lien or interest (including, without
limitation, any of the foregoing executed in connection with the Original Credit
Agreement and assigned by Bankers Trust Company, as collateral agent, to the
Agent as contemplated by the Bank Assignment Agreement).
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by the Borrower,
Parent or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross amount
of Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
26
"Notice of Borrowing" has the meaning specified in Section 2.2(b), the
form of which is attached as Exhibit E.
"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b), the form of which is attached as Exhibit F.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement
(including, without limitation, pursuant to the Existing Loan and Security
Agreement) or any of the other Loan Documents, whether or not evidenced by any
note, or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all principal, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
the Borrower hereunder or under any of the other Loan Documents. "Obligations"
includes, without limitation, all debts, liabilities, and obligations now or
hereafter owing from the Borrower to the Agent and/or any Lender under or in
connection with the Letters of Credit and all loans made under the Original
Credit Agreement and assigned to BABC under the Bank Assignment Agreement.
"Original Closing Date" means October 24, 1997.
"Original Credit Agreement" has the meaning specified in the recitals
to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"Parent" means Sweetheart Holdings Inc., a Delaware corporation and
the owner of 100% of the outstanding capital stock of the Borrower.
"Parent Guaranty" means the Guaranty dated as of the Original Closing
Date made by Parent in favor of the Agent.
"Parent Pledge Agreement" means the Pledge Agreement dated as of the
Closing Date made by Parent in favor of the Collateral Agent.
"Parent Security Agreement" means the Amended and Restated Security
Agreement dated as of the Original Closing Date between Parent and the Agent.
27
"Participating Lender" means any Person who shall have been granted
the right by any Lender to participate in the financing provided by such Lender
under the terms and conditions of this Agreement, and who shall have entered
into a participation agreement in form and substance satisfactory to such
Lender.
"Payment Account" means each blocked bank account established pursuant
to Section 6.9, to which the funds of the Borrower (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or the Borrower, as
the Agent may determine, on terms reasonably acceptable to the Agent.
"Payment and Termination Date" means the first date on which all of
the following are satisfied: the Commitments of all Lenders have been
terminated, all outstanding monetary Obligations have been paid in full and all
Letters of Credit have been terminated or canceled or have expired (or
Supporting Letters of Credit have been delivered to the Agent therefor in
accordance with Section 2.4(j)).
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice(s) of Borrowing received
by the Agent which have not yet been advanced and for which the Lenders will
advance unless the Agent has notified the Borrower that such Revolving Loan(s)
will not be funded.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Borrower or Parent sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"Permitted Commodities Agreement" means any Commodities Agreement
which is entered into in the ordinary course of business by Parent and/or any of
its Subsidiaries consistent with past practices.
"Permitted Liens" means:
(a) Liens for taxes, assessments or governmental charges or levies
not delinquent or statutory Liens for taxes, assessments or governmental charges
or levies in an aggregate amount not to exceed $1,000,000 (with the Agent having
the right in its reasonable commercial discretion to establish reserves against
Availability for any amount in excess of $100,000 in the aggregate) provided
that the payment of such taxes, assessments or governmental charges or levies
which are due and payable is being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
28
been established on the books and records of the Borrower, Parent
or its other Subsidiaries, as the case may be, and no enforcement action has
been taken;
(b) the Agent's Liens;
(c) deposits under worker's compensation, unemployment insurance,
social security and other similar laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) or
to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demands when due, such
claims or demands do not exceed $1,000,000 in the aggregate (with the Agent
having the right in its reasonable commercial discretion to establish reserves
against Availability for any amount in excess of $100,000 in the aggregate);
(e) Reservations, exceptions, encroachments, easements, rights of
way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they do not in the
aggregate materially detract from the value of the Real Estate or materially
interfere with its use in the ordinary conduct of the Borrower's or Parent's
business;
(f) Judgment and other similar Liens arising in connection with court
proceedings to the extent the attachment or enforcement of such Liens would not
result in an Event of Default hereunder;
(g) Liens securing the obligations of the Borrower and Parent under
the Secured Sale/Leaseback Arrangements, subject to the terms and conditions set
forth in the Intercreditor Agreement; provided that such Liens shall not in any
event (i) encumber any Excluded Sale/Leaseback Assets or (ii) secure greater
than $165,000,000 in obligations owing by the Borrower under the Secured
Sale/Leaseback Documents;
(h) Purchase Money Liens;
(i) Liens in existence on the Closing Date which are listed, and the
property subject thereto described, in Schedule 9.19 (Liens referred to in this
clause (i) are herein referred to as "Existing Liens") but only to the
respective date, if any, set forth in such Schedule 9.19 for the termination of
any such Liens and Liens on property securing Debt which constitutes an
extension, renewal or refinancing of Existing Debt, which extension, renewal or
refinancing is
29
permitted pursuant to Section 9.13; provided that (i) the principal amount of
such Debt does not exceed the principal amount of the Existing Debt being
extended, renewed or refinanced at the time of such extension, renewal or
refinancing, and (ii) such Lien secures only such Debt and applies only to the
property subject to the Existing Lien securing the Existing Debt being extended,
renewed or refinanced;
(j) Liens arising as a result of non-recourse, sale-leaseback
transactions with respect to any Real Estate, so long as the respective
transaction, and all documentation with respect thereto, is approved by the
Agent and additionally is either approved by the Majority Lenders or permitted
under Section 9.24;
(k) Liens upon assets subject to Capital Leases to the extent
permitted by Section 9.23, provided that (i) such Liens only serve to secure the
payment arising under such Capital Lease and (ii) the Lien encumbering the asset
giving rise to the Capital Lease does not encumber any other asset of Parent or
any of its Subsidiaries;
(l) deposits securing liabilities to insurance carriers under
insurance or self-insurance arrangements, provided that the aggregate amount of
cash and non-cash collateral so deposited shall at no time exceed $15,000,000;
(m) with respect to any Real Estate subject to a Mortgage assigned by
Bankers Trust Company, as collateral agent, to the Agent as contemplated by the
Bank Assignment Agreement, such exceptions to title as are set forth in the
title insurance policy or title commitment delivered to such collateral agent
when such Mortgage was executed; and
(n) Liens on the assets of Lily Cup securing only the Debt of Lily
Cup permitted to be incurred pursuant to Section 9.13(d)(y).
"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or Parent sponsors or maintains or to which the
Borrower or Parent makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Pledge Agreement" means the Pledge Agreement dated as of the Closing
Date made by the Borrower in favor of the Collateral Agent.
"PNC" means PNC Bank, National Association.
30
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Premises" means the land identified by addresses on Schedule 8.12,
together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which the Borrower or
Parent has any interests on the Closing Date.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders.
"Proprietary Rights" means all of the Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including, without limitation, those patents, registered trademarks,
registered service marks and registered copyrights set forth on Schedule 8.13
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing.
"Purchase Money Lien" means a lien granted on a fixed asset (not
including Inventory) to secure a Purchase Money Obligation permitted to be
incurred hereunder, and incurred solely to finance the acquisition of such
asset; provided, however, that such lien encumbers only such asset and is
granted within 180 days of such acquisition.
"Purchase Money Obligations" of any Person means any obligations of
such Person to any seller or any other Person incurred or assumed to finance the
acquisition of real or personal property (other than Inventory) to be used in
the business of such Person or any of its Subsidiaries in an amount that is not
more than 100% of the cost of such property, and incurred within 180 days after
the date of such acquisition (excluding accounts payable to trade creditors
incurred in the ordinary course of business).
"Real Estate" means all of the present and future interests of the
Borrower or Parent (as appropriate), as owner, lessee, or otherwise, in the
Premises, including, without
31
limitation, any interest arising from an option to purchase or lease the
Premises or any portion thereof.
"Receivables Corp." means Sweetheart Receivables Corporation, a
Delaware corporation.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the migration of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rentals" has the meaning specified in Section 9.24.
"Replacement Election" has the meaning specified in Section 4.5(b).
"Replacement Notice" means, with respect to a sale or other
disposition of assets referred to in clause (iii) of the first sentence of
Section 4.5(b), a written notice signed by the Borrower stating that the
Borrower, in good faith, intends and expects to use all or a specified portion
of the net after tax proceeds from such sale or other disposition to purchase
replacement Equipment in accordance with such clause (iii).
"Replacement Prepayment Amount" means, with respect to any Replacement
Election, the amount, if any, on the Replacement Prepayment Date relating
thereto by which (i) the Anticipated Replacement Amount in respect of such
Replacement Election exceeds (ii) the aggregate amount thereof expended by the
Borrower to purchase replacement Equipment in accordance with clause (iii) of
the first sentence of Section 4.5(b).
"Replacement Prepayment Date" means, with respect to any Replacement
Election, the earliest of (i) the date, if any, upon which the Agent shall have
delivered a written termination notice to the Borrower with respect to the
Replacement Election, provided that such notice may only be given while an Event
of Default exists, (ii) the date occurring 270 days after the date of the
consummation of the sale or other disposition of the assets relating to such
Replacement Election and (iii) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, proceed with the purchase
of replacement Equipment in accordance with clause (iii) of the first sentence
of Section 4.5(b) with the related Anticipated Replacement Amount.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
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"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 66% of the aggregate principal amount of
the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate, the chief
financial officer or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means any acquisition of property by Parent or
any of its Subsidiaries (other than Lily Cup) in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except
acquisitions of the following: (a) Proprietary Rights and Fixed Assets to be
used in the business (to the extent such business is permitted under Section
9.18) of Parent, the Borrower or its Subsidiaries (other than Receivables Corp.
and Lily Cup) so long as the acquisition costs thereof constitute Capital
Expenditures permitted hereunder or costs for the purchase of General
Intangibles in the ordinary course of business or ordinary and customary
supplies, in each instance for such General Intangibles and supplies, for the
operation of the business (as limited as provided above) of Parent, the Borrower
or its Subsidiaries (other than Receivables Corp. and Lily Cup); (b) Inventory
in the ordinary course of business; (c) current assets arising from the sale or
lease of goods or the rendition of services in the ordinary course of business
of the Borrower or its Subsidiaries (other than Receivables Corp. and Lily Cup);
(d) direct obligations of the United States of America, or any agency thereof,
or obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof; (e)
certificates of deposit maturing within one year from the date of acquisition,
bankers' acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with a bank or trust company organized under
the laws of the United States or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) commercial paper given a rating of "A2"
or better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x
Investors Service, Inc. and maturing not more than 180 days from the date of
creation thereof; (g) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (d) above and
entered into with any bank meeting the qualifications specified in clause (e)
above; (h) money market funds substantially all of the assets of which are
comprised of securities of the types described in clauses (d) - (g) above; and
(i) stock, debt, indebtedness, obligations or any other property received in
consideration of any asset sale permitted under Section 9.9.
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"Revolving Loans" has the meaning specified in Section 2.2 and
includes each Agent Advance and BofA Loan.
"Secured Sale/Leaseback Arrangements" means the sale/leaseback
arrangements entered into by the Borrower pursuant to the Secured Sale/Leaseback
Documents.
"Secured Sale/Leaseback Collateral" has the meaning set forth in the
Intercreditor Agreement; provided that in any event such collateral shall not
include any Excluded Sale/Leaseback Assets.
"Secured Sale/Leaseback Documents" has the meaning set forth in the
Intercreditor Agreement.
"Security Documents" means this Agreement, the Borrower Security
Agreement, the Trademark, Patent and Copyright Agreements, the Parent Security
Agreement, the Pledge Agreement, the Parent Pledge Agreement, the Assignment of
Contract as Collateral Security, the Mortgages and all other security
agreements, mortgages, pledges and assignments at any time delivered by Parent
or any of its Subsidiaries or any other Person to the Agent pursuant to the
terms of this Agreement or any other Loan Document.
"Senior Secured Notes" means the $190,000,000 face amount of 9 5/8%
Senior Secured Notes due 2000 issued by the Borrower (as successor to Cup
Acquisition Corporation) pursuant to an Indenture dated as of August 30, 1993.
"Senior Subordinated Notes" means the $110,000,000 face amount of
Senior Subordinated Notes due 2003 issued by the Borrower (as successor to Cup
Acquisition Corporation) pursuant to an Indenture dated as of August 30, 1993.
"Settlement" and "Settlement Date" have the meanings specified in
Section 2.2(j)(i).
"Shared Collateral" has the meaning set forth in the Intercreditor
Agreement.
"Sherwood" means Sherwood Industries, Inc.
"Sherwood-Related Merger Documents" means the documents pursuant to
which the Sherwood-Related Mergers are consummated, including, without
limitation, the documents filed with the Secretaries of State of Delaware or
Connecticut in order to effectuate such mergers.
"Sherwood-Related Mergers" means (i) the mergers of each of the
Subsidiaries of Sherwood with and into Sherwood with Sherwood as the surviving
entity of such mergers and
34
(ii) the merger immediately thereafter of Sherwood with and into the Borrower
with the Borrower as the surviving entity of such merger.
"Sherwood-Related Subordinated Notes" means, collectively, the
Subordinated Convertible Notes by the Borrower to the order of the sellers under
the Sherwood Stock Purchase Agreement in the aggregate principal amount of
$5,000,000 representing a portion of the purchase price payable by the Borrower
under the Sherwood Stock Purchase Agreement.
"Sherwood Stock Purchase Agreement" means the Stock Purchase
Agreement, dated as of December 20, 1999, among the Borrower, as purchaser, and
Xxxx X. Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx Xxxx and Xxxxxxx X. Xxxxxxxxx
Trust, as sellers, as amended as of April 3, 2000.
"Sherwood Stock Purchase Documents" means, collectively, the Sherwood
Stock Purchase Agreement, the related amended and restated escrow agreement, the
Sherwood-Related Subordinated Notes and all other documents, agreements and
instruments executed and/or delivered in connection therewith.
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(i) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute
and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means the fifth anniversary of the Closing
Date; provided that in the event the Borrower has not refinanced, repaid or
extended the Senior Subordinated Notes on terms reasonably acceptable to the
Agent and the Majority Lenders (which terms shall, to the extent the Senior
Subordinated Notes are refinanced or repaid with other indebtedness, in any
event require subordination provisions in the documents governing the
35
indebtedness refinancing or repaying any of the Senior Subordinated Notes that
are no less favorable to the Lenders than the subordination provisions in the
indenture governing the Senior Subordinated Notes) prior to June 1, 2003, the
Stated Termination Date means July 1, 2003.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of Parent.
"Suppressed Availability" means, at any time, the amount, if any, by
which (x) the amount in clause (a)(ii) of the defined term Availability exceeds
(y) the amount in clause (a) of such defined term.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized or
maintains a lending office.
"Term Loan" and "Term Loans" have the meanings specified in Section
2.3(a).
"Term Loan Note" and "Term Loan Notes" have the meanings specified in
Section 2.3(c).
"Term Loan Reserve" means, at any time, the amount by which the Term
Loan Support (as defined below) is less than the outstanding principal balance
of the Term Loans. For purposes of this definition, "Term Loan Support" means,
at any time, the sum of (1) 80% of the orderly liquidation value of the Credit
Agreement Term Loan Equipment Collateral in existence on the Closing Date, as
such orderly liquidation value shall be determined by an appraisal, in form and
substance reasonably satisfactory the Agent, of such Equipment by Xxxxx Xxxxxx
or another appraiser reasonably satisfactory to the Agent (it being understood
that until such appraisal is received by the Agent, this clause (1) shall be
deemed to be zero (0)), plus (2) the Suppressed Availability.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to Section 4.2 or by the Majority Lenders pursuant to Section
11.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever in accordance with the terms hereof.
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"Test Period" means, for any determination, the four consecutive
fiscal quarters of the Borrower then last ended (taken as one accounting
period).
"Total Facility" has the meaning specified in Section 2.1.
"Trademark, Patent and Copyright Agreements" means, collectively,
(i) the Collateral Assignment For Security in U.S. Patents, the Collateral
Assignment For Security in U.S. Trademarks, the Collateral Assignment For
Security in U.S. Copyrights, the Collateral Assignment For Security in Canadian
Patents and the Collateral Assignment For Security in Canadian Trademarks, each
dated as of August 30, 1993 by the Borrower in favor of Bankers Trust Company,
as collateral agent, the Borrower Intellectual Property Agreement and the
Holdings Intellectual Property Agreement, each dated as of August 30, 1993 and
between the Borrower or Parent, respectively, and Bankers Trust Company, as
collateral agent, all of the foregoing agreements which have been assigned to
the Agent pursuant to the Bank Assignment Agreement and (ii) all other
intellectual property security agreements executed and delivered by Parent or
any of its Subsidiaries to the Agent to evidence and perfect the Agent's
security interest in such Person's present and future patents, trademarks,
copyrights and related licenses and rights, for the benefit of the Agent and the
Lenders.
"Transaction Documents" means, collectively, the Loan Documents, the
Senior Subordinated Notes and the indenture governing same, the Secured
Sale/Leaseback Documents, the Sherwood Stock Purchase Documents and the
Sherwood-Related Merger Documents.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of New York or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"Unused Letter of Credit Subfacility" means an amount equal to
$15,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus (b) without duplication, the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.5.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Wholly-Owned Subsidiary" means, as to any Person, (i) any corporation
100% of whose capital stock (other than director's qualifying shares) is at the
time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such
Person and (ii) any partnership,
37
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
1.2 Accounting Terms . Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements. All calculations to be made
for the purposes of determining compliance with the financial covenants
contained in this Agreement (except as otherwise expressly provided herein)
shall be made by application of GAAP applied on a basis consistent with the most
recent annual or quarterly financial statements delivered pursuant to Section
7.2 (or, prior to the delivery of the first financial statements pursuant to
Section 7.2, consistent with GAAP effective on the Original Closing Date);
provided, however, that if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or other rules promulgated with respect thereto or (b)
the Agent or the Majority Lenders shall so object in writing within 30 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent annual or quarterly financial
statements delivered by the Borrower to the Agent as to which no objection shall
have been made.
1.3 Interpretive Provisions .
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including," the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments
38
and other modifications are not prohibited by the terms of any Loan Document,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
---------------------------
2.1 Total Facility . Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit facility
of up to $160,000,000 (the "Total Facility") for the Borrower's use from time to
time during the term of this Agreement. The Total Facility shall be comprised of
(a) a revolving line of credit consisting of revolving loans and letters of
credit up to the Maximum Revolver Amount, as described in Sections 2.2 and 2.4,
and (b) term loans in the aggregate original principal amount of $25,000,000, as
described in Section 2.3.
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2.2 Revolving Loans .
(a) Amounts. Subject to the satisfaction of the conditions precedent
set forth in Article 10, each Lender severally agrees, upon the Borrower's
request from time to time on any Business Day during the period from the
Original Closing Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower, in amounts not to exceed (except for BofA
with respect to BofA Loans or Agent Advances) such Lender's Pro Rata Share of
the Borrower's Availability. The Lenders, however, in their discretion, may
elect to make Revolving Loans or participate (as provided for in Section 2.4(f))
in the credit support or enhancement provided through the Agent to the issuers
of Letters of Credit in excess of the Availability on one or more occasions, but
if they do so, neither the Agent nor the Lenders shall be deemed thereby to have
changed the limits of the Maximum Revolver Amount or the Availability or to be
obligated to exceed such limits on any other occasion. If the sum of outstanding
Revolving Loans, the aggregate amount of Pending Revolving Loans, the undrawn
amount of outstanding Letters of Credit and any unpaid reimbursement obligations
in respect of Letters of Credit exceeds the Availability, the Lenders may refuse
to make or otherwise restrict the making of Revolving Loans as the Lenders
determine until such excess has been eliminated, subject to the Agent's
authority, in its sole discretion, to make Agent Advances pursuant to the terms
of Section 2.2(i). The Borrower acknowledges and agrees that the payment (the
"Assignment Payment") made on the Original Closing Date pursuant to Section
3(a)(i) of the Bank Assignment Agreement by BABC to those banks and other
financial institutions party to the Original Credit Agreement with respect to
the purchase of the outstanding loans made to the Borrower under the Original
Credit Agreement shall constitute a Revolving Loan requested by the Borrower in
the amount of such payment.
(b) Procedure for Borrowing.
(i) Each Borrowing shall be made upon the Borrower's irrevocable
written notice delivered to the Agent in the form of a Notice of Borrowing
together with a Borrowing Base Certificate reflecting sufficient Availability,
which must be received by the Agent (x) prior to 11:00 a.m. (New York time)
three Business Days prior to the requested Funding Date, in the case of LIBOR
Revolving Loans and (y) no later than 12:00 noon (New York time) on the
requested Funding Date, in the case of Base Rate Revolving Loans, specifying:
(A) the amount of the Borrowing;
(B) the requested Funding Date, which shall be a Business
Day;
(C) whether the Revolving Loans requested are to be Base
Rate Revolving Loans or LIBOR Revolving Loans; and
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(D) the duration of the Interest Period if the requested
Revolving Loans are to be LIBOR Revolving Loans. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any Borrowing comprised
of LIBOR Revolving Loans, such Interest Period shall be three months.
(ii) After giving effect to any Borrowing, there may not be more
than seven different Interest Periods in effect under the Total Facility.
(iii) With respect to any request for Base Rate Revolving Loans,
in lieu of delivering the above-described Notice of Borrowing the Borrower may
give the Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice but Agent shall be entitled to rely on the telephonic notice in
making such Revolving Loans.
(c) Reliance upon Authority. On or prior to the Original Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), the Borrower shall deliver to
the Agent a writing setting forth (i) the account of the Borrower to which the
Agent is authorized to transfer the proceeds of the Revolving Loans requested
pursuant to this Section 2.2, and (ii) the names of the officers authorized to
request Revolving Loans on behalf of the Borrower, and shall provide the Agent
with a specimen signature of each such officer. The Agent shall be entitled to
rely conclusively on such officer's authority to request Revolving Loans on
behalf of the Borrower, the proceeds of which are to be transferred to any of
the accounts specified by the Borrower pursuant to the immediately preceding
sentence, until the Agent receives written notice to the contrary. The Agent
shall have no duty to verify the identity of any individual representing him or
herself as one of the officers authorized by the Borrower to make such requests
on its behalf.
(d) No Liability. The Agent shall not incur any liability to the
Borrower as a result of acting upon any notice referred to in Sections 2.2(b)
and (c), which notice the Agent believes in good faith to have been given by an
officer duly authorized by the Borrower to request Revolving Loans on its behalf
or for otherwise acting in good faith under this Section 2.2, and the crediting
of Revolving Loans to the Borrower's deposit account, or transmittal to such
Person as the Borrower shall direct, shall conclusively establish the obligation
of the Borrower to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice
in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and the
Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
(f) Agent's Election. Promptly after receipt of a Notice of Borrowing
(or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the Agent
shall elect, in its discretion, (i) to have the terms of Section 2.2(g) apply to
such requested Borrowing, or (ii) to request BofA to make a BofA Loan pursuant
to the terms of Section 2.2(h) in the amount of the
41
requested Borrowing; provided, however, that if BofA declines in its sole
discretion to make a BofA Loan pursuant to Section 2.2(h), the Agent shall elect
to have the terms of Section 2.2(g) apply to such requested Borrowing.
(g) Making of Revolving Loans.
(i) In the event that the Agent shall elect to have the terms
of this Section 2.2(g) apply to a requested Borrowing as described in
Section 2.2(f), then promptly after receipt of a Notice of Borrowing or
telephonic notice pursuant to Section 2.2(b), the Agent shall notify the Lenders
by telecopy, telephone or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of
the requested Borrowing available to the Agent in same day funds, to such
account of the Agent as the Agent may designate, not later than 2:00 p.m. (New
York time) on the Funding Date applicable thereto. After the Agent's receipt of
the proceeds of such Revolving Loans, upon satisfaction of the applicable
conditions precedent set forth in Article 10, the Agent shall make the proceeds
of such Revolving Loans available to the Borrower on the applicable Funding Date
by transferring same day funds equal to the proceeds of such Revolving Loans
received by the Agent to the account of the Borrower, designated in writing by
the Borrower and acceptable to the Agent; provided, however, that the amount of
Revolving Loans so made on any date shall in no event exceed the Availability of
the Borrower on such date.
(ii) Unless the Agent receives notice from a Lender on or prior
to the Original Closing Date or, with respect to any Borrowing after the
Original Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when required
hereunder to the Agent for the account of the Borrower the amount of that
Lender's Pro Rata Share of the Borrowing, the Agent may assume that each Lender
has made such amount available to the Agent in immediately available funds on
the Funding Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the Borrower such amount, that
Lender shall on the Business Day following such Funding Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Agent submitted to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Lender's Revolving Loan on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to the Agent on
the Business Day following the Funding Date, the Agent will notify the Borrower
of such failure to fund and, upon demand by the Agent, the Borrower shall pay
such amount to the Agent for the Agent's account, together with interest thereon
for each day elapsed since the date of such Borrowing, at a rate per annum equal
to the interest rate applicable at the time to the Revolving Loans comprising
such Borrowing. The failure of any Lender to make any Revolving Loan on any
Funding Date (any such Lender, prior to the cure of such failure, being
hereinafter referred to as a "Defaulting Lender") shall not relieve any other
Lender of any obligation hereunder to make a Revolving
43
Loan on such Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Revolving Loan to be made by such other Lender on
any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by the Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in its
discretion, re-lend to the Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. Any amounts so re-lent
to the Borrower shall bear interest at the rate applicable to Base Rate
Revolving Loans and for all other purposes of this Agreement shall be treated as
if they were Revolving Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and
such Lender's Commitment shall be deemed to be zero (-0-). Until a Defaulting
Lender cures its failure to fund its Pro Rata Share of any Borrowing (1) such
Defaulting Lender shall not be entitled to any portion of the Unused Line Fee
and (2) the Unused Line Fee shall accrue in favor of the Lenders which have
funded their respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing Lenders ratably based upon their relative
Commitments, and shall be calculated based upon the average amount by which the
aggregate Commitments of such performing Lenders (but only the portion thereof
with respect to the revolving line of credit facility under the Total Facility)
exceeds the sum of outstanding Revolving Loans and the undrawn face amount of
all outstanding Letters of Credit. This section shall remain effective with
respect to such Lender until such time as the Defaulting Lender shall no longer
be in default of any of its obligations under this Agreement. The terms of this
Section shall not be construed to increase or otherwise affect the Commitment of
any Lender, or relieve or excuse the performance by the Borrower of its duties
and obligations hereunder.
(h) Making of BofA Loans.
(i) In the event the Agent shall elect, with the consent of
BofA, to have the terms of this Section 2.2(h) apply to a requested Borrowing as
described in Section 2.2(f), BofA shall make a Revolving Loan in the amount of
such Borrowing (any such Revolving Loan made solely by BofA pursuant to this
Section 2.2(h) being referred to as a "BofA Loan" and such Revolving Loans being
referred to collectively as "BofA Loans") available to the Borrower on the
Funding Date applicable thereto by transferring same day funds to an account of
the Borrower, designated in writing by the Borrower and acceptable to the Agent.
Each BofA Loan is a Revolving Loan hereunder and shall be subject to all the
terms and conditions applicable to other Revolving Loans except that all
payments thereon shall be payable to BofA solely for its own account (and for
the account of the holder of any participation interest with respect to such
Revolving Loan). The Agent shall not request BofA to make any BofA Loan if (i)
the Agent shall have received written notice from any Lender, or otherwise has
actual knowledge, that one or more of the applicable conditions precedent set
forth in Article 10 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the
Availability of the Borrower on such Funding Date. BofA shall not otherwise be
43
required to determine whether the applicable conditions precedent set forth in
Article 10 have been satisfied or the requested Borrowing would exceed the
Availability of the Borrower on the Funding Date applicable thereto prior to
making, in its sole discretion, any BofA Loan. Notwithstanding Section 9.25,
BofA may, in its sole discretion, make BofA Loans which, after giving effect
thereto, would result in Availability of less than $5,000,000 (but not less than
zero), provided that the Borrower shall not permit the portion of any such BofA
Loan which so results in Availability of less than $5,000,000 to be outstanding
for more than five consecutive days in any calendar quarter or more than ten
days in total in any calendar quarter.
(ii) The BofA Loans shall be repayable on demand and secured by
the Collateral, shall constitute Revolving Loans and Obligations hereunder, and
shall bear interest at the rate applicable to the Revolving Loans from time to
time.
(i) Agent Advances.
