EXHIBIT 10.1
AMENDED AND RESTATED
LOAN AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION
as Lender
and
RBX INDUSTRIES, INC.
as Borrower
RBX CORPORATION
as Guarantor
Dated: August 27, 2001
TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS ........................................................................... 2
SECTION 2. CREDIT FACILITIES ..................................................................... 28
2.1 Revolving Loans ...................................................................... 28
2.2 Letter of Credit Accommodations ...................................................... 28
2.3 Purchase Money Term Loans ............................................................ 31
2.4 Term Loan ............................................................................ 35
SECTION 3. INTEREST AND FEES ..................................................................... 35
3.1 Interest ............................................................................. 35
3.2 Closing Fee .......................................................................... 37
3.3 Servicing Fee ........................................................................ 37
3.4 Unused Line Fee ...................................................................... 37
3.5 Changes in Laws and Increased Costs of Loans ......................................... 37
SECTION 4. CONDITIONS PRECEDENT .................................................................. 38
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations ............ 38
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations ................ 41
SECTION 5. COLLECTION AND ADMINISTRATION ......................................................... 42
5.1 Borrower's Loan Accounts ............................................................. 42
5.2 Statements ........................................................................... 42
5.3 Collection of Accounts ............................................................... 43
5.4 Payments ............................................................................. 44
5.5 Authorization to Make Loans .......................................................... 44
5.6 Use of Proceeds ...................................................................... 45
SECTION 6. COLLATERAL REPORTING AND COVENANTS .................................................... 45
6.1 Collateral Reporting ................................................................. 45
6.2 Accounts Covenants ................................................................... 46
6.3 Inventory Covenants .................................................................. 48
6.4 Equipment and Real Property Covenants ................................................ 48
6.5 Right to Cure ........................................................................ 49
6.6 Access to Premises ................................................................... 49
SECTION 7. REPRESENTATIONS AND WARRANTIES ........................................................ 49
7.1 Corporate Existence, Power and Authority; Subsidiaries ............................... 50
7.2 Financial Statements; No Material Adverse Change. .................................... 50
7.3 Chief Executive Office; Collateral Locations. ........................................ 50
7.4 Priority of Liens; Title to Properties ............................................... 51
7.5 Tax Returns .......................................................................... 51
7.6 Litigation ........................................................................... 51
7.7 Compliance with Other Agreements and Applicable Laws ................................. 52
7.8 Environmental Compliance ............................................................. 52
7.9 Capitalization ....................................................................... 53
7.10 Employee Benefits. ................................................................... 53
7.11 Intellectual Property ................................................................ 54
7.12 Labor Disputes ....................................................................... 54
7.13 Corporate Name; Prior Transactions ................................................... 55
7.14 Restrictions on Subsidiaries ......................................................... 55
7.15 Material Contracts ................................................................... 55
7.16 Confirmation Order. .................................................................. 55
7.17 Merger ............................................................................... 56
7.18 Accuracy and Completeness of Information. ............................................ 56
7.19 Survival of Warranties; Cumulative ................................................... 56
SECTION 8. AFFIRMATIVE AND NEGATIVE COVENANTS .................................................... 56
8.1 Maintenance of Existence ............................................................. 57
8.2 New Collateral Locations ............................................................. 57
8.3 Compliance with Laws, Regulations, Etc. .............................................. 57
8.4 Payment of Taxes and Claims .......................................................... 58
8.5 Insurance ............................................................................ 59
8.6 Financial Statements and Other Information ........................................... 59
8.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc .............................. 61
8.8 Encumbrances ......................................................................... 63
8.9 Indebtedness ......................................................................... 65
8.10 Loans, Investments, Guarantees, Etc .................................................. 67
8.11 Dividends and Redemptions ............................................................ 70
8.12 Transactions with Affiliates ......................................................... 70
8.13 Compliance with ERISA ................................................................ 70
8.14 Adjusted Tangible Net Worth .......................................................... 71
8.15 Minimum Excess Availability .......................................................... 71
8.16 End of Fiscal Years; Fiscal Quarters ................................................. 72
8.17 Change in Business ................................................................... 72
8.18 Limitation of Restrictions Affecting Subsidiaries .................................... 72
8.19 ...................................................................................... 72
8.20 Costs and Expenses ................................................................... 73
8.21 Further Assurances ................................................................... 74
SECTION 9. EVENTS OF DEFAULT AND REMEDIES ........................................................ 74
9.1 Events of Default .................................................................... 74
9.2 Remedies ............................................................................. 76
SECTION 10. ACKNOWLEDGMENT AND RESTATEMENT ........................................................ 77
10.1 Existing Obligations ................................................................. 77
10.2 Acknowledgment of Security Interests ................................................. 77
10.3 Existing Agreement ................................................................... 77
10.4 Restatement .......................................................................... 78
10.5 Release .............................................................................. 78
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW .......................... 79
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver ................ 79
11.2 Waiver of Notices .................................................................... 80
11.3 Amendments and Waivers ............................................................... 80
11.4 Waiver of Counterclaims .............................................................. 80
11.5 Indemnification ...................................................................... 81
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS ...................................................... 81
12.1 Term ................................................................................. 81
12.2 Interpretative Provisions ............................................................ 83
12.3 Notices .............................................................................. 84
12.4 Partial Invalidity ................................................................... 84
12.5 Successors ........................................................................... 85
12.7 Counterparts ......................................................................... 86
12.8 Entire Agreement ..................................................................... 86
INDEX TO
EXHIBITS AND SCHEDULES
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Exhibit A Information Certificate
Exhibit B Form of Purchase Money Term Note
Schedule 1.49 Existing Agreements
Schedule 1.105 Security Agreements
Schedule 5.5 List of Authorized Persons
Schedule 7.10 ERISA Matters
Schedule 7.16 Sources and Uses Pursuant to Confirmation Order
Schedule 8.7 Release Prices for Bedford Real Estate
Schedule 8.15 EBITDA Requirements for Covenant Reduction
Schedule 8.19 EBITDA Requirements for Business Plan Evaluations
AMENDED AND RESTATED LOAN AGREEMENT
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This Amended and Restated Loan Agreement dated as of August 27, 2001
is entered into by and among Congress Financial Corporation, a Delaware
corporation ("Lender"), RBX Industries, Inc., a Delaware corporation
("Borrower") and RBX Corporation, a Delaware corporation.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Rubatex Corporation, as debtor and debtor-in-possession, a
Delaware corporation ("Rubatex"), Xxxxxxxx Manufacturing Company, Inc., as
debtor and debtor-in-possession, a Delaware corporation ("Xxxxxxxx"), OleTex,
Inc., a Delaware corporation ("OleTex"), Midwest Rubber Custom Mixing Corp., as
debtor and debtor-in-possession, a Delaware corporation, ("Midwest"),
Xxxxxx-Xxxxx Rubber Custom Mixing Corp., as debtor and debtor-in-possession, a
Delaware corporation ("Xxxxxx", and together with Rubatex, Xxxxxxxx, OleTex and
Midwest, individually, a "Chapter 11 Borrower" and collectively, "Chapter 11
Borrower"), and RBX Corporation, as debtor and debtor-in-possession, a Delaware
corporation ("RBX"), RBX Group, Inc., as debtor and debtor-in-possession, a
Delaware corporation ("RBX Group"), UPR Disposition, Inc., as debtor and
debtor-in-possession, a Delaware corporation ("UPR"), Universal Rubber Company,
as debtor and debtor-in-possession, a Delaware corporation ("Universal"), and
Waltex Corporation, as debtor and debtor-in-possession, a Delaware corporation
("Waltex", and together with RBX, RBX Group, UPR and Universal, individually, a
"Chapter 11 Guarantor", and collectively, "Chapter 11 Guarantors") filed Chapter
11 cases under the U.S. Bankruptcy Code which were pending in the United States
Bankruptcy Court for the Western District of Virginia, Roanoke Division;
WHEREAS, Lender has provided a secured revolving credit facility in
the Chapter 11 cases to the Chapter 11 Borrowers pursuant to the Existing
Agreements (as hereinafter defined) and the Financing Order (as hereinafter
defined); and
WHEREAS, in the Chapter 11 cases of the Chapter 11 Borrowers and
Chapter 11 Guarantors, the Second Amended Joint Plan of Reorganization of RBX
Group, Inc. and its subsidiaries has been confirmed pursuant to the Confirmation
Order (as hereinafter defined), and concurrently with the making of the initial
loans or issuance of letters of credit hereunder, the effective date with
respect to such Plan has occurred; and
WHEREAS, concurrently with the effective date of such Plan, the
Chapter 11 Borrowers and Chapter 11 Guarantors (other than RBX and RBX Group)
have each merged with and into Borrower with Borrower as the surviving
corporation; and
WHEREAS, concurrently with the effective date of such Plan, RBX has
merged with and into Guarantor with Guarantor as the surviving corporation; and
WHEREAS, Borrower and Guarantor have requested that Lender provide a
secured revolving credit facility and term loan to Borrower on and after the
effective date of the Plan; and
WHEREAS, Lender is willing to provide such secured revolving credit
facility and term loan on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
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For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower
to payment of a monetary obligation, whether or not earned by performance, (a)
for property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed, (b) for services rendered or to be rendered, (c) for a
policy of insurance issued or to be issued, and (d) for a secondary obligation
incurred or to be incurred.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.3 "Adjusted Tangible Net Worth" shall mean as to any Person, at
any time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if any),
the amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its Subsidiaries (excluding the value of patents,
trademarks, tradenames, copyrights, other Intellectual Property, licenses,
goodwill, leasehold improvements, prepaid assets and other intangible assets),
calculating the book value of inventory for this purpose on a first-in-first-out
basis, after deducting from such book values all appropriate reserves in
accordance with GAAP (including all reserves for doubtful receivables,
obsolescence, depreciation and amortization) and (b) the aggregate amount of the
Indebtedness and other liabilities of such Person and its Subsidiaries
(including tax and other proper accruals).
1.4 "Affiliate" shall mean, with respect to a specified Person, any
other Person (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person; (b) which beneficially owns or holds five (5%)
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percent or more of any class of the Voting Stock or other equity interest of
such specified person; or (c) of which five (5%) percent or more of the Voting
Stock or other equity interest is beneficially owned or held by such specified
person or a Subsidiary of such specified person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") when used with
respect to any specified person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of Voting Stock, by
agreement or otherwise.
1.5 "Agent Payment Account" shall mean such bank account of
Collateral Agent as Collateral Agent may from time to time specify for purposes
of receiving payments in respect of the Obligations.
1.6 "Applicable Margin" shall mean, at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if the Quarterly
Average Excess Availability for the immediately preceding fiscal quarter is at
or within the amounts indicated for such percentage:
Quarterly Average Prime Rate Prime Rate Eurodollar Rate Eurodollar
Excess Availability Revolving Loans Term Loans Revolving Loans Term Loans
------------------- --------------- ---------- --------------- ----------
(a) $20,000,000 or more 0% 1/2% 2 3/4% 3 1/4%
(b) Greater than or equal to 1/4% 3/4% 3% 3 1/2%
$15,000,000 and less
than $20,000,000
(c) Greater than or equal to 1/2% 1% 3 1/4% 3 3/4%
$7,500,000 and less than
$15,000,000
(d) Greater than or equal to 3/4% 1 1/4% 3 1/2% 4%
$5,000,000 and less than
$7,500,000
(e) Less than $5,000,000 1% 1 1/2% 3 3/4% 4 1/4%
Provided, that, the Applicable Margin shall be calculated and established once
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each fiscal quarter commencing with the fiscal quarter ending on or about
December 31, 2001.
1.7 "Bankruptcy Code" shall mean the United States Bankruptcy Code,
being Title 11 of the United States Code, as the same now exists or may from
time to time hereafter be amended, modified, recodified or supplemented,
together with all official rules, regulations and interpretations thereunder or
related thereto.
1.8 "Bankruptcy Court" shall mean the United States Bankruptcy Court
for the Western District of Virginia, Roanoke Division.
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1.9 "Bedford Real Estate" shall mean the Real Property of Borrower
located in Bedford, Virginia as described in the survey by Xxxxx X. Xxxxxx dated
June 1, 2001, as last revised on or about the date hereof and delivered by
Borrower to Lender.
1.10 "Benefit Plan" shall mean an employee benefit plan (as defined
in Section 3(3) of ERISA) (other than medical, dental and tuition reimbursement
plans) which Borrower sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multiemployer Plan has
made contributions at any time during the immediately preceding six (6) plan
years.
1.11 "Blocked Accounts" shall have the meaning set forth in Section
5.3 hereof.
1.12 "Borrower" shall mean RBX Industries, Inc., a Delaware
corporation, as successor by merger to each of the Chapter 11 Borrowers and
Chapter 11 Guarantors (other than RBX and RBX Group), formerly known as Rubatex
Corporation and the successor upon conclusion of the Chapter 11 Cases pursuant
to the Confirmation Order, and its successors and assigns.
1.13 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) eighty-five (85%) percent of the Net Amount of Eligible
Accounts; plus
----
(b) the lesser of:
(i) the sum of: (A) the lesser of (1) thirty-five (35%)
percent multiplied by the Value of the Eligible Inventory consisting of raw
materials or (2) eighty-five (85%) percent of the Net Recovery Percentage for
the Eligible Inventory consisting of raw materials multiplied by the Value of
such Eligible Inventory plus (B) the lesser of (1) forty (40%) percent
multiplied by the Value of the Eligible Inventory consisting of finished goods
or (2) eighty-five (85%) percent of the Net Recovery Percentage for the Eligible
Inventory consisting of finished goods multiplied by the Value of such Eligible
Inventory, or
(ii) $10,000,000;
minus
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(c) any Reserves.
For purposes only of applying the sublimit on Loans based on Eligible Inventory
set forth in clause (b)(ii) above, Lender may treat the then undrawn amounts of
outstanding Letter of Credit Accommodations for the purpose of purchasing
Eligible Inventory as Loans to the extent Lender is in effect basing the
issuance of the Letter of Credit Accommodations on the Value of the Eligible
Inventory being purchased with such Letter of Credit Accommodations. In
determining the actual amounts of such Letter of Credit Accommodations to be so
treated for purposes of the sublimit, the outstanding Loans and Reserves shall
be attributed first to any components of the lending
4
formulas set forth above that are not subject to such sublimit, before being
attributed to the components of the lending formulas subject to such sublimit.
1.14 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which the Reference Bank and Lender are open for the transaction of business,
except that if a determination of a Business Day shall relate to any Eurodollar
Rate Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market.
1.15 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.16 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, partnership interests or interests in any
limited liability company at any time outstanding, and any and all rights,
warrants or options exchangeable for or convertible into such capital stock or
other interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.17 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof; provided, that, the full faith
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and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of one hundred
eighty (180) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $250,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued or
guaranteed by a corporation (except an Affiliate of Borrower) organized under
the laws of any State of the United States of America or the District of
Columbia or a bank organized under the laws of any State of the United States of
America or constituting a national banking association under the laws of the
United States of America, in each case having a rating of at least A-1 by
Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc.
or at least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations
with a term of not more than thirty (30) days for underlying securities of the
types described in clause (a) above entered into with any financial institution
having combined capital and surplus and undivided profits of not less than
$250,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or issued by any governmental agency thereof and
backed by the full faith and credit to the United States of America, in each
case maturing within one hundred eighty (180) days or less from the date of
acquisition; provided, that, the terms of such agreements comply with the
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guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and
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(f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.
1.18 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of Borrower or Guarantor to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act); (b) the liquidation or dissolution of
Borrower or Guarantor or the adoption of a plan by the stockholders of Borrower
or Guarantor relating to the dissolution or liquidation of Borrower or
Guarantor; (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act) of beneficial ownership, directly or
indirectly, of fifty (50%) percent or more of the voting power of the total
outstanding Voting Stock of Borrower or Guarantor; (d) during any period of two
(2) years, individuals who at the beginning of such period constituted the Board
of Directors of Borrower or Guarantor (together with any new directors whose
nomination for election was approved by a vote of at least a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Borrower or Guarantor, then still in office; or (e) the failure of
Guarantor to own, directly or indirectly, one hundred (100%) percent of the
voting power of the total outstanding Voting Stock of Borrower.
1.19 "Chapter 11 Borrowers" shall mean collectively, each of the
following (together with their respective successors and assigns): (a) Rubatex
Corporation, as debtor and debtor-in-possession, a Delaware corporation, (b)
Xxxxxxxx Manufacturing Company, Inc., as debtor and debtor-in-possession, a
Delaware corporation, (c) OleTex, Inc., as debtor and debtor-in-possession, a
Delaware corporation, (d) Midwest Rubber Custom Mixing Corp., as debtor and
debtor-in-possession, a Delaware corporation, and (e) Xxxxxx-Xxxxx Rubber Custom
Mixing Corp., as debtor and debtor-in-possession, a Delaware corporation; each
sometimes being referred to herein individually as a "Chapter 11 Borrower".
1.20 "Chapter 11 Cases" shall mean the Chapter 11 cases of the
Chapter 11 Borrowers and the Chapter 11 Guarantors under the Bankruptcy Code
referred to as In re RBX Corporation, et al., Case No. 0-00-00000 WRS, Jointly
-----------------------------
Administered, which were pending in the Bankruptcy Court.
1.21 "Chapter 11 Guarantors" shall mean, collectively, the following
(together with their respective successors and assigns): (a) RBX Corporation, as
debtor and debtor-in-possession, a Delaware corporation, (b) RBX Group, Inc., as
debtor and debtor-in-possession, a Delaware corporation, (c) UPR Disposition,
Inc., as debtor and debtor-in-possession, a Delaware corporation, (d) Universal
Rubber Company, as debtor and debtor-in-possession, a Delaware corporation, and
(e) Waltex Corporation; as debtor and debtor-in-possession, a Delaware
Corporation; each sometimes being referred to herein individually as a "Chapter
11 Guarantor".
1.22 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
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1.23 "Collateral" shall mean, collectively, "Collateral" as such term
is defined in each of the Security Agreements, together with any other assets or
properties of Borrower or Guarantor in or upon which Collateral Agent at any
time has a security interest or lien pursuant to any Security Agreement or
otherwise.
1.24 "Collateral Access Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Lender in good faith, from any
lessor of premises to Borrower or Guarantor, or any other person to whom any
Collateral (including Inventory, Equipment, bills of lading or other documents
of title) is consigned or who has custody, control or possession of any such
Collateral or is otherwise the owner or operator of any premises on which any of
such Collateral is located, pursuant to which such lessor, consignee or other
person, inter alia, acknowledges the security interest of Lender in such
----- ----
Collateral, agrees to waive any and all claims such lessor, consignee or other
person may, at any time, have against such Collateral, whether for processing,
storage or otherwise, and agrees to permit Lender access to, and the right to
remain on, the premises of such lessor, consignee or other person so as to
exercise Lender's rights and remedies and otherwise deal with such Collateral
and, in the case of any consignee or other person who at any time has custody,
control or possession of any Collateral, acknowledges that it holds and will
hold possession of the Collateral for the benefit of Lender and agrees to follow
all instructions of Lender with respect thereto.
1.25 "Collateral Agent" shall mean Congress Financial Corporation, a
Delaware corporation, in its capacity as Collateral Agent on behalf of Lender
and Note Trustee (for itself and on behalf of holders of the Senior Secured
Notes) pursuant to the terms of the Intercreditor Agreement and any replacement
or successor Collateral Agent.
1.26 "Confirmation Order" shall mean the Order and Judgment
Confirming the Second Amended Joint Plan of Reorganization of RBX Group, Inc.
and its Subsidiaries issued by the Bankruptcy Court and entered on July 17, 2001
in the Chapter 11 Cases.
1.27 "Consolidated Net Income" shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or unusual and/or non-recurring gains and
any extraordinary and/or unusual and/or non-recurring non-cash charges) after
deducting all charges which should be deducted before arriving at the net income
(loss) for such period and, without duplication, after deducting the Provision
for Taxes for such period, all as determined in accordance with GAAP; provided,
--------
that, (a) the net income of any Person that is not a wholly-owned Subsidiary or
----
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid or payable to
such Person or a wholly-owned Subsidiary of such Person; (b) except to the
extent included pursuant to the foregoing clause, the net income of any Person
accrued prior to the date it becomes a wholly-owned Subsidiary of such Person or
is merged into or consolidated with such Person or any of its wholly-owned
Subsidiaries or that Person's assets are acquired by such Person or by its
wholly-owned Subsidiaries shall be excluded; (c) the net income (if positive) of
any wholly-owned Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such wholly-owned Subsidiary to such
Person or to any other wholly-owned Subsidiary of such
7
Person is not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such wholly-owned Subsidiary shall be
excluded and (d) as to Borrower, the losses for discontinued operations of
Borrower at the Midwest facility in Barbarton, Ohio and at the Bedford Real
Estate shall be excluded. For the purposes of this definition, net income
excludes any gain, together with any related Provision for Taxes for such gain,
realized upon the sale or other disposition of any assets that are not sold in
the ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person and any net income realized as a result of
changes in accounting principles or the application thereof to such Person.
1.28 "Deposit Account Control Agreement" shall mean a written
agreement, in form and substance satisfactory to Lender, by and among Collateral
Agent, Borrower (or Guarantor, as the case may be) and the bank at which any
deposit account of Borrower (or Guarantor, as applicable)) is at any time
maintained which provides that such bank will comply with instructions
originated by Collateral Agent directing disposition of the funds in the deposit
account without further consent by Borrower (or Guarantor, as applicable) and
such other terms and conditions as Lender may require, including as to any such
agreement with respect to any Blocked Account, providing that all items received
or deposited in such Blocked Account are the property of Collateral Agent, that
the bank has no lien upon, or right to setoff against, the Blocked Account, the
items received for deposit therein, or the funds from time to time on deposit
therein and that the bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Blocked Accounts to the Agent Payment Account.
1.29 "Dilution" shall mean for any period, the fraction, expressed as
a percentage, the numerator of which is the aggregate amount of non-cash
reductions in Accounts for such period and the denominator of which is the
aggregate dollar amount of the sales of Borrower for such period.
1.30 "Dilution Reserve" shall mean a Reserve in amounts established
by Lender to reflect that Dilution with respect to any category of Eligible
Accounts as calculated by Lender for any period is or is reasonably anticipated
to be greater than five (5%) percent.
1.31 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person and
its Subsidiaries for such period, plus (b) depreciation, amortization and other
----
non-cash charges (including, but not limited to, imputed interest and deferred
compensation) for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), all in accordance with GAAP, plus (c)
----
Interest Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) the Provision of Taxes for
----
such period (to the extent deducted in the computation of Consolidated Net
Income of such Person).
1.32 "Effective Date" shall mean the date after which the
Confirmation Order shall have become a Final Order and that all of the
conditions precedent to the effectiveness of the Plan shall
8
have been satisfied as determined by Lender in good faith, or with the consent
of Lender, waived in accordance with the terms thereof.