(i) Subject to the limitations set forth in the provisos
contained in this Section 2.2(i), the Agent is hereby authorized by the Lenders,
from time to time in the Agent's sole discretion, (1) after the occurrence of a
Default or an Event of Default, or (2) at any time that any of the other
applicable conditions precedent set forth in Article 10 have not been satisfied,
to make Revolving Loans to the Borrower on behalf of the Lenders which the
Agent, in its reasonable business judgment, deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of, or maximize the amount of, repayment of the Loans and other
Obligations, or (C) to pay any other amount chargeable to the Borrower pursuant
to the terms of this Agreement, including, without limitation, costs, fees and
expenses as described in Section 15.7 (any of the advances described in this
Section 2.2(i) being hereinafter referred to as "Agent Advances"); provided,
that the Required Lenders may at any time revoke the Agent's authorization
contained in this Section 2.2(i) to make Agent Advances, any such revocation to
be in writing and to become effective prospectively upon the Agent's receipt
thereof; and provided further, that the Agent shall not make Agent Advances for
purposes described in clauses (B) and (C) above which would cause the Revolving
Loans and Letters of Credit otherwise permitted to be outstanding under this
Agreement to exceed $135,000,000.
(ii) The Agent Advances shall be repayable on demand and secured
by the Collateral, shall constitute Revolving Loans and Obligations hereunder,
and shall bear interest at the rate applicable to the Revolving Loans from time
to time. The Agent shall notify each Lender in writing of each such Agent
Advance.
(j) Settlement. It is agreed that each Lender's funded portion of the
Revolving Loan is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, BofA, and the other Lenders agree (which agreement shall
not be for the benefit of or enforceable by the Borrower) that in order to
facilitate the administration of this Agreement and the other Loan Documents,
settlement among them as to the Revolving Loans, the BofA Loans and the Agent
Advances shall take place on a periodic basis in accordance with the following
provisions:
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(i) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, (1) on behalf of BofA, with respect to each outstanding BofA Loan, (2)
for itself, with respect to each Agent Advance, and (3) with respect to
collections received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone or other similar form of transmission, of such
requested Settlement, no later than 1:00 p.m. (New York time) on the date of
such requested Settlement (the "Settlement Date"). Each Lender (other than BofA,
in the case of BofA Loans, and the Agent, in the case of Agent Advances) shall
make the amount of such Lender's Pro Rata Share of the outstanding principal
amount of the BofA Loans and Agent Advances with respect to which Settlement is
requested available to the Agent, for itself or for the account of BofA, in same
day funds, to such account of the Agent as the Agent may designate, not later
than 3:00 p.m. (New York time), on the Settlement Date applicable thereto,
regardless of whether the applicable conditions precedent set forth in Article
10 have then been satisfied. Such amounts made available to the Agent shall be
applied against the amounts of the applicable BofA Loan or Agent Advance and,
together with the portion of such BofA Loan or Agent Advance representing BofA's
Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any
such amount is not made available to the Agent by any Lender on the Settlement
Date applicable thereto, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Federal Funds Rate
for the first three (3) days from and after the Settlement Date and thereafter
at the Interest Rate then applicable to the Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a BofA Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase and receive
from BofA or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BofA Loan or Agent Advance to the
extent of such Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such BofA Loan or
Agent Advance. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest Rate
then applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any BofA Loan or Agent
Advance pursuant to subsection (ii) above, the Agent shall promptly distribute
to such Lender at such address as such Lender may request in writing, such
Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such BofA Loan or
Agent Advance.
45
(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or BofA Loans are outstanding, may pay over to BofA any payments
received by the Agent, which in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to
BofA's other outstanding Revolving Loans. If, as of any Settlement Date,
collections received since the then immediately preceding Settlement Date have
been applied to BofA's other outstanding Revolving Loans other than to BofA
Loans or Agent Advances, as provided for in the previous sentence, BofA shall
pay to the Agent for the accounts of the Lenders, to be applied to the
outstanding Revolving Loans of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the Revolving Loans. During the period between Settlement Dates,
BofA with respect to BofA Loans, the Agent with respect to Agent Advances, and
each Lender with respect to the Revolving Loans other than BofA Loans and Agent
Advances, shall be entitled to interest at the applicable rate or rates payable
under this Agreement on the actual average daily amount of funds employed by
BofA, the Agent and the other Lenders.
(k) Notation. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including the BofA Loans
owing to BofA, and the Agent Advances owing to the Agent, from time to time. In
addition, each Lender is authorized, at such Lender's option, to note the date
and amount of each payment or prepayment of principal of such Lender's Revolving
Loans in its books and records, including computer records, such books and
records constituting rebuttably presumptive evidence, absent manifest error, of
the accuracy of the information contained therein.
(l) Lenders' Failure to Perform. All Revolving Loans (other than BofA
Loans and Agent Advances) shall be made by the Lenders simultaneously and
in accordance with their Pro Rata Shares. It is understood that (a) no
Lender shall be responsible for any failure by any other Lender to perform
its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligation to make any Revolving
Loans hereunder, (b) no failure by any Lender to perform its obligation to
make any Revolving Loans hereunder shall excuse any other Lender from its
obligation to make any Revolving Loans hereunder, and (c) the obligations
of each Lender hereunder shall be several, not joint and several.
2.3 Term Loan .
(a) Amounts of Term Loans. Each Lender severally agrees to make a
term loan (any such term loan being referred to as a "Term Loan" and such term
loans being referred to collectively as the "Term Loans") to the Borrower on the
Closing Date, upon the satisfaction of the applicable conditions precedent set
forth in Article 10, in an amount equal to such Lender's Pro Rata Share of
$25,000,000. The Term Loans shall initially be Base Rate Term Loans.
46
(b) Making of Term Loans. Each Lender shall make the amount of such
Lender's Term Loan available to the Agent in same day funds, to such account of
the Agent as the Agent may designate, not later than 2:00 p.m. (New York time)
on the Closing Date. After the Agent's receipt of the proceeds of such Term
Loans, upon satisfaction of the applicable conditions precedent set forth in
Article 10, the Agent shall make the proceeds of such Term Loans available to
the Borrower on such Funding Date by transferring same day funds equal to the
proceeds of such Term Loans received by the Agent to an account of the Borrower
designated in writing by the Borrower or as the Borrower shall otherwise
instruct in writing.
(c) Term Loan Notes. The Borrower shall execute and deliver to the
Agent on behalf of each Lender, on the Closing Date, a promissory note,
substantially in the form of Exhibit A attached hereto and made a part hereof
(such promissory notes, together with any new notes issued pursuant to Section
13.3 upon the assignment of any portion of any Lender's Term Loan, being
hereinafter referred to collectively as the "Term Loan Notes" and each of such
promissory notes being hereinafter referred to individually as a "Term Loan
Note"), to evidence such Lender's Term Loan, in an original principal amount
equal to the amount of such Lender's Pro Rata Share of $25,000,000 and with
other appropriate insertions. The principal amount of the Term Loan Note
delivered to the Agent on behalf of each Lender shall be dated the Closing Date
and stated to mature in sixty (60) monthly installments (if the Stated
Termination Date shall be the fifth anniversary of the Closing Date) or
thirty-seven (37) monthly installments (if the Stated Termination Date shall be
July 1, 2003). Each of the monthly installments (other than the final
installment) of principal to be payable to each Lender shall be in an amount
equal to such Lender's Pro Rata Share of $416,666.67 and shall be payable on the
first day of each month, commencing on July 1, 2000, and the final installment
of principal, if the Term Loans have not been paid in full before the Stated
Termination Date, shall be in an amount equal to such Lender's Pro Rata Share of
the then remaining principal balance of the Term Loan Notes and shall be payable
on the Stated Termination Date. Each such installment shall be payable to the
Agent for the account of the applicable Lender.
(d) Notation and Endorsement. The Agent shall record on its books the
principal amount of the Term Loans owing to each Lender from time to time. In
addition, each Lender is authorized, at such Lender's option, to note the date
and amount of each payment or prepayment of principal of such Lender's Term
Loans in its books and records, such books and records constituting rebuttably
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein. Prior to the transfer of a Term Loan Note, the applicable
Lender shall endorse on the reverse side thereof the outstanding principal
balance of the Term Loan evidenced thereby. Failure by such Lender to make such
notation or endorsement shall not affect the obligations of the Borrower under
such Term Loan Note or any of the other Loan Documents.
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2.4 Letters of Credit .
(a) Agreement to Cause Issuance. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations and warranties of
the Borrower herein set forth, the Agent agrees to take reasonable steps to
cause to be issued for the account of the Borrower and to provide credit support
or other enhancement to banks reasonably acceptable to the Agent, which issue
Letters of Credit for the account of the Borrower (any such credit support or
enhancement being herein referred to a "Credit Support") in accordance with this
Section 2.4 from time to time during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have any
obligation to take steps to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (1) the maximum
undrawn amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof exceed the Availability of the
Borrower at such time; or (3) such Letter of Credit has an expiration date later
than thirty (30) days prior to the Stated Termination Date or more than twelve
(12) months from the date of issuance in the case of standby letters of credit
or six (6) months from the date of issuance in the case of letters of credit
issued to support purchases of Inventory.
(c) Other Conditions. In addition to being subject to the satisfaction
of the applicable conditions precedent contained in Article 10, the obligation
of the Agent to take reasonable steps to cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit is subject to the
following conditions precedent having been satisfied in a manner satisfactory to
the Agent:
(1) The Borrower shall have delivered to the proposed issuer of
such Letter of Credit, at such times and in such manner as such proposed issuer
may prescribe, an application in form and substance satisfactory to such
proposed issuer and the Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and the form
and terms of the proposed Letter of Credit shall be satisfactory to the Agent
and such proposed issuer; and
(2) As of the date of issuance, no order of any court, arbitrator
or Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
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(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall give the Agent two
(2) Business Days' prior written notice of the Borrower's request for the
issuance of a Letter of Credit. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit is
to expire (which date shall be a Business Day), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrower shall attach to such notice the proposed form of the Letter
of Credit.
(2) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the requested effective
date of issuance of the Letter of Credit set forth in the notice from the
Borrower pursuant to Section 2.4(d)(1), (i) the amount of the applicable Unused
Letter of Credit Subfacility and (ii) the Availability of the Borrower as of
such date. If (i) the undrawn amount of the requested Letter of Credit is not
greater than the applicable Unused Letter of Credit Subfacility and (ii) the
issuance of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof would not
exceed the Availability of the Borrower, the Agent shall take reasonable steps
to cause such issuer to issue the requested Letter of Credit on such requested
effective date of issuance.
(3) Notice of Issuance. On each Settlement Date the Agent shall
give notice to each Lender of the issuance of all Letters of Credit issued since
the last Settlement Date.
(4) No Extensions or Amendment. The Agent shall not be obligated
to cause any Letter of Credit to be extended or amended unless the requirements
of this Section 2.4(d) are met as though a new Letter of Credit were being
requested and issued. With respect to any Letter of Credit which contains any
"evergreen" or automatic renewal provision, each Lender shall be deemed to have
consented to any such extension or renewal unless any such Lender shall have
provided to the Agent, not less than 30 days prior to the last date on which the
applicable issuer can in accordance with the terms of the applicable Letter of
Credit decline to extend or renew such Letter of Credit, written notice that it
declines to consent to any such extension or renewal, provided, that if all of
the requirements of this Section 3.4 are met and no Default or Event of Default
exists, no Lender shall decline to consent to any such extension or renewal.
49
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The Borrower agrees
to reimburse the issuer for any draw under any Letter of Credit and the Agent
for the account of the Lenders upon any payment pursuant to any Credit Support
immediately upon demand, and to pay the issuer of the Letter of Credit the
amount of all other obligations and other amounts payable to such issuer under
or in connection with any Letter of Credit immediately when due, irrespective of
any claim, setoff, defense or other right which the Borrower may have at any
time against such issuer or any other Person.
(2) Revolving Loans to Satisfy Reimbursement Obligations. In the
event that the issuer of any Letter of Credit honors a draw under such Letter of
Credit or the Agent shall have made any payment pursuant to any Credit Support
and the Borrower shall not have repaid such amount to the issuer of such Letter
of Credit or the Agent, as applicable, pursuant to Section 2.4(e)(1), the Agent
shall, upon receiving notice of such failure, notify each Lender of such
failure, and each Lender shall unconditionally pay to the Agent, for the account
of such issuer or the Agent, as applicable, as and when provided hereinbelow, an
amount equal to such Lender's Pro Rata Share of the amount of such payment in
Dollars and in same day funds. If the Agent so notifies the Lenders prior to
1:00 p.m. (New York time) on any Business Day, each Lender shall make available
to the Agent the amount of such payment, as provided in the immediately
preceding sentence, on such Business Day. Such amounts paid by the Lenders to
the Agent shall constitute Revolving Loans which shall be deemed to have been
requested by the Borrower pursuant to Section 2.2 as set forth in Section 4.7.
(f) Participations.
(1) Purchase of Participations. Immediately upon issuance of any
Letter of Credit in accordance with Section 2.4(d), each Lender shall be deemed
to have irrevocably and unconditionally purchased and received without recourse
or warranty, an undivided interest and participation in the Letter of Credit or
the Credit Support provided through the Agent to such issuer in connection with
the issuance of such Letter of Credit, equal to such Lender's Pro Rata Share of
the face amount of such Letter of Credit or the amount of such Credit Support
(including, without limitation, all obligations of the Borrower with respect
thereto, and any security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from the Borrower on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which the
Agent has previously received for the account of the issuer thereof payment from
a Lender pursuant to Section 2.4(e)(2), the Agent shall promptly pay to such
Lender such Lender's Pro Rata Share of such payment from the Borrower in
Dollars. Each such payment shall be made by the Agent on the Business Day on
which the Agent receives immediately available funds paid to such Person
pursuant to the
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immediately preceding sentence, if received prior to 1:00 p.m. (New York time)
on such Business Day and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements executed in connection therewith, application for any Letter of
Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with respect
to any Credit Support provided through the Agent with respect to a Letter of
Credit or with respect to their participation in either of the foregoing, and
the obligations of the Borrower to make payments to the Agent, for the account
of the Lenders, shall be irrevocable, not subject to any qualification or
exception whatsoever, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), any Lender, the Agent, the issuer of
such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
51
(g) Recovery or Avoidance of Payments. In the event any payment by or
on behalf of the Borrower received by the Agent with respect to any Letter of
Credit or Credit Support provided for any Letter of Credit (or any guaranty by
the Borrower or reimbursement obligation of the Borrower relating thereto) and
distributed by the Agent to the Lenders on account of their respective
participations therein is thereafter set aside, avoided or recovered from the
Agent in connection with any receivership, liquidation or bankruptcy proceeding,
the Lenders shall, upon demand by the Agent, pay to the Agent their respective
Pro Rata Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount required
to be repaid by it.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower agrees to pay to the Agent
with respect to each Letter of Credit, for the account of the Lenders, the
Letter of Credit Fee specified in, and in accordance with the terms of, Section
3.6.
(2) Issuer Fees and Charges. The Borrower shall pay to the issuer
of any Letter of Credit, or to the Agent, for the account of the issuer of any
such Letter of Credit, solely for such issuer's account, such fees and other
charges as are charged by such issuer for letters of credit issued by it,
including, without limitation, its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and all other
customary fees associated with issuing or servicing letters of credit, as and
when assessed.
(i) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts payable as elsewhere
provided in this Section 2.4, the Borrower hereby agrees to protect, indemnify,
pay and save the Lenders and the Agent harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which any Lender or the Agent may incur
or be subject to as a consequence, direct or indirect, of the issuance of any
Letter of Credit or the provision of any credit support or enhancement in
connection therewith. The agreement in this Section 2.4(i)(1) shall survive
payments of all Obligations.
(2) Assumption of Risk by the Borrower. As among the Borrower,
the Lenders and the Agent, the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or
52
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of any Letter of
Credit to comply duly with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order make a drawing under any Letter of Credit or of the proceeds thereof; (G)
the misapplication by the beneficiary of any Letter of Credit of the proceeds of
any drawing under such Letter of Credit; or (H) any consequences arising from
causes beyond the control of the Lenders or the Agent, including, without
limitation, any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto Governmental Authority. None of the foregoing shall
affect, impair or prevent the vesting of any rights or powers of the Agent or
any Lender under this Section 2.4(i). Further, none of the foregoing shall
prejudice any rights of the Borrower against any issuer of a Letter of Credit.
(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put the Agent or
any Lender under any resulting liability to the Borrower or relieve the Borrower
of any of its obligations hereunder to any such Person.
(4) Power of Attorney. In connection with all Inventory financed
by Letters of Credit, the Borrower hereby appoints the Agent, or the Agent's
designee, as its attorney, with full power and authority: (a) to sign and/or
endorse the Borrower's name upon any warehouse or other receipts; (b) to sign
the Borrower's name on bills of lading and other negotiable and non-negotiable
documents; (c) to clear Inventory through customs in the Agent's or the
Borrower's name, and to sign and deliver to customs officials powers of attorney
in the Borrower's name for such purpose; (d) to complete in the Borrower's or
the Agent's name, any order, sale, or transaction, obtain the necessary
documents in connection therewith, and collect the proceeds thereof; and (e) to
do such other acts and things as are necessary in order to enable the Agent to
obtain possession or control of the Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as the Borrower's attorney,
will be liable for any acts or omissions, nor for any error of judgement or
mistakes of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(5) Account Party. The Borrower hereby authorizes and directs any
issuer of a Letter of Credit to name the Borrower as the "Account Party" therein
and to deliver to the Agent all instruments, documents and other writings and
property received by the issuer pursuant to the Letter of Credit, and to accept
and rely upon the Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the application
therefor.
53
(6) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, the Borrower will, at the Agent's request,
instruct all suppliers, carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, documents or instruments in which the Agent
holds a security interest to deliver them to the Agent and/or subject to the
Agent's order, and if they shall come into the Borrower's possession, to deliver
them, upon request, to the Agent in their original form. The Borrower shall
also, at the Agent's request, designate the Agent as the consignee on all bills
of lading and other negotiable and non-negotiable documents.
(7) Indemnification by Lenders. The Lenders agree to indemnify
each issuer of a Letter of Credit (to the extent not reimbursed by the Borrower
and without limiting the obligations of the Borrower hereunder) ratably in
accordance with their respective Pro Rata Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against such issuer
in any way relating to or arising out of any Letter of Credit issued by such
issuer or the transactions contemplated thereby or any action taken or omitted
by such issuer under any Letter of Credit issued by such issuer or any Loan
Document in connection therewith; provided that no Lender shall be liable for
any of the foregoing to the extent it arises from the gross negligence or
willful misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse each issuer of a Letter of Credit
promptly upon demand for its Pro Rata Share of any costs or expenses payable by
the Borrower to such issuer, to the extent that such issuer is not promptly
reimbursed for such costs and expenses by the Borrower. The agreement contained
in this section shall survive payment in full of all Obligations.
(j) Supporting Letter of Credit. If, notwithstanding the provisions of
Section 2.4(b) and Section 12.1, any Letter of Credit is outstanding upon the
termination of this Agreement, then upon such termination the Borrower shall
deposit with the Agent, for the ratable benefit of the Agent and the Lenders,
with respect to each Letter of Credit then outstanding, a standby letter of
credit (a "Supporting Letter of Credit") in form and substance reasonably
satisfactory to the Agent, issued by an issuer reasonably satisfactory to the
Agent in an amount equal to the greatest amount for which such Letter of Credit
may be drawn plus any fees and expenses associated with such Letter of Credit,
under which Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments made by the Agent
and the Lenders under such Letter of Credit or under any credit support or
enhancement provided through the Agent with respect thereto and any fees and
expenses associated with such Letter of Credit. Such Supporting Letter of Credit
shall be held by the Agent, for the ratable benefit of the Agent and the
Lenders, as security for, and to provide for the payment of, the aggregate
undrawn amount of such Letters of Credit remaining outstanding.
2.5 Assignment and Assumption by PNC .
54
(a) Effective upon the effectiveness of the amendment and restatement
of the Existing Loan and Security Agreement as contemplated hereby (but prior to
the making of any financial accommodations on the Closing Date) (the time of
such effectiveness under this Section 2.5(a), the "Assignment Effective Time"),
each Lender (other than PNC) (each an "Assignor") hereby sells, transfers and
assigns to PNC, and PNC hereby purchases, assumes and undertakes from each
Assignor, without recourse and without representation or warranty (except as
provided in this Section 2.5), 15.625% ("PNC's Percentage Share") of (A) the
Commitment of such Assignor, each of the Revolving Loans of such Assignor, the
obligations of such Assignor with respect to Letters of Credit and Credit
Support (including, without limitation, any obligation to participate in Letters
of Credit and Credit Support) and all other obligations of such Assignor, in
each instance, under the Existing Loan and Security Agreement as in effect
immediately prior to the effectiveness of the amendment and restatement of the
Existing Loan and Security Agreement as contemplated hereby and (B) all related
rights, benefits, obligations, liabilities and indemnities of such Assignor
under and in connection with the Existing Loan and Security Agreement as in
effect immediately prior to the effectiveness of the amendment and restatement
of the Existing Loan and Security Agreement as contemplated hereby (for each
Assignor, the foregoing, its "Assigned Interest" and collectively for all the
Assignors, the "Assigned Interests"); it being the intention of the parties
hereto that after giving effect to the amendment and restatement of the Existing
Loan and Security Agreement as contemplated hereby each Lender shall have a Pro
Rata Share of all rights, interests and obligations of the Lenders hereunder).
(b) With effect on and after such assignments and assumptions, PNC
shall be a party to this Agreement and shall succeed to all of the rights and be
obligated to perform all of the obligations of a Lender under this Agreement,
including the requirements concerning confidentiality and the payment of
indemnification, with a Commitment in an amount equal to $25,000,000. PNC agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
It is the intent of the parties hereto that the Commitment of each Assignor in
effect immediately prior to the amendment and restatement of the Existing Loan
and Security Agreement as contemplated hereby shall, as of the Assignment
Effective Time, be reduced such that the portion of its Commitment hereunder
relating to the revolving line of credit portion of the Total Facility shall be
its Pro Rata Share of the Maximum Revolver Amount and each Assignor shall
relinquish its rights and be released from its obligations under the Existing
Loan and Security Agreement in effect immediately prior to the amendment and
restatement of the Existing Loan and Security Agreement as contemplated hereby
to the extent such obligations have been assumed by PNC under this Section 2.5;
provided, however, no Assignor shall relinquish its rights under Sections 4.1,
4.2 and 4.6 of this Agreement to the extent such rights relate to the time prior
to the Assignment Effective Time.
(c) After giving effect to the assignments and assumptions set forth
in this Section 2.5, at the Assignment Effective Time the Commitment of each
Lender will be as set
55
forth beside such Lender's name under the heading "Commitment" on the signature
pages of this Agreement.
(d) As consideration for the sales, assignments and transfers
contemplated in this Section 2.5, PNC shall pay to each Assignor on the Closing
Date in immediately available funds an amount equal to PNC's Percentage Share of
the principal amount of all Revolving Loans outstanding as of the Assignment
Effective Time owing to such Assignor.
(e) Any interest, fees and other payments accrued to the Closing Date
with respect to each Assigned Interest shall be for the account of the
respective Assignor. Any interest, fees and other payments accrued on and after
the Closing Date with respect to each Assigned Interest shall be for the account
of PNC. Each Assignor and PNC agrees that it will hold in trust for the other
party any interest, fees and other amounts which it may receive to which the
other party is entitled pursuant to the preceding two sentences and pay to the
other party any such amounts which it may receive promptly upon receipt.
(f) PNC (i) acknowledges that it has received a copy of the Existing
Loan and Security Agreement, this Agreement and the Schedules and Exhibits
thereto, together with copies of the most recent financial statements of Parent
and its Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Agreement and the assignments and assumptions contemplated by this Section
2.5; and (ii) agrees that it will, independently and without reliance upon any
Assignor, the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under this Agreement.
(g) Each Assignor represents and warrants to PNC that (i) it is the
legal and beneficial owner of the Assigned Interest being assigned by it to PNC
hereunder and that such Assigned Interest is free and clear of any Lien or other
adverse claim; (ii) it is duly organized and existing and it has the full power
and authority to take, and has taken, all action necessary to execute and
deliver this Agreement and to fulfill its obligations hereunder (including,
without limitation, those in this Section 2.5); (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Agreement or the Existing Loan and Security Agreement, and no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; and (iv) this Agreement has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation enforceable against it in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights and
to general equitable principles.
(h) No Assignor makes any representation or warranty or assumes any
responsibility with respect to any statements, warranties or representations
made in or in
56
connection with the Existing Loan and Security Agreement, this Agreement or any
other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Existing Loan and Security Agreement,
this Agreement or any other instrument or document furnished pursuant thereto.
No Assignor makes any representation or warranty in connection with, or assumes
any responsibility with respect to, the solvency, financial condition or
statements of the Borrower or any of its Affiliates, or the performance or
observance by the Borrower or any other Person, of any of its respective
obligations under the Existing Loan and Security Agreement, this Agreement or
any other instrument or document furnished in connection therewith.
(i) PNC represents and warrants to each Assignor that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Agreement and to fulfill
its obligations hereunder (including, without limitation, those in this Section
2.5); (ii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Agreement; and no further action by,
or notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iii) this Agreement has been duly executed and
delivered by it and constitutes its legal, valid and binding obligation
enforceable against it in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(j) Each of the parties hereto hereby consents to the assignments and
assumptions contemplated by this Section 2.5, notwithstanding any failure to
comply with (and each of the parties hereto hereby waives) the requirements of
Section 13.3 in order to make such assignments and assumptions effective.
ARTICLE 3
INTEREST AND FEES
-----------------
3.1 Interest .
(a) Interest Rates. All outstanding Obligations shall bear interest on
the unpaid principal amount thereof (including, to the extent permitted by law,
on interest thereon not paid when due) from the date made until paid in full in
cash at a rate determined by reference to the Base Rate or the LIBOR Rate and
Section 3.1(a)(i), (ii), (iii) or (iv), as applicable, but not to exceed the
Maximum Rate described in Section 3.3. Subject to the provisions of Section 3.2,
any of the Loans may be converted into, or continued as, Base Rate Loans or
LIBOR Rate Loans in the manner provided in Section 3.2. If at any time Loans are
outstanding with respect to which notice has not been delivered to the Agent in
accordance with the terms of this Agreement
57
specifying the basis for determining the interest rate applicable thereto, then
those Loans shall be Base Rate Loans and shall bear interest at a rate
determined by reference to the Base Rate until notice to the contrary has been
given to the Agent in accordance with this Agreement and such notice has become
effective. Except as otherwise provided herein, the outstanding Obligations
shall bear interest as follows:
(i) For all Base Rate Revolving Loans and other Obligations
(other than LIBOR Revolving Loans, Base Rate Term Loans and LIBOR Term Loans) at
a fluctuating per annum rate equal to the Base Rate plus the Applicable Margin;
(ii) For all LIBOR Revolving Loans at a per annum rate equal to
the LIBOR Rate plus the Applicable Margin;
(iii) For all Base Rate Term Loans at a fluctuating per annum
rate equal to the Base Rate plus the Applicable Margin; and
(iv) For all LIBOR Term Loans at a per annum rate equal to the
LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in clause (i) or (iii) above as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest accrued on all Loans will be payable in
arrears on the first day of each month after the Original Closing Date and on
the Termination Date; provided that interest accrued on all LIBOR Rate Loans
having an Interest Period of one, two or three months will be payable in arrears
on the last day of each Interest Period and interest accrued on all LIBOR Rate
Loans having an Interest Period of six months will be payable in arrears on the
date which occurs three months after the initial date of each such Interest
Period, each of the dates which occur one and two months after the end of such
third month and the last day of each such Interest Period and, in each instance,
on the Termination Date.
(b) Default Rate. If any Event of Default occurs and is continuing and
the Majority Lenders in their discretion so elect, then, while any such Event of
Default is outstanding, all of the Obligations shall bear interest at the
Default Rate applicable thereto.