1.33 "Eligible Accounts" shall mean, the Accounts created by Borrower
which are and continue to be acceptable to Lender in good faith based on the
criteria set forth below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
---- ----
delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed substantially
in accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts are not unpaid more than the earlier of (i)
ninety (90) days after the date of the original invoice for them or (ii) sixty
(60) days after the original due date for them;
(c) such Accounts comply with the terms and conditions
contained in Section 6.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or Canada
(provided, that, at any time promptly upon Lender's request, Borrower shall
-------- ----
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Lender to perfect
the security interests of Lender in those Accounts of an account debtor with its
chief executive office or principal place of business in Canada in accordance
with the applicable laws of the Province of Canada in which such chief executive
office or principal place of business is located and take or cause to be taken
such other and further actions as Lender may request to enable Lender as secured
party with respect thereto to collect such Accounts under the applicable Federal
or Provincial laws of Canada) or, at Lender's option, if the chief executive
office and principal place of business of the account debtor with respect to
such Accounts is located other than in the United States of America or Canada,
then if any of: (i) the account debtor has delivered to such Borrower an
irrevocable letter of credit issued or confirmed by a bank reasonably
satisfactory to Lender and payable only in the United States of America and in
U.S. dollars, sufficient to cover such Account, in form and substance
satisfactory to Lender and if required by Lender, the original of such letter of
credit has been delivered to Lender or Lender's agent (including Collateral
Agent) and the issuer thereof notified of, and the issuer has acknowledged in
writing, in form and substance satisfactory to Lender, the assignment of the
proceeds of such letter of credit to Collateral Agent, or (ii) such Account is
subject to credit insurance payable to Collateral Agent or Lender issued by an
insurer and on terms and in an amount acceptable to Lender, or (iii) such
Account is otherwise acceptable in all respects to Lender (subject to such
lending formula with respect thereto as Lender may in good faith determine);
9
(f) such Accounts do not consist of progress xxxxxxxx, xxxx
and hold invoices or retainage invoices, except as to xxxx and hold invoices, if
Lender shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Lender, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such
invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed by Borrower to such account
debtor or claimed owed by such account debtor may be deemed Eligible Accounts);
(h) there are no facts, events or occurrences known to Lender,
Borrower or Guarantor which would impair the validity, enforceability or
collectability of such Accounts or reduce the amount payable or delay payment
thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Collateral Agent and any goods giving rise
thereto are not, and were not at the time of the sale thereof, subject to any
liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of
the account debtor with respect to such Accounts is an officer, employee, agent
or other Affiliate of Borrower or Guarantor;
(k) the account debtors with respect to such Accounts are not
any foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of (i) ninety (90) days after the date of
the original invoice for them or (ii) sixty (60) days after the original due
date for them, which constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
(m) such Accounts owing by a single account debtor or its
Affiliates (other than Georgia Duck and Cordage Mill Inc. ("Georgia Duck")) do
not constitute more than ten (10%) percent of all Accounts and as to such
Accounts owing by Georgia Duck do not constitute more than the lesser of ten
(10%) percent of all Accounts or $2,500,000 (but in each case the portion of the
Accounts not in excess of such applicable percentage or amount may be deemed
Eligible Accounts);
(n) such Accounts are not evidenced by or do not arise
pursuant to any instrument or chattel paper;
10
(o) the account debtor is not located in a State requiring the
filing of a Notice of Business Activities Report or similar report in order to
permit Borrower to seek judicial enforcement in such State of payment of such
Account, unless Borrower has qualified to do business in such state or has filed
a Notice of Business Activities 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;
(p) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to such
account debtors as determined by Borrower consistent with its current practice
and as is acceptable to Lender (but the portion of the Accounts not in excess of
such credit limit may be deemed Eligible Accounts).
(q) such Accounts are owed by account debtors deemed
creditworthy with respect to their ability to pay their respective accounts at
all times by Lender, as determined in good faith by Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
1.34 "Eligible Inventory" shall mean, the Inventory consisting of
finished goods held for resale in the ordinary course of the business of
Borrower and raw materials for such finished goods, in each case which are
acceptable to Lender in good faith based on the criteria set forth below. In
general, Eligible Inventory shall not include (a) work-in-process; (b) spare
parts for equipment; (c) packaging and shipping materials; (d) Inventory at
premises other than those owned and controlled by Borrower, except that any
------ ----
Inventory which would otherwise be deemed Eligible Inventory at locations which
are not owned and operated by Borrower shall nevertheless be considered Eligible
Inventory if: (i) as to premises leased by Borrower, Lender shall have received
a Collateral Access Agreement duly authorized, executed and delivered by the
owner and lessor of such premises, or otherwise at Lender's option if Lender
shall not have received a Collateral Access Agreement with respect to such
premises, provided, that, Lender may at any time and from time to time establish
such Reserves as Lender may determine in respect of amounts at any time payable
by Borrower to the owner or lessor of such premises without limiting any other
rights and remedies of Lender with respect to the establishment of Reserves or
otherwise (except that upon Borrower's written request instead of establishing
------ ----
such a Reserve, any Inventory at premises where Lender has not received a
Collateral Access Agreement duly authorized, executed and delivered by the owner
and lessor thereof may not be considered Eligible Inventory) and (ii) as to
premises of third parties (including sales agents, warehouses, consignees and
processors), Lender shall have received a Collateral Access Agreement duly
authorized, executed and delivered by the owner and operator of such premises or
otherwise at Lender's option if Lender has not received a Collateral Access
Agreement with respect to such premises, provided, that, Lender may at any time
and from time to time establish such Reserves as Lender may determine in respect
of amounts at any time payable by Borrower to the owner or operator of such
premises without limiting any other rights and remedies of Lender with respect
to the establishment of Reserves or otherwise (except that upon Borrower's
------ ----
written request instead of establishing such a Reserve, any Inventory at
premises
11
where Lender has not received a Collateral Access Agreement duly authorized,
executed and delivered by the owner and lessor thereof may not be considered
Eligible Inventory), and in addition, if required by Lender: (A) the owner and
operator executes appropriate UCC-1 financing statements in favor of Borrower,
which are duly assigned to Collateral Agent and (B) any secured lender to the
owner and operator is properly notified of the first priority lien on such
Inventory of Collateral Agent; (e) Inventory located outside the continental
United States of America; (f) Inventory subject to a security interest or lien
in favor of any person other than Collateral Agent except those permitted in
this Agreement; (g) xxxx and hold goods; (h) unserviceable, obsolete or
discontinued Inventory; (i) slow moving Inventory; (j) Inventory which is not
subject to the first priority, valid and perfected security interest of
Collateral Agent; (k) returned, damaged and/or defective Inventory; and (l)
Inventory purchased or sold on consignment. General criteria for Eligible
Inventory may be established and revised from time to time by Lender in good
faith. Any Inventory which is not Eligible Inventory shall nevertheless be part
of the Collateral.
1.35 "Eligible New Equipment" shall mean manufacturing Equipment
owned by Borrower and acquired after the date hereof, which is in good order,
repair, running and marketable condition, located at Borrower's premises and
acceptable to Lender in all respects. In general, Eligible New Equipment shall
not include: (a) Equipment at premises other than those owned or leased and
controlled by Borrower, except that any Equipment which would otherwise be
------ ----
deemed Eligible New Equipment at locations which are leased by Borrower shall
nevertheless be considered Eligible New Equipment if Lender shall have received
a Collateral Access Agreement duly authorized, executed and delivered by the
owner and lessor of such premises, or otherwise at Lender's option if Lender
shall not have received a Collateral Access Agreement with respect to such
premises, provided, that, Lender may at any time and from time to time establish
such Reserves as Lender may determine in respect of amounts at any time payable
by Borrower to the owner or lessor of such premises without limiting any other
rights and remedies of Lender with respect to the establishment of Reserves or
otherwise; (b) Equipment subject to a security interest or lien in favor of any
person other than Collateral Agent; (c) Equipment which is not located in the
continental United States of America; (d) Equipment which is not subject to the
first priority, valid and perfected security interest of Collateral Agent; (e)
worn-out, obsolete, damaged or defective Equipment or Equipment not used or
usable in the ordinary course of such Borrower's business as presently
conducted; (f) computer hardware; (g) tooling or (h) Equipment not used for the
manufacturing of Inventory in the ordinary course of the business of Borrower.
General criteria for Eligible New Equipment may be established and revised from
time to time by Lender in good faith. Any Equipment which is not Eligible New
Equipment shall nevertheless be part of the Collateral.
1.36 "Eligible New Real Property" shall mean Real Property acquired
by Borrower in fee simple after the date hereof and acceptable to Lender in all
respects. In general, Eligible New Real Property shall not include: (a) Real
Property which is not owned and operated by Borrower; (b) Real Property not used
in the ordinary course of the business of Borrower; (c) Real Property subject to
a security interest, lien or mortgage or other encumbrance in favor of any
person other than Collateral Agent, except as Lender may otherwise specifically
agree; (d) Real Property which is not located in the continental United States
of America; (e) Real Property which is not subject to the first priority, valid
and perfected security interest, lien and mortgage of Collateral Agent;
12
(f) Real Property where Lender determines that issues relating to compliance
with Environmental Laws adversely affect the value thereof or the ability of
Collateral Agent or Lender to sell or otherwise dispose thereof. General
criteria for Eligible New Real Property may be established and revised from time
to time by Lender in good faith. Any Real Property which is not Eligible New
Real Property shall nevertheless be part of the Collateral.
1.37 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between each Borrower and
any governmental authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.38 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.39 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.40 "ERISA Affiliate" shall mean any person required to be
aggregated with Borrower or Guarantor or any Subsidiary of Borrower or Guarantor
under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.41 "ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Benefit Plan; (b) the adoption of any amendment to a Benefit Plan that would
require the provision of security pursuant to Section
13
401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect
to any Benefit Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Benefit Plan; (e) the occurrence of a "prohibited transaction" with respect to
which Borrower or any of its Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which Borrower or any of
its Subsidiaries could otherwise be liable; (f) a complete or partial withdrawal
by Borrower or any ERISA Affiliate from a Multiemployer Benefit Plan or a
cessation of operations which is treated as such a withdrawal or notification
that a Multiemployer Plan is in reorganization; (g) the filing of a notice of
intent to terminate, the treatment of a Benefit Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
Pension Benefit Guaranty Corporation to terminate a Benefit Plan or
Multiemployer Plan; (h) 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 Benefit Plan or Multiemployer Plan;
(i) the imposition of any liability under Title IV of ERISA, other than the
Pension Benefit Guaranty Corporation premiums due but not delinquent under
Section 4007 of ERISA, upon Borrower or any ERISA Affiliate; and (j) any other
event or condition with respect to a Benefit Plan or Multiemployer Plan or any
Benefit Plan subject to Title IV of ERISA maintained, or contributed to, by any
ERISA Affiliate that could reasonably be expected to result in liability of
Borrower in excess of $100,000.
1.42 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Lender) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by or on behalf of Borrower.
1.43 "Eurodollar Rate Loans" shall mean, individually and
collectively, Eurodollar Rate Revolving Loans and Eurodollar Rate Term Loans.
1.44 "Eurodollar Rate Revolving Loans" shall mean any Revolving Loans
or portion thereof on which interest is payable based on the Adjusted Eurodollar
Rate in accordance with the terms hereof.
1.45 "Eurodollar Rate Term Loans" shall mean any portion of the Term
Loan on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.46 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 9.1 hereof.