3.2 Conversion and Continuation Elections .
(a) The Borrower may, upon irrevocable written notice to the Agent in
accordance with Subsection 3.2(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans to convert any such Loans (or any part thereof in an amount not less than
$10,000,000 ($1,500,000
58
in the case of the Term Loans), or that is in an integral multiple of $1,000,000
($500,000 in the case of the Term Loans) in excess thereof) into LIBOR Rate
Loans; or
(ii) elect, as of th last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $10,000,000 ($1,500,000
in the case of the Term Loans), or that is in an integral multiple of $1,000,000
($500,000 in the case of the Term Loans) in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $10,000,000 ($1,500,000 in the case of the Term
Loans), such LIBOR Rate Loans shall automatically convert into Base Rate Loans,
and on and after such date the right of the Borrower to continue such Loans as,
and convert such Loans into, LIBOR Rate Loans, as the case may be, shall
terminate.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than 11:00 a.m. (New York time) at least
three Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or renewed;
(iii) the type of Loans resulting from the proposed conversion or
continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to LIBOR
Rate Loans, the Borrower has failed to select timely a new Interest Period to be
applicable to LIBOR Rate Loans or if any Default or Event of Default then
exists, the Borrower shall be deemed to have elected to convert such LIBOR Rate
Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as a LIBOR
Rate Loan.
59
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than seven different Interest Periods in effect hereunder.
3.3 Maximum Interest Rate . In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by the Lenders under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this Section 3.3,
have been paid or accrued if the interest rates otherwise set forth in this
Agreement had at all times been in effect, then the Borrower shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the difference between (a) the lesser of (i) the
amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have accrued
had the interest rates otherwise set forth in this Agreement, at all times, been
in effect and (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Agent and/or any Lender
has received interest and other charges hereunder in excess of the Maximum Rate,
such excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest, in the inverse order of
maturity, and if there are no Obligations outstanding, the Agent and/or such
Lender shall refund to the Borrower such excess.
3.4 Certain Fees . The Borrower agrees to pay BofA for its own account the
fees (the "BofA Fees") referred to in the Fee Letter as and when payable as
provided in such letter. The Agent, the Lenders and the Borrower agree that the
BofA Fees may be financed by the Lenders as Revolving Loans.
3.5 Unused Line Fee . Until the Obligations have been paid in full and
this Agreement is terminated, the Borrower agrees to pay, on the first day of
each month and on the Termination Date, to the Agent, for the ratable account of
the Lenders, an unused line fee equal to three-eighths of one percent (.375%)
per annum on the average daily amount by which the Maximum Revolver Amount
exceeded the sum of the average daily outstanding amount of Revolving Loans and
the undrawn face amount of all outstanding Letters of Credit, during the
immediately preceding month or shorter period if calculated on the Termination
Date. The unused line fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed. All payments received by the Agent on account
of Accounts or as proceeds of other Collateral shall be deemed to be credited to
the Borrower's Loan Account immediately upon receipt for purposes of calculating
the unused line fee pursuant to this Section 3.5.
60
3.6 Letter of Credit Fee .The Borrower agrees to pay to the Agent, for the
ratable account of the Lenders, for each Letter of Credit, a fee (the"Letter of
Credit Fee") equal to two percent (2%) per annum of the undrawn face amount of
each Letter of Credit issued for the Borrower's account at the Borrower's
request, plus all out-of-pocket costs, fees and expenses reasonably incurred by
the Agent in connection with the application for, processing of, issuance of, or
amendment to any Letter of Credit, which costs, fees and expenses could include
a "fronting fee" required to be paid by the Agent to such issuer for the
assumption of the settlement risk in connection with the issuance of such Letter
of Credit. The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains outstanding and on the
Termination Date. The Letter of Credit Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed, and shall increase to the
Default Rate if any Event of Default occurs and is continuing and the Majority
Lenders in their discretion so elect.
3.7 Collateral Management Fee . The Borrower agrees to pay to the Agent,
for the account of the Agent, a non-refundable collateral management fee in the
amount of $125,000 per annum, payable in advance on the Closing Date and each
Anniversary Date (other than an Anniversary Date occurring on or after the
Payment and Termination Date).
ARTICLE 4
PAYMENTS AND PREPAYMENTS
------------------------
4.1 Revolving Loans . The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrower may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided, however, that with
respect to any LIBOR Revolving Loans prepaid by the Borrower prior to the
expiration date of the Interest Period applicable thereto, the Borrower promises
to pay to the Agent for account of the Lenders the amounts described in Section
5.4. In addition, and without limiting the generality of the foregoing, upon
demand the Borrower promises to pay to the Agent, for account of the Lenders,
the amount, without duplication, by which the sum of outstanding Revolving
Loans, the aggregate amount of Pending Revolving Loans, the Term Loan Reserve,
the aggregate undrawn amounts of all outstanding Letters of Credit and the
amount of all unpaid reimbursement obligations with respect to the Letters of
Credit exceeds the Availability (with Availability being determined for purposes
of this sentence as if clause (b) thereof were zero).
4.2 Termination of Facility . The Borrower may terminate this Agreement
upon at least ten (10) Business Days' notice to the Agent and the Lenders, upon
(a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation and return of all outstanding
Letters of Credit, (b) the prepayment in full of the Term Loans, together
61
with accrued interest thereon, (c) the payment of the early termination fee set
forth in the next sentence, (d) the payment in full in cash of all other
outstanding monetary Obligations together with accrued interest thereon, if any,
and (e) with respect to any LIBOR Rate Loans prepaid in connection with such
termination prior to the expiration date of the Interest Period applicable
thereto, the payment of the amounts described in Section 5.4. If this Agreement
is terminated at any time prior to the Stated Termination Date, whether pursuant
to this Section or pursuant to Section 11.2, the Borrower shall pay to the
Agent, for the account of the Lenders, an early termination fee determined in
accordance with the following table:
Period during which early
termination occurs Early Termination Fee
------------------ ---------------------
On or prior to the first Anniversary Date $800,000
After the first Anniversary Date but on or prior to $400,000
the third Anniversary Date $0
After the third Anniversary Date $0
; provided that in the event that (i) the Borrower terminates this Agreement
because the Lenders were unwilling to modify this Agreement to reflect a
borrower hereunder which would be the survivor of the merger of the Borrower
with Xxxxx (and which modified Agreement would otherwise have substantially the
same terms as in this Agreement), (ii) such merger is consummated on the date of
such termination and (iii) the Agent is provided evidence reasonably acceptable
to it of such merger, then no early termination fee shall be payable hereunder.
4.3 Repayment of the Term Loans . The Borrower shall, until payment in
full of the Term Loans and subject to earlier prepayment and payment as
hereinafter provided, make installment payments in respect of the principal of
the Term Loans to the Agent, for the account of the Lenders, in equal monthly
installments of $416,666.67 each (other than the final installment), payable on
the first day of each month, commencing on July 1, 2000, with a final
installment of principal, if the Term Loans have not been paid in full before
the Stated Termination Date, to be paid on the Stated Termination Date in an
amount equal to the then remaining principal balance of the Term Loans.
4.4 Voluntary Prepayments of the Term Loans . The Borrower may prepay
the principal of the Term Loans in whole or in part (subject to a minimum amount
of $250,000 or an integral multiple of $100,000 in excess thereof), at any time
and from time to time upon (a) at least five (5) Business Days' prior written
notice to the Agent and the Lenders, and (b) payment of, with respect to any
LIBOR Term Loans to be prepaid prior to the expiration date of the Interest
Period applicable thereto, the amounts described in Section 5.4. All voluntary
prepayments of the principal of the Term Loans shall be accompanied by the
payment of all accrued but unpaid interest on the Term Loans to the date of
prepayment. Any voluntary prepayment under this Section 4.4 of less than all of
the outstanding principal of the Term Loans shall be applied to the installments
of principal of the Term Loans in the inverse order of
62
maturity. Amounts prepaid in respect of the Term Loans pursuant to this Section
4.4 may not be reborrowed.
4.5 Mandatory Prepayments of the Term Loans .
(a) The Borrower shall prepay the entire unpaid principal balance of
the Term Loans, and all accrued but unpaid interest thereon, on the Termination
Date.
(b) On the tenth day following the date of receipt thereof by Parent
or any of its Subsidiaries of the cash proceeds from any sale or other
disposition of assets consummated on or after the Closing Date (other than (i)
sales of inventory in the ordinary course of business, (ii) the sale by the
Borrower on the Closing Date of Equipment pursuant to the Secured Sale/Leaseback
Documents, (iii) sales or other dispositions of Credit Agreement Term Loan
Equipment Collateral or Equipment constituting Excluded Sale/Leaseback Assets,
in each instance, permitted by Section 6.11(c) to the extent the net after tax
proceeds thereof are, within 270 days after the consummation of the relevant
sale or other disposition, used by the Borrower to purchase replacement
Equipment constituting Credit Agreement Term Loan Equipment Collateral or
Excluded Sale/Leaseback Assets, as the case may be, which shall be subject to a
first priority perfected Lien in favor of the Agent and for which the other
requirements set forth in Section 6.11(c) and the requirements of the remaining
sentences of this Section 4.5(b) have been satisfied and (iv) sales or other
dispositions of Secured Sale/Leaseback Collateral permitted hereunder to the
extent the proceeds thereof are, within 180 days after the consummation of the
relevant sale or other disposition, applied to the payment of the obligations of
the Borrower under the Secured Sale/Leaseback Documents or the purchase of
replacement Secured Sale/Leaseback Collateral), an amount equal to 100% of the
net cash proceeds from such asset sale or other disposition shall be applied
first as a mandatory repayment of principal of the then outstanding Term Loans
(to be applied to the installments of principal thereof in the inverse order of
maturity) and second, after the Term Loans have been paid in full, as a
mandatory repayment of principal of the then outstanding Revolving Loans. With
respect to a sale or other disposition referred to in clause (iii) of the first
sentence of this Section 4.5(b) for which the Borrower elects that all or a
portion of the net after tax proceeds thereof be used to purchase replacement
Equipment as provided in and in accordance with such clause (iii) and not be
applied to the repayment of Obligations as and when hereinabove required (a
"Replacement Election") (which election may be made only if no Default or Event
of Default exists), the Borrower shall deliver a Replacement Notice to the Agent
on or below the date of the consummation of such sale or other disposition, with
such Replacement Election being effective with respect to the portion of the net
after tax proceeds of such sale or other disposition equal to the Anticipated
Replacement Amount specified in such Replacement Notice. If the Borrower
exercises its Replacement Election with respect to such a sale or other
disposition, then until such time as such portion of the net after tax proceeds
thereof are used to purchase replacement Equipment in accordance with the terms
of clause (iii) of the first sentence of this Section 4.5(b) such proceeds shall
be applied to the repayment of the Revolving Loans (and a reserve in
Availability shall be established in the amount of such repayment to fund such
purchase and/or
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the repayment of Obligations as provided in the last sentence of this Section
4.5 (b)) or delivered to the Agent as cash collateral for the payment of the
Obligations on terms satisfactory to the Agent. With respect to the portion, if
any, of the net after tax proceeds of such sale or other disposition for which
the Replacement Election is not timely exercised, such portion thereof shall be
applied to the repayment of the Obligations as and when provided above. On the
Replacement Prepayment Date with respect to a Replacement Election, an amount
equal to the Replacement Prepayment Amount, if any, for such Replacement
Election shall be borrowed as a Revolving Loan and applied first as a mandatory
repayment of principal of the then outstanding Term Loans (to be applied to the
installments of principal thereof in inverse order of maturity) and second,
after the Term Loans have been paid in full, as a mandatory repayment of
principal of the then outstanding Revolving Loans.
(c) Notwithstanding anything contained herein to the contrary, unless
the Borrower shall have prepaid all its Obligations hereunder and all of the
Commitments are terminated, all sales or other dispositions of assets of Parent
or any of its Subsidiaries (other than sales or other dispositions of assets
permitted by Section 9.9) shall require the prior written consent of the
Majority Lenders.
(d) In connection with any prepayment under this Section 4.5, if any
LIBOR Term Loans are prepaid prior to the expiration date of the Interest Period
applicable thereto, the Borrower shall pay to the Lenders the amounts described
in Section 5.4. Amounts prepaid in respect of the Term Loans pursuant to this
Section 4.5 may not be reborrowed.
4.6 Payments by the Borrower .
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Agent for the account
of the Lenders at the Agent's address set forth in Section 15.8, and shall be
made in Dollars and in immediately available funds, no later than 1:00 p.m. (New
York time) on the date specified herein; provided, however, that, except as
otherwise provided herein (including, in any event, Section 6.9(d)), any
payments by the Borrower which the Borrower has notified the Agent prior to
12:00 noon (New York time) on a Business Day that such payments will be received
by the Agent via wire transfer prior to 4:00 p.m. (New York time) on such
Business Day shall be deemed to have been received by the Agent for this purpose
prior to 1:00 p.m. (New York time) on such Business Day, but only if such
payment is actually received by the Agent via wire transfer no later than 4:00
p.m. (New York time) on such Business Day and the Borrower hereby agrees to
indemnify and hold harmless the Agent and each Lender from and against any and
all actual out-of-pocket liabilities, obligations, losses, damages, penalties,
costs or expenses incurred by the Agent or such Lender in the event such payment
is not actually received by the Agent via wire transfer by such time. Any
payment received by the Agent later than 1:00 p.m. (New York time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
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(b) Subjec to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Lenders that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount equal
to the amount then due such Lender. If and to the extent the Borrower has not
made such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
4.7 Payments as Revolving Loans . All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including all reimbursement for expenses
pursuant to Section 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.7, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrower pursuant to Section 2.2 or a deemed request as provided in this
Section 4.7. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans (including
BofA Loans and Agent Advances) and that all such Revolving Loans so made shall
be deemed to have been requested by Borrower pursuant to Section 2.2. The Agent
agrees, so long as no Event of Default is continuing, to provide the Borrower
with three days' prior notice of any such charge to the Loan Account for the
purpose of paying expenses owing by the Borrower under Section 15.7. All amounts
charged to the Loan Account pursuant to this Section 4.7 shall be deemed correct
and binding on the Borrower, subject to Section 4.10.
4.8 Apportionment, Application and Reversal of Payments . Aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any fees, indemnities
or expense reimbursements then due to the Agent from the Borrower; second, to
pay any fees or expense reimbursements then due to the Lenders from the
Borrower; third, to pay interest due in respect of all Revolving Loans,
including BofA Loans and
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Agent Advances; fourth, to pay or prepay principal of the BofA Loans and Agent
Advances; fifth, to pay or prepay principal of the Revolving Loans (other than
BofA Loans and Agent Advances) and unpaid reimbursement obligations in respect
of Letters of Credit; sixth, to pay or prepay principal of the Term Loans (to
installments thereof in the inverse order of maturity); and seventh, to the
payment of any other Obligation due to the Agent or any Lender by the Borrower.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrower, or unless an Event of Default is outstanding, neither
the Agent nor any Lender shall apply any payments which it receives to any LIBOR
Revolving Loan or LIBOR Term Loan, except (a) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event, and
only to the extent, that there are no outstanding Base Rate Revolving Loans or
Base Rate Term Loans. The Agent shall promptly distribute to each Lender,
pursuant to the applicable wire transfer instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided for in Section 2.2(j). The Agent and the Lenders shall have
the continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations.
4.9 Indemnity for Returned Payments . If, after receipt of any payment of,
or proceeds applied to the payment of, all or any part of the Obligations, the
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force as
if such payment or proceeds had not been received by the Agent or such Lender,
and the Borrower shall be liable to pay to the Agent and the Lenders, and hereby
does indemnify the Agent and the Lenders and hold the Agent and the Lenders
harmless for, the amount of such payment or proceeds surrendered. The provisions
of this Section 4.9 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Agent or any Lender in reliance upon
such payment or application of proceeds, and any such contrary action so taken
shall be without prejudice to the Agent's and the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The provisions of
this Section 4.9 shall survive the termination of this Agreement.
4.10 Agent's and Lenders' Books and Records; Monthly Statements . The
Borrower agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute rebuttably presumptive proof thereof, irrespective of whether
any Obligation is also evidenced by a promissory note or other instrument. The
Agent will provide to the Borrower a monthly statement of Loans, payments, and
other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Borrower and an account stated (except for
reversals and reapplications of payments made as provided in Section 4.8 and
corrections of errors discovered by the Agent), absent manifest error or unless
the Borrower notifies the Agent in writing to the
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contrary within thirty (30) days after such statement is rendered. In the event
a timely written notice of objections is given by the Borrower, only the items
to which exception is expressly made will be considered to be disputed by the
Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
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5.1 Taxes .
(a) Any and all payments by the Borrower to each Lender or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Lender and
the Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
paid by the Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days after
the date the Lender or the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to each Lender or the Agent for
the account of such Lender, at the time interest is paid, all additional amounts
which the respective Lender specifies as necessary to preserve the after-tax
yield the Lender would have received if such Taxes or Other Taxes had not been
imposed.
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(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
5.2 Illegality .
(a) If any Lender determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable lending office to make LIBOR Rate Loans, then,
on notice thereof by the Lender to the Borrower through the Agent, any
obligation of that Lender to make LIBOR Rate Loans shall be suspended until the
Lender notifies the Agent and the Borrower that the circumstances giving rise to
such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBOR
Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Rate Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 5.4, either on the last day of the
Interest Period thereof, if the Lender may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if the Lender may not lawfully
continue to maintain such LIBOR Rate Loan. If the Borrower is required to so
prepay any LIBOR Rate Loan, then concurrently with such prepayment, the Borrower
shall borrow from the affected Lender, in the amount of such repayment, a Base
Rate Loan.
5.3 Increased Costs and Reduction of Return .
(a) If any Lender determines that, due to either (i) the introduction
of or any change in the interpretation of any law or regulation or (ii) the
compliance by that Lender with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining any LIBOR Rate Loans, then the Borrower shall be liable
for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Agent), pay to the Agent for the account of such Lender, additional
amounts as are sufficient to compensate such Lender for such increased costs. If
the Borrower is required to pay additional amounts to any Lender pursuant to
this Section 5.3(a) that increase the effective lending rate of such Lender with
respect to its share of the Loans to greater than 25 basis points
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in excess of the effective lending rate of the other Lenders, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its lending office with respect to making LIBOR
Rate Loans so as to eliminate any such additional payment by the Borrower which
may thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender. In the event that any one or more
Lenders, pursuant to this Section 5.3(a) , incur any increased costs (other than
increased costs to the extent such increased costs are not a recurring cost) for
which any such Lender demands compensation pursuant to this Section 5.3(a) which
increases the effective lending rate of such Lender with respect to its share of
the Loans to greater than 25 basis points in excess of the effective lending
rate of the other Lenders and such Lender has not mitigated such costs within 60
days after receipt by such Lender from the Borrower of a written notice that
such Lender's effective lending rate has so exceeded the effective lending rate
of the other Lenders, then and in any such event, the Borrower may substitute
another financial institution for such Lender which is reasonably acceptable to
the Agent to assume the Commitment of such Lender and to purchase the Loans of
such Lender hereunder, without recourse to or warranty by, or expense to, such
Lender for a purchase price equal to the outstanding principal amount of the
Loans owing to such Lender plus any accrued but unpaid interest on such Loans
and accrued but unpaid fees and other amounts in respect of that Lender's
Commitment and share of the Loans (other than any prepayment penalty or other
premium; it being agreed that amounts payable under Section 5.4 are not
prepayment penalties or other premiums). Upon such purchase such Lender shall no
longer be a party hereto or have any rights or benefits hereunder (except for
rights or benefits that such Lender would retain hereunder and under the other
Loan Documents upon payment in full of all of the Obligations) and the
replacement Lender shall succeed to the rights and benefits, and shall assume
the obligations, of such Lender hereunder and thereunder. The Agent and the
Lenders shall cooperate with the Borrower to amend the Loan Documents to reflect
such substitution. In no event may the Borrower replace a Lender which is also
an issuer of a Letter of Credit or Credit Support or whose Affiliate has issued
a Letter of Credit or Credit Support unless (x) all Letters of Credit and Credit
Support issued by such Lender and its Affiliates have expired or have been
terminated or canceled and such Lender and/or Affiliate, as the case may be,
shall have been reimbursed for all payments made by it under the Letters of
Credit and Credit Support issued by it or (y) such Lender and/or Affiliate, as
the case may be, shall have been indemnified in a manner satisfactory to it for
any outstanding Letters of Credit and Credit Support issued by it and other
obligations, absolute or contingent, with respect to Letters of Credit and
Credit Support issued by it.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender or any corporation or other entity controlling the Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Lender or any corporation or other
entity controlling the Lender and (taking into consideration such Lender's or
such corporation's or other entity's policies with
69
respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrower through the Agent, the Borrower shall pay
to the Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase.
5.4 Funding Losses . The Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or reasonable expense which the Lender may
sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation; or
(c) the prepayment or other payment (including after acceleration
thereof) of a LIBOR Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
5.5 Inability to Determine Rates . If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrower may, notwithstanding any
other provision herein to the contrary, revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Borrower does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Borrower, in the amount specified in the applicable notice submitted by
the Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Rate Loans.
5.6 Certificates of Lenders . Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrower (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Borrower in the absence of manifest error.
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5.7 Survival . The agreements and obligations of the Borrower in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
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6.1 Grant of Security Interest .
(a) As security for all present and future Obligations, the Borrower
hereby grants to the Agent, for the ratable benefit of the Agent and the
Lenders, a continuing security interest in, lien on, and right of set-off
against, all of the following property of the Borrower, whether now owned or
existing or hereafter acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of credit, Assigned
Contracts, chattel paper, instruments, notes, documents, and documents of title;
(iv) all General Intangibles;
(v) all Equipment; provided that, with respect to any item of
Equipment which is subject to a Purchase Money Lien or Capital Lease
permitted hereunder, such item shall not, so long as the Debt with respect to
such Purchase Money Lien or Capital Lease is outstanding, constitute Collateral
hereunder but only if (i) the documentation with respect thereto prohibits a
Lien on such Equipment in favor of the Agent and (ii) such item of Equipment is
not collateral security for the payment of the obligations of the Borrower or
Parent under the Secured Sale/Leaseback Documents;
(vi) all money, investment property, securities and other
property of any kind of the Borrower in the possession or under the control of
the Agent or any Lender, any assignee of or participant in the Obligations, or a
bailee of any such party or such party's affiliates;
(vii) all deposit accounts, credits and balances with and other
claims against the Agent or any Lender or any of its affiliates or any other
financial institution in which the Borrower maintains deposits;
(viii) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing
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records, computer software and other property and General Intangibles at any
time evidencing or relating to any of the foregoing; and
(ix) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with the Real Estate covered by the Mortgage(s),
and all other property of Parent or any of its Subsidiaries in which the Agent
or any Lender may at any time be granted a Lien, is herein collectively referred
to as the "Collateral." The foregoing grant by the Borrower in favor of the
Agent of Liens on the Borrower's property shall be in addition to any grants by
the Borrower in favor of the Agent of Liens on the Borrower's property provided
under the Borrower Security Agreement, any other Security Document or under the
Existing Loan and Security Agreement.
(b) Not later than 60 days after the Original Closing Date, the Agent
shall have received:
(i) fully executed counterparts of Mortgages (or with respect to
Mortgages assigned by Bankers Trust Company, as collateral agent, to the Agent
as contemplated by the Bank Assignment Agreement, amendments to such Mortgages),
in each case in form and substance reasonably satisfactory to the Agent,
covering the Real Estate and Premises owned by the Borrower or Parent, and
arrangements reasonably satisfactory to the Agent shall be in place to provide
that counterparts of such Mortgages (or amendments thereto, if applicable) shall
be recorded in all places to the extent necessary, in the reasonable judgment of
the Agent, to create a valid and enforceable first priority Lien, subject only
to Permitted Liens, on such Real Estate and Premises in favor of the Agent (or
such other agent or trustee as may be required or desired under local law) for
the benefit of the Agent and the Lenders or, with respect to any such
amendments, to conform the related Mortgage to the terms hereof and to make such
other modifications to such Mortgages as the Agent may reasonably request in
order to give effect to the transactions contemplated hereby ;
(ii) mortgagee title insurance policies (the "Mortgage Policies")
issued by title insurers reasonably satisfactory to the Agent (it being agreed
that Chicago Title Insurance Company is acceptable to the Agent) in amounts
reasonably satisfactory to the Agent, not to exceed the value of such Real
Estate and Premises as reasonably determined by the Agent, and assuring the
Agent that the Mortgages in respect of such owned Real Estate and Premises are
valid and enforceable first priority mortgage Liens (subject only to Permitted
Liens) on such Real Estate and Premises, free and clear of all defects and
encumbrances except Permitted Liens. Such Mortgage Policies shall be in form and
substance reasonably satisfactory to the Agent and shall include an endorsement
for future advances under this Agreement and the Mortgages, for mechanics liens
and for any other matter that the Agent in its reasonable commercial discretion
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may request so long as such requested endorsements are legally available in the
applicable jurisdiction; and
(iii) a survey, in form and substance reasonably satisfactory to
the Agent, of each such owned Real Estate and Premises, each certified by a
licensed professional surveyor reasonably satisfactory to the Agent and
revealing no facts (other than Permitted Liens) which would materially interfere
with the use of such properties by the Borrower and Parent, or an update of an
existing survey provided the title company will delete the exception for
existing facts which a current survey would disclose.
(c) Not later than 60 days after the Original Closing Date, the Agent
shall have received:
(i) to the extent requested by the Agent, fully executed
counterparts of leasehold Mortgages (or with respect to leasehold Mortgages
assigned by Bankers Trust Company, as collateral agent, to the Agent as
contemplated by the Bank Assignment Agreement, amendments to such mortgages), in
each case in form and substance reasonably satisfactory to the Agent, covering
the Real Estate and Premises leased by the Borrower or Parent, and arrangements
reasonably satisfactory to the Agent shall be in place to provide that
counterparts of such leasehold Mortgages (or amendments thereto, if applicable)
shall be recorded in all places to the extent necessary, in the reasonable
judgment of the Agent, to create a valid and enforceable first priority Lien,
subject only to Permitted Liens, with respect to such leased Real Estate and
Premises in favor of the Agent (or such other agent or trustee as may be
required or desired under local law) for the benefit of the Agent and the
Lenders or, with respect to any such amendments, to conform the related
leasehold Mortgage to the terms hereof and to make such other modifications to
such leasehold Mortgages as the Agent may reasonably request in order to reflect
the transactions contemplated by this Agreement; and
(ii) to the extent requested by the Agent, fully executed
counterparts of collateral assignments of leases in form and substance
reasonably satisfactory to the Agent covering the Real Estate and Premises
leased out by the Borrower or Parent.
(d) Each of Parent and the Borrower will, and will cause its
respective Subsidiaries (other than Lily Cup) to, at the expense of the
Borrower, grant to the Agent security interests and mortgages (each an
"Additional Mortgage") in such real property of Parent, the Borrower and their
respective Subsidiaries (other than Lily Cup) acquired after the Original
Closing Date as may be requested in writing from time to time by the Agent. Such
Additional Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons
(except holders of Permitted Liens with respect to Permitted Liens) and subject
to no other Liens except for Permitted Liens. The Additional Mortgages or
instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the
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Agent required to be granted pursuant to the Additional Mortgages and all taxes,
fees and other charges payable in connection therewith shall have been paid in
full.
(e) If at any time after the Original Closing Date, any Person shall
become a Subsidiary of the Borrower or Parent (the foregoing not constituting a
consent thereto), the Borrower or Parent will promptly notify the Agent in
writing thereof and will, at the expense of the Borrower and at the written
request of the Agent, promptly cause (i) such Subsidiary to guaranty the
Obligations and grant to the Agent for the benefit of the Agent and the Lenders
a security interest in and lien on the property and assets of such Subsidiary to
secure its obligations under such guaranty, and (ii) the capital stock or other
equity interests of such Subsidiary to be pledged to the Agent for the benefit
of the Agent and the Lenders. All such security interests, pledges and
guaranties shall be granted or made pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons
(except holders of Permitted Liens with respect to Permitted Liens) and subject
to no other Liens except for Permitted Liens. All documents or instruments
related thereto shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Agent required to be granted pursuant to this clause
(e) and all taxes, fees and other charges payable in connection therewith shall
have been paid in full.
(f) Each of the Borrower and Parent will, and will cause its
respective Subsidiaries to, at the expense of the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfers, endorsements, certificates, real property surveys,
reports and other assurances or instruments and take such further steps relating
to the collateral covered by any of the Loans Documents as the Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to the
Agent such opinions of counsel, title insurance and other related documents as
may be reasonably requested by the Agent to assure themselves that this Section
6.1 has been complied with (such opinions to be consistent generally with the
opinions given on the Original Closing Date to the extent the relevant opinion
matter was covered in such opinions and any opinions with respect to Mortgages
to be consistent with the opinions given on such type of collateral under the
Original Credit Agreement).
(g) In the event that the Agent at any time after the Original Closing
Date determines in its good faith discretion that real estate appraisals
satisfying the requirements set forth in 12 CFR., Part 34-Subpart C, or any
successor or similar statute, rule, regulation, guideline or order (any such
appraisal, a "Required Appraisal") are or were required to be obtained, or
should be obtained, in connection with any or all of the properties subject to a
Mortgage, then, such Required Appraisal shall be delivered, at the expense of
the Borrower, to the Agent, which Required Appraisal, and the respective
appraiser, shall be reasonably satisfactory to the Agent.
(h) All of the Obligations shall be secured by all of the Collateral.
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(i) The Agent and the Lenders hereby agree that the Agent's Liens in
Credit Agreement Term Loan Equipment Collateral shall not at any time secure
greater than $25,000,000 in aggregate principal amount of Obligations.
6.2 Perfection and Protection of Security Interest .
(a) The Borrower shall, at its expense, perform all steps requested by
the Agent at any time to perfect, maintain, protect, and enforce the Agent's
Liens, including, without limitation: (i) executing, delivering and/or filing
and recording of the Mortgage(s), the Trademark Patent and Copyright Agreements
and/or amendments thereto and executing and filing financing or continuation
statements, and amendments thereof, in form and substance reasonably
satisfactory to the Agent; (ii) delivering to the Agent the originals of all
instruments, documents, and chattel paper, and all other Collateral having a
value in excess of $250,000 in the aggregate of which the Agent determines it
should have physical possession in order to perfect and protect the Agent's
security interest therein (other than Secured Sale/Leaseback Collateral), duly
pledged, endorsed or assigned to the Agent without restriction; provided that
with respect to any Collateral that constitutes Shared Collateral, the
Collateral Agent may continue to remain in possession thereof, subject to the
terms of the Pledge Agreement, the Parent Pledge Agreement and the Intercreditor
Agreement, and with respect to any other Collateral constituting capital stock
of the Borrower or any of its Subsidiaries, the Borrower shall cause the stock
certificates evidencing same to be delivered to the Agent, together with duly
executed undated stock powers therefor; (iii) delivering to the Agent negotiable
warehouse receipts covering any portion of the Collateral (other than Secured
Sale/Leaseback Collateral) located in warehouses and for which negotiable
warehouse receipts are issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses designated by the Agent; (v) placing
notations on the Borrower's books of account to disclose the Agent's security
interest; (vi) delivering to the Agent all letters of credit (other than Secured
Sale/Leaseback Collateral) on which the Borrower is named beneficiary; and (vii)
taking such other steps as are deemed necessary or reasonably desirable by the
Agent to maintain and protect the Agent's Liens. To the extent permitted by
applicable law, the Agent may file, without the Borrower's signature, one or
more financing statements disclosing the Agent's Liens. The Borrower agrees that
a carbon, photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement.
(b) If any Collateral with an aggregate value in excess of $100,000 is
at any time in the possession or control of any warehouseman, bailee or any of
the Borrower's agents or processors, then the Borrower shall notify the Agent
thereof and shall notify such Person of the Agent's security interest in such
Collateral and, upon the Agent's request, instruct such Person to hold all such
Collateral (other than Secured Sale/Leaseback Collateral and subject to the
terms of the Intercreditor Agreement) for the Agent's account subject to the
Agent's instructions. If at any time any Collateral (other than Secured
Sale/Leaseback Collateral and subject to the terms of the Intercreditor
Agreement) is located on any operating facility of the Borrower which is not
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owned by the Borrower, then the Borrower shall, at the request of the Agent,
obtain written waivers, in form and substance reasonably satisfactory to the
Agent, of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral.
(c) From time to time, the Borrower shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent, for
the ratable benefit of the Agent and the Lenders, the Collateral with respect to
the Borrower, but the Borrower's failure to do so shall not affect or limit the
Agent's security interest or the Agent's other rights in and to the Collateral
with respect to the Borrower. So long as this Agreement is in effect and until
the Payment and Termination Date, the Agent's Liens shall continue in full force
and effect in all Collateral (whether or not deemed eligible for the purpose of
calculating the Availability or as the basis for any advance, loan, extension of
credit, or other financial accommodation).
6.3 Location of Collateral . The Borrower represents and warrants to the
Agent and the Lenders that except as modified by notices from the Borrower
pursuant to and in accordance with the immediately succeeding sentence: (a)
Schedule 6.3 is a correct and complete list of the Borrower's chief executive
office, the location of its books and records, the locations where the Borrower
maintains its Collateral (other than Secured Sale/Leaseback Collateral), and the
locations of all of its other places of business; and (b) Schedule 6.3 correctly
identifies any of such facilities and locations that are not owned by the
Borrower and sets forth the names of the owners and lessors or sublessors of
and, to the best of the Borrower's knowledge, the holders of any mortgages on,
such facilities and locations. The Borrower covenants and agrees that it will
not (i) maintain any Collateral at any location other than those locations
listed for the Borrower on Schedule 6.3, (ii) otherwise change or add to any of
such locations, or (iii) change the location of its chief executive office from
the location identified in Schedule 6.3, unless it gives the Agent at least
thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith. Without limiting the foregoing, the Borrower represents
that all of its Inventory (other than Inventory in transit) and all Credit
Agreement Term Loan Equipment Collateral is, and covenants that all of its
Inventory and all Credit Agreement Term Loan Equipment Collateral will be,
maintained either (a) on premises owned by the Borrower, (b) on premises leased
by the Borrower, provided that the Agent has received an executed landlord
waiver from the landlord of such premises in form and substance reasonably
satisfactory to the Agent (except that with respect to premises leased by the
Borrower on the Original Closing Date, such landlord waivers shall be received
by the Agent no later than 90 days after the Original Closing Date), or (c) in
the case of Inventory only, in a public warehouse, provided that the Agent has
received an executed bailee letter from the applicable public warehouseman in
form and substance reasonably satisfactory to the Agent (except that with
respect to public warehouses utilized by the Borrower on the Original Closing
Date, such bailee letters shall be received by the Agent no later than 90 days
after the Original Closing Date). In addition to the representations,
warranties, covenants and agreements set forth above, the Borrower represents,
warrants, covenants and agrees that (i) on the Closing Date all Credit Agreement
Term Loan Equipment Collateral is located at the
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premises owned by the Borrower in Conyers, Georgia, (ii) the Borrower shall, not
later than 10 days after any Credit Agreement Term Loan Equipment Collateral is
moved to another location, provide the Agent with written notice of its new
location, (iii) the Borrower shall, not later than 30 days after the end of each
Fiscal Year, provide the Agent with a list in detail satisfactory to the Agent
of all then existing Credit Agreement Term Loan Equipment Collateral and the
location of each item thereof and (iv) on the Closing Date all of the Equipment
to be sold by the Borrower on the Closing Date pursuant to the Secured
Sale/Leaseback Documents is located at the premises owned by the Borrower in
Owings Mills, Maryland, Dallas, Texas and Chicago, Illinois.
6.4 Title to, Liens on, and Sale and Use of Collateral . The Borrower
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of the Collateral of the Borrower is and will
continue to be owned by the Borrower free and clear of all Liens whatsoever,
except for Permitted Liens; (b) the Agent's Liens in the Collateral, other than
Shared Collateral and Secured Sale/Leaseback Collateral, will not be subject to
any prior Lien (other than Purchase Money Liens on fixed assets, not
constituting Credit Agreement Term Loan Equipment Collateral, in respect of
Purchase Money Obligations permitted hereunder and Existing Liens); (c) the
Borrower will use, store, and maintain the Collateral with all reasonable care
and will use such Collateral for lawful purposes only; and (d) the Borrower will
not, without the Majority Lenders' prior written approval, sell or dispose of or
permit the sale or disposition of any of the Collateral except as permitted by
Section 9.9. The inclusion of proceeds in the Collateral shall not be deemed to
constitute the Agent's or any Lender's consent to any sale or other disposition
of the Collateral except as expressly permitted herein.
6.5 Appraisals . Whenever a Default or Event of Default exists, and at
such other times not more frequently than once a year as the Agent requests, the
Borrower shall, at its expense and upon the Agent's request, provide the Agent
with appraisals or updates thereof of any or all of the Collateral from an
appraiser, and prepared on a basis, reasonably satisfactory to the Agent, such
appraisals and updates to include, without limitation, information required by
applicable law and regulation and by the internal policies of the Lenders.
6.6 Access and Examination; Confidentiality .
(a) The Agent, accompanied by any Lender which so elects, may, upon
reasonable prior notice to the Borrower (and without notice when a Default or
Event of Default exists), at all reasonable times during regular business hours
(and at any time when a Default or Event of Default exists) have access to,
examine, audit, make extracts from or copies of and inspect any or all of the
Borrower's records, files, and books of account and the Collateral, and discuss
the Borrower's affairs with the Borrower's officers and management. The Borrower
will deliver to the Agent any instrument necessary for the Agent to obtain
records from any service bureau maintaining records for the Borrower. The Agent
may, and at the direction of the Majority Lenders shall, at any time when a
Default or Event of Default exists, and at the Borrower's expense, make copies
of all of the Borrower's books and records, or require the
77
Borrower to deliver such copies to the Agent. During the continuance of an Event
of Default, the Agent may, without expense to the Agent, use such of the
Borrower's respective personnel, supplies, and premises as may be reasonably
necessary for maintaining or enforcing the Agent's Liens. The Agent shall have
the right, at any time, in the Agent's name (during the continuance of an Event
of Default) or in the name of a nominee of the Agent (whether or not an Event of
Default is continuing), to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.
(b) The Borrower agrees that, subject to the Borrower's prior consent
for uses other than in a traditional tombstone, which consent shall not be
unreasonably withheld or delayed, the Agent and each Lender may use the
Borrower's name in advertising and promotional material and in conjunction
therewith disclose the general terms of this Agreement. The Agent and each
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to the Agent or such Lender by or on
behalf of the Borrower, under this Agreement or any other Loan Document, and
neither the Agent, nor such Lender nor any of their respective Affiliates shall
use any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable requirement of law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (6)
to the Agent's or such Lender's independent auditors, accountants, attorneys and
other professional advisors so long as they are informed of the confidential
nature of such information; (7) to any prospective Participating Lender or
assignee under any Assignment and Acceptance, actual or potential, provided that
such prospective Participating Lender or assignee agrees to keep such
information confidential to the same extent required of the Agent and the
Lenders hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is party
or is deemed party with the Agent or such Lender, and (9) to its Affiliates so
long as they are informed of the confidential nature of such information.
6.7 Collateral Reporting . The Borrower shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) on a daily basis, a Borrowing Base Certificate (reflecting the calculation
of the Accounts and Inventory components
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thereof as provided in the definition of Borrowing Base Certificate) and on a
weekly basis, or more frequently if requested by the Agent, a schedule of the
Borrower's sales, Accounts, collections and credits, in each case created,
received or granted since the last such schedule; (b) on a weekly basis, not
later than Tuesday of the following week, an aging of the Borrower's Accounts,
together with, if requested by the Agent, a reconciliation to the previous
week's aging of the Borrower's Accounts and to the Borrower's general ledger;
(c) on a monthly basis, not later than the fifteenth day of the following month,
a report indicating for each Account Debtor to whom the Borrower owes $10,000 or
more as of the last day of the previous month the name of such Account Debtor,
the amount owed by the Borrower to such Account Debtor as of the last day of
such previous month and the amount owed by such Account Debtor to the Borrower
as of the last day of such previous month; (d) on a monthly basis (or more
frequently if requested by the Agent), Inventory reports by category and
location, with additional detail, if requested by the Agent, showing additions
to and deletions from the Inventory, and, on a weekly basis, a summary Inventory
report; (e) upon request during the continuance of a Default, copies of invoices
in connection with the Borrower's Accounts, customer statements, credit memos,
remittance advices and reports, deposit slips, shipping and delivery documents
in connection with the Borrower's Accounts and for Inventory and Equipment
acquired by the Borrower, purchase orders and invoices; (f) upon request, a
statement of the balance of each of the Intercompany Accounts; (g) upon request,
an open voucher and cash requirements report; (h) such other reports as to the
Collateral of the Borrower as the Agent shall reasonably request from time to
time; and (i) with the delivery of each of the foregoing, a certificate of the
Borrower executed by an officer thereof certifying as to the accuracy and
completeness of the foregoing. If any of the Borrower's records or reports of
the Collateral are prepared by an accounting service or other agent, the
Borrower hereby authorizes such service or agent to deliver such records,
reports, and related documents to the Agent, for distribution to the Lenders.
6.8 Accounts .
(a) The Borrower hereby represents and warrants to the Agent and the
Lenders, with respect to the Borrower's Accounts, that: (i) each existing
Account represents, and each future Account will represent, a bona fide sale or
lease and delivery of goods by the Borrower, or rendition of services by the
Borrower, in the ordinary course of the Borrower's business; (ii) each existing
Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Agent, without, with respect to Eligible
Accounts, any offset, deduction, defense, or counterclaim except those known to
the Borrower and disclosed to the Agent and the Lenders pursuant to this
Agreement; (iii) no payment will be received with respect to any Account, and no
credit, discount, or extension, or agreement therefor will be granted on any
Account, except as reported to the Agent and the Lenders in accordance with this
Agreement; (iv) each copy of an invoice required to be delivered to the Agent by
the Borrower will be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) all goods described in each invoice will have been
delivered to the Account Debtor and all
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services of the Borrower described in each invoice will have been performed in
all material respects.
(b) The Borrower shall not re-date any invoice or sale or make sales
on extended dating beyond that customary in the Borrower's business or extend or
modify any Account (other than in the ordinary course of business consistent
with past practices). If the Borrower becomes aware of any matter adversely
affecting the collectibility of any Account or Account Debtor involving an
amount greater than $1,000,000, including information regarding the Account
Debtor's creditworthiness, the Borrower will promptly so advise the Agent.
(c) The Borrower shall not accept any note or other instrument (except
a check or other instrument for the immediate payment of money) with respect to
any Eligible Account or, with respect to any ineligible Account, in an amount in
excess of $250,000, without the Agent's written consent. If the Agent consents
to the acceptance of any such instrument, it shall be considered as evidence of
the Account and not payment thereof and the Borrower will promptly deliver such
instrument to the Agent, endorsed by the Borrower to the Agent in a manner
satisfactory in form and substance to the Agent. Regardless of the form of
presentment, demand, notice of protest with respect thereto, the Borrower shall
remain liable thereon until such instrument is paid in full.
(d) The Borrower shall notify the Agent promptly of all disputes and
claims in excess of $250,000, individually, or $1,000,000 in the aggregate with
any Account Debtor, and agrees to settle, contest, or adjust such dispute or
claim at no expense to the Agent or any Lender. No discount, credit or allowance
shall be granted to any such Account Debtor without the Agent's prior written
consent, except for discounts, credits and allowances made or given in the
ordinary course of the Borrower's business when no Event of Default exists
hereunder. The Borrower shall send the Agent a copy of each credit memorandum in
excess of $250,000 as soon as issued. The Agent may, and at the direction of the
Majority Lenders shall, at all times when an Event of Default exists hereunder,
settle or adjust disputes and claims directly with Account Debtors for amounts
and upon terms which the Agent or the Majority Lenders, as applicable, shall
consider advisable and, in all cases, the Agent will credit the Borrower's Loan
Account with only the net amounts received by the Agent in payment of any
Accounts.
(e) If an Account Debtor returns any Inventory to the Borrower when no
Event of Default exists, then the Borrower shall in the ordinary course of its
business consistent with past practices promptly determine the reason for such
return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. The Borrower shall immediately report to the Agent any
return involving an amount in excess of $250,000. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to the
Borrower when an Event of Default exists, the Borrower, upon request of the
Agent, shall: (i) hold the returned Inventory in trust for the Agent; (ii)
segregate all returned Inventory from all of its other property; (iii) dispose
of the returned Inventory solely according to the Agent's written instructions;
and (iv) not issue any
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credits or allowances with respect thereto without the Agent's prior written
consent. All returned Inventory shall be subject to the Agent's Liens thereon.
Whenever any Inventory is returned, the related Account shall be deemed
ineligible to the extent of the amount owing by the Account Debtor with respect
to such returned Inventory.
6.9 Collection of Accounts; Payments .
(a) The Borrower shall maintain lock-box accounts and other lock-box
arrangements reasonably satisfactory to the Agent with such banks as are
reasonably acceptable to the Agent to which all Account Debtors shall be
instructed to make payments on Accounts. If, notwithstanding such instructions,
the Borrower receives any payments with respect to Accounts or, subject to the
terms of the Intercreditor Agreement with respect to Secured Sale/Leaseback
Collateral or Shared Collateral, if the Borrower receives any payments on
account of Inventory and other Collateral or any other payments from whatever
source (other than immaterial amounts not to exceed $50,000 in the aggregate at
any one time), whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise (collectively all of the foregoing,
including without limitation, payments with respect to Accounts, referred to
herein as "Payments"), the Borrower will, at its own cost and expense, cause all
such Payments to be deposited not less often than daily in one of the lock-box
accounts referred to above or in a Payment Account. All funds in such lock-box
accounts shall be transferred on each Business Day to one or more concentration
accounts designated by the Agent with a bank reasonably acceptable to the Agent.
Each bank requested by the Agent at which a lock-box account is maintained and
each bank at which a concentration account referred to in the immediately
preceding sentence is maintained shall execute and deliver to the Agent such
agreements, in form and substance satisfactory to the Agent, as the Agent shall
request with respect to such accounts, including, without limitation, with
respect to prohibitions on the Borrower withdrawing funds from such accounts or
otherwise directing or modifying actions with respect to such accounts. Each
agreement with a bank at which a concentration account is established shall
provide, among other things, that all funds deposited into such account shall be
transferred directly to the Agent on a daily basis. The Agent or the Agent's
designee may, at any time after the occurrence and during the continuance of a
Default or an Event of Default, notify Account Debtors that the Accounts have
been assigned to the Agent and of the Agent's security interest therein, and may
collect them directly and charge the collection costs and expenses to the
Borrower's Loan Account as a Revolving Loan. So long as an Event of Default has
occurred and is continuing, the Borrower, at the Agent's request, shall execute
and deliver to the Agent such documents as the Agent requires to grant the Agent
access to any post office box in which collections of Accounts are received.
(b) If sales of Inventory are made for cash, the Borrower shall
immediately deliver to the Agent or deposi into a Payment Account the cash
which the Borrower receives.
(c) All payments, including immediately available funds received by
the Agent at a bank designated by it, received by the Agent on account of
Accounts or as proceeds of
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other Collateral (other than Secured Sale/Leaseback Collateral and Shared
Collateral except as provided in the Intercreditor Agreement) will be the
Agent's sole property for its benefit and the benefit of the Lenders and will be
credited to the Borrower's Loan Account (conditional upon final collection) on
the Business Day following receipt by the Agent (except for any such payments
received by the Agent by 1:00 p.m. (New York time) on a Business Day, in which
case such payments shall be credited to the Borrower's Loan Account (conditional
upon final collection) on the Business Day received by the Agent; it being
agreed that, except as otherwise provided herein (including, in any event,
Section 6.9(d)), any such payments which the Borrower has notified the Agent
prior to 12:00 noon (New York time) on a Business Day that such payment will be
received by the Agent via wire transfer prior to 4:00 p.m. (New York time) on
such Business Day shall be deemed to be received by the Agent for this purpose
prior to 1:00 p.m. (New York time) on such Business Day, but only if such
payment is actually received by the Agent via wire transfer no later than 4:00
p.m. (New York time) on such Business Day and the Borrower hereby agrees to
indemnify and hold harmless the Agent and each Lender from and against any and
all actual out-of-pocket liabilities, obligations, losses, damages, penalties,
costs or expenses incurred by the Agent or such Lender in the event such payment
is not actually received by the Agent via wire transfer by such time); provided,
however, that such payments shall be deemed to be credited to the Borrower's
Loan Account immediately upon receipt for purposes of (i) determining
Availability, (ii) calculating the unused line fee pursuant to Section 3.5, and
(iii) calculating the amount of interest to be distributed by the Agent to the
Lenders (but not the amount of interest payable by the Borrower).
(d) In the event the Borrower repays all of the Obligations upon the
termination of this Agreement or upon acceleration of the Obligations, other
than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrower's Loan Account one (1) Business Day after
the Agent's receipt of such funds (except for any such payment received by the
Agent by 1:00 p.m. (New York time) on a Business Day, in which case such payment
shall be credited to the Borrower's Loan Account (conditional upon final
collection) on the Business Day received by the Agent).
6.10 Inventory; Perpetual Inventory . The Borrower represents and warrants
to the Agent and the Lenders and agrees with the Agent and the Lenders that all
of the Inventory owned by the Borrower is and will be held for sale or lease, or
to be furnished in connection with the rendition of services, in the ordinary
course of the Borrower's business, and is and will be fit for such purposes. The
Borrower will use commercially reasonable efforts to keep its Inventory in good
and saleable condition, at its own expense. The Borrower will not, without the
prior written consent of the Agent, acquire or accept any Inventory on
consignment or approval. The Borrower agrees that all Inventory produced in the
United States will be produced in accordance in all material respects with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. The Borrower will conduct a physical count
of the Inventory at least once per Fiscal Year, and after and during the
continuation of an Event of Default, at such other times as the Agent requests.
The Borrower will maintain a perpetual
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inventory reporting system at all times. The Borrower will not, without the
Agent's written consent, sell any Inventory on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis (other than for damage).
6.11 Equipment .
(a) The Borrower represents and warrants to the Agent and the Lenders
and agrees with the Agent and the Lenders that all of the Equipment owned by the
Borrower which is necessary for the conduct of the Borrower's business
(including, in any event, all Credit Agreement Term Loan Equipment Collateral)
is and will be used or held for use in the Borrower's business, and is and will
be fit for such purposes. The Borrower shall keep and maintain such Equipment
(including, in any event, all Credit Agreement Term Loan Equipment Collateral)
in good operating condition and repair (ordinary wear and tear excepted) and
shall make all necessary replacements thereof.
(b) The Borrower shall promptly inform the Agent of any material
additions to or deletions from the Equipment. The Borrower shall not permit any
Equipment to become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to which real or
personal property the Agent does not have a Lien. The Borrower will not, without
the Agent's prior written consent, alter or remove any identifying symbol or
number on any of the Borrower's Equipment consisting of Collateral.
(c) The Borrower shall not, without the Majority Lenders' prior
written consent, sell, lease as a lessor, or otherwise dispose of any of the
Borrower's Equipment; provided, however, that the Borrower may dispose of (i)
Equipment to the extent permitted pursuant to Section 9.9, (ii) obsolete or
unusable Equipment constituting Secured Sale/Leaseback Collateral not leased by
the Borrower pursuant to the Secured Sale/Leaseback Documents having an orderly
liquidation value, together with the orderly liquidation value of all other
obsolete or unusable Equipment disposed of by the Borrower, of not greater than
$10,000,000 in the aggregate in any Fiscal Year, or $30,000,000 in the aggregate
during the term of this Agreement (from the Original Closing Date), (iii)
obsolete or unusable Equipment constituting Credit Agreement Term Loan Equipment
Collateral having an orderly liquidation value of not greater than $1,000,000 in
the aggregate in any Fiscal Year, or $2,000,000 in the aggregate during the term
of this Agreement (from the Original Closing Date), and (iv) obsolete or
unusable Equipment (other than Equipment constituting Secured Sale/Leaseback
Collateral or Credit Agreement Term Loan Equipment Collateral) having an orderly
liquidation value of not greater than $2,500,000 in the aggregate in any Fiscal
Year, or $5,000,000 in the aggregate during the term of this Agreement (from the
Original Closing Date), in each instance, without the Majority Lenders' consent,
subject to the conditions set forth in the remainder of this clause (c). In the
event any of such Equipment is sold, transferred or otherwise disposed of
pursuant to the proviso contained in the immediately preceding sentence, then,
except for the sale by the Borrower on the Closing Date of Equipment pursuant to
the Secured Sale/Leaseback Arrangements and substitutions and additions thereto
not constituting Credit Agreement Term Loan Equipment
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Collateral, the Borrower shall use the proceeds of such sale, transfer or
disposition to purchase replacement Equipment or to repay Obligations hereunder
and shall deliver to the Agent written evidence of the use of the proceeds for
such purchase. All such replacement Equipment purchased by the Borrower shall be
free and clear of all Liens except the Agent's Lien, the Liens in favor of the
holders of the obligations of the Borrower under the Secured Sale/Leaseback
Documents (but only (i) to the extent such replacement Equipment does not
constitute Excluded Sale/Leaseback Assets and (ii) in the event such replacement
Equipment constitutes Credit Agreement Term Loan Equipment Collateral which is
not Excluded Sale/Leaseback Assets, if the Lien of such holders therein is
subordinate to the Agent's Lien therein pursuant to the terms of the
Intercreditor Agreement) and Purchase Money Liens in respect of Purchase Money
Obligations permitted hereunder (but only to the extent such replacement
Equipment does not constitute Credit Agreement Term Loan Equipment Collateral).
Any Equipment replacing Credit Agreement Term Loan Equipment Collateral shall
have an orderly liquidation value equal to or greater than that of the Equipment
being replaced as determined by an appraisal in form and substance satisfactory
to the Agent and by an appraiser satisfactory to the Agent or by other evidence
satisfactory to the Agent.
6.12 Assigned Contracts . The Borrower shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment. Without limiting the generality of the foregoing, the
Borrower shall take all action necessary or appropriate to permit, and shall not
take any action which would have any materially adverse effect upon, the full
enforcement of all indemnification rights under its Assigned Contracts taken as
a whole. The Borrower shall notify the Agent and the Lenders in writing,
promptly after the Borrower becomes aware thereof, of any event or fact which
could reasonably be expected to give rise to a claim by it for indemnification
in excess of $250,000 under any of its Assigned Contracts, and shall diligently
pursue such right and report to the Agent on all further developments with
respect thereto. Except as provided otherwise in the Intercreditor Agreement,
the Borrower shall remit directly to the Agent for application to the
Obligations in such order as the Majority Lenders shall determine, all amounts
received by the Borrower as indemnification or otherwise pursuant to its
Assigned Contracts. If the Borrower shall fail after the Agent's demand to
pursue diligently any material right under its Assigned Contracts, or if an
Event of Default then exists, the Agent may, and at the direction of the
Majority Lenders shall, directly enforce such right in its own or the Borrower's
name and may enter into such settlements or other agreements with respect
thereto as the Agent or the Majority Lenders, as applicable, shall determine. In
any suit, proceeding or action brought by the Agent for the benefit of the
Lenders under any Assigned Contract for any sum owing thereunder or to enforce
any provision thereof, the Borrower shall indemnify and hold the Agent and
Lenders harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaims, recoupment, or reduction of liability
whatsoever of the obligor thereunder arising out of a breach by the Borrower of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing from the Borrower to or in favor of such obligor or
its successors. All such obligations of the Borrower shall be and remain
enforceable only against the Borrower and shall not be enforceable against the
Agent or the
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Lenders. Notwithstanding any provision hereof to the contrary, the Borrower
shall at all times remain liable to observe and perform all of its duties and
obligations under its Assigned Contracts, and the Agent's or any Lender's
exercise of any of their respective rights with respect to the Collateral shall
not release the Borrower from any of such duties and obligations. Neither the
Agent nor any Lender shall be obligated to perform or fulfill any of the
Borrower's duties or obligations under its Assigned Contracts or to make any
payment thereunder, or to make any inquiry as to the nature or sufficiency of
any payment or property received by it thereunder or the sufficiency of
performance by any party thereunder, or to present or file any claim, or to take
any action to collect or enforce any performance, any payment of any amounts, or
any delivery of any property.
6.13 Documents, Instruments, and Chattel Paper . The Borrower represents
and warrants to the Agent and the Lenders that (a) all documents, instruments,
and chattel paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon (except those of Persons other than the
Borrower or any of its Affiliates which shall be only to the knowledge of the
Borrower), are and will be complete in all material respects, valid, and
genuine, and (b) all goods evidenced by such documents, instruments, and chattel
paper are and will be owned by the Borrower, free and clear of all Liens other
than Permitted Liens.