14
1.47 "Excess Availability" shall mean, the amount calculated at any
time, equal to: (a) the lesser of: (i) the Borrowing Base or (ii) the Revolving
Loan Limit minus (b) the sum of: (i) the amount of all then outstanding and
-----
unpaid Obligations, plus (ii) the aggregate amount of all trade payables and
other obligations of Borrower which are more than sixty (60) days past due as of
such time plus (iii) the amount of checks issued by Borrower to pay trade
payables and other obligations which are more than sixty (60) days past due, but
not yet sent (without duplication of amounts included in clause (b)(ii) of this
definition).
1.48 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
the same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.49 "Existing Agreements" shall mean, collectively, the following
(each as amended, modified or supplemented prior to the date hereof): (a) the
Loan and Security Agreement, dated April 20, 2001, by and among Lender, Chapter
11 Borrowers and the Chapter 11 Guarantors, and (b) the other agreements listed
on Schedule 1.49 hereto.
1.50 "Final Order" shall mean a judgement, order, ruling or other
decree issued and entered by the Bankruptcy Court or by any state or other
federal court or other tribunal which judgment, order, ruling or other decree
has not been reversed, stayed, modified or amended and as to which (a) the time
to appeal or petition for review, rehearing or certiorari has expired and as to
which no appeal or petition for review, rehearing or certiorari is pending or
(b) any appeal or petition for review, rehearing or certiorari has been finally
decided and no further appeal or petition for review, review, rehearing or
certiorari can be taken for granted.
1.51 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements (including the Security
Agreements) and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Borrower or any Obligor in connection
with this Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.52 "Financing Order" shall mean the Financing Order pursuant to
Sections 361, 363 and 364(c) and (d) of the Bankruptcy Code and Rule 4001 of the
Federal Rules of Bankruptcy Procedure (i) Authorizing Debtors to Obtain
Post-Petition Financing, Granting Senior Liens and Priority Administrative
Expense Status, Modifying the Automatic Stay, Authorizing the Debtors to Enter
into Agreements with Congress Financial Corporation, as Lender (ii) Granting
Adequate Protection and Administrative Expense Priority to the Trustee for the
Senior Secured Noteholders and (iii) Authorizing Debtors to Indefeasibly Pay in
Full the Secured Claims Asserted by Pre-Petition Secured Lenders, entered by the
Bankruptcy Court on April 19, 2001 in the Chapter 11 Cases.
1.53 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable
15
to the circumstances as of the date of determination consistently applied,
except that, for purposes of Section 8.14 hereof, GAAP shall be determined on
the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements delivered to
Lender prior to the date hereof.
1.54 "General Intangibles" shall mean all of Borrower's now owned or
hereafter existing or acquired contracts, contract rights, licenses, customer
lists and other general intangibles of any kind, nature or description,
including any tax and duty refunds, goodwill, licenses, whether as licensor or
licensee, choses in action and other claims and existing and future leasehold
interests in equipment, real estate and fixtures, Intellectual Property,
interests in general partnerships or limited liability companies, including
NeoCork Technologies, L.L.C., agreements or arrangements with sales agents,
distributors or the like and/or consignees, warehouses or other third persons in
possession of any of the Inventory or any other Collateral, the Blocked
Accounts, any other deposit accounts, investment accounts or securities
accounts, loans by Lender to any Affiliates of any Borrower, letters of credit
supporting payment of any Receivables or other obligations included within the
Collateral, documents which evidence rights to Inventory or any other
Collateral, instruments evidencing obligations in respect of any Receivables or
other obligations included within the Collateral, rights and claims against
shippers and carriers, indemnification rights, guaranty or warranty claims with
respect to any Receivables, Inventory or other Collateral, any funds which may
become payable to Borrower in connection with the termination of any Benefit
Plan or other employee benefit plan and any other amounts payable to Borrower
from any Benefit Plan or other employee benefit plan, business interruption
insurance and proceeds thereof, casualty or any similar types of insurance and
any proceeds thereof and proceeds of insurance covering the lives of employees
on which Borrower is a beneficiary.
1.55 "Governmental Authority" shall mean any nation or government,
any state, province, 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.
1.56 "Guarantor" shall mean RBX Corporation, a Delaware corporation,
as successor by merger to RBX Group, Inc., and the successor upon conclusion of
the Chapter 11 Cases pursuant to the Confirmation Order, and its successors and
assigns.
1.57 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
16
1.58 "Holding Company Merger" shall mean the merger of RBX Group with
and into Guarantor, with Guarantor as the surviving corporation pursuant to the
terms of certain of the Merger Agreements.
1.59 "Indebtedness" shall mean, with respect to any Person, without
duplication, any liability, whether or not contingent, (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof) or evidenced by bonds,
notes, debentures or similar instruments; (b) representing the balance deferred
and unpaid of the purchase price of any property or services (except any such
balance that constitutes an account payable to a trade creditor (whether or not
an Affiliate) created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection with obtaining goods or
materials that is not overdue by more than ninety (90) days or in connection
with obtaining services that is not overdue by more than the number of days that
is consistent with the current practices of Borrower as of the date hereof,
unless the trade payable is being contested in good faith); (c) all obligations
as lessee under leases which have been, or should be, in accordance with GAAP
recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any
indebtedness described in this definition of another Person, including, without
limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial condition; (e) all obligations with respect to mandatorily
redeemable stock and redemption or repurchase obligations under any Capital
Stock or other equity securities issued by such Person which redemption and
repurchase obligations are mandatory or are exercisable at the election of the
holder thereof; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances or similar documents or instruments
issued for such Person's account; and (g) all indebtedness of such Person in
respect of indebtedness of another Person for borrowed money or indebtedness of
another Person otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person,
whether or not such obligations, liabilities or indebtedness are assumed by or
are a personal liability of such Person, all as of such time.
1.60 "Information Certificate" shall mean the Information
Certificates with respect to Borrower and Guarantor constituting Exhibit A
hereto containing material information with respect to Borrower and Guarantor,
their respective businesses and assets provided by or on behalf of Borrower or
Guarantor to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.61 "Intellectual Property" shall mean all of Borrower's now owned
and hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
17
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill; customer and other lists in
whatever form maintained; domain names and domain name registrations; and trade
secret rights, copyright rights, rights in works of authorship, and contract
rights relating to computer software programs, in whatever form created or
maintained.
1.62 "Interest Expense" shall mean, for any period, as to any Person
and its Subsidiaries, as determined in accordance with GAAP, the total interest
expense, whether paid or accrued (including the interest component of Capital
Leases for such period), including, without limitation, all bank fees,
commissions, discounts and other fees and charges owed with respect to letters
of credit, banker's acceptances or similar instruments which, in accordance with
GAAP, are required to be accounted for as interest expense.
1.63 "Intercreditor Agreement" shall mean the Intercreditor and
Collateral Agency Agreement, dated of even date herewith, by and among
Collateral Agent, Senior Secured Note Trustee (for itself and the holders of the
Senior Secured Notes), as acknowledged and agreed to by Borrower and Guarantor,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.64 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
-------- ----
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
1.65 "Interest Rate" shall mean:
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Revolving Loans, a rate equal to
one-half (1/2%) percent per annum in excess of the Prime Rate,
(ii) as to Prime Rate Term Loans, a rate equal to one
(1%) percent per annum in excess of the Prime Rate,
(iii) as to Eurodollar Rate Revolving Loans, a rate equal
to three and one-quarter (3 1/4%) percent per annum in excess of the Adjusted
Eurodollar Rate (in each case, based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower as in effect three (3) Business Days after
the date of receipt by Lender of the request of Borrower for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is higher or
lower than any rate previously quoted to Borrower), and
(iv) as to Eurodollar Rate Term Loans, a rate equal to
three and three-quarters (3 3/4%) percent per annum in excess of the Adjusted
Eurodollar Rate (determined as provided above).
18
(b) Subject to clause (c) of this definition below, effective
as of the first (1st) day of the second month after the end of each fiscal
quarter (commencing with the fiscal quarter ending on or about December 31,
2001), the Interest Rate payable by Borrower shall be increased or decreased, as
the case may be, (i) as to Prime Rate Loans, to the rate equal to the Applicable
Margin on a per annum basis in excess of the Prime Rate, and (ii) as to
Eurodollar Rate Loans, to the rate equal to the Applicable Margin on a per annum
basis in excess of the Adjusted Eurodollar Rate.
(c) Notwithstanding anything to the contrary contained in
clauses (a) and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall
be the highest percentage set forth in the definition of the term Applicable
Margin for each category of Loans (without regard to the amount of Quarterly
Average Excess Availability) plus two (2%) percent per annum, at Lender's
option, after notice to Borrower, (i) for the period (A) from and after the
effective date of termination hereof until Lender has received full and final
payment of all outstanding and unpaid Obligations which are not contingent and
cash collateral (or an acceptable letter of credit) in the amounts and on the
terms required under Section 12.1 hereof for contingent Obligations
(notwithstanding entry of a judgment against Borrower) and (B) from and after
the date of the occurrence of an Event of Default for so long as such Event of
Default is continuing, and (ii) on Loans to Borrower at any time outstanding in
excess of the Borrowing Base (whether or not such excess(es) arise or are made
with or without Lender's knowledge or consent and whether made before or after
an Event of Default).
1.66 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods held for sale or lease, or furnished or to be
furnished under contracts of service or consumed in Borrower's business and all
other inventory of whatsoever kind or nature, wherever located, including raw
materials, intermediates, work-in-process, packaging materials, semi-finished
inventory, finished goods, manufacturing supplies and spare parts.
1.67 "Investment Property Control Agreement" shall mean an agreement
in writing, in form and substance satisfactory to Lender, by and among
Collateral Agent, Borrower (or Guarantor, as the case may be) and any securities
intermediary, commodity intermediary or other person who has custody, control or
possession of any investment property of Borrower (or Guarantor, as applicable)
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
of Collateral Agent, that it will comply with entitlement orders originated by
Collateral Agent with respect to such investment property, or other instructions
of Collateral Agent, or (as the case may be) apply any value distributed on
account of any commodity contract as directed by Collateral Agent, in each case,
without the further consent of Borrower or Guarantor and including such other
terms and conditions as Lender may require.
1.68 "Lender" shall mean Congress Financial Corporation, a Delaware
corporation, and its successors and assigns.
19
1.69 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Lender for the account of Borrower or any Obligor
or (b) with respect to which Lender has, for the benefit of Borrower or
Guarantor, agreed to indemnify the issuer or guaranteed to the issuer the
performance by Borrower or Guarantor of its obligations to such issuer.
1.70 "Loans" shall mean the Term Loan, the Revolving Loans and the
Purchase Money Term Loans.
1.71 "Material Adverse Effect" shall mean a material adverse effect
on (a) the condition (financial or otherwise), business, performance, operations
or properties of Borrower (but not including for this purpose any material
adverse effect on any industry as a whole, except to the extent it has or has a
reasonable likelihood of having such a material adverse affect with respect to
the condition (financial or otherwise), business, performance, operations or
properties of Borrower); (b) the legality, validity or enforceability of this
Agreement or any of the other Financing Agreements; (c) the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Collateral Agent upon the Collateral or any other property which is security for
the Obligations; (d) the Collateral or any other property which is security for
the Obligations, or the aggregate value of the Collateral or such other
property; (e) the ability of Borrower to repay the Obligations or of Borrower to
perform its obligations under this Agreement or any of the other Financing
Agreements; or (f) the ability of Collateral Agent or Lender to enforce the
obligations or realize upon the Collateral or otherwise with respect to the
rights and remedies of Collateral Agent or Lender under this Agreement or any of
the other Financing Agreements.