6.14 Right to Cure . The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of the
Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which the Borrower fails to pay or do, including, without
limitation, payment of any judgment against the Borrower, any insurance premium,
any warehouse charge, any finishing or processing charge, any landlord's claim,
and any other Lien upon or with respect to the Collateral. All payments that the
Agent makes under this Section 6.14 and all reasonable out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Borrower's Loan Account as a Revolving Loan.
Any payment made or other action taken by the Agent under this Section 6.14
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed thereafter as herein provided.
6.15 Power of Attorney . The Borrower hereby appoints the Agent and the
Agent's designee as the Borrower's attorney, with power: (a) so long as any
Event of Default has occurred and is continuing, to endorse the Borrower's name
on any checks, notes, acceptances, money orders, or other forms of payment or
security that come into the Agent's or any Lender's possession; (b) to sign the
Borrower's name on any invoice, xxxx of lading, warehouse receipt or other
document of title relating to any Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and
other public records and to file any such financing statements by electronic
means with or without a signature as authorized or required by applicable law or
filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of the Borrower's mail to an address designated by the Agent and to
receive, open and dispose of all
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mail addressed to the Borrower; (d) to send requests for verification of
Accounts to customers or Account Debtors (in the name of the Borrower or a
nominee of the Agent or, with the consent of the Borrower, in the name of the
Agent so long as no Event of Default has occurred and is continuing, and in the
name of the Borrower, the Agent or a nominee of the Agent if an Event of Default
has occurred and is continuing); (e) so long as any Event of Default has
occurred and is continuing, to clear Inventory, the purchase of which was
financed with Letters of Credit, through customs in the Borrower's name, the
Agent's name or the name of the Agent's designee, and to sign and deliver to
customs officials powers of attorney in the Borrower's name for such purpose;
and (f) so long as any Event of Default has occurred and is continuing, to do
all things necessary to carry out this Agreement. The Borrower ratifies and
approves all acts of such attorney. None of the Lenders or the Agent nor their
attorneys will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law unless determined by a final and non-appealable
decision of a court of competent jurisdiction to constitute the gross negligence
or willful misconduct of the Agent. This power, being coupled with an interest,
is irrevocable until this Agreement has been terminated and the Obligations have
been fully satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities . The Borrower
assumes all responsibility and liability arising from or relating to the use,
sale or other disposition of the Collateral. The Obligations shall not be
affected by any failure of the Agent or any Lender to take any steps to perfect
the Agent's Liens or to collect or realize upon the Collateral, nor shall loss
of or damage to the Collateral release the Borrower from any of the Obligations.
Following the occurrence and continuation of an Event of Default, the Agent may
(but shall not be required to), and at the direction of the Majority Lenders
shall, without notice to or consent from the Borrower, xxx upon or otherwise
collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral, any security therefor,
any agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Borrower for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and the Borrower.
6.17 Intercreditor Agreement . Notwithstanding anything to the contrary
contained in this Agreement or in any other Loan Document, the priority of the
Agent's Lien in, and the rights and remedies of the Agent with respect to, the
Secured Sale/Leaseback Collateral and the Shared Collateral are limited by and
subject to the terms of the Intercreditor Agreement.
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ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
-------------------------------------------------
7.1 Books and Records . Each of the Borrower and Parent shall maintain
(and shall cause each of their respective Subsidiaries to maintain), at all
times, correct and complete books, records and accounts in which complete (in
all material respects), correct and timely entries are made of its transactions
in conformity with past practices. Each of the Borrower and Parent shall (and
shall cause each of their respective Subsidiaries to), by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. Each of the
Borrower and Parent shall maintain (and shall cause each of their respective
Subsidiaries to maintain) at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts;
(b) the return, rejections, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory; and (c) all other dealings affecting the
Collateral.
7.2 Financial Information . Each of the Borrower and Parent shall promptly
furnish to each Lender, all such financial information as the Agent or any
Lender shall reasonably request, and notify its auditors and accountants that
the Agent, on behalf of the Lenders, is authorized to obtain such information
directly from them. Without limiting the foregoing, each of the Borrower and
Parent will furnish to the Agent, in sufficient copies for distribution by the
Agent to each Lender, in such detail as the Agent or the Lenders shall
reasonably request, the following:
(a) As soon as available, but in any event not later than ninety (90)
days after the close of each Fiscal Year, consolidated audited and consolidating
audited balance sheets, and statements of income and expense, cash flow and of
stockholders' equity for the Borrower and its Subsidiaries for such Fiscal Year,
and the accompanying notes thereto, setting forth in each case in comparative
form figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
operations of the Borrower and its consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such statements prepared on a
consolidated basis, accompanied by a report thereon unqualified as to scope of
independent certified public accountants selected by the Borrower and reasonably
satisfactory to the Agent. The Agent agrees that Deloitte & Touche LLP is
reasonably satisfactory to the Agent. The Borrower, simultaneously with
retaining such independent public accountants to conduct such annual audit,
shall send a letter to such accountants, with a copy to the Agent and the
Lenders, notifying such accountants that one of the primary purposes for
retaining such accountants' services and having audited financial statements
prepared by them is for use by the Agent and the Lenders. The Borrower hereby
authorizes the Agent to communicate directly with its certified public
accountants and, by this provision, authorizes those accountants to disclose to
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the Agent any and all financial statements and other supporting financial
documents and schedules relating to the Borrower and to discuss directly with
the Agent the finances and affairs of the Borrower. The Agent agrees to provide
the Borrower with reasonable prior notice of the Agent's intention to
communicate with the Borrower's certified public accountants and an opportunity
to be present at any such communications.
(b) As soon as available, but in any event not later than thirty (30)
days after the end of each fiscal month, consolidated and consolidating
unaudited balance sheets of the Borrower and its consolidated Subsidiaries as at
the end of such fiscal month, and consolidated and consolidating unaudited
statements of income and expense and cash flow for the Borrower and its
consolidated Subsidiaries for such fiscal month and for the period from the
beginning of the Fiscal Year to the end of such fiscal month, all in reasonable
detail, fairly presenting in all material respects the financial position and
results of operations of the Borrower and its consolidated Subsidiaries as at
the date thereof and for such periods, and prepared in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 7.2(a) (except for the absence of footnotes and
subject to normal year-end adjustments). The Borrower shall certify by a
certificate signed by its chief financial officer or treasurer that all such
statements have been prepared in accordance with GAAP and present fairly in all
material respects (except for the absence of footnotes and subject to normal
year-end adjustments) the Borrower's financial position as at the dates thereof
and its results of operations for the periods then ended.
(c) As soon as available, but in any event not later than forty-five
(45) days after the close of each fiscal quarter other than the fourth quarter
of a Fiscal Year, consolidated and consolidating unaudited balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such quarter, and
consolidated and consolidating unaudited statements of income and expense and
statement of cash flows for the Borrower and its Subsidiaries for such quarter
and for the period from the beginning of the Fiscal Year to the end of such
quarter, all in reasonable detail, fairly presenting in all material respects
the financial position and results of operation of the Borrower and its
Subsidiaries as at the date thereof and for such periods, prepared in accordance
with GAAP consistent with the audited Financial Statements required to be
delivered pursuant to Section 7.2(a) (except for the absence of footnotes and
subject to normal year-end adjustments). The Borrower shall certify by a
certificate signed by its chief financial officer or treasurer that all such
statements have been prepared in accordance with GAAP and present fairly in all
material respects (except for the absence of footnotes and subject to normal
year-end adjustments) the Borrower's financial position as at the dates thereof
and its results of operations for the periods then ended.
(d) With each of the audited Financial Statements delivered pursuant
to Section 7.2(a), a certificate of the independent certified public accountants
that examined such statement to the effect that they have reviewed and are
familiar with this Agreement and that, in the course of its audit of such
Financial Statements, they did not become aware of any fact or
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condition which then constituted a Default or Event of Default, except for
those, if any, described in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements delivered
pursuant to Section 7.2(a), and within forty-five (45) days after the end of
each fiscal quarter, a certificate of the chief financial officer or treasurer
of the Borrower (i) setting forth in reasonable detail the calculations required
to establish that the Borrower was in compliance with the covenants set forth in
Sections 9.23 and 9.26 during the period covered in such Financial Statements
and as at the end thereof, and (ii) stating that, except as explained in
reasonable detail in such certificate, (A) all of the representations and
warranties of the Borrower contained in this Agreement and the other Loan
Documents are correct and complete in all material respects as at the date of
such certificate as if made at such time, (B) the Borrower is, at the date of
such certificate, in compliance in all material respects with all of its
respective covenants and agreements in this Agreement and the other Loan
Documents, (C) no Default or Event of Default then exists or existed during the
period covered by such Financial Statements, (D) describing and analyzing in
reasonable detail all material trends, changes, and developments in each and all
Financial Statements; and (E) explaining the variances of the figures in the
corresponding budgets and prior Fiscal Year financial statements. If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrower has taken or proposes to take with respect thereto.
(f) No later than 60 days after the beginning of each Fiscal Year,
annual forecasts (to include forecasted consolidated and consolidating balance
sheets, statements of income and expenses and statements of cash flow) for the
Borrower and its Subsidiaries as at the end of and for each fiscal month of such
Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of each
annual report or other material filing filed with respect to each Plan of the
Borrower or Parent.
(h) Promptly upon the filing thereof, copies of all reports, if any,
to or other documents filed by the Borrower, Parent or any of its Subsidiaries
with the Securities and Exchange Commission under the Exchange Act, and all
reports, notices, or statements sent or received by the Borrower, Parent or any
of its Subsidiaries to or from the holders of any equity interests of Borrower,
Parent (other than routine non-material correspondence sent by shareholders of
Parent to Parent) or any such Subsidiary or of any Debt of Parent or any of its
Subsidiaries registered under the Securities Act of 1933 or to or from the
trustee under any indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15 days
after the Borrower's or Parent's receipt thereof, a copy of all management
reports and management letters prepared for the Borrower or Parent by Deloitte &
Touche LLP or any other independent certified public accountants of the Borrower
or Parent.
89
(j) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which the Borrower or Parent makes
available to its shareholders.
(k) Upon request of the Agent, a copy of each tax return filed by
Parent or by any of its Subsidiaries.
(l) With the first financial statements delivered pursuant to Section
7.2(b) after the Closing Date, a pro forma balance sheet of the Borrower as at
the first fiscal month end following the Closing Date reflecting the Borrower's
financial condition as at that date after giving effect to the transactions
contemplated herein to occur on the Closing Date (such pro forma balance sheet
to be prepared in accordance with GAAP (subject to the absence of footnotes and
normal year-end adjustments)), together with a reconciliation in reasonable
detail of the changes in the Borrower's financial condition on that date as a
result of the transactions contemplated herein to occur on the Closing Date from
that immediately prior to such transactions.
(m) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of Parent or any Subsidiary.
7.3 Notices to the Lenders . The Borrower or Parent shall notify the
Agent, in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event of
Default or of any Lease Default, Material Default or Lease Event of Default (as
defined in the Secured Sale/Leaseback Documents), by notice or otherwise.
(b) Immediately after becoming aware of the assertion by the holder of
any capital stock of Parent, the Borrower or any Subsidiary thereof or of any
Debt of Parent or any of its Subsidiaries in excess of $2,500,000 that a default
exists with respect thereto or that Parent, the Borrower or any Subsidiary is
not in compliance with the terms thereof, or the actual threat or commencement
by such holder of any enforcement action because of such asserted default or
non-compliance.
(c) Immediately after becoming aware of any event which has resulted
in, or which could reasonably be expected to result in, a Material Adverse
Effect.
(d) Immediately after becoming aware of any pending or actual
threatened action, suit, proceeding, or counterclaim by any Person, or any
pending or actual threatened investigation by a Governmental Authority, which
may reasonably be expected to materially and adversely affect the Collateral,
the repayment of the Obligations, the Agent's or any Lender's
90
rights under the Loan Documents, or the property, business, operations, or
condition (financial or otherwise) of the Borrower and Parent taken as a whole.
(e) Immediately after becoming aware of any pending or actual
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting Parent or any of its Subsidiaries in a manner which could
reasonably be expected to have a Material Adverse Effect.
(f) Immediately after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting Parent
or any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
(g) Immediately after receipt of any notice of any violation by Parent
or any of its Subsidiaries of any Environmental Law where such violation could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted that Parent or any Subsidiary thereof is not
in compliance with any Environmental Law or is investigating Parent's or such
Subsidiary's compliance therewith which, in either case, is reasonably likely to
give rise to liability in excess of $1,000,000.
(h) Immediately after receipt of any written notice that Parent or any
of its Subsidiaries is or may be liable to any Person as a result of the Release
or threatened Release of any Contaminant or that Parent or any Subsidiary is
subject to investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $1,000,000.
(i) Immediately after receipt of any written notice of the imposition
of any Environmental Lien against any property owned by Parent or any of its
Subsidiaries.
(j) Any change in the Borrower's name, state of incorporation, or form
of organization, trade names or styles under which the Borrower will sell
Inventory or create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior thereto.
(k) Within ten (10) Business Days after the Borrower, Parent or any
ERISA Affiliate knows or has reaon to know, that an ERISA Event or a non-exempt
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) has occurred, and, when known, any action taken or threatened by the IRS,
the DOL or the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within ten (10)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC,
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the DOL or the IRS with respect to each Plan, (ii) a copy of each funding waiver
request filed with the PBGC, the DOL or the IRS with respect to any Plan and all
communications received by the Borrower, Parent or any ERISA Affiliate from the
PBGC, the DOL or the IRS with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL or the IRS, with respect to
each Plan of either the Borrower, Parent or any ERISA Affiliate.
(m) Upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan; and within
ten (10) Business Days after receipt thereof by the Borrower, Parent or any
ERISA Affiliate, copies of the following: (i) any notices of the PBGC's
intention to terminate a Plan or to have a trustee appointed to administer such
Plan; (ii) any favorable or unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Code; or (iii)
any notice from a Multi-employer Plan regarding the imposition of withdrawal
liability.
(n) Within ten (10) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plans which increase the Borrower's
or Parent's annual costs with respect thereto by an amount in excess of
$1,000,000 in the aggregate for all such Plans, or the establishment of any new
Plan or the commencement of contributions to any Plan to which the Borrower,
Parent or any ERISA Affiliate was not previously contributing; or (ii) any
failure by the Borrower, Parent or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment.
(o) Within ten (10) Business Days after the Borrower, Parent or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii)
the administrator or plan sponsor of a Multi-employer Plan intends to terminate
a Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that Parent, the Borrower,
its Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
--------------------------------------
Each of the Borrower and Parent, jointly and severally, warrants and
represents to the Agent and the Lenders that except as hereafter disclosed to
and accepted by the Agent and the Majority Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement and the
other Transaction Documents . Each of the Borrower and Parent has the corporate
power and authority
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to execute, deliver and perform this Agreement and the other Transaction
Documents to which it is a party, to incur the Obligations, and to grant to the
Agent Liens upon and security interests in the Collateral. Each of the Borrower
and Parent has taken all necessary corporate action (including without
limitation, obtaining approval of its stockholders if necessary) to authorize
its execution, delivery, and performance of this Agreement and the other
Transaction Documents to which it is a party. No consent, approval, exemption or
authorization or other action of, or notice to, or declaration or filing with,
any Governmental Authority, and no consent of any other Person, is required in
connection with the execution, delivery or performance by, or enforcement
against, the Borrower or Parent of this Agreement and the other Transaction
Documents, except for those already duly obtained or made and except for the
filing of (i) Uniform Commercial Code financing statements, Mortgages and
security documents relating to Proprietary Rights in the appropriate
governmental filing offices in order to perfect the Agent's Liens in certain of
the Collateral, (ii) Uniform Commercial Code financing statements, mortgages and
other security documents in the appropriate governmental filing offices in order
to perfect the Liens granted under the Secured Sale/Leaseback Documents and
(iii) the Sherwood-Related Merger Documents with the Secretaries of State for
the states of Delaware and Connecticut in order to effectuate the
Sherwood-Related Mergers. This Agreement and the other Transaction Documents
have been duly executed and delivered by the Borrower and Parent party thereto,
and constitute the legal, valid and binding obligations of the Borrower and
Parent, enforceable against each of the Borrower and Parent in accordance with
their respective terms without defense, setoff or counterclaim. The Borrower's
and Parent's execution, delivery, and performance of this Agreement and the
other Transaction Documents do not and will not conflict with, or constitute a
violation or breach of, or constitute a default under, or result in the creation
or imposition of any Lien upon the property of Parent or any of its Subsidiaries
by reason of the terms of (a) any contract, mortgage, Lien, lease, agreement,
indenture, or instrument to which Parent or any of its Subsidiaries is a party
or which is binding upon it (except to the extent with respect to the foregoing
such conflicts, violations, breaches or defaults could not individually or in
the aggregate reasonably be expected to have a Material Adverse Effect), (b) any
material Requirement of Law applicable to Parent or any of its Domestic
Subsidiaries, or (c) the certificate or articles of incorporation or bylaws of
Parent or any of its Domestic Subsidiaries. Each borrowing of a Loan and
issuance of a Letter of Credit or Credit Support and each delivery by the
Borrower of a Borrowing Base Certificate constitutes a representation and
warranty by the Borrower and Parent that, as of the date of such borrowing,
issuance or delivery, as the case may be, the financial accommodations provided
to the Borrower under this Agreement do not as of such date violate the
borrowing limits set forth in the Indenture relating to the Senior Subordinated
Notes (which as of the Closing Date is, with respect to the revolving line of
credit portion of the Total Facility, 80% of the Borrower's accounts not more
than 60 days past due plus 50% of the Borrower's inventory, each calculated in
accordance with GAAP, (as provided in clause (a) of the second paragraph of
Section 4.09 of such indenture) and, with respect to the Term Loans, $25,000,000
(as provided in clause (c) of the second paragraph of Section 4.09 of such
indenture)).
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8.2 Validity and Priority of Security Interest . The provisions of this
Agreement, the Mortgage(s) (when executed), and the other Loan Documents create
legal and valid Liens on all the Collateral in favor of the Agent, for the
ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the Collateral, and with respect to Credit
Agreement Collateral, having priority over all other Liens on such Collateral,
securing all the Obligations, and enforceable against the Borrower and all third
parties.
8.3 Organization and Qualification . Each of the Borrower and Parent (a)
is duly incorporated and organized and validly existing in good standing under
the laws of the state of its incorporation, (b) is qualified to do business as a
foreign corporation and is in good standing in the jurisdictions set forth on
Schedule 8.3 as updated from time to time by written notice to the Agent, which
are the only jurisdictions in which qualification is necessary in order for it
to own or lease its property and conduct its business except for those
jurisdictions in which the failure to so qualify or be in good standing could
not reasonably be expected to have a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and to own its property.
8.4 Corporate Name; Prior Transactions . Except as otherwise expressly
permitted hereunder for any of the following occurring after the Original
Closing Date (and for which written notice thereof has been given to the Agent),
neither the Borrower nor Parent has, during the past five (5) years, been known
by or used any other corporate or fictitious name, or been a party to any merger
or consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property outside of the ordinary course of
business.
8.5 Subsidiaries and Affiliates . Schedule 8.5 is a correct and complete
list as of the Closing Date of the name and relationship to Parent of each and
all of Parent's Subsidiaries (other than the Borrower) and other Affiliates.
Each Subsidiary of Parent is (a) duly incorporated and organized and validly
existing in good standing under the laws of its state of incorporation set forth
on Schedule 8.5, and (b) qualified to do business as a foreign corporation and
in good standing in each jurisdiction in which the failure to so qualify or be
in good standing could reasonably be expected to have a Material Adverse Effect
and (c) has all requisite power and authority to conduct its business and own
its property.
8.6 Financial Statements and Projections .
(a) The Borrower has delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained earnings, cash
flows, and changes in stockholders equity for the Borrower and its consolidated
Subsidiaries as of September 26, 1999, and for the Fiscal Year then ended,
accompanied by the report thereon of the Borrower's independent certified public
accountants, Deloitte & Touche LLP. The Borrower has also delivered to the Agent
and the Lenders the unaudited balance sheet and related statements of income and
cash flows for the Borrower and its consolidated Subsidiaries as of March 26,
2000. Such financial statements are attached hereto as Exhibit C. All such
financial statements have
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been prepared in accordance with GAAP (other than, with respect to the interim
financial statements, the absence of footnotes and being subject to normal
year-end adjustments) and present fairly in all material respects the financial
position of the Borrower and its consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required
herein represent the Borrower's reasonable best estimate of the future financial
performance of the Borrower and its consolidated Subsidiaries for the periods
set forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Borrower believes are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lender.
(c) The pro forma balance sheet of the Borrower as at the first fiscal
month end following the Closing Date required to be delivered to the Agent
pursuant to Section 7.2(l) presents fairly and accurately in all material
respects the Borrower's financial condition as at that date after giving effect
to the transactions contemplated herein to occur on the Closing Date, and has
been prepared in accordance with GAAP (subject to the absence of footnotes and
normal year-end adjustments). The foregoing representation and warranty in this
clause (c) shall not be made by the Borrower and Parent until such balance sheet
is delivered to the Agent.
8.7 Capitalization . The Borrower's authorized capital stock consists of
500 shares of common stock, par value $.05 per share, all of which shares are
validly issued and outstanding, fully paid and non-assessable and are owned
beneficially and of record by Parent.
8.8 Solvency . The Borrower is Solvent prior to and after giving effect to
the making of the Term Loans and the Revolving Loans to be made on the Closing
Date, the issuance of the Letters of Credit to be issued on the Closing Date and
the consummation on the Closing Date of the transactions contemplated by the
Transaction Documents, and shall remain Solvent during the term of this
Agreement.
8.9 Debt . After giving effect to the making of the Term Loans and the
Revolving Loans to be made on the Closing Date and the consummation on the
Closing Date of the transactions contemplated by the Transaction Documents, the
Borrower and its Subsidiaries have no Debt, except as permitted by Section 9.13.
8.10 Distributions . Since September 30, 1996, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of the Borrower or any of its Subsidiaries except as otherwise
permitted hereby.
8.11 Title to Property . Each of the Borrower and Parent has good and
marketable title in fee simple to its real property listed in Schedule 8.12
hereto (except for any such real property which has been sold in accordance with
Section 9.9), and each of the Borrower and Parent has good, indefeasible and
valid title to all of its inventory, accounts and other material property
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owned by it (including, without limitation, the assets reflected on the March
26, 2000 Financial Statements of the Borrower and Parent delivered to the Agent
and the Lenders except as disposed of in the ordinary course of business since
the date thereof or pursuant to Section 9.9), free of all Liens except Permitted
Liens.
8.12 Real Estate; Leases . Schedule 8.12 sets forth a correct and complete
list as of the Closing Date of all Real Estate owned by the Borrower, Parent or
any of its other Subsidiaries, all leases and subleases of real or personal
property by the Borrower, Parent or its other Subsidiaries as lessee or
sublessee (other than leases of personal property as to which the Borrower,
Parent or any of its other Subsidiaries is lessee or sublessee for which the
value of such personal property is less than $50,000 individually or $1,000,000
in the aggregate), and all leases and subleases of real or personal property by
the Borrower, Parent or its other Subsidiaries as lessor or sublessor. Each of
such leases and subleases is valid and enforceable in accordance with its terms
and is in full force and effect, and no default by any party to any such lease
or sublease exists (other than such invalidity, unenforceability or defaults
which could not reasonably be expected to have a Material Adverse Effect).
8.13 Proprietary Rights . Schedule 8.13 sets forth a correct and complete
list as of the Closing Date of all of the Borrower's and Parent's patents,
registered trademarks, registered service marks and registered copyrights and
applications for any of the foregoing. None of the Proprietary Rights is subject
to any licensing agreement or similar arrangement except as set forth on
Schedule 8.13. To the best of the Borrower's and Parent's knowledge, none of the
Proprietary Rights infringes on or conflicts with any other Person's property in
any material respect, and no other Person's property infringes on or conflicts
with the Proprietary Rights. To the best of the Borrower's and Parent's
knowledge, the Proprietary Rights described on Schedule 8.13 constitute as of
the Closing Date all of the property of such type necessary to the current and
anticipated future conduct of the Borrower's and Parent's business.
8.14 Trade Names . All trade names or styles under which Parent or any of
its Subsidiaries will sell Inventory or create Accounts, or to which instruments
in payment of Accounts may be made payable, are listed on Schedule 8.14 as
updated in writing from time to time by the Borrower to the Agent.
8.15 Litigation . Except as set forth on Schedule 8.15, there is no pending
or (to the best of the Borrower's and Parent's knowledge) threatened, action,
suit, proceeding, or counterclaim by any Person, or investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to cause a Material Adverse Effect.
8.16 Restrictive Agreements . Neither Parent nor any of its Subsidiaries is
a party to any contract or agreement, or subject to any charter or other
corporate restriction, which affects its ability to execute, deliver, and
perform the Transaction Documents and repay the Obligations or which, insofar as
the Borrower and Parent can reasonably foresee, could reasonably be expected to
have a Material Adverse Effect.
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8.17 Labor Disputes . Except as set forth on Schedule 8.17, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of Parent or any of its Subsidiaries, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) to the best knowledge of the Borrower and
Parent, no union or other labor organization is seeking to organize, or to be
recognized as, a collective bargaining unit of employees of Parent or any of its
Subsidiaries or for any similar purpose, and (d) there is no pending or (to the
best of the Borrower's and Parent's knowledge) threatened, strike, work
stoppage, material unfair labor practice claim, or other material labor dispute
against or affecting Parent or its Subsidiaries or their employees.
8.18 Environmental Laws . Except as otherwise disclosed on Schedule 8.18:
(a) Parent and its Subsidiaries have complied with all Environmental
Laws applicable to its Premises and business except for such non-compliance
which could not reasonably be expected to have a Material Adverse Effect, and
neither Parent nor any Subsidiary nor any of its present Premises or operations,
nor its past property or operations, is subject to any enforcement order from or
liability agreement with any Governmental Authority or private Person respecting
(i) compliance with any Environmental Law or (ii) any potential liabilities and
costs or remedial action arising from the Release or threatened Release of a
Contaminant where such enforcement order or liability agreement could reasonably
be expected to have a Material Adverse Effect.
(b) Parent and its Subsidiaries have obtained all permits necessary
for their current operations under Environmental Laws, and all such permits are
in good standing and Parent and its Subsidiaries are in compliance with all
terms and conditions of such permits, except where the failure to obtain or
comply with such permits could not reasonably be expected to have a Material
Adverse Effect.
(c) Neither Parent nor any of its Subsidiaries, nor, to the best of
the Borrower's and Parent's knowledge, any of its predecessors in interest, has
stored, treated or disposed of any hazardous waste on any Premises, as defined
pursuant to 40 CFR Part 261 or any equivalent Environmental Law in a manner that
could reasonably be expected to have a Material Adverse Effect.
(d) Neither Parent nor any of its Subsidiaries has received any
summons, complaint, order or similar written notice that it is not currently in
compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant
where such non-compliance or liability could reasonably be expected to have a
Material Adverse Effect.
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(e) None of the present or past operations of Parent and its
Subsidiaries is the subject of any investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to a Release or
threatened Release of a Contaminant where such remedial action, if so needed,
could reasonably be expected to have a Material Adverse Effect.
(f) Neither Parent nor any of its Subsidiaries has filed any notice
under any requirement of Environmental Law reporting a spill or accidental and
unpermitted release or discharge of a Contaminant into the environment where
such spill, release or discharge could reasonably be expected to have a Material
Adverse Effect.
(g) Neither Parent nor any of its Subsidiaries has entered into any
negotiations or settlement agreements with any Person (including, without
limitation, the prior owner of its property) imposing obligations or liabilities
on Parent or any of its Subsidiaries with respect to any remedial action in
response to the Release of a Contaminant or environmentally related claim where
such obligations or liabilities could reasonably be expected to have a Material
Adverse Effect.
(h) None of the products manufactured, distributed or sold by Parent
or any of its Subsidiaries contain asbestos.
(i) No Environmental Lien has attached to any Premises of Parent or
any of its Subsidiaries.
8.19 No Violation of Law . Neither Parent nor any of its Subsidiaries is in
violation of any law, statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to have a Material
Adverse Effect.
8.20 No Default . Neither Parent nor any of its Subsidiaries is in default
with respect to any note, indenture, loan agreement, mortgage, lease, deed, or
other agreement to which Parent or such Subsidiary is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.
8.21 ERISA Compliance . Except as specifically disclosed in Schedule 8.21
and subject to the last sentence of this Section 8.21:
(a) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of the Borrower and Parent,
nothing has occurred which would cause the loss of such qualification. The
Borrower, Parent and each ERISA Affiliate has made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.
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(b) There are no pending or, to the best knowledge of Borrower and
Parent, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Events have occurred or are reasonably expected to
occur; (ii) no Pension Plans have any Unfunded Pension Liability; (iii) none of
the Borrower, Parent nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
none of the Borrower, Parent nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and
(v) none of the Borrower, Parent nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
Breaches of one or more of the representations and warranties made under
this Section 8.21 shall not constitute a Default or Event of Default under this
Section 8.21 unless the aggregate liability incurred or reasonably expected to
be incurred by the Borrower, Parent or any ERISA Affiliate under this Section
8.21 for all such breaches shall exceed $5,000,000 in the aggregate for all such
Persons.
8.22 Taxes . Parent and its Subsidiaries have filed all Federal, provincial
and other material tax returns and reports required to be filed, and have paid
all Federal, provincial and other taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable (except for non-payment of any such taxes,
assessments, fees and other governmental charges permitted by Section 9.1).
8.23 Regulated Entities . None of Parent, any Person controlling Parent, or
any Subsidiary, is an "Investment Company" within the meaning of the Investment
Company Act of 1940. Neither the Borrower nor Parent is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur indebtedness.
8.24 Use of Proceeds; Margin Regulations . The proceeds of the Revolving
Loans are to be used solely for working capital purposes and general corporate
purposes of the Borrower not prohibited hereby and, with respect to certain
Revolving Loans made on the Original Closing Date, to purchase from Receivables
Corp. on the Original Closing Date for a purchase price of approximately
$32,727,815 all accounts and other assets (other than immaterial assets) of
Receivables Corp. as contemplated by Section 10.1(f). Immediately after giving
effect to the transactions contemplated by Section 10.1 (f) and at all times
thereafter, Receivables Corp. will
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own assets having an aggregate value not in excess of $75,000. The proceeds of
the Term Loans are to be used, together with certain proceeds from the sale by
the Borrower on the Closing Date of Equipment pursuant to the Secured
Sale/Leaseback Documents, to redeem all of the Senior Secured Notes. Neither
Parent nor any Subsidiary is engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. Each of Parent and
its Subsidiaries owns or is licensed or otherwise has the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of its businesses, without conflict with the rights of any other
Person except such conflicts which could not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Borrower and Parent, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by Parent or
any Subsidiary infringes upon any rights held by any other Person, except such
infringement which could not reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or to
the knowledge of the Borrower and Parent threatened, and no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code is pending or, to the knowledge of the Borrower and Parent, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
8.26 No Material Adverse Change . No Material Adverse Effect has occurred
since the date of the Financial Statements referred to in Section 8.6.
8.27 Full Disclosure . None of the representations or warranties made by
Parent or any Subsidiary in any of the Transaction Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of Parent or any Subsidiary in connection with any of the
Transaction Documents (including the offering and disclosure materials delivered
by or on behalf of the Borrower to the Lenders prior to the Original Closing
Date), contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not misleading
as of the time when made or delivered.
8.28 Material Agreements . Schedule 8.28 sets forth all material agreements
and contracts to which Parent or any of its Subsidiaries is a party or is bound
as of the Closing Date.
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8.29 Bank Accounts . Schedule 8.29 contains a complete and accurate list of
all bank accounts maintained by the Borrower with any bank or other financial
institution; provided that such schedule may by written notice to the Agent be
updated from time to time by the Borrower to add or delete bank accounts so long
as (i) any bank or other financial institution to be added to such schedule and
not theretofore on such schedule shall be reasonably satisfactory to the Agent
and (ii) if any bank account is to be added to such schedule, the Borrower shall
have notified the Agent thereof prior to opening such bank account and shall
have caused the bank or other financial institution at which such bank account
is maintained to execute such agreements, in form and substance reasonably
satisfactory to the Agent, as the Agent may request with respect to such bank
account.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Each of the Borrower and Parent covenants to the Agent and each Lender
that, until the Payment and Termination Date:
9.1 Taxes and Other Obligations . Parent shall, and shall cause each of
its Subsidiaries to, (a) file when due all federal, provincial and other
material tax returns and other reports which it is required to file; (b) pay, or
provide for the payment, when due, of all taxes, fees, assessments and other
governmental charges against it or upon its property, income and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Agent and the
Lenders, upon request, reasonably satisfactory evidence of its timely compliance
with the foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords and other like Persons
(except, with respect to such claims, to the extent the aggregate amount of all
such claims not paid when due does not exceed $1,000,000) and all other
indebtedness owed by it (except, with respect to such Debt, claims and other
indebtedness and subject to the immediately preceding parenthetical with respect
to claims, to the extent the aggregate amount of all such Debt, claims and other
indebtedness not paid when due does not exceed $5,000,000 (with the Agent having
the right in its reasonable commercial discretion to establish reserves against
Availability for any amount of such Debt, claims and other indebtedness not paid
when due in excess of $100,000 in the aggregate)) and perform and discharge in a
timely manner all other obligations undertaken by it; provided, however, so long
as Borrower or Parent has notified the Agent in writing, neither Parent nor any
of its Subsidiaries need pay any tax, fee, assessment, or governmental charge,
that (i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) Parent or its Subsidiary, as the case may be, has established
proper reserves for as provided in GAAP, and (iii) no Lien (other than a
Permitted Lien) results from such non-payment.
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9.2 Corporate Existence and Good Standing . Parent shall, and shall cause
each of its Subsidiaries to, maintain its corporate existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements; Maintenance of Licenses . Parent
shall comply, and shall cause each Subsidiary to comply, with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act) except where the liability for
non-compliance could not reasonably be expected to exceed $2,000,000 in the
aggregate for all such non-compliances (except that where another provision in
Article 6 or this Article 9 contains a different level of materiality or
liability with respect to non-compliance with a specific type of laws
(including, without limitation, Sections 9.7(a) and 9.8), the level of
materiality or liability under the other provision shall control with respect to
the type of laws within the scope of such provision). Parent shall, and shall
cause each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date, except for such licenses,
permits, franchises and governmental authorizations the failure to obtain and
maintain which could not reasonably be expected to have a Material Adverse
Effect. The Borrower shall not modify, amend or alter its certificate or article
of incorporation other than in a manner which does not adversely affect the
rights of the Lenders or the Agent.
9.4 Maintenance of Property . Parent shall, and shall cause each of its
Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
9.5 Insurance
(a) Parent shall maintain, and shall cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers having a rating of at
least A-VII or better by Best Rating Guide, insurance against loss or damage by
fire with extended coverage; theft, burglary, pilferage and loss in transit;
public liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business, as the Agent, in its
discretion, or acting at the direction of the Majority Lenders, shall specify,
in amounts, and under policies reasonably acceptable to the Agent and the
Majority Lenders. Without limiting the foregoing, Parent shall also maintain,
and shall cause each of its Subsidiaries to maintain, flood insurance, in the
event of a designation of the area in which any real property covered by the
Mortgages and any of the Equipment and Inventory located on such real property
is located as "flood prone" or a "flood risk area," (hereinafter "SFHA") as
defined by the Flood Disaster Protection Act of 1973, in an amount to be
reasonably determined by the Agent, and shall comply with the additional
requirements of the National Flood Insurance Program as set forth in said Act.
Upon the Majority Lenders' request,
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the Borrower shall maintain flood insurance for its Inventory and Equipment
which is, at any time, located in a SFHA. The Agent acknowledges that the
insurance coverage of Parent and its Subsidiaries as in effect on the Original
Closing Date is acceptable to the Agent; provided, however that if the rating of
any insurer worsens or circumstances with respect to Parent or any of its
Subsidiaries or any of their respective properties, operations, business,
liabilities or financial condition shall change in any material respect, such
insurance may no longer be acceptable to the Agent.
(b) The Borrower and Parent shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named in each such policy as secured
party or mortgagee and loss payee or additional insured, in a manner reasonably
acceptable to the Agent. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty (30) days' prior
written notice to the Agent in the event of cancellation of the policy for any
reason whatsoever and a clause or endorsement stating that the interest of the
Agent shall not be impaired or invalidated by any act or neglect of Parent or
any of its Subsidiaries or the use of any premises for purposes more hazardous
than are permitted by such policy. All premiums for such insurance shall be paid
by the Borrower or Parent when due, and certificates of insurance and, if
requested by the Agent or any Lender, photocopies of the policies, shall be
delivered to the Agent, in each case in sufficient quantity for distribution by
the Agent to each of the Lenders. If the Borrower or Parent fails to procure
such insurance or to pay the premiums therefor when due, the Agent may, and at
the direction of the Majority Lenders shall, do so from the proceeds of
Revolving Loans.
(c) The Borrower or Parent shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to Collateral in excess of $500,000
arising from its or any other Person's use, whether or not covered by insurance.
The Agent is hereby authorized to collect all insurance proceeds directly, and
to apply or remit them as follows:
(i) With respect to insurance proceeds relating to Credit
Agreement Collateral, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8; provided that, with
respect to insurance proceeds relating to Credit Agreement Collateral that
constitutes Equipment or other fixed assets, the Agent shall apply such
proceeds, ratably, first to the payment in full of principal on the Term Loans
(to be applied to installments thereof in the inverse order of maturity) and
then to the reduction of the other Obligations in the order provided for in
Section 4.8.
(ii) With respect to insurance proceeds relating to Collateral
other than Credit Agreement Collateral, except as provided in the Intercreditor
Agreement, after deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent shall
apply such proceeds, ratably, first to the payment in full of principal on the
Term Loans (to be applied to installments thereof in the inverse order of
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maturity) and then to the reduction of the other Obligations in the order
provided for in Section 4.8.
9.6 Condemnation .
(a) The Borrower or Parent shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of its
or any of its Subsidiaries' property having a value in excess of $500,000,
notify the Agent of the pendency of such proceeding, and agrees that the Agent
may participate in any such proceeding, and the Borrower and Parent will deliver
to the Agent all instruments reasonably requested by the Agent to permit such
participation.
(b) Except as provided in the Intercreditor Agreement, the Agent is
hereby authorized to collect the proceeds of any condemnation claim or award
directly, and to apply or remit them as follows:
(i) With respect to condemnation proceeds relating to property
other than Credit Agreement Collateral, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, first to the payment in
full of principal on the Term Loans (to be applied to installments thereof in
the inverse order of maturity) and then to the reduction of the other
Obligations in the order provided for in Section 4.8.
(ii) With respect to condemnation proceeds relating to Credit
Agreement Collateral, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8; provided that, with
respect to condemnation proceeds relating to Credit Agreement Collateral that
constitutes Equipment or other fixed assets, the Agent shall apply such
proceeds, ratably, first to the payment in full of principal on the Term Loans
(to be applied to installments thereof in the inverse order of maturity) and
then to the reduction of the other Obligations in the order provided for in
Section 4.8.
9.7 Environmental Laws .
(a) Parent shall, and shall cause each of its Subsidiaries to, conduct
its business in compliance with all Environmental Laws applicable to it,
including, without limitation, those relating to the generation, handling, use,
storage, and disposal of any Contaminant, except for such non-compliance that
could not reasonably be expected to have or result in a Material Adverse Effect.
Parent shall, and shall cause each of its Subsidiaries to, take prompt and
appropriate action to respond to any non-compliance with Environmental Laws.
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(b) Without limiting the generality of the foregoing, the Borrower or
Parent shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, an update of
the status of each material environmental compliance or liability issue. The
Agent or any Lender may request copies of technical reports prepared by Parent
or any of its Subsidiaries and its communications with any Governmental
Authority to determine whether Parent or any of its Subsidiaries is proceeding
reasonably to correct, cure or contest in good faith any alleged non-compliance
or environmental liability. The Borrower shall, at the Agent's or the Majority
Lenders' reasonable request and at the Borrower's expense, (a) retain an
independent environmental consultant reasonably acceptable to the Agent to
evaluate the environmental non-compliance or liability issue, including tests if
appropriate, and prepare and deliver to the Agent, in sufficient quantity for
distribution by the Agent to the Lenders, a report setting forth the results of
such evaluation, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof, and (b) provide to the
Agent and the Lenders a supplemental report of such consultant whenever the
scope of the environmental problems, or the response thereto or the estimated
costs thereof, shall change in any material respect.
9.8 Compliance with ERISA . Except as specifically disclosed in
Section 8.21 with respect to the litigation therein described and subject to the
last sentence of this Section 9.8, Parent shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) make all required contributions to any Plan subject to
Section 412 of the Code; (d) not engage in a non-exempt prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan; and
(e) not engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA. Breaches of one or more of the covenants contained in this Section 9.8
shall not constitute a Default or Event of Default under this Section 9.8 unless
the aggregate liability incurred or reasonably expected to be incurred by Parent
and its ERISA Affiliates for all such breaches shall exceed $5,000,000 in the
aggregate for all such Persons.
9.9 Mergers, Consolidations or Sales . Neither Parent nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except:
(i) for sales of Inventory in the ordinary course of its
business;
(ii) for sales or other dispositions of Equipment and
Proprietary Rights in the ordinary course of business that are
obsolete or no longer usable by the Borrower or Parent in its business
as permitted by Section 6.11;
(iii) for transactions which are part or all of the Divestiture;
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(iv) [Intentionally Omitted];
(v) that, in additio to any of the other clauses of this
Section 9.9, so long as no Default or Event of Default exists, the
Borrower and its Subsidiaries may (A) sell other assets which do not
constitute Secured Sale/Leaseback Collateral at fair market value
(determined in good faith by the Board of Directors of the Borrower)
in the ordinary course of business, provided that (1) the gross
proceeds thereof shall consist of at least 75% in cash or Cash
Equivalents, (2) the aggregate net cash proceeds from which shall not
exceed $200,000 per sale so long as all such net cash proceeds do not
exceed $1,000,000 in any Fiscal Year and (3) the aggregate gross cash
proceeds received by the Borrower with respect to Accounts and
Inventory, if any, included as part of such sale shall be in an amount
not less than the then book value of all such Accounts and Inventory
as shown on a balance sheet of the Borrower prepared in accordance
with GAAP or (B) sell assets which constitute Secured Sale/Leaseback
Collateral at fair market value (determined in good faith by the Board
of Directors of the Borrower), provided that (1) the gross proceeds
thereof shall consist of at least 75% in cash or Cash Equivalents and
(2) the aggregate net cash proceeds from which shall not exceed
$3,000,000 in any Fiscal Year and shall not exceed $15,000,000 in the
aggregate during the term of this Agreement (from the Original Closing
Date);
(vi) that investments or other transfers or sales may be made
to the extent expressly permitted by Section 9.10;
(vii) the Borrower and its Subsidiaries may sell or discount, in
each case without recourse and only to non-Affiliated Persons, in the
ordinary course of business ineligible accounts receivable arising in
the ordinary course of business, but only in connection with the
compromise or collection thereof consistent with customary industry
practice (and not as part of any bulk sale or financing receivables);
provided, that (A) the account debtor thereon is no longer a customer
of the Borrower or any of its Subsidiaries and no other accounts
receivable which are Eligible Accounts are owing by such account
debtor to the Borrower or any of its Subsidiaries and (B) the gross
proceeds from any sale shall be immediately deposited in a lockbox
account pursuant to Section 6.9;
(viii) for licenses of Proprietary Rights (x) in the ordinary
course of business or (y) to Lily Cup consistent with past practices;
(ix) for the Sherwood-Related Mergers pursuant to the
Sherwood-Related Merger Documents; provided that (a) the Agent shall
have received such UCC financing statements, intellectual property
assignments and other collateral documentation duly executed by the
Borrower as the Agent shall have requested with respect to the
perfection of Liens in certain assets of Sherwood and its
Subsidiaries; (b) the Agent shall have received such UCC and other
collateral releases in form and substance satisfactory to the Agent
with respect to all Liens on the assets of Sherwood and its
Subsidiaries (other than
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Permitted Liens); (c) the Agent shall have received evidence in form
and substance satisfactory to the Agent of all necessary corporate
proceedings of the Borrower, Sherwood and its Subsidiaries to duly
authorize the execution, delivery and performance of the
Sherwood-Related Merger Documents and of all necessary consents to
permit the execution, delivery and performance thereof; (d) the Agent
shall have received landlord waivers in form and substance
satisfactory to the Agent with respect to the premises leased by
Sherwood or any of its Subsidiaries; (e) the Agent shall have received
a blocked account agreement, in form and substance satisfactory to the
Agent, duly executed by PNC; (f) the Agent shall have received a
Borrowing Base Certificate duly executed by the Borrower after giving
effect to the Sherwood-Related Mergers; and (g) the Agent shall have
received such other documents as the Agent or any Lender may
reasonably request in connection with the Sherwood-Related Mergers or
the transactions related thereto;
(x) for the sale by the Borrower on the Closing Date of
Equipment (other than Credit Agreement Term Loan Equipment Collateral)
pursuant to the Secured Sale/Leaseback Documents, which documents
shall be in form and substance reasonably satisfactory to the Agent
and the Majority Lenders; provided that (A) the Agent shall have
received the Intercreditor Agreement duly executed by State Street
Bank and Trust Company of Connecticut, National Association, as owner
trustee/lessor, the Borrower and Parent, and (B) the Borrower shall
have received on the date of such sale net cash proceeds from such
sale of no less than $212,300,000 and such net cash proceeds shall
have been applied by the Borrower (w) together with the proceeds of
the Term Loans, to the redemption of all Senior Secured Notes (other
than accrued interest thereon, which interest shall be paid with the
proceeds of Revolving Loans), (x) to the payment in full of all loans
and other monetary obligations of Sherwood and/or any of its
affiliates under the financing arrangements between one or more of
such entities, certain lenders and PNC, as agent for such lenders, (y)
to the payment in full of the Demand Loans, and (z) to the payment of
the Revolving Loans (in an amount not less than $25,000,000); and
(xi) that, with the prior written consent of the Majority
Lenders, any other assets may be sold or transferred.
Except in the case of the transfer of assets between or among Parent
and any of its Subsidiaries (the foregoing not constituting a consent to any
such transfer except as expressly permitted hereunder and in which case if so
permitted there shall be no release of Collateral, and all steps deemed
necessary or, in the reasonable opinion of the Agent or the Majority Lenders,
desirable to maintain the priority and perfection of the security interests of
the Agent in the Collateral shall be taken in connection therewith), to the
extent any Collateral is sold as expressly permitted by this Section 9.9, such
Collateral shall be sold free and clear of the Liens created by any of the Loan
Documents (so long as such Collateral is also sold free and clear of the Liens
created by the documents granting collateral security for the payment of the
obligations of the Borrower or Parent under the Secured Sale/Leaseback
Documents, and, subject to the terms of
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the Intercreditor Agreement, the net cash proceeds from such sale are deposited
in the lock-box accounts referred to in Section 6.9(a) or in a Payment Account
or, if applicable, applied to the Obligations in accordance with Section 4.5(b);
nothing contained in this paragraph constituting a release of any of the Liens
created by any of the Loan Documents in the proceeds of such sale), and in such
event all Exhibits and Schedules hereto or to any of the other Loan Documents
evidencing a present or prospective interest of Parent or its Subsidiaries in
such Collateral shall be deemed amended automatically (without any consent or
notice) to reflect such sale. In case of any release as described in the
immediately preceding sentence (including any release with respect to the sale
of Equipment permitted by clause (x) above), the Agent is hereby authorized and
directed to take such action as may be deemed necessary or desirable by it to
effect the release.
9.10 Distributions; Capital Change; Restricted Investments . Neither Parent
nor any of its Subsidiaries shall (i) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions to the
Borrower by its Subsidiaries, (ii) make any change in its capital structure
which could have a Material Adverse Effect or (iii) make any Restricted
Investment; provided, however that notwithstanding clauses (i) and (iii) above:
(A) the Borrower may (a) pay cash dividends and make loans and
advances to Parent, in each instance, for the purpose of paying, and
so long as all proceeds thereof are promptly used by Parent to pay,
its operating expenses incurred in the ordinary course of business and
other corporate overhead costs and expenses of Parent (including,
without limitation, any payments, fees and expenses owing by Parent
pursuant to this Agreement or the transactions contemplated by this
Agreement and which are paid by Parent to the Agent or a Lender, as
appropriate), (b) pay cash dividends and make loans and advances to
Parent, in each instance, for the purpose of paying, and so long as
all proceeds thereof are promptly used by Parent to pay, franchise
taxes and federal, state and local income taxes, in each instance,
with respect to the operations of the Borrower and interest and
penalties with respect thereto, if any, payable by Parent (provided
that any refund shall be promptly returned by Parent to the Borrower
and provided that dividends may be made pursuant to this clause (b) if
all proceeds thereof are immediately used to repay loans made by the
Borrower to Parent pursuant to this clause (b)), (c) so long as no
Default or Event of Default then exists or would exist after giving
effect thereto, upon the death, disability or termination of
employment of any officer or employee of Parent or any of its
Subsidiaries, and pursuant to the terms and conditions set forth in
any subscription agreements with respect thereto, pay cash dividends
and make loans and advances to Parent, in each instance, for the
purpose of purchasing or making payments in respect of, and so long as
all proceeds thereof are promptly used by Parent to purchase or make
payments in respect of, common stock of Parent held by such Persons,
their estates or certain other related Persons, provided that (x) the
total cash consideration paid after the Original Closing Date in
respect of all such purchases shall not exceed $3,000,000 (with cash
permitted to be paid pursuant to this clause (x) only to the extent
such cash payment would be permitted pursuant to the terms of the
indentures relating to each of the Senior
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Secured Notes (with respect to payments made while such notes were
outstanding) and the Senior Subordinated Notes) and (y) all other
consideration paid to such Persons or their estates for such purchases
shall be subordinated to the payment of all Obligations (including,
without limitation, the obligations of Parent under the Parent
Guaranty) and be evidenced by a subordinated promissory note in the
form of Exhibit H (each, a "Stockholder Subordinated Note") and (d) so
long as no Default or Event of Default then exists or would exist
after giving effect thereto, pay cash dividends and make loans and
advances to Parent, in each instance, for the purpose of Parent
reimbursing Buyer, and so long as all proceeds thereof are promptly
used by Parent to reimburse Buyer, for out-of-pocket costs and
expenses incurred by Buyer with respect to the stock option program
provided by Buyer to employees of Parent and its Subsidiaries with
respect to capital stock of Buyer (including, without limitation, any
out-of-pocket costs and expenses with respect to the repurchase by
Buyer from any of such employees or its estate of any capital stock of
Buyer issued to such employee pursuant to such stock option program),
provided that the aggregate amount of such dividends, loans and
advances by the Borrower to Parent in any Fiscal Year shall not exceed
$1,000,000;
(B) Parent and its Subsidiaries may make loans, advances and
other payments to officers, employees and agents of Parent and its
Subsidiaries in the ordinary course of business, including with
respect to travel and relocation expenses, so long as the aggregate
principal amount thereof at any time outstanding (determined without
regard to any write-downs or write-offs of such loans and advances)
shall not exceed $4,500,000;
(C) the Borrower may make intercompany loans to Lilly Cup,
provided that (i) all such intercompany loans are evidenced by an
intercompany promissory note in the form of Exhibit I payable by Lily
Cup to the Borrower, which is pledged by the Borrower as Shared
Collateral pursuant to the Pledge Agreement (or if constituting
Excluded Sale/Leaseback Assets, pledged by the Borrower to the Agent
to secure the payment of the Obligations pursuant to a pledge
agreement having terms substantially similar to those in the Pledge
Agreement), (ii) the aggregate principal amount of all loans
outstanding pursuant to this clause (C) shall at no time exceed
$5,000,000, and (iii) prior to making any such loan, the Borrower
shall provide the Agent with evidence reasonably acceptable to the
Agent that, after giving effect to such loan, Availability shall be no
less than $10,000,000, with Availability being determined after giving
effect to all of the Borrower's obligations being current;
(D) the Borrower may hold non-cash proceeds from assets sales
permitted pursuant to Section 9.9, such proceeds to be held subject to
the Agent's Lien therein;
(E) Parent may own the stock of the Borrower, and the Borrower
may own the stock of its Subsidiaries in existence on the Closing Date
as set forth on Schedule 8.5; provided that no additional investments
shall be permitted in Subsidiaries of the Borrower except as provided
in clause (C) above;
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(F) the Borrower and its Subsidiaries may establish
Wholly-Owned Subsidiaries with the prior written consent of the Agent
and the Majority Lenders;
(G) to the extent otherwise prohibited by this Section 9.10,
the Borrower and its Subsidiaries may make investments which
constitute Debt permitted pursuant to Section 9.13;
(H) any Subsidiary of the Borrower may make intercompany loans
to the Borrower, provided that the aggregate principal amount of all
loans outstanding pursuant to this clause shall at no time exceed
$5,000,000;
(I) Parent may make loans to certain of its employees in
aggregate principal amount not to exceed $5,000,000 so long as (a)
such loans are used by such employees solely to purchase common stock
of Parent, (b) such loans are evidenced by full recourse promissory
notes executed by such employees and pledged to the Collateral Agent
pursuant to the Parent Pledge Agreement (or if constituting Excluded
Sale/Leaseback Assets, pledged by Parent to the Agent to secure the
payment of the Obligations pursuant to a pledge agreement having terms
substantially similar to those in the Parent Pledge Agreement); and
(c) no cash is actually remitted to any such employee as proceeds of
any such loan;
(J) the Borrower and Parent may effect transactions related to
assets other than Credit Agreement Collateral in accordance with the
terms of the Asset Transfer Documents as in effect on the Original
Closing Date; and
(K) the Borrowe may acquire all of the capital stock of
Sherwood pursuant to the Sherwood Stock Purchase Agreement; provided
that (a) the stock acquisition contemplated thereby shall have been
duly consummated in accordance with the Sherwood Stock Purchase
Documents without waiver and in accordance with applicable law; and
(b) after such acquisition (but in any event no later than the Closing
Date), the Sherwood-Related Mergers shall have been duly consummated
in accordance with the Sherwood-Related Merger Documents (which
documents shall be satisfactory to the Agent) and applicable law and
the requirements with respect to such mergers set forth in the proviso
to Section 9.9(ix) shall have been satisfied.
All loans and advances made by the Borrower to Parent (pursuant to this
Section 9.10 or otherwise) shall be evidenced by an intercompany note payable
from Parent to the Borrower and pledged as Shared Collateral pursuant to the
Pledge Agreement (or if constituting Excluded Sale/Leaseback Assets, pledged by
the Borrower to the Agent to secure the payment of the Obligations pursuant to a
pledge agreement having terms substantially similar to those in the Pledge
Agreement).
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9.11 Transactions Affecting Collateral or Obligations . Neither Parent nor
any of its Subsidiaries shall enter into any transaction which would be
reasonably expected to have a Material Adverse Effect.
9.12 Guaranties . Neither Parent nor any of its Subsidiaries shall make,
issue, or become liable on any Guaranty, except Guaranties of the Obligations in
favor of the Agent and guaranties of the obligations of the Borrower under the
Secured Sale/Leaseback Documents.