1.72 "Material Contract" shall mean (a) any contract or other
agreement (other than the Financing Agreements), written or oral, of Borrower
involving monetary liability of or to any Person in an amount in excess of
$1,000,000 in any fiscal year and (b) any other contract or other agreement
(other than the Financing Agreements), whether written or oral, to which
Borrower is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations or prospects of Borrower or the validity or enforceability of this
Agreement, any of the other Financing Agreements, or any of the rights and
remedies of Collateral Agent or hereunder or thereunder.
1.73 "Maximum Credit" shall mean $45,000,000.
1.74 "Merger Agreements" shall mean, collectively, the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the Agreement of Merger, dated as
of August 17, 2001, by and among Borrower, the Chapter 11 Borrowers and the
Chapter 11 Guarantors (other than RBX and RBX Group); (b) the Agreement of
Merger, dated as of August 17, 2001, by and among Guarantor and RBX Group; (c)
the Certificates of Merger of Guarantor and RBX Group; (d) the Certificates of
Merger of each of Chapter 11 Borrowers and Chapter 11 Guarantors (other than RBX
and RBX Group); and (e) all related agreements, documents and instruments.
20
1.75 "Mergers" shall mean, collectively, (a) the mergers of each of
the Chapter 11 Borrowers and the Chapter 11 Guarantors (other than RBX and RBX
Group) with and into Borrower, with Borrower as the surviving corporation
pursuant to the terms of the Merger Agreements and (b) the merger of RBX Group
with and into Guarantor, with Guarantor as the surviving corporation pursuant to
the terms of the Merger Agreements.
1.76 "Minimum Sale Price" shall mean:
(a) Subject to clause (c) of this definition below, in
the case of the sale of any Equipment permitted under Section 8.7(b)(iii)
hereof, the amount equal to (i) the orderly liquidation value of such Equipment,
as set forth in the most recent appraisals with respect to the Equipment
received by Lender prior to the date hereof (or in the case of Equipment
acquired after the date of such appraisals, as set forth in such appraisals
thereof as Lender may require), minus (ii) the amount equal to (A) in the case
-----
of Equipment set forth in the most recent appraisals received by Lender prior to
the date hereof, (1) the total amount of payments of principal of the Term Loan
received by Lender prior to the date of the sale of such Equipment multiplied by
(2) the fraction with a numerator equal to the orderly liquidation value of the
Equipment to be sold as set forth in the most recent appraisals with respect
thereto received by Lender prior to the date hereof and a denominator equal to
the total amount of the orderly liquidation value of all Equipment as set forth
in such appraisals and (B) in the case of Eligible New Equipment which has been
the basis for a Purchase Money Term Loan, the total amount of payments of
principal of the applicable Purchase Money Term Loan received by Lender prior to
the date of the sale of such Equipment prior to the date of the sale of such
Equipment.
(b Subject to clause (c) below, in the case of the sale
of any Real Property permitted under Section 8.7(b)(iii) hereof, the amount
equal to (i) the fair market value of such Real Property, as set forth in the
appraisals with respect thereto received by Lender prior to the date hereof (or
in the case of Real Property acquired after the date of such appraisals, as set
forth in such appraisals as Lender may require) minus (ii) the amount equal to
-----
(A) in the case of Real Property set forth in the most recent appraisals
received by Lender prior to the date hereof, (1) the total amount of payments of
principal of the Term Loan received by Lender prior to the date of the sale of
such Real Property multiplied by (2) the fraction with a numerator equal to the
fair market value of the Real Property to be sold as set forth in the appraisal
with respect thereto received by Lender prior to the date hereof and a
denominator equal to the total amount of the fair market value of all Real
Property set forth in such appraisals and (B) in the case of Eligible New Real
Property which has been the basis for a Purchase Money Term Loan, the total
amount of payments of principal of the applicable Purchase Money Term Loan
received by Lender prior to the date of the sale of such Real Property.
(c Notwithstanding anything to the contrary set forth
in clauses (a) and (b) of this definition above, (i) Borrower may, at its
option, once each month provide to Lender a list of all of the Equipment or Real
Property (other than the Bedford Real Estate) sold pursuant to Section
8.7(b)(iii) hereof in the immediately preceding month which list shall include
(A) a description of such Equipment or Real Property from the appraisal thereof
received by Lender prior to the date hereof with respect to such Equipment or
Real Property, (B) the actual Net Cash Proceeds from the
21
sale of such Equipment and Real Property as received by Lender in accordance
with the terms of Section 8.7(b)(iii) hereof and (C) the orderly liquidation
value for such Equipment or fair market value for such Real Property as set
forth in such appraisals, (ii) to the extent that the aggregate amount of the
Net Cash Proceeds received by Lender from the sale of such Equipment and Real
Property shall exceed the aggregate amount of the appraised orderly liquidation
value of such Equipment and Real Property, Borrower may, at its option, upon
prior written notice to Lender in connection with subsequent sales of any
Equipment or Real Property pursuant to Section 8.7(b)(iii) reduce the amount
that it would otherwise be required to receive in payment for the sale of such
Equipment or Real Property under clause (a) or clause (b) of this definition.
1.77 "Mortgages" shall mean, individually and collectively, each of
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Deed of Trust,
Assignment of Rents and Leases and Security Agreement, dated April 20, 2001, by
Borrower as successor by merger to Rubatex in favor of Collateral Agent with
respect to the Real Property and related assets of Borrower located in Bedford,
Virginia; (b) the Deed of Trust and Security Agreement, dated April 20, 2001, by
Borrower as successor by merger to Waltex in favor of Collateral Agent with
respect to the Real Property and related assets of Borrower located in Bedford,
Virginia; (c the Deed of Trust, Security Agreement and Fixture Filing, dated by
April 20, 2001, by Borrower as successor by merger to Rubatex in favor of
Collateral Agent with respect to the Real Property and related assets of
Borrower located in Conover, North Carolina; (d) the Deed of Trust, Assignment
of Rents and Leases and Security Agreement, dated April 20, 2001, by Borrower as
successor by merger to Xxxxxxxx in favor of Collateral Agent with respect to the
Real Property and related assets of Borrower located in Buchanan, Virginia; (e)
the Deed to Secure Debt and Security Agreement, dated April 20, 2001, by
Borrower as successor by merger with Xxxxxx-Xxxxx in favor of Collateral Agent
with respect to Real Property and related assets of Borrower located in
Tallapoosa, Georgia and (f) the Mortgage, Security Agreement and Assignment of
Leases and Rents, dated of even date herewith, by Borrower as successor by
merger to Rubatex Corporation in favor of Collateral Agent with respect to the
Real Property and related assets of Borrower located in Colt, Arkansas.
1.78 "Multiemployer Plan" shall mean 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
Borrower or any ERISA Affiliate.
1.79 "Net Amount of Eligible Accounts" shall mean the gross amount of
the Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto.
1.80 "Net Cash Proceeds" shall mean the aggregate cash proceeds
payable to Borrower (and received by Lender) in respect of the sale price for
any Equipment or Real Property, net of the direct costs relating to such sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions), taxes paid or payable as a result thereof, and amounts
required to be applied to the repayment of Indebtedness secured by a lien on the
asset or assets that
22
are the subject of such sale. Net Cash Proceeds shall exclude any non-cash
proceeds received from any sale but shall include such proceeds when and as
converted by Borrower to cash and received by Lender in accordance with the
terms hereof.
1.81 "Net Recovery Percentage" shall mean the fraction, expressed as
a percentage, (a) the numerator of which is the amount equal to the amount of
the recovery in respect of any category of the Inventory at such time on an
orderly value basis as set forth in the most recent acceptable appraisal of
Inventory received by Lender in accordance with Section 6.3, net of operating
expenses, liquidation expenses and commissions, and (b) the denominator of which
is the original cost of the aggregate amount of such Inventory subject to such
appraisal.
1.82 "Obligations" shall mean, collectively, the Pre-Effective Date
Obligations and the Post-Effective Date Obligations.
1.83 "Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations (including Guarantor),
other than Borrower.
1.84 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Code), limited liability
company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision
thereof.
1.85 "Plan" shall mean the Second Amended Joint Plan of
Reorganization of RBX Group, Inc. and its Subsidiaries dated May 11, 2001, as
confirmed by order of the Bankruptcy Court on July 17, 2001 and any amendments,
supplements or modifications thereto.
1.86 "Post-Effective Date Obligations" shall mean any and all Loans,
Letter of Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrower to
Collateral Agent or Lender and/or its affiliates arising on and after the
Effective Date, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to Borrower under the Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the commencement of such case, whether or
not such amounts are allowed or allowable in whole or in part in such case),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.87 "Pre-Effective Date Obligations" shall mean any and all
obligations, liabilities and indebtedness of every kind, nature and description
owing by Chapter 11 Borrowers to Lender and/or its affiliates arising prior to
the Effective Date, including principal, interest, charges, fees,
23
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, arising under the Existing Agreements, now existing,
whether arising before or during the term of the Existing Agreements, or during
the Chapter 11 Cases, or before, during or after the confirmation of any plan of
reorganization in the Chapter 11 Cases (and including any principal, interest,
fees, costs, expenses and other amounts owed to Lender by any Chapter 11
Borrower in the Chapter 11 Cases or any similar case or proceeding), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.88 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.89 "Prime Rate Loans" shall mean, individually and collectively,
the Prime Rate Revolving Loans and the Prime Rate Term Loan.
1.90 "Prime Rate Revolving Loan" shall mean any Revolving Loans or
portion thereof on which interest is payable based on the Prime Rate in
accordance with the terms hereof.
1.91 "Prime Rate Term Loan" shall mean the portion of the Term Loan
on which interest is payable based on the Prime Rate in accordance with the
terms hereof.
1.92 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.93 "Purchase Money Loan Limit" shall mean, at any time, the amount
equal to the lesser of (a) $5,000,000 or (b) the aggregate amount of the Net
Cash Proceeds received by Lender from sales of Equipment or Real Property
permitted under Section 8.7(b)(iii) hereof for the period commencing as of the
date hereof through such time.
1.94 "Purchase Money Term Loans" shall mean the secured term loans
hereafter made by Lender to Borrower as provided for in Section 2.3; such term
loans being from time to time referred to herein individually as an "Purchase
Money Term Loan".
1.95 "Purchase Money Term Notes" shall mean, collectively, the
Purchase Money Term Notes which may at any time hereafter be issued by Borrower
to Lender pursuant to Section 2.3 hereof to evidence a Purchase Money Term Loan;
such notes being from time to time referred to herein individually as an
"Purchase Money Term Note".
1.96 "Quarterly Average Excess Availability" shall mean, at any time,
the average of the amount of the Excess Availability for the immediately
preceding fiscal quarter as calculated by Lender in good faith based on the
amount of the Excess Availability on the date in each week
24
during such fiscal quarter as of which the Borrowing Base is calculated in the
reports provided by Borrower to Lender pursuant to Section 6.1(a) hereof.
1.97 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower and Guarantor, including leasehold interests, together
with Borrower's or Guarantor's interests in all buildings, structures, and other
improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located.