9.13 Debt . Neither Parent nor any of its Subsidiaries shall incur or
maintain any Debt, other than:
(a) the Obligations;
(b) Purchase Money Obligations, Capital Leases and any other Debt, in
an aggregate outstanding principal amount not to exceed $25,000,000 at any time;
provided that such other Debt may not be secured by Liens in Credit Agreement
Collateral and any Lien in any assets of Parent or any of its Subsidiaries
securing such other Debt shall be junior and subordinate to the Lien of the
Agent therein;
(c) other Debt existing on the Closing Date and set forth on Schedule
9.13 and any and all interest and other amounts owing in respect thereof
("Existing Debt"), but no increases in the principal amount thereof and no
refinancings or renewals thereof except to the extent that such refinancing or
renewal does not increase the principal amount of such Debt outstanding
immediately prior to such refinancing or renewal, or add guarantors, obligors or
security from that which applied to such Debt being refinanced or renewed, and
all other terms of such refinancing or renewal are no more restrictive or less
favorable to the Borrower or its Subsidiary, as applicable, than previously
existing with respect to such Debt;
(d) Lily Cup may (x) incur Debt as described in Section 9.10 (C) and
(y) incur or suffer to exist Debt not in excess of Cd. $30,000,000 in an
aggregate principal amount at any time outstanding under the Lily Credit
Facility and any refinancing or renewal thereof on terms and conditions which
are no more restrictive or less favorable to Lily Cup than previously existing
with respect to such Debt; provided, however, that the Debt permitted pursuant
to clause (y) shall not be secured by any assets of Parent, the Borrower or any
Subsidiary of Parent other than Lily Cup but may be guaranteed (on an unsecured
basis) by Parent and/or the Borrower;
(e) unsecured Debt under any Interest Rate Protection or Other Hedging
Agreement or under any similar type of agreement entered into with a Person not
a Lender, in each case to the extent the respective agreement relates to Debt
outstanding as otherwise permitted under this Section 9.13;
(f) unsecured Debt under any Permitted Commodities Agreements;
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(g) unsecured Debt owing to non-Affiliated Persons in an aggregate
principal amount not to exceed $5,000,000 at any time outstanding;
(h) Debt subject to Liens permitted under clauses (c) and (d) of the
definition of Permitted Liens (such Debt to be subject to any limitations
(including, without limitation, as to amount) set forth in such clauses);
(i) upon the purchase by Parent of common stock of Parent as permitted
by Section 9.10(A)(c), Debt of Parent represented by the Stockholder
Subordinated Note issued as the consideration therefor; and
(j) unsecured Debt under the Senior Subordinated Notes and the
Sherwood-Related Subordinated Notes, but no increases in the principal amount
thereof and no refinancings or renewals thereof.
9.14 Prepayment . Neither Parent nor any of its Subsidiaries shall
voluntarily prepay, redeem or repurchase prior to its final stated maturity any
Debt (not including refinancings, refundings or replacements thereof expressly
permitted hereunder) (including, without limitation, the Senior Subordinated
Notes), except the Obligations in accordance with the terms of this Agreement
and except for other Debt (other than the Senior Subordinated Notes) so long as
the aggregate principal amount of such prepayments, redemptions and repurchases
of such other Debt shall not exceed $2,500,000 during the term of this Agreement
(from the Original Closing Date). Neither Parent, the Borrower nor any of its
Subsidiaries shall incur any liability to make any payment or prepayment of the
Senior Subordinated Notes prior to their final stated maturity date. Neither
Parent, the Borrower nor any of its Subsidiaries shall voluntarily prepay any
rental payments owing by the Borrower under the Secured Sale/Leaseback
Documents. The Borrower shall not make any payment or prepayment (whether of
principal, interest or otherwise) under or with respect to any of the
Sherwood-Related Subordinated Notes, except upon the scheduled maturity thereof
and only then if there is not continuing a Default or Event of Default.
9.15 Transactions with Affiliates . Except as set forth below or as
otherwise permitted by Section 9.10, neither Parent nor any of its Subsidiaries
shall sell, transfer, distribute, or pay any money or property, including, but
not limited to, any fees or expenses of any nature (including, but not limited
to, any fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, Parent and its Subsidiaries may engage in transactions with
Affiliates in the ordinary course of business, in amounts and upon terms fully
disclosed to the Agent and the Lenders, and no less favorable to Parent and its
Subsidiaries than would be obtained in a comparable arm's-length transaction
with a third party who is not an Affiliate. Further, notwithstanding the
foregoing, (a) so long as no Event of Default exists at the time of
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payment or would exist immediately after giving effect thereto, Parent or the
Borrower may pay the fees as required pursuant to the Management Services
Agreement as in effect on the Closing Date in an aggregate amount not to exceed
$2,000,000 in any Fiscal Year (payable semi-annually 45 days after each interest
payment date with respect to, and as defined in, the Senior Subordinated Notes;
it being understood and agreed that in the event the Senior Subordinated Notes
shall be redeemed in full, such fees shall continue to be payable at such times
as if the Senior Subordinated Notes were not redeemed) and reimbursement for
reasonable out-of-pocket expenses, provided, however, that all obligations of
Parent or the Borrower to pay fees pursuant to said Management Services
Agreement shall also be subordinated to the payment of all Obligations in
respect of this Agreement and the other Loan Documents (including, without
limitation, pursuant to the Parent Guaranty) to at least the same extent as the
obligations of the Borrower in respect of the Senior Subordinated Notes are
subordinated to the prior payment of "Senior Indebtedness" (as defined in the
Indenture for the Senior Subordinated Notes) (it being understood and agreed
that in the event the Senior Subordinated Notes shall be redeemed in full, such
subordination of such fees shall continue as if the Senior Subordinated Notes
were not redeemed); (b) Parent and its Subsidiaries may enter into transactions
with employees and/or officers of Parent and its Subsidiaries in the ordinary
course of business so long as any such material transactions have been approved
by the Board of Directors of Parent or such Subsidiaries; (c) Parent and its
Subsidiaries may engage in immaterial transactions with each other; and (d)
Parent and its Subsidiaries may, subject to Section 9.10(A)(b), make payments
under tax sharing, disaffiliation, tax allocation and other similar agreements
entered into by Parent or any Subsidiary of Parent after the Original Closing
Date with the prior written approval of the Agent and the Majority Lenders (and
in the form as originally executed) so long as, in each instance, the Borrower
shall not, and shall not be liable or required to, make any payments thereunder
in excess of any tax payments of the type covered by such agreement that the
Borrower would have to make had such agreement not been in effect.
Notwithstanding anything herein to the contrary, neither Parent nor any of its
Subsidiaries may make any payment, sale, transfer or other disposition of cash
or any other property to Receivables Corp. except for the payment by the
Borrower to Receivables Corp. on the Original Closing Date in the amount of
approximately $32,727,815 to purchase all accounts and other assets (other than
immaterial assets) owned by Receivables Corp. on such date as contemplated by
Section 10.1(f).
9.16 Investment Banking and Finder's Fees . Neither Parent nor any of its
Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Borrower shall defend and indemnify the Agent and the Lenders against and
hold them harmless from all claims of any Person that Parent, the Borrower or
any of its Subsidiaries is obligated to pay for any such fees, and all costs and
expenses (including without limitation, attorneys' fees) incurred by the Agent
and/or any Lender in connection therewith.
9.17 Amendments of Senior Subordinated Notes and Other Documents . Neither
Parent nor any of its Subsidiaries shall, directly or indirectly, amend or
modify, or permit the
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amendment or modification of, the Senior Subordinated Notes or any indenture or
other agreement or document related thereto, except for Permitted Amendments and
Consents (as defined in the Intercreditor Agreement (as defined in the Existing
Loan and Security Agreement) as in effect on the Original Closing Date) with
respect thereto (assuming for this purpose that Permitted Amendments and
Consents applied to the Senior Subordinated Notes and related agreements and
documents). Neither Parent nor any of its Subsidiaries shall, directly or
indirectly, amend or modify, or permit the amendment or modification of, the
Secured Sale/Leaseback Documents, except for amendments and modifications which
do not result in the violation of, and which are not otherwise contrary to, any
provisions of the Intercreditor Agreement. Neither Parent nor any of its
Subsidiaries shall, directly or indirectly, amend or modify, or permit the
amendment or modification of, any Sherwood Stock Purchase Documents or any
Sherwood-Related Merger Documents.
9.18 Business Conducted . Neither Parent nor the Borrower shall, and
neither Parent nor the Borrower shall permit any of its Subsidiaries to, engage
directly or indirectly, in any line of business other than the businesses in
which the Borrower is engaged on the Original Closing Date and reasonable
extensions thereof. Receivables Corp. shall not engage in any line of business
or activities or incur any Debt.
9.19 Liens . Neither Parent nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
9.20 Sale and Leaseback Transactions . Neither Parent nor any of its
Subsidiaries shall, directly or indirectly, enter into any arrangement with any
Person providing for Parent or such Subsidiary to lease or rent property that
Parent or such Subsidiary has sold or will sell or otherwise transfer to such
Person, except for such arrangements under the Secured Sale/Leaseback Documents
and for any such other transactions with non-Affiliates relating to Fixed Assets
(other than Credit Agreement Term Loan Equipment Collateral) for an aggregate
sales price for all such transactions not to exceed $10,000,000 in any Fiscal
Year and $30,000,000 during the term of this Agreement (from the Original
Closing Date).
9.21 New Subsidiaries . Parent shall not, directly or indirectly, organize,
create, acquire or permit to exist any Subsidiary other than those listed on
Schedule 8.5 and the acquisition by the Borrower of Sherwood and its
Subsidiaries pursuant to the Sherwood Stock Purchase Agreement.
9.22 Fiscal Year . Neither the Borrower nor Parent shall change its Fiscal
Year without the prior written consent of the Agent (such consent not to be
unreasonably withheld) and the receipt by the Agent of a duly executed amendment
to the financial covenants herein contained, in form and substance reasonably
satisfactory to the Agent and the Majority Lenders, to equitably reflect the
effect of such change in Fiscal Year.
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9.23 Capital Expenditures . Neither Parent nor any of its Subsidiaries
shall make or incur any Capital Expenditures in any Fiscal Year set forth below
if, after giving effect thereto, the aggregate amount of all Capital
Expenditures by Parent and its Subsidiaries on a consolidated basis during such
Fiscal Year shall exceed the amount set forth below opposite such Fiscal Year:
Fiscal Year Amount
------------- -------------
2000 $47,000,000
2001 $30,000,000
2002 $30,000,000
2003 $30,000,000
2004 $30,000,000
2005 $30,000,000
2006 $30,000,000
The Borrower will use its commercially reasonable best efforts to use the net
proceeds (but in any event shall use not less than 75% of the net proceeds) of
each sale of Secured Sale/Leaseback Collateral permitted pursuant to Sections
9.9(ii), (iii) and (iv) to incur Capital Expenditures, to the extent otherwise
permitted under this Section. The Borrower agrees to promptly notify the Agent
of any such sale and the amount of net proceeds to be derived from each such
sale.
9.24 [Reserved.]
9.25 Minimum Availability . The Borrower will maintain at all times
Availability of not less than $5,000,000, except as permitted by Section 2.2(h).
9.26 Fixed Charge Coverage Ratio . The Borrower will maintain a Fixed
Charge Coverage Ratio for each Test Period ended at the end of the fiscal
quarter of the Borrower set forth below of not less than the ratio set forth
below opposite such fiscal quarter:
Fiscal Quarter Year Ratio
-------------- ---- -----
Each of First, Second, Third and Fourth 2000 .90/1
Each of First, Second, Third and Fourth 2001 .90/1
Each of First, Second, Third and Fourth 2002 1.00/1
Each of First, Second, Third and Fourth 2003 1.10/1
Each of First, Second, Third and Fourth 2004 1.20/1
Each of First, Second, Third and Fourth 2005 1.20/1
9.27 Use of Proceeds . The Borrower shall not, and shall not suffer or
permit Parent or any Subsidiary to, use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Borrower or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
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carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
9.28 Senior Indebtedness and Secured Sale/Leaseback Collateral .
(a) Each of Parent and the Borrower covenants and agrees that its
obligations in respect of this Agreement and the other Loan Documents are and
will be prior to the Stated Termination Date the only obligations designated as
"Material Senior Indebtedness" for purposes of, and as such term is defined in,
the indenture governing the Senior Subordinated Notes.
(b) Neither Parent nor the Borrower shall designate any documents with
respect to any Debt (other than this Agreement) as the "Credit Agreement" or
"Bank Credit Agreement" for purposes of the receipt of notices by the Agent, and
delivery of blockage notices pursuant to the subordination provisions of the
documents with respect to the Senior Subordinated Notes.
(c) Neither Parent nor the Borrower shall designate any Debt as
"Material Senior Indebtedness," as such term is defined in the indenture
governing the Senior Subordinated Notes as in effect on the Original Closing
Date or pursuant to any analogous provision.
(d) Neither Parent, nor the Borrower, nor any of its Subsidiaries
shall assign, transfer or otherwise dispose of any Secured Sale/Leaseback
Collateral except in accordance with Section 3.5(b) of the Intercreditor
Agreement (for this purpose, without giving effect to changes thereto not agreed
to by the Borrower).
(e) Neither Parent nor the Borrower shall deliver or otherwise remit
to or deposit with or into the Trustee or the Collateral Account (as such terms
are defined in the Intercreditor Agreement) any Collateral or any proceeds
thereof, other than Secured Sale/Leaseback Collateral and proceeds thereof.
(f) Neither Parent nor the Borrower shall use (i) Secured
Sale/Leaseback Collateral or proceeds thereof to purchase or otherwise acquire
Credit Agreement Collateral or (ii) Credit Agreement Collateral or proceeds
thereof to purchase or otherwise acquire Secured Sale/Leaseback Collateral.
9.29 Further Assurances . The Borrower and Parent shall execute and
deliver, or cause to be executed and delivered, to the Agent and/or the Lenders
such documents and agreements, and shall take or cause to be taken such actions,
as the Agent or any Lender may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents.
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ARTICLE 10
CONDITIONS OF LENDING
---------------------
10.1 Conditions Precedent to Making of Loans on the Original Closing Date .
The obligation of the Lenders to make the initial Revolving Loans on the
Original Closing Date and the obligation of the Agent to cause to be issued or
provide Credit Support for any Letter of Credit on the Original Closing Date,
are subject to the following conditions precedent having been satisfied in a
manner satisfactory to the Agent and each Lender:
(a) The Existing Loan and Security Agreement and the other Loan
Documents (as defined therein) have been executed by each party thereto
(including, without limitation, if requested by the Agent, amendments, in form
and substance reasonably satisfactory to the Agent, to Credit Documents (as
defined in the Original Credit Agreement) assigned to BABC or the Agent pursuant
to the Bank Assignment Agreement) and the Borrower and Parent shall have
performed and complied with all covenants, agreements and conditions contained
therein which are required to be performed or complied with by the Borrower or
Parent before or on the Original Closing Date.
(b) Upon making the Revolving Loans on the Original Closing Date
(including such Revolving Loans made to finance the Closing Fee (as defined in
the Existing Loan and Security Agreement) or otherwise pursuant to Section 4.7
as reimbursement for fees, costs and expenses then payable under the Existing
Loan and Security Agreement) and with all its obligations current and after
giving effect to the effectiveness of the assignments and transfers contemplated
by the Bank Assignment Agreement, the Borrower would have Availability (as
defined in the Existing Loan and Security Agreement) in an amount no less than
$13,500,000.
(c) All representations and warranties made under the Existing Loan
and Security Agreement and in the other Loan Documents (as defined therein)
shall be true and correct as of the Original Closing Date as if made on such
date.
(d) No Default or Event of Default shall exist on the Original Closing
Date, or would exist immediately after giving effect to the Loans to be made on
such date.
(e) The Agent and the Lenders shall have received such opinions of
counsel for Parent and its Subsidiaries as the Agent or any Lender shall
reasonably request, each such opinion to be in a form, scope, and substance
satisfactory to the Agent, the Lenders, and their respective counsel.
(f) The Agent shall have received evidence reasonably satisfactory to
it that (i) Receivables Corp. shall have transferred to the Borrower all of its
assets (including in any event all accounts receivable and cash) other than
immaterial assets and terminated any and all present and future receivables
transfers by the Borrower to Receivables Corp., in each instance,
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on terms and conditions and pursuant to agreements satisfactory to the Agent and
(ii) the receivables securitization facility entered into by Receivables Corp.
shall have been terminated on terms and conditions satisfactory to the Agent.
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing statements duly
filed on or before the Original Closing Date under the UCC of all jurisdictions
that the Agent may deem necessary or desirable in order to perfect the Agent's
Lien.
(ii) duly executed UCC-3 Termination Statements and such other
instruments, in form and substance satisfactory to the Agent, as shall be
necessary to terminate and satisfy all Liens on the property of Parent and its
Subsidiaries (including, without limitation, UCC-3 Termination Statements
terminating all UCC filings made under the receivables transfer and receivables
securitization facilities referred to in clause (f) above), except Permitted
Liens.
(iii) the Bank Assignment Agreement duly executed and delivered
by all the parties thereto and all conditions to the effectiveness of the
assignments and transfers contemplated thereby (other than the payment of any
monies by BABC under Section 3(a)(i) thereof and the return to the agent under
the Original Credit Agreement of the BT Letter of Credit (as defined in the Bank
Assignment Agreement)) shall have been satisfied.
(iv) a duly executed acknowledgment and agreement to the
Intercreditor Agreement (as defined in the Existing Loan and Security
Agreement), in form and substance satisfactory to the Agent, acknowledging the
Agent as the "Credit Agent" under and as defined in the Intercreditor Agreement
(as so defined).
(h) The Borrower shall have paid all fees and expenses of the Agent
and the Attorney Costs reasonably incurred by the Agent in connection with any
of the Loan Documents (as defined in the Existing Loan and Security Agreement)
and the transactions contemplated thereby.
(i) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by the Existing Loan and Security Agreement.
(j) The Agent and the Lenders shall have had an opportunity, if they
so choose, to examine the books of account and other records and files of Parent
and its Subsidiaries and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of Inventory,
Accounts, and Availability (as defined in the Existing Loan and Security
Agreement), and the results of such examination and audit shall have been
satisfactory to the Agent and the Lenders in all respects.
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(k) All proceedings taken in connection with the execution of the
Existing Loan and Security Agreement, all other Loan Documents (as therein
defined) and all documents and papers relating thereto shall be satisfactory in
form, scope, and substance to the Agent and the Lenders.
(l) The Agent shall have received certified copies of the Senior
Secured Notes, the Senior Subordinated Notes, the Intercreditor Agreement (as
defined in the Existing Loan and Security Agreement), the Asset Transfer
Documents and all documents, instruments and agreements entered into pursuant
thereto or in connection therewith.
The acceptance by the Borrower of any Loans made on the Original Closing
Date shall be deemed to be a representation and warranty made by the Borrower to
the effect that all of the conditions precedent to the making of such Loans have
been satisfied, with the same effect as delivery to the Agent and the Lenders of
a certificate signed by a Responsible Officer of the Borrower, dated the
Original Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of the
Existing Loan and Security Agreement shall be deemed confirmation by such Lender
that (i) all conditions precedent in this Section 10.1 have been fulfilled to
the satisfaction of such Lender and (ii) the decision of such Lender to execute
and deliver to the Agent an executed counterpart of the Existing Loan and
Security Agreement was made by such Lender independently and without reliance on
the Agent or any other Lender as to the satisfaction of any condition precedent
set forth in this Section 10.1.
10.2 Conditions Precedent to Each Loan . The obligation of the Lenders to
make each Loan, including the initial Revolving Loans on the Original Closing
Date and the Term Loans and any Revolving Loans on the Closing Date, and the
obligation of the Agent to take reasonable steps to cause to be issued or to
provide Credit Support for any Letter of Credit, shall be subject to the further
conditions precedent that on and as of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance by the
Borrower of any extension of credit shall be deemed to be a statement to the
effect set forth in clauses (i) and (ii), with the same effect as the delivery
to the Agent and the Lenders of a certificate signed by a Responsible Officer,
dated the date of such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Agent and the Lenders have
been notified by the Borrower that any representation or warranty is not correct
and the Majority Lenders have explicitly waived in writing compliance with such
representation or warranty; and
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(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(b) without limiting Section 10.1(b), the amount of the Availability
shall be sufficient to make such Revolving Loan or permit the issuance of such
Letter of Credit or Credit Support without exceeding the Availability, provided,
however, that the foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing BofA or the Agent for such Lenders' Pro
Rata Share of any BofA Loan or Agent Advance as provided in Sections 2.2(h), (i)
and (j).
10.3 Conditions Precedent to Effectiveness of Amendment and Restatement and
Making of Loans on Closing Date . The effectiveness of the amendment and
restatement of the Existing Loan and Security Agreement as provided herein and
the obligation of the Lenders to make the Term Loans and any Revolving Loans on
the Closing Date and the obligation of the Agent to cause to be issued or
provide Credit Support for any Letter of Credit on the Closing Date, are subject
to the following conditions precedent having been satisfied prior thereto (or,
in the case of clauses (e)(ii) and (g) below, concurrently therewith) in a
manner satisfactory to the Agent and each Lender:
(a) This Agreement, the Term Loan Notes, the Fee Letter, the Pledge
Agreement, the Assignment of Contract As Collateral Security, the Intercreditor
Agreement and the other Loan Documents (to the extent not heretofore executed by
the parties thereto) have been executed by each party thereto (including,
without limitation, if requested by the Agent, amendments, in form and substance
reasonably satisfactory to the Agent, to Loan Documents previously executed by
the parties thereto to reflect modifications to the Existing Loan and Security
Agreement being made hereby) and the Borrower and Parent shall have performed
and complied in all material respects with all covenants, agreements and
conditions contained herein and in the other Loan Documents which are required
to be performed or complied with by the Borrower or Parent before or on the
Closing Date.
(b) All representations and warranties made hereunder and in the other
Loan Documents shall be true and correct as of the Closing Date as if made on
such date.
(c) No Default or Event of Default shall exist on the Closing Date, or
would exist immediately after giving effect to the Loans, Letters of Credit and
Credit Support to be made or issued on such date.
(d) The Agent and the Lenders shall have received such opinions of
counsel for Parent and its Subsidiaries as the Agent or any Lender shall
reasonably request, each such opinion to be in a form, scope, and substance
reasonably satisfactory to the Agent, the Lenders, and their respective counsel.
(e) The Agent shall have received:
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(i) acknowledgment copies of proper financing statements duly
filed on or before the Closing Date under the UCC of all jurisdictions that the
Agent may deem reasonably necessary or desirable in order to perfect the Agent's
Lien (to the extent not heretofore received by the Agent).
(ii) duly executed UCC-3 Termination Statements and such other
instruments, in form and substance reasonably satisfactory to the Agent, as
shall be necessary to terminate and satisfy all Liens on the property of Parent
and its Subsidiaries (including, without limitation and in any event, UCC-3
Termination Statements and other documents to terminate all Liens securing the
Senior Secured Notes and the financing arrangements with PNC referred to below),
except Permitted Liens.
(f) The Borrower shall have paid (i) all fees and expenses of the
Agent and the Attorney Costs reasonably incurred by the Agent in connection with
any of the Loan Documents and the transactions contemplated thereby and (ii) all
interest and fees owing to the Agent and the Lenders under the Existing Loan and
Security Agreement which have accrued through but excluding the Closing Date
(whether or not then otherwise due and payable).
(g) The Secured Sale/Leaseback Documents, which documents shall be in
form and substance reasonably satisfactory to the Agent and the Majority
Lenders, shall have been duly executed by all the parties thereto, all
conditions precedent to the closing thereof shall have been satisfied and the
Borrower shall have received the net cash proceeds from the sale on the Closing
Date of Equipment as contemplated thereby (which net cash proceeds shall be no
less than $212,300,000) and such net cash proceeds shall have been applied by
the Borrower (w) together with the proceeds of the Term Loans, to the redemption
of all Senior Secured Notes (other than accrued interest thereon, which interest
shall be paid with the proceeds of Revolving Loans), (x) to the payment in full
of all loans and other monetary obligations of Sherwood and/or any of its
affiliates under the financing arrangements between one or more of such
entities, certain lenders and PNC, as agent for such lenders, (y) to the payment
in full of the Demand Loans, and (z) to the payment of the Revolving Loans (in
an amount not less than $25,000,000).
(h) All proceedings taken in connection with the execution of this
Agreement, all other Transaction Documents and all documents and papers relating
thereto shall be reasonably satisfactory in form, scope, and substance to the
Agent and the Lenders.
(i) The Agent shall have received certified copies of the Secured
Sale/Leaseback Documents, the documents prepared in connection with the
redemption of the Senior Secured Notes and all documents, instruments and
agreements entered into pursuant thereto or in connection therewith.
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(j) No material adverse change shall have occurred, as determined by
the Agent or the Lenders in its or their sole discretion, in the business,
operations, profits or prospects of the Borrower since September 26, 1999.
(k) There shall exist no action, suit, investigation, litigation, or
proceeding pending or, to any of the Borrower's, the Agent's or any Lender's
knowledge, threatened in any court or before any arbitrator or governmental
instrumentality that in the Agent's or the Lenders' reasonable judgment (i)
could reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, performance, or prospects of the
Borrower or which could impair in any material respect the Borrower's ability to
perform satisfactorily under the Loan Documents or (ii) could reasonably be
expected to materially and adversely affect the transactions contemplated by the
Transaction Documents.
(l) All governmental and third party consents and approvals necessary
in connection with the transactions contemplated by the Transaction Documents
have been obtained by the Borrower.
(m) Satisfaction by the Agent and Lenders that the Borrower is
adequately capitalized, that the fair salable value of the Borrower's assets
will exceed its liabilities on the Closing Date (after giving effect to the
transactions contemplated hereunder to occur on the Closing Date), and that the
Borrower will have sufficient working capital to pay its debts as they become
due.
(n) The Agent shall have conducted a collateral takedown examination
with respect to the assets of Sherwood and its subsidiaries and such examination
shall have been satisfactory to the Agent.
(o) The Borrower shall have satisfied such other conditions precedent
reasonably requested by the Agent or any Lender.
The acceptance by the Borrower of any Loans made or other financial
accommodations hereunder provided on the Closing Date shall be deemed to be a
representation and warranty made by the Borrower to the effect that all of the
conditions precedent to the making of such Loans and the provision of such other
financial accommodations have been satisfied, with the same effect as delivery
to the Agent and the Lenders of a certificate signed by a Responsible Officer of
the Borrower, dated the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 10.3 have been fulfilled to the satisfaction of such
Lender and (ii) the decision of such Lender to execute and deliver to the Agent
an executed counterpart of this Agreement was made by such Lender independently
and without reliance on the Agent or any other Lender as to the satisfaction of
any condition precedent set forth in this Section 10.3.