1.98 "Receivables" shall mean: (a) all Accounts; (b) all amounts at
any time payable to Borrower in respect of the sale or other disposition by
Borrower of any Account or other obligation for the payment of money; (c) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (d) all
letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued payable to Borrower or otherwise in favor of or
delivered to Borrower in connection with any Account; (e) chattel paper,
instruments, notes and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including General Intangibles), rendition of services or from loans or advances
by Borrower to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of Borrower) or otherwise associated
with any Accounts, Inventory, other Receivables or General Intangibles
(including, without limitation, bills of lading, warehouse receipts and other
documents of title or shipping documents); (f) all monies, securities and other
investment property, credit balances, deposits, deposit accounts and other
property and the proceeds thereof, now or hereafter held or received or held by,
or in transit to, Collateral Agent or Lender or any of its Affiliates or
participants or held or received by any other bank, other financial institution
or other person, whether for safekeeping, pledge, custody, transmission,
collection or otherwise; (g) deposits (general or special) and balances at any
bank or other financial institution or other person; (h) all right, title and
interest in, to and in respect of the foregoing, including, without limitation,
all goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, any of same, including,
without limitation, all returned, reclaimed or repossessed Inventory; (i) all
right, title and interest, and all enforcement and other rights, remedies, and
security and liens, in, to and in respect of any of the foregoing, including,
without limitation, rights of stoppage in transit, replevin, repossession,
sequestration and reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guaranties, or other contracts of suretyship with
respect thereto, or deposits or other security for the obligation of any account
debtor; and (j) credit and other insurance with respect to any Receivables or
Inventory.
1.99 "Records" shall mean all of Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).
25
1.100 "Reference Bank" shall mean First Union National Bank, or such
other bank as Lender may from time to time designate.
1.101 "Renewal Date" shall have the meaning set forth in Section
11.1(a) hereof.
1.102 "Reserves" shall mean as of any date of determination, such
amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to Borrower under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value, (ii) the assets,
business or prospects of Borrower or any Obligor or (iii the security interests
and other rights of Collateral Agent or Lender in the Collateral (including the
enforceability, perfection and priority thereof), or (b) to reflect Lender's
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Obligor to Lender is or may have been
incomplete, inaccurate or misleading in any material respect or (c) to reflect
outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or
(d) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default. The term "Reserves" as used herein shall
include, in addition and not in limitation, the Dilution Reserve. To the extent
Lender may revise the lending formulas used to determine the Borrowing Base or
establish new criteria or revise existing criteria for Eligible Accounts or
Eligible Inventory so as to address any circumstances, condition, event or
contingency in a manner satisfactory to Lender, Lender shall not establish a
Reserve for the same purpose. The amount of any Reserve established by Lender
shall have a reasonable relationship to the event, condition or other matter
which is the basis for such reserve as determined by Lender in good faith.
1.103 "Revolving Loan Limit" shall mean $35,000,000.
1.104 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.105 "Security Agreements" shall mean, collectively, the agreements
listed on Schedule 1.105 hereto and any other agreement at any time executed
and/or delivered by Borrower or any Obligor to or in favor of Collateral Agent
granting a security interest in or lien upon any Collateral of Borrower or such
Obligor to Collateral Agent, in each case as the same now or may hereafter exist
and may be amended, modified, supplemented, extended, renewed, restated or
replaced; sometimes being referred to herein individually as a "Security
Agreement".
1.106 "Senior Secured Note Indenture" shall mean the Indenture, dated
on or about the date hereof, by and among Guarantor, as issuer, Borrower, as
Subsidiary Guarantor and the Senior Secured Note Trustee, as Trustee, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
26
1.107 "Senior Secured Note Trustee" shall mean State Street Bank and
Trust Company, as trustee under the Senior Secured Note Indenture and any
successor, replacement or additional trustee and their respective successors and
assigns.
1.108 "Senior Secured Notes" shall mean, collectively, the 12% Senior
Secured Notes due issued by Guarantor in the aggregate original principal amount
of $25,000,000, pursuant to the Senior Secured Note Indenture, as such notes now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.109 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited or general partnership, trust, association or
other business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the election of
the board of directors of such corporation (irrespective of whether, at the
time, Capital Stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency),
managers, trustees or other controlling persons, or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more subsidiaries of such Person.
1.110 "Term Loan" shall mean the term loan made by Lender to Borrower
as provided for in Section 2.4 hereof.
1.111 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Lender may otherwise determine).
1.112 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on an average cost basis in
accordance with GAAP (and consistent with the current practices of Borrower) or
(b) market value as determined in accordance with GAAP, provided, that, for
-------- ----
purposes of the calculation of the Borrowing Base, (i) the Value of the
Inventory shall not include: (A) the portion of the value of Inventory equal to
the profit earned by any Affiliate on the sale thereof to Borrower or Guarantor
or (B) write-ups or write-downs in value with respect to currency exchange rates
and (ii) notwithstanding anything to the contrary contained herein, the cost of
the Inventory shall be computed in the same manner and consistent with the
appraisal of the Inventory conducted by Xxxxx-Xxxxxx, Inc. furnished to Lender
prior to the date hereof.
1.113 "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction or further investment at the option of the
holder thereof into Capital Stock of such Person described in clause (a) of this
definition.
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SECTION 2. CREDIT FACILITIES
-----------------
2.1 Revolving Loans.
---------------
(a Subject to and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans to Borrower from time to time in amounts
requested by Borrower up to the amount equal to the lesser of (i) the Borrowing
Base or (ii) the Revolving Loan Limit.
(b Lender may, in its discretion, from time to time, upon not less
than five (5) days' prior notice to Borrower, reduce the lending formula(s) with
respect to Eligible Inventory to the extent that Lender determines in good
faith, that, without duplication: (i) the number of days of the turnover of the
Inventory for any period has changed in any material respect or (ii) the nature,
quality or mix of the Inventory has deteriorated since April 30, 2001. The
amount of any reduction in any lending formula by Lender pursuant to this
Section 2.1(b) shall have a reasonable relationship to the matter which is the
basis for such reduction in the good faith determination of Lender. To the
extent a Reserve shall have been established which is sufficient to address any
event, condition or matter in a manner satisfactory to Lender in its good faith
determination, Lender shall not exercise its rights under this Section 2.1(b) to
reduce the lending formulas to address such event, condition or matter.
(c Except in Lender's discretion, (i the aggregate amount of the
Loans and Letter of Credit Accommodations outstanding at any time shall not
exceed the Revolving Loan Limit and (ii the aggregate amount of the Loans and
Letter of Credit accommodations outstanding at any time shall not exceed the
Maximum Credit. In the event that the outstanding amount of any component of the
Loans, or the aggregate amount of the outstanding Loans and Letter of Credit
Accommodations, exceed the Revolving Loan Limit, the amounts available under the
Borrowing Base, the sublimit for Eligible Inventory set forth in the definition
of Borrowing Base, the sublimit for Letter of Credit Accommodations set forth in
Section 2.2(g), the Purchase Money Loan Limit or the Maximum Credit, as
applicable, such event shall not limit, waive or otherwise affect any rights of
Lender in that circumstance or on any future occasions and Borrower shall, upon
demand by Lender, which may be made at any time or from time to time,
immediately repay to Lender the entire amount of any such excess(es) for which
payment is demanded.
2.2 Letter of Credit Accommodations.
-------------------------------
(a Subject to and upon the terms and conditions contained herein,
at the request of Borrower, Lender agrees to provide or arrange for Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Lender and the issuer thereof. Any payments made by
Lender to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations shall constitute additional Revolving Loans to
Borrower pursuant to this Section 2.
(b In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, Borrower shall
pay to Lender a letter of
28
credit fee at a rate equal to two (2%) percent per annum on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Borrower shall pay to Lender such letter of
credit fee, at Lender's option, without notice, at a rate equal to four (4%)
percent per annum or such daily outstanding balance for: (i) the period from and
after the date of termination or non-renewal hereof until Lender has received
full and final payment of all outstanding and unpaid Obligations which are not
contingent and cash collateral (or an acceptable letter of credit) in connection
with contingent Obligations as provided in Section 11.1(a) hereof
(notwithstanding entry of a judgment against Borrower) and (ii) the period from
and after the date of the occurrence of an Event of Default and for so long as
such Event of Default is continuing. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c Borrower shall give Lender two (2) Business Days' prior written
notice of Borrower's request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. Borrower shall
attach to such notice the proposed form of the Letter of Credit Accommodation.
(d In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Lender: (i) Borrower shall have delivered
to the proposed issuer of such Letter of Credit Accommodation at such times and
in such manner as such proposed issuer may require, an application in form and
substance satisfactory to such proposed issuer and Lender for the issuance of
the Letter of Credit Accommodation and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit Accommodation shall be satisfactory to Lender and such proposed issuer,
(ii) as of the date of issuance, no order of any court, arbitrator or other
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 Accommodation, 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 Accommodation refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit Accommodation; and (iii) the Excess Availability, prior to
giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than: (A) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible
29
Inventory and the documents of title with respect thereto are consigned to the
issuer, the sum of (1) the percentage equal to one hundred (100%) percent minus
the then applicable percentage with respect to Eligible Inventory consisting of
raw materials set forth in the definition of the term Borrowing Base multiplied
by the Value of such Eligible Inventory, plus (2) freight, taxes, duty and other
amounts which Lender estimates must be paid in connection with such Inventory
upon arrival and for delivery to one of Borrower's locations for Eligible
Inventory within the United States of America and (B) if the proposed Letter of
Credit Accommodation is for any other purpose or the documents of title with
respect thereto are not consigned to the issuer, an amount equal to one hundred
(100%) percent of the face amount thereof and all other commitments and
obligations made or incurred by Lender with respect thereto. Effective on the
issuance of each Letter of Credit Accommodation, a Reserve shall be established
in the applicable amount set forth in Section 2.2(d)(iii)(A) or Section
2.2(d)(iii)(B).
(e In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, Borrower shall, at Lender's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Collateral
Agent holds a security interest to deliver them to Collateral Agent or Lender
(as Lender may specify) and/or subject to Collateral Agent's or Lender's order
(as Lender may specify), and if they shall come into Borrower's possession, to
deliver them, upon Lender's request, to Lender in their original form. Borrower
shall also, at Lender's request, designate Lender or Collateral Agent, as Lender
may specify, as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(f Borrower hereby irrevocably authorizes and directs any issuer of
a Letter of Credit Accommodation to name Borrower as the account party therein
and to deliver to Lender all instruments, documents and other writings and
property received by issuer pursuant to the Letter of Credit Accommodations and
to accept and rely upon Lender's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit Accommodations or the
applications therefor. Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any interpretation made in good faith by Lender, or
any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or has occurred and is continuing, (A0 approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times, (A) grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit
30
included in the Collateral. Lender, or Collateral Agent on behalf of Lender, may
take such actions either in its own name or in Borrower's name.
(g Except in Lender's discretion, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Lender in connection therewith shall not at any time exceed
$6,000,000. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrower will either furnish cash collateral
to secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Collateral Agent
for the Letter of Credit Accommodations, and in either case, the Loans otherwise
available to Borrower shall not be reduced as provided in Section 2.2(d) to the
extent of such cash collateral.
(h Borrower shall indemnify and hold Collateral Agent and Lender
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses suffered or incurred by Collateral Agent or Lender in
connection with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any issuer
or correspondent with respect to any Letter of Credit Accommodation. Borrower
assumes all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed Borrower's agent. Borrower assumes all
risks for, and agrees to pay, all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Borrower
hereby releases and holds Collateral Agent and Lender harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Borrower, by
any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation except as to Lender for Lender's own gross
negligence or wilful misconduct or as to Collateral Agent, for Collateral
Agent's own gross negligence or wilful misconduct, in each case as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
The provisions of this Section 2.2(h) shall survive the payment of Obligations
and the termination or non-renewal of this Agreement.
(i Any rights, remedies, duties or obligations granted or undertaken
by Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower or Guarantor to Lender. Any duties
or obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrower and Guarantor
to Lender and to apply in all respects to Borrower and Guarantor.
2.3 Purchase Money Term Loans.
-------------------------
31
(a Subject to and upon the terms and conditions contained herein,
Lender shall make Purchase Money Term Loans to Borrower, from time to time, at
the request of Borrower, the proceeds of which shall be used solely for the
payment of the purchase price of Eligible New Equipment or Eligible New Real
Property or to repay Revolving Loans which were used to pay the purchase price
of Eligible New Equipment or Eligible New Real Property. Subject to the terms
and conditions contained herein, (i) any Purchase Money Term Loan to be used in
connection with the purchase of Eligible New Equipment shall be in an amount of
up to eighty (80%) percent of the orderly liquidation value (net of anticipated
expenses, commissions, taxes, fees and other anticipated costs in connection
with the disposition thereof) of such Eligible New Equipment as set forth in an
acceptable appraisal thereof received by Lender in accordance with the terms set
forth below and (ii) any Purchase Money Term Loan to be used in connection with
the purchase of Eligible New Real Property shall be in an amount of up to fifty
(50%) percent of the fair market value (net of anticipated expenses,
commissions, taxes, fees and other anticipated costs in connection with the
disposition thereof) of such Eligible New Real Property as set forth in an
acceptable appraisal thereof received by Lender in accordance with the terms set
forth below. Each Purchase Money Term Loan shall be in an amount of not less
than $500,0000 (and in integral multiples of $50,000 greater than such amount)
and the aggregate amount of all Purchase Money Term Loans shall not exceed the
Purchase Money Loan Limit as then in effect. All of the proceeds of each
Purchase Money Term Loan shall be used solely for the payment of the purchase
price of the Eligible New Equipment or Eligible New Real Property specified in
the notice required to be delivered to Lender pursuant to Section 2.3(d)(i)
below or to repay Revolving Loans the proceeds of which were used to pay the
purchase price of the Eligible New Equipment or Eligible New Real Property
specified in the notice required to be delivered to Lender pursuant to Section
2.3(d)(i) below.
(b Except in Lender's discretion, the outstanding aggregate
principal amount of the Purchase Money Term Loans shall not exceed, at any time,
the Purchase Money Loan Limit as then in effect. If at any time the outstanding
aggregate principal amount of all Purchase Money Term Loans shall exceed the
Purchase Money Loan Limit as then in effect or the sum of eighty (80%) percent
of the appraised orderly liquidation value of all Eligible New Equipment which
is the basis for Purchase Money Term Loans plus fifty (50%) percent of the
appraised fair market value of all Eligible New Real Property which is the basis
for Purchase Money Term Loans (in each case based on the most recent acceptable
appraisal received by Lender with respect thereto, and net of anticipated
expenses, commissions, taxes, fees and other anticipated costs in connection
with the disposition thereof), Borrower shall remain liable therefor, and Lender
may, at its option, create a Reserve in an amount equal to the entire amount of
such excess(es) or at Lender's option, Borrower shall, upon the demand by
Lender, which may be made at any time and from time to time, promptly repay to
Lender the entire amount of such excess(es).
(c Each Purchase Money Term Loan shall be (i) evidenced by a
Purchase Money Term Note executed and delivered by Borrower to Lender
concurrently with each Purchase Money Term Loan, (ii) repaid, together with
interest and other amounts payable thereunder, in accordance with the provisions
of the applicable Purchase Money Term Note, this Agreement and the other
Financing Agreements, and (iii) secured by all of the Collateral.
32
(d In addition to the other conditions precedent to any Loan or
Letter of Credit Accommodation set forth in this Agreement, the making of each
Purchase Money Term Loan shall be subject to the satisfaction of each of the
following applicable additional conditions precedent, as determined by Lender:
(i Lender shall have received from Borrowers not less than ten
(10) Business Days prior written notice of the proposed Purchase Money Term
Loan, which notice shall specify the following: (A) the proposed date and amount
of the Purchase Money Term Loan, (B) in the case of a Purchase Money Term Loan
to be used to purchase, or repay Revolving Loans used to purchase, Eligible New
Equipment, a list and description of the Eligible New Equipment (by model, make,
manufacturer, serial no. and/or such other identifying information as may be
appropriate, as determined by Lender) or in the case of a Purchase Money Term
Loan to be used to purchase, or repay Revolving Loans used to purchase, Eligible
New Real Property, the address, legal description and such other identifying
information with respect to such Eligible New Real Property as may be
appropriate, as determined by Lender, (C) the total purchase price for the
Eligible New Equipment or Eligible New Real Property purchased or to be
purchased with or in connection with the proceeds of such Purchase Money Term
Loan (and the terms of payment of such purchase price) and the various fees,
commissions, taxes and other costs related to the purchase thereof and (D) such
other information and documents as Lender may from time to time require related
thereto;
(ii Collateral Agent shall have a valid and perfected first
priority security interest in and lien upon the Eligible New Equipment or a
valid and perfected first priority security interest in and mortgage and lien
upon the Eligible New Real Property, as the case may be, to be purchased with
the proceeds of the Purchase Money Term Loan, or purchased with Revolving Loans
which are being repaid with the proceeds of the Purchase Money Term Loan, as the
case may be, and the Eligible New Equipment and Eligible New Real Property (as
the case may be) shall be free and clear of all other liens, security interests,
claims or other encumbrances (except as Lender may specifically otherwise agree
in writing), and Lender shall have received such evidence thereof, as Lender may
from time to time, require;
(iii Lender shall have received not less than fifteen (15)
business days prior to the proposed date of the Purchase Money Term Loan, at the
sole cost and expense of Borrower, an appraisal by an appraiser acceptable to
Lender and in form, scope and methodology acceptable to Lender, addressed to
Lender and upon which Lender is expressly permitted to rely, setting forth the
orderly liquidation value of the Eligible New Equipment or the fair market value
of the Eligible Real Property (as the case may be) to be purchased by Borrower
with the proceeds of the proposed Purchase Money Term Loan or which has been
purchased with proceeds of Revolving Loans which are being repaid with the
proceeds of the proposed Purchase Money Term Loan (in each case net of
anticipated expenses, commissions, taxes, fees and other anticipated costs in
connection with the disposition thereof), without limiting the rights of Lender
to receive any other appraisals as provided herein or in any of the other
Financing Agreements;
(iv in the case of a Purchase Money Term Loan the proceeds of
which are to be used to purchase any Real Property or repay Revolving Loans the
proceeds of which were used to
33
purchase any Real Property, Lender shall have received, in form and substance
satisfactory to Lender, each of the following:
(A0 a mortgage, deed of trust or deed to secure debt, as
Lender may specify, with respect to such Real Property in favor of Collateral
Agent, duly authorized, executed and delivered by Borrower;
(B0 environmental audits (or updates of existing audits)
with respect to the Real Property to be so purchased conducted by an independent
environmental engineering firm acceptable to Lender, and in form, scope and
methodology satisfactory to Lender, addressed to Lender and upon which Lender is
expressly permitted to rely, confirming (1) the Real Property to be purchased
with such Purchase Money Term Loan is in compliance with all material applicable
Environmental Laws and (2) the absence of any material environmental problems at
such Real Property as determined by Lender;
(C0 a valid and effective title insurance policy with
respect to the Real Property so purchased issued by a company and agent
acceptable to Lender (1) insuring the priority, amount and sufficiency of the
mortgage, deed of trust or deed to secure debt (as the case may be) with respect
to the Real Property to be so purchased, (2) insuring against matters that would
be disclosed by surveys and (3) containing any legally available endorsements,
assurances or affirmative coverage requested by Lender for protection of its
interests;
(D0 an opinion letter of counsel to Borrower qualified to
practice law in the jurisdiction in which the Eligible New Real Property is
located with respect to the security interest, mortgage and lien of Lender with
respect thereto, the mortgage, deed of trust or deed to secure debt with respect
thereto (as the case may be), and such other matters as Lender may require;
(v in the case of a Purchase Money Term Loan relating to the
purchase of Eligible New Equipment, the amount of any Purchase Money Term Loan
shall not exceed eighty (80%) percent of the orderly liquidation value of the
Eligible New Equipment purchased by Borrower as set forth in the most recent
acceptable appraisal delivered to Lender or in the case of a Purchase Money Term
Loan relating to the purchase of Eligible New Real Property, the amount of the
Purchase Money Term Loan shall not exceed fifty (50%) percent of the fair market
value of the Eligible New Real Property purchased by Borrower, as the case may
be (in each case net of anticipated expenses, commissions, taxes, fees and other
anticipated costs in connection with the disposition thereof);
(vi as of the date of such Purchase Money Term Loan and after
giving effect thereto, the aggregate amount of all Purchase Money Term Loans
then outstanding shall not exceed the Purchase Money Loan Limit as then in
effect;
(vii Lender shall have received copies, or upon Lender's
request, the originals, of all agreements, documents and instruments relating to
the purchase of the Eligible New Equipment or Eligible New Real Property (as the
case may be) by Borrower, including, without limitation, any purchase orders,
invoices, bills of sale or similar documents;
34
(viii Lender shall have received a single original Purchase Money
Term Note in the form annexed hereto as Exhibit B, as completed to reflect the
date and amount of each such loan and with the number of monthly installments of
principal payable thereunder and the amount of each such monthly installment
completed in accordance with Sections 2.3(e) and 2.3(f) below, as the case may
be, duly authorized, executed and delivered by Borrower, which note shall
evidence a valid and legally enforceable indebtedness of Borrower
unconditionally owing to Lender, without offset, defense or counterclaim of any
kind, nature or description whatsoever; and
(ix no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default, shall
exist or have occurred and be continuing.
(e The principal amount of each Purchase Money Term Loan shall be
payable (subject to earlier payment to the extent required hereunder or under
the Purchase Money Term Note) in sixty (60) equal, consecutive monthly
installments of principal, each in an amount calculated as set forth below,
commencing on the first day of the second month after the date of the making of
such loan, together with interest and other amounts as provided herein and in
the Purchase Money Term Note with respect to such loan.
(f The amount of each monthly installment of principal in respect of
each Purchase Money Term Loan (other than the last installment which shall be in
an amount equal to the entire unpaid balance of the Purchase Money Term Note)
shall equal: (i) the principal amount of the proposed Purchase Money Term Loan
divided by (ii) sixty (60).
2.4 Term Loan. Lender is making a Term Loan to Borrower in the original
---------
principal amount of $10,000,000. The Term Loan is (a) evidenced by a Term
Promissory Note in such original principal amount duly executed and delivered by
Borrower to Lender concurrently herewith; (b) to be repaid, together with
interest and other amounts, in accordance with this Agreement, the Term
Promissory Note and the other Financing Agreements and (c) secured by all of the
Collateral.
SECTION 3. INTEREST AND FEES
-----------------
3.1 Interest.
--------
(a) Borrower shall pay to Lender interest on the outstanding
principal amount of the non-contingent Obligations at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default (and
for so long as the same is continuing) or the effective date of the termination
or non-renewal hereof shall be payable on demand.
(b) Borrower may from time to time request Eurodollar Rate Loans or
may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that
any existing Eurodollar Rate Loans continue for an additional Interest Period.