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ARTICLE 11
DEFAULT; REMEDIES
-----------------
11.1 Events of Default . It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) (i) any failure to pay the principal in respect of any Obligations
when due, whether upon demand or otherwise, or (ii) any failure to pay interest
or premium on any of the Obligations or any fees owing hereunder within 3
Business Days of when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the Borrower
or Parent in this Agreement or by Parent or any of its Subsidiaries in any of
the other Loan Documents, any Financial Statement, or any certificate furnished
by Parent or any of its Subsidiaries at any time to the Agent or any Lender
shall prove to be untrue in any material respect as of the date on which made,
deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance of
any of the covenants and agreements contained in Section 6.2, 6.3, 6.7 or 6.9 or
in Article 7 or in Article 9 (other than Section 9.4, 9.6, 9.16, 9.20, 9.24 or
9.29) of this Agreement (provided, however, to the extent that any covenant in
Article 7 specifies the number of days within which the Borrower or Parent must
comply (including, without limitation, for the giving of notice or delivery of a
financial statement, forecast or report), the Borrower or Parent, as the case
may be, shall have the numbers of days specified in such covenant plus 5 days
within which to comply before such non-compliance becomes an Event of Default
under this clause (i)), or (ii) any default shall occur in the observance or
performance of any of the covenants and agreements contained in any of Section
9.4, 9.6, 9.16, 9.20, 9.24 or 9.29 of this Agreement and such default shall
continue unremedied for a period of 10 days after the earlier to occur of (x)
notice thereof from the Agent or any Lender to Parent or the Borrower or (y)
Parent's or the Borrower's actual knowledge thereof, or (iii) any default shall
occur in the observance or performance of any of the covenants and agreements
contained in this Agreement (other than as specified in clause (a) or (c)(i) or
(ii) above), any other Loan Documents, or any other agreement entered into at
any time to which the Borrower, Parent or any Subsidiary and the Agent or any
Lender are party and such default shall continue unremedied for a period of 30
days after the earlier to occur of (x) notice thereof from the Agent or any
Lender to Parent or the Borrower or (y) Parent's or the Borrower's actual
knowledge thereof, or (iv) if any agreement or document referred to in clauses
(i), (ii) or (iii) above shall terminate (other than in accordance with its
terms or the terms hereof or with the written consent of the Agent and the
Majority Lenders) or become void or unenforceable, without the written consent
of the Agent and the Majority Lenders;
123
(d) (i) default shall occur with respect to the Senior Subordinated
Notes or any Sherwood-Related Subordinated Notes or with respect to any other
Debt (other than the Obligations) in an aggregate outstanding principal amount
for all such other Debt which exceeds $5,000,000, or under any agreement or
instrument under or pursuant to which the Senior Subordinated Notes, the
Sherwood-Related Subordinated Notes or any such other Debt may have been issued,
created, assumed, or guaranteed by Parent or any of its Subsidiaries, and such
default shall continue for more than the period of grace, if any, therein
specified, if the effect thereof (with or without the giving of notice or
further lapse of time or both) is to accelerate, or to permit the holders of the
Senior Subordinated Notes, the Sherwood-Related Subordinated Notes or any such
other Debt to accelerate, the maturity of any such Debt; or any such Debt shall
be declared due and payable or be required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof,
or (ii) a Lease Event of Default (as defined in the Secured Sale/Leaseback
Documents) shall occur;
(e) Parent or any of its Subsidiaries shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts or for any other relief under the federal Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency act or law, state
or federal, now or hereafter existing, or consent to, approve of, or acquiesce
in, any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of Parent or any of its Subsidiaries
or for any other relief under the federal Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing and either (i) such petition, proposal, action or proceeding
shall not have been dismissed within a period of sixty (60) days after its
commencement or (ii) an order for relief against Parent or such Subsidiary shall
have been entered in such proceeding;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for Parent or any of its Subsidiaries or for
all or any part of its property shall be appointed or a warrant of attachment,
execution or similar process shall be issued against any part of the property of
Parent or any of its Subsidiaries;
(h) Parent or any of its Subsidiaries shall file a certificate of
dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or shall take any corporate action
in furtherance thereof;
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(i) all or any material part of the property of Parent or any of its
Subsidiaries or the equipment subject to the Secured Sale/Leaseback Arrangements
shall be nationalized, expropriated or condemned, seized or otherwise
appropriated, or custody or control of such property or of Parent or such
Subsidiary shall be assumed by any Governmental Authority or any court of
competent jurisdiction at the instance of any Governmental Authority, except
where contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
(j) any guaranty of the Obligations shall be terminated, revoked or
declared void or invalid;
(k) one or more judgments or orders for the payment of money
aggregating in excess of $2,500,000, which amount shall not be fully covered by
insurance, shall be rendered against Parent or any of its Subsidiaries;
(l) any loss, theft, damage or destruction of any item or items of
Collateral, any other property of Parent or any Subsidiary or any equipment
subject to the Secured Sale/Leaseback Arrangements occurs which materially and
adversely affects the property, business, operation or financial condition of
Parent and the Borrower taken as a whole;
(m) there occurs a Material Adverse Effect;
(n) there is filed against Parent or any of its Subsidiaries any
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within one hundred twenty (120) days, and (2) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(o) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens pursuant to
the Loan Documents, any Loan Document ceases to be in full force and effect or
any Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens) or is terminated, revoked or declared void;
(p) (i) one or more ERISA Events shall occur; (ii) any Pension Plans
shall have any Unfunded Pension Liability; or (iii) Parent, the Borrower or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, one or more installment payments with respect to its
withdrawal liability under Section 4201 of ERISA under any Multi-employer Plans;
provided, however, that (x) the events, acts or conditions described in clauses
(i), (ii) and (iii) above shall not constitute a Default or Event of Default
under this clause (p) unless the aggregate liability incurred or reasonably
expected to be incurred by Parent, the Borrower or any ERISA Affiliates for all
such events, acts or conditions shall exceed $5,000,000
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in the aggregate for all such Persons and (y) the Agent and the Majority Lenders
hereby agree that the occurrence of any event set forth above, resulting
directly from the litigation described in Schedule 8.21 so long as the aggregate
amount of, without duplication, liens, security interests and liabilities
resulting therefrom shall not exceed $17,500,000, shall not be deemed to be or
otherwise constitute a Default or Event of Default under this clause (p)
(however, notwithstanding the foregoing, the Agent shall have the right, in its
sole discretion, to establish reserves against Availability if any liens or
security interests on the assets of Parent or any of its Subsidiaries securing
greater than $100,000 in liabilities in the aggregate for Parent and its
Subsidiaries shall attach or otherwise arise as a result of such litigation);
(q) there occurs a Change of Control;
(r) there shall occur any of the events, acts or conditions described
in Section 6 of the Waiver dated January 21, 1998 by the Lenders to the Borrower
and Parent or any of the waivers or other agreements of the Majority Lenders in
such Waiver shall be revoked or of no further force or effect as contemplated by
such Section 6; or the Borrower or Parent shall breach any agreement made by it
under such Waiver; or
(s) the Secured Sale/Leaseback Arrangements shall terminate prior to
the Stated Termination Date.
11.2 Remedies .
(a) If a Default or an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on the Borrower or Parent: (i) reduce the Maximum Revolver Amount, or the
advance rates against Eligible Accounts and/or Eligible Inventory used in
computing the Availability, or reduce one or more of the other elements used in
computing the Availability; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to arrange for or provide Letters
of Credit or Credit Support. If an Event of Default exists, the Agent shall, at
the direction of the Majority Lenders, do one or more of the following, in
addition to the actions described in the preceding sentence, at any time or
times and in any order, without notice to or demand on the Borrower or Parent:
(a) terminate the Commitments and this Agreement; (b) declare any or all
Obligations to be immediately due and payable; provided, however, that upon the
occurrence of any Event of Default described in Section 11.1(e), 11.1(f),
11.1(g) or 11.1(h), the Commitments shall automatically and immediately expire
and all Obligations shall automatically become immediately due and payable
without notice or demand of any kind; and (c) pursue its other rights and
remedies under the Loan Documents and applicable law.
(b) If an Event of Default exists, except as provided in the
Intercreditor Agreement with respect to Secured Sale/Leaseback Collateral and
Shared Collateral: (i) the Agent shall have for the benefit of the Agent and the
Lenders, in addition to all other rights of the
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Agent and the Lenders, the rights and remedies of a secured party under the UCC;
(ii) the Agent may, at any time, take possession of the Collateral and keep it
on the Borrower's and/or Parent's premises, at no cost to the Agent or any
Lender, or remove any part of it to such other place or places as the Agent may
desire, or the Borrower shall, upon the Agent's demand, at the Borrower's cost,
assemble or cause to be assembled the Collateral and make it available to the
Agent at a place reasonably convenient to the Agent; and (iii) the Agent may
sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Without in any way requiring notice to be given in the following
manner, each of Parent and the Borrower agrees that any notice by the Agent of
sale, disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable notice to
it if such notice is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against receipt, at least
five (5) Business Days prior to such action to Parent's or the Borrower's
address, as appropriate, specified in or pursuant to Section 15.8. If any
Collateral is sold on terms other than payment in full at the time of sale, no
credit shall be given against the Obligations until the Agent or the Lenders
receive payment, and if the buyer defaults in payment, the Agent may resell the
Collateral without further notice to the Borrower or Parent. In the event the
Agent seeks to take possession of all or any portion of the Collateral by
judicial process, each of Parent and the Borrower irrevocably waives: (a) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (b) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (c) any requirement that
the Agent retain possession and not dispose of any Collateral until after trial
or final judgment. Each of Parent and the Borrower agrees that the Agent has no
obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person. The Agent is hereby granted a license or other right
to use, without charge, the Borrower's and Parent's labels, patents, copyrights,
name, trade secrets, trade names, trademarks, and advertising matter, or any
similar property, in completing production of, advertising or selling any
Collateral, and the Borrower's and Parent's rights under all licenses and all
franchise agreements shall inure to the Agent's benefit for such purpose. The
proceeds of sale shall be applied first to all expenses of sale, including
attorneys' fees, and then to the Obligations in whatever order the Agent elects.
The Agent will, subject to the terms of the Intercreditor Agreement and any
applicable law or court order, return any excess to the Borrower or Parent, as
appropriate, and each of Parent and the Borrower shall remain liable for any
deficiency.
(c) If an Event of Default occurs, each of Parent and the Borrower
hereby waives all rights to notice and hearing prior to the exercise by the
Agent of the Agent's rights to repossess the Collateral without judicial process
or to replevy, attach or levy upon the Collateral without notice or hearing.
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ARTICLE 12
TERM AND TERMINATION
--------------------
12.1 Term and Termination . The term of this Agreement shall end on the
Stated Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all outstanding monetary Obligations
(including, without limitation, all unpaid principal, accrued interest and any
early termination or prepayment fees or penalties) shall become immediately due
and payable and the Borrower shall immediately arrange for the cancellation of
Letters of Credit then outstanding. Notwithstanding the termination of this
Agreement, until all outstanding monetary Obligations are indefeasibly paid in
full in cash and the Payment and Termination Date shall have occurred, each of
Parent and the Borrower shall remain bound by the terms of this Agreement and
shall not be relieved of any of its Obligations hereunder, and the Agent and the
Lenders shall retain all their rights and remedies hereunder (including, without
limitation, the Agent's Liens in and all rights and remedies with respect to all
then existing and after-arising Collateral). From and after the Payment and
Termination Date, the Agent shall, at the reasonable request of the Borrower and
at the Borrower's sole cost and expense, execute and deliver to the Borrower
such instruments and agreements in form reasonably acceptable to the Agent, to
release the Agent's Liens in the Collateral. Such instruments and agreements
shall be without representation or warranty by, and without recourse to, the
Agent or any Lender.
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
-----------------------------------------------------------
13.1 No Waivers; Cumulative Remedies . No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document or any present or future supplement thereto, or in any other
agreement between or among the Borrower and/or Parent or any of its other
Subsidiaries and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower and Parent of any
provision of this Agreement. The Agent's and each Lender's rights under this
Agreement will be cumulative and not exclusive of any other right or remedy
which the Agent or any Lender may have.
13.2 Amendments and Waivers . No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower, Parent or any of its other Subsidiaries therefrom,
shall be effective unless the same
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shall be in writing and signed by the Majority Lenders (or by the Agent at the
written request of the Majority Lenders), the Borrower and Parent and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders,
the Borrower and Parent and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or any fees or other amounts payable hereunder or under any other
Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;
(e) increase any of the percentages set forth in the definition of
Availability;
(f) amend this Section or any provision of this Agreement providing
for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section 14.12 or
any guaranty of any Obligations;
(h) change the definitions of "Majority Lenders" or "Required
Lenders."
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3 Assignments; Participations .
(a) Any Lender may, with the written consent of the Agent, assign and
delegate to one or more assignees (provided that no written consent of the Agent
shall be required in connection with any assignment and delegation by a Lender
to an Affiliate of such Lender) (each an "Assignee") all, or any ratable part of
all, of the Loans, the Commitments and the other rights and obligations of such
Lender hereunder, in a minimum amount of $10,000,000 or if less the entire
amount of such Lender's Commitment and Loans (provided, that unless an assignor
Lender has assigned and delegated all of its Commitment and Loans, no such
assignment and/or delegation shall be permitted unless, after giving effect to
such assignment
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and/or delegation, such assignor Lender retains a Commitment in a minimum amount
of $10,000,000); provided, however, that the Borrower, Parent and the Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower (on behalf of the
Borrower and Parent) and the Agent by such Lender and the Assignee; (ii) such
Lender and its Assignee shall have delivered to the Borrower (on behalf of the
Borrower and Parent) and the Agent an Assignment and Acceptance in substantially
the form of Exhibit G ("Assignment and Acceptance"), together with the Term Loan
Note subject to such assignment and (iii) the assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto; (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, Parent or any of its other Subsidiaries or
the performance or observance by the Borrower, Parent or any of its other
Subsidiaries of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (4) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (5) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the
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terms hereof, together with such powers as are reasonably incidental thereto;
and (6) such Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of the Borrower (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower, Parent and the Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31
CFR ss. 203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.
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ARTICLE 14
THE AGENT
---------
14.1 Appointment and Authorization . Each Lender hereby designates and
appoints Bank of America, N.A. as its Agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this Article
14. The provisions of this Article 14 are solely for the benefit of the Agent
and the Lenders and the Borrower and Parent shall have no rights as a third
party beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Availability, (b) the making of Agent Advances pursuant to Section 2.2(i), and
(c) the exercise of remedies pursuant to Section 11.2, and any action so taken
or not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties . The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent . None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
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Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall 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 other Loan Document, or to
inspect the properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
14.4 Reliance by Agent .
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Majority
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
14.5 Notice of Default . The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be
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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.
14.6 Credit Decision . Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries and Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries and Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries and Affiliates. Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by the Agent, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Borrower or any of its Subsidiaries or Affiliates which
may come into the possession of any of the Agent-Related Persons.
14.7 Indemnification . Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), pro rata, from and
against any and all Indemnified Liabilities as such term is defined in Section
15.11; provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section 14.7 shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
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14.8 Agent in Individual Capacity . BofA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrower or such
Affiliate) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
include BofA in its individual capacity.
14.9 Successor Agent . The Agent may resign as Agent upon 30 days' notice
to the Lenders and the Borrower. If the Agent resigns under this Agreement, the
Majority Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Agent hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above.
14.10 Withholding Tax .
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Lender agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed IRS
Forms 1001 and W-8 before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
135
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Lender, such Lender agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrower to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section 14.10 are not delivered to the Agent, then the Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent and the Borrower (but in the
case of the Borrower only if the appropriate form was either not delivered or
not properly executed either at the time that such Lender first became a Lender
hereunder or at any later time if such form then could have been legally
delivered by such Lender) fully for all amounts paid, directly
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or indirectly, by the Agent or the Borrower as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section 14.10, together with all
costs and expenses (including Attorney Costs), and the Borrower shall not have
any obligation pursuant to Section 5.1 for such withholding taxes if the
appropriate form is not delivered under the circumstances set forth in the
second immediately preceding parenthetical. The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
14.11 [Reserved.]
14.12 Collateral Matters .
(a) The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release any Agent's Lien upon any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
the Borrower of all Loans and reimbursement obligations in respect of Letters of
Credit and Credit Support, and, subject to Section 2.4(j), the termination of
all outstanding Letters of Credit (whether or not any of such obligations are
due) and all other outstanding monetary Obligations; (ii) constituting property
being sold or disposed of if the Borrower certifies to the Agent that the sale
or disposition is made in compliance with Section 9.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which neither the Borrower nor any other grantor of
Collateral owned any interest at the time the Lien was granted or at any time
thereafter; (iv) constituting property leased to the Borrower or any other
grantor of Collateral under a lease which has expired or been terminated in a
transaction permitted under this Agreement; or (v) as and when provided or
required by the terms of the Intercreditor Agreement. Except as provided above,
the Agent will not release any of the Agent's Liens without the prior written
authorization of the Lenders; provided that the Agent may, in its discretion,
release the Agent's Liens on Collateral valued in the aggregate not in excess of
$5,000,000 without the prior written authorization of the Lenders. Upon request
by the Agent or the Borrower at any time, the Lenders will confirm in writing
the Agent's authority to release any Agent's Liens upon particular types or
items of Collateral pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 14.12(a) from the Lenders of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days' prior written request by the Borrower, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Agent's Liens upon such
Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Borrower or any other grantor of Collateral in respect of) all interests
retained by the Borrower or any other
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grantor of Collateral, including (without limitation) the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower or any
other grantor of Collateral or is cared for, protected or insured or has been
encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant to any
of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent's own
interest in the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments .
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of all Lenders, set off against the Obligations or
any guarantee thereof, any amounts owing by such Lender to the Borrower or any
other party liable for any Obligations or any guarantee thereof or any grantor
of any Collateral or any accounts of the Borrower or such other party or grantor
now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement or any
other Loan Document or against the Borrower or any other party liable for any
Obligations or any guarantee thereof or any grantor of any Collateral,
including, without limitation, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of the Borrower to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is
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thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
14.14 Agency for Perfection . Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC, can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 Payments by Agent to Lenders . All payments to be made by the Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, Term Loans or
otherwise.
14.16 Concerning the Collateral and the Related Loan Documents . Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the ratable benefit of the
Agent and the Lenders. Each Lender agrees that any action taken by the Agent,
Majority Lenders or Required Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Agent, the Majority Lenders, or the Required Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders . By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by the Agent;
(b) expressly agrees and acknowledges that neither BofA nor the Agent
(i) makes any representation or warranty as to the accuracy of any Report, or
(ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or
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examination will inspect only specific information regarding the Borrower or any
of its Affiliates and will rely significantly upon the Borrower's and/or such
Affiliate's books and records, as well as on representations of the Borrower's
and/or such Affiliate's personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of the Borrower; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including, without limitation attorney costs) incurred by the Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
14.18 Relation Among Lenders . The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 15
MISCELLANEOUS
-------------
15.1 Cumulative Remedies; No Prior Recourse to Collateral . The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of one
right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, proceed
directly against the Borrower or any other Person to collect the Obligations
without any prior recourse to the Collateral. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
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15.2 Severability . The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK;
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, PARENT, THE AGENT AND THE
LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, PARENT, THE
AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OF THE BORROWER, PARENT OR
THEIR RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR
THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL
OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) EACH OF THE BORROWER AND PARENT 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 IT AT ITS ADDRESS
SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE (5) DAYS
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AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS. NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY
ANY OTHER MANNER PERMITTED BY LAW.
(d) No provision of this Agreement shall limit the right of the Agent
or the Lenders to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or
obtaining provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Agent's option, foreclosure under a
deed of trust or mortgage may be accomplished either by exercise of power of
sale under the deed of trust or mortgage or by judicial foreclosure.
15.4 WAIVER OF JURY TRIAL . THE BORROWER, PARENT, THE LENDERS AND THE
AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER, PARENT, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
15.5 Survival of Representations and Warranties . All of the Borrower's
and Parent's representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
15.6 Other Security and Guaranties . The Agent, may, without notice or
demand and without affecting the Borrower's or Parent's obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and
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(b) accept and hold any endorsement or guaranty of payment of all or any part of
the Obligations and release or substitute any such endorser or guarantor, or any
Person who has given any Lien in any other collateral as security for the
payment of all or any part of the Obligations, or any other Person in any way
obligated to pay all or any part of the Obligations.
15.7 Fees and Expenses . The Borrower agrees to pay to the Agent, for its
benefit, on demand, all reasonable costs and expenses that Agent pays or incurs
in connection with the negotiation, preparation, consummation, administration,
syndication, enforcement, and termination of this Agreement, including, without
limitation or duplication: (a) Attorney Costs; (b) reasonable costs and expenses
(including reasonable attorneys' and paralegals' fees and disbursements which
shall include the reasonable allocated costs of Agent's in-house counsel fees
and disbursements) for any amendment, supplement, waiver, consent, or subsequent
closing in connection with the Loan Documents and the transactions contemplated
thereby; (c) costs and expenses of lien and title searches and title insurance;
(d) taxes, fees and other charges for recording the Mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Agent's Liens (including costs and expenses paid or incurred by the
Agent in connection with the consummation of this Agreement); (e) sums paid or
incurred to pay any amount or take any action required of the Borrower, Parent
or any of its other Subsidiaries under the Loan Documents that the Borrower,
Parent or such other Subsidiary fails to pay or take; (f) costs of appraisals,
inspections, and verifications of the Collateral, including, without limitation,
travel, lodging, and meals for inspections of the Collateral and the Borrower's
operations by the Agent plus the Agent's then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $750 per day (or portion thereof) for each agent or employee of the
Agent with respect to each field examination or audit) (such field examinations
and audits to be conducted not more often than three times each calendar year
unless an Event of Default shall have occurred); (g) costs and expenses of
forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts and lock boxes; (h) costs and
expenses of preserving and protecting the Collateral; and (i) costs and expenses
(including attorneys' and paralegals' fees and disbursements which shall include
the allocated cost of Agent's in-house counsel fees and disbursements) paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to defend any claims made or threatened against the
Agent or any Lender arising out of the transactions contemplated hereby
(including without limitation, preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrower. All of the foregoing costs and expenses shall be charged to the
Borrower's Loan Account as Revolving Loans as described in Section 4.7.
15.8 Notices . Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by
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overnight mail and courier service, (b) four (4) days after it shall have been
mailed by United States mail, first class, certified or registered, with postage
prepaid, or (c) in the case of notice by such a telecommunications device, when
properly transmitted, in each case addressed to the party to be notified as
follows:
If to the Agent or to BofA:
Bank of America, N.A.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Division Manager
Telecopy No. (000) 000-0000
with copies to:
Bank of America, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Telecopy No. (000) 000-0000
If to any other Lender: at its address below its signature on the signature
pages hereof
If to the Borrower or Parent:
Sweetheart Cup Company Inc.
or Sweetheart Holdings Inc. (as appropriate)
00000 Xxxxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Director of Treasury Services
Telecopy No. (000) 000-0000
with copies to:
Sweetheart Cup Company Inc.
00000 Xxxxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Vice President - General Counsel and
Corporate Secretary
Telecopy No. (000) 000-0000
144
-and-
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No. (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 Waiver of Notices . Unless otherwise expressly provided herein, each
of the Borrower and Parent waives presentment, protest and notice of demand or
dishonor and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any and
all other notices to which it might otherwise be entitled. No notice to or
demand on the Borrower or Parent which the Agent or any Lender may elect to give
shall entitle the Borrower or Parent to any or further notice or demand in the
same, similar or other circumstances.
15.10 Binding Effect . The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by the Borrower or Parent without prior written consent of the Agent
and each Lender. The rights and benefits of the Agent and the Lenders hereunder
shall, if such Persons so agree, inure to any party acquiring any interest in
the Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by the Borrower . The
Borrower agrees to defend, indemnify and hold the Agent-Related Persons, and
each Lender and each of its respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Lender) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement, any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party
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thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities to the extent
resulting from the willful misconduct of such Indemnified Person. The agreements
in this Section shall survive payment of all other Obligations.
15.12 Limitation of Liability . No claim may be made by the Borrower,
Parent, any Lender or other Person against the Agent, any Lender, or the
affiliates, directors, officers, officers, employees, or agents of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
the Borrower, Parent and each Lender hereby waive, release and agree not to xxx
upon any claim for such damages, whether or not accrued and whether or not know
or suspected to exist in its favor.
15.13 Final Agreement . This Agreement and the other Loan Documents are
intended by the Borrower, Parent, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof (including, without limitation, the terms of the Original Credit
Agreement, which terms were amended and restated in their entirety pursuant to
the Existing Loan and Security Agreement). Further, the terms of the Borrower
Security Agreement, the Parent Security Agreement and each of the Amended and
Restated Borrower Intellectual Property Agreement and the Amended and Restated
Holdings Intellectual Property Agreement, each dated as of the Original Closing
Date, between the Borrower or Parent, respectively, and the Agent supersede in
their entirety the terms of the predecessors thereof, which were amended and
restated (such amendments and restatements not affecting the security interests
and liens created under the predecessor agreements (which shall remain in full
force and effect) or the time of creation thereof, except as modified by such
amendments and restatements). No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall be
made, except by a written agreement signed by the Borrower and Parent and a duly
authorized officer of each of the Agent and the requisite Lenders.
15.14 Counterparts . This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, the Borrower and Parent in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
15.15 Captions . The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.16 Right of Setoff . In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower or Parent, any
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such notice being waived by the Borrower and Parent to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Borrower or Parent against any and all Obligations owing to such
Lender, now or hereafter existing, irrespective of whether or not the Agent or
such Lender shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Borrower or Parent, as appropriate, and the Agent after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY
RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR
PROPERTY OF THE BORROWER OR PARENT HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE
PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
15.17 Credit Agreement and Conflicts . This Agreement is and is hereby
deemed to be a "Credit Agreement" for all purposes of the Intercreditor
Agreement. In the event of a conflict between any of the terms and provisions of
this Agreement and any of the terms and provisions of the Borrower Security
Agreement, the terms and provisions of this Agreement shall control.
15.18 Intercreditor Agreement .
(a) EACH LENDER HEREBY GRANTS TO THE AGENT ALL REQUISITE AUTHORITY TO
EXECUTE AND DELIVER THE INTERCREDITOR AGREEMENT (OR OTHERWISE TO BECOME BOUND
THEREBY) AND TO BIND THE LENDERS THERETO BY THE AGENT'S EXECUTION AND DELIVERY
THEREOF OR BY THE AGENT OTHERWISE BECOMING BOUND THEREBY, AND NO FURTHER CONSENT
OR APPROVAL ON THE PART OF THE LENDERS IS OR WILL BE REQUIRED IN CONNECTION WITH
THE EXECUTION, DELIVERY AND PERFORMANCE OF THE INTERCREDITOR AGREEMENT.
(b) EACH LENDER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND THE
OTHER SECURITY DOCUMENTS (INCLUDING THE ALLOCATION OF PROCEEDS OF COLLATERAL)
ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.
15.19 Amendments to Certain Security Documents. The parties hereto agree
that the following Security Documents are amended as provided below:
(a) Each of the Parent Security Agreement and the Borrower Security
Agreement is amended by (x) replacing the term "Senior Note Priority Collateral"
in each place where it appears in such agreements with the term "Secured
Sale/Leaseback Collateral," (y) replacing the term "Senior Secured Note Security
Documents" in each place where it appears
147
in such agreements with the term "Secured Sale/Leaseback Security Documents" and
(z) replacing the term "Intercreditor Agreement" in each place where it appears
in such agreements with the term "Intercreditor Agreement" as defined herein.
(b) Each of the Amended and Restated Borrower Intellectual Property
Agreement, dated as of October 24, 1997, between the Borrower and the Agent and
the Amended and Restated Holdings Intellectual Property Agreement, dated as of
October 24, 1997, between Parent and Agent is amended by (x) replacing the term
"Intercreditor Agreement" in each place where it appears in such agreements with
the term "Intercreditor Agreement" as defined herein and (y) adding the phrase
"(or with respect to any Trademarks not constituting Secured Sale/Leaseback
Collateral, ending on the Payment and Termination Date)" immediately after the
phrase "ending on the date which occurs six months thereafter" in the second
sentence of Section 3.1 thereof.
15.20 Ratification and Confirmation . Each of the Borrower and Parent
hereby ratifies and confirms its grant of security interests and liens in the
Collateral (including, without limitation, any and all Collateral granted under
the Existing Loan and Security Agreement and the other Loan Documents (as
therein defined)) in which it has rights and confirms and agrees that such
Collateral secures any and all of the Obligations, including, without
limitation, the Revolving Loans and Term Loans. Parent hereby ratifies and
confirms its guarantee pursuant to the Parent Guaranty of any and all
Obligations, including, without limitation, the Revolving Loans and Term Loans.
All Obligations outstanding under the Existing Loan and Security Agreement
immediately prior to the amendment and restatement thereof as contemplated
hereby (such Obligations, the "Existing Loan and Security Agreement
Obligations") shall, unless and until paid, continue to remain outstanding under
this Agreement and shall not constitute new Obligations incurred by the Borrower
on or after the Closing Date. The Borrower hereby confirms that all Existing
Loan and Security Agreement Obligations are due and owing without offset,
defense, counterclaim or recoupment of any kind or nature. Except as herein
otherwise agreed, each of the Security Documents is ratified and confirmed in
accordance with its terms and shall continue in full force and effect.
148
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWER"
SWEETHEART CUP COMPANY INC.
By: ___________________________
Name:
Title:
"PARENT"
SWEETHEART HOLDINGS INC.
By: ___________________________
Name:
Title:
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By: ___________________________
Name:
Title:
"LENDERS"
Commitment: $67,500,000 BANK OF AMERICA, N.A.,
Pro Rata Share: 42.1875% as a Lender
By: ___________________________
Name:
Title:
149
Commitment: $30,000,000 CONGRESS FINANCIAL CORPORATION,
Pro Rata Share: 18.75% as a Lender
By: ___________________________
Name:
Title:
Address:
1133 Avenue of the Xxxxxxxx,
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy No. (000) 000-0000
Commitment: $20,000,000 TRANSAMERICA BUSINESS CREDIT
Pro Rata Share: 12.50% CORPORATION, as a Lender
By: ___________________________
Name:
Title:
Address:
000 Xxxxxxxx Xxxxx Xxxxxx,
Xxxxx X-000
Xxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx Xxxxxxx
Telecopy No. (000) 000-0000
Commitment: $17,500,000 XXXXXXX NATIONAL LIFE INSURANCE
Pro Rata Share: 10.9375% COMPANY, as a Lender
By: PPM Finance Inc.,
as its Attorney-in-Fact
By: ___________________________
Name:
Title:
Address:
000 Xxxx Xxxxxx Xxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy No. (000) 000-0000
150
Commitment: $25,000,000 PNC BANK, NATIONAL ASSOCIATION,
Pro Rata Share: 15.625% as a Lender
By: ___________________________
Name:
Title:
Address:
Xxx Xxxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx-Nurse
Telecopy No. (000) 000-0000
151