Such request from or on behalf of Borrower shall specify the amount of the
Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans
35
which will be continued or the amount of the Prime Rate Loans which will be
converted to Eurodollar Rate Loans (subject to the limits set forth below) and
the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to
the terms and conditions contained herein, three (3) Business Days after receipt
by Lender of such a request from or on behalf of a Borrower, such Prime Rate
Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans
shall continue, as the case may be, provided, that, (i) no Event of Default, or
-------- ----
act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred and be continuing,
(ii) no party hereto shall have sent any notice of termination or non-renewal of
this Agreement, (iii) Borrower shall have complied with such customary
procedures as are established by Lender and specified by Lender to Borrower from
time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no more
than eight (8) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $500,000 in excess thereof, (vi) the
maximum amount of the Eurodollar Rate Loans at any time requested by or on
behalf of Borrower shall not exceed the amount equal to ninety (90%) percent of
the lowest principal amount of the Loans, which it is anticipated will be
outstanding during the applicable Interest Period, in each case as determined by
Lender, but with no obligation of Lender to make such Loans and (vii) Lender
shall have determined that the Interest Period or Adjusted Eurodollar Rate is
available to Lender through the Reference Bank and can be readily determined as
of the date of the request for such Eurodollar Rate Loan by or on behalf of
Borrower. Any request by or on behalf of Borrower for Eurodollar Rate Loans or
to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Lender and Reference Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Lender and Reference Bank had
purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Lender
has received and approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans to Borrower shall, at Lender's option,
upon notice by Lender to Borrower, convert to Prime Rate Loans (i) upon an Event
of Default or act, condition or event which, with the notice or passage of time,
or both, would constitute an Event of Default or (ii) upon the effective date of
the termination or non-renewal of this Agreement. Borrower shall pay to Lender,
upon demand by Lender (or Lender may, at its option, charge any loan account of
Borrower) any amounts required to compensate Lender, the Reference Bank or any
participant with Lender for any loss (including loss of anticipated profit),
cost or expense incurred by such person, as a result of the conversion of
Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrower to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime
36
Rate is publicly announced by Reference Bank based on the Prime Rate in effect
on the last day of the month in which any such change occurs. In no event shall
charges constituting interest payable by Borrower to Lender exceed the maximum
amount or the rate permitted under any applicable law or regulation, and if any
such part or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrower shall pay to Lender as a closing fee the amount
-----------
of $275,000 which shall be fully earned and payable as of the date hereof.
3.3 Servicing Fee. Borrower shall pay to Lender a servicing fee in an
-------------
amount equal to $22,500 for each quarter (or part thereof) while this Agreement
remains in effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be fully earned as of and payable in advance on the
date hereof and on the first day of each quarter hereafter.
3.4 Unused Line Fee. Borrower shall pay to Lender monthly an unused line
---------------
fee at a rate equal to three-eighths (3/8%) percent per annum calculated upon
the amount by which the Revolving Loan Limit exceeds the average daily principal
balance of the outstanding Revolving Loans and Letter of Credit Accommodations
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding.
Such fee shall be payable on the first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
--------------------------------------------
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to Borrower, convert to Prime
Rate Loans in the event that (i) any change in applicable law or regulation (or
the interpretation or administration thereof) shall either (A) make it unlawful
for Lender, Reference Bank or any participant to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the Eurodollar
Rate Loans, or (B) shall result in the increase in the costs to Lender,
Reference Bank or any participant of making or maintaining any Eurodollar Rate
Loans by an amount deemed by Lender in good faith to be material, or (C) reduce
the amounts received or receivable by Lender in respect thereof, by an amount
deemed by Lender in good faith to be material or (ii) the cost to Lender,
Reference Bank or any participant of making or maintaining any Eurodollar Rate
Loans shall otherwise increase by an amount deemed by Lender in good faith to be
material. Borrower shall pay to Lender, upon demand by Lender (or Lender may, at
its option, charge any loan account of a Borrower) any amounts required to
compensate Lender, the Reference Bank or any participant with Lender for any
loss (including loss of anticipated profits), cost or expense incurred by such
person as a result of the foregoing, including, without limitation, any such
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain the
Eurodollar Rate Loans or any portion thereof. A certificate of Lender setting
forth the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrower and shall be conclusive,
absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to
37
acceleration, upon maturity or otherwise), including any payments pursuant to
the application of collections under Section 5.3 or any other payments made with
the proceeds of Collateral, Borrower shall pay to Lender upon demand by Lender
(or Lender may, at its option, charge loan account of Borrower) any amounts
required to compensate Lender, the Reference Bank or any participant with Lender
for any additional loss (including loss of anticipated profits), cost or expense
incurred by such person as a result of such prepayment or payment, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such person
to make or maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 Conditions Precedent to Initial Loans and Letter of Credit
----------------------------------------------------------
Accommodations. Each of the following is a condition precedent to Lender making
--------------
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) no court of competent jurisdiction shall have issued any
injunction, restraining order or other order with respect to the Confirmation
Order which otherwise prohibits the consummation of the transactions described
herein, or modifies such transactions, and no governmental or other action or
proceeding shall have been commenced, seeking any injunction, restraining order
or other order which seeks to void or otherwise modify the transactions
described herein.
(b) no motion, action or proceeding shall be pending against Borrower
or Guarantor (or their predecessors) by any creditor or other party-in-interest
in the Bankruptcy Court or in any other court of competent jurisdiction which
would if successful have a Material Adverse Effect;
(c) Lender shall have received a certified copy of the Confirmation
Order as duly entered by the Bankruptcy Court and entered on the docket of the
Clerk of the Bankruptcy Court in the Chapter 11 Cases, following due notice to
such creditors and other parties-in-interest as required by the Bankruptcy
Court, which order shall be in form and substance acceptable to Lender,
providing, among other things, that (i) the Existing Agreements and the
Financing Order shall continue in full force and effect through the Effective
Date, (ii) as of and after the Effective Date, all loans, advances, financial
accommodations, borrowing and obligations outstanding under the Existing
Agreements shall continue in effect on and after the Effective Date and be
deemed loans, advances, financial accommodations and borrowing of or to be
assumed by Borrower, (iii) the security interests and liens in favor of Lender
granted by the Financing Order and the Existing Agreements shall continue in
effect in favor of Collateral Agent on and after the Effective Date and shall
not be discharged, released or terminated, and (iv) Borrower and Guarantor are
authorized to enter into this Agreement and the other Financing Agreements and
perform all of their obligations hereunder and thereunder;
(d) Lender shall have received evidence, in form and substance
satisfactory to Lender, that prior to the date hereof or concurrently herewith,
(i) the Effective Date shall have
38
occurred, the Confirmation Order shall be valid, subsisting and continuing and a
Final Order and all conditions precedent to the effectiveness of the Plan shall
have been fulfilled, or validly waived, including, without limitation, the
execution, delivery and performance of all of the conditions thereof other than
conditions that have been validly waived (but not including conditions
consisting of the effectiveness of this Agreement), and (ii) no motion, action
or proceeding shall be pending or filed by any creditor or other
party-in-interest to the Chapter 11 Cases which could adversely affect the Plan,
the consummation of the Plan, the business or operations of Borrower or
Guarantor or the transactions contemplated by the Financing Agreements, as
determined by Lender in good faith;
(b) Lender shall have received, in form and substance satisfactory to
Lender, evidence that the certificates of mergers with respect to each of the
Mergers has been filed with the Secretary of State of the State of Delaware and
each of the Mergers is valid and effective in accordance with the terms and
provisions of the Merger Agreements and the applicable corporation statute of
the State of Delaware;
(e) Lender shall have received, in form and substance satisfactory to
Lender, evidence that the Merger Agreements have been duly executed and
delivered by and to the appropriate parties thereto and the transactions
contemplated under the terms of the Merger Agreements have been consummated
before or contemporaneously with the occurrence of the Effective Date;
(f) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(g) no material adverse change shall have occurred in the assets or
business of Borrower, since the date of Lender's latest field examination (not
including for this purpose the field review referred to in clause (d) below) and
no change or event shall have occurred which would impair the ability of
Borrower or any Obligor in any material respect to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Collateral Agent or Lender to enforce the Obligations or realize upon the
Collateral;
(h) Lender shall have received such information with respect to the
agings of account payables, agings of account receivables, current perpetual
inventory records and such other information concerning the Eligible Accounts
and Eligible Inventory as Lender may require as of July 31, 2001 in order to
determine the amount of Loans available to Borrower;
(i) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgments and other agreements from third
persons which Lender may deem necessary or desirable in order to permit, protect
and perfect the security interests in and liens upon the Collateral of
Collateral Agent or to effectuate the provisions or purposes of this
39
Agreement and the other Financing Agreements, including, without
limitation, Collateral Access Agreements by lessors, mortgagees and warehousemen
used by Borrower;
(j) Lender shall have received, in form and substance satisfactory to
Lender, all releases, terminations and such other documents as Lender may
request to evidence and effectuate the termination by the State Street Bank and
Trust Company in its capacity as trustee in connection with certain notes issued
by the predecessors of the Chapter 11 Borrowers or Chapter 11 Guarantors of any
interest in and to any assets and properties of any Chapter 11 Borrower or
Chapter 11 Guarantor or Borrower and any Obligor, duly authorized, executed and
delivered by such trustee or otherwise for the benefit or on behalf of the
holders of such notes, including, but not limited to, UCC termination statements
for all UCC financing statements previously filed by or on behalf of such
trustee or its predecessor (or otherwise for the benefit or on behalf of the
holders of any of such notes), as secured party and any Chapter 11 Borrower or
Chapter 11 Guarantor or Borrower or any Obligor (or any of their respective
predecessors), as debtor and discharges and satisfactions of mortgages or deeds
of trust previously executed by any Chapter 11 Borrower or Chapter 11 Guarantor
or Borrower or any Obligor (or any of their respective predecessors) with, to or
in favor of such trustee or its predecessor (or otherwise for the benefit of or
on behalf of the holders of any of such notes);
(k) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Collateral Agent has valid perfected and first
priority security interests in and liens upon the Collateral and any other
property which is intended to be security for the Obligations or the liability
of any Obligor in respect thereof, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(l) the Excess Availability shall be not less than $10,000,000, as of
the date hereof, after giving effect to the initial Loans made or to be made and
initial Letter of Credit Accommodations issued or to be issued in connection
with the initial transactions hereunder;
(m) Lender shall have received, in form and substance satisfactory to
Lender, all Deposit Account Control Agreements with the banks at which Borrower
and Guarantor have any deposit accounts, duly authorized, executed and delivered
by such banks and Borrower or Guarantor (as applicable);
(n) Lender shall have received the Intercreditor Agreement, in form
and substance satisfactory to Lender, as duly authorized, executed and delivered
by the Senior Secured Note Trustee (for itself and the holders of the Senior
Secured Notes), Borrower and Guarantor;
(o) Lender shall have received the Senior Secured Note Indenture and
all related agreements, documents and instruments, which shall each be in form
and substance satisfactory to Lender;
(p) Lender shall have received and reviewed UCC and other lien search
results for the jurisdiction of the chief executive office of Borrower and
Guarantor, all jurisdictions in which assets of Borrower and Guarantor are
located and the jurisdiction of incorporation for Borrower and Guarantor, which
search results shall be in form and substance satisfactory to Lender;
40
(q) Lender shall have received, in form and substance satisfactory to
Lender, valid and effective endorsements to each of the existing title insurance
policies previously issued to Lender (but not including for this purpose the
policy to be issued with respect to the Mortgage on the Real Property located in
Colt, Arkansas as provided below), which endorsements (i) confirm the insuring
of the priority, amount and sufficiency of the Mortgages, (ii) provide for
insuring against matters that would be disclosed by surveys and (iii) add any
further legally available endorsements, assurances or affirmative coverage
requested by Lender for protection of its interests;
(r) Lender shall have received, in form and substance satisfactory to
Lender, a valid and effective title insurance policy issued by a company and
agent acceptable to Lender (i) insuring the priority, amount and sufficiency of
the Mortgage with respect to the Real Property of Borrower located in Colt,
Arkansas, (ii) insuring against matters that would be disclosed by surveys with
respect to such Real Property and (iii) containing any legally available
endorsements, assurances or affirmative coverage requested by Lender for
protection of its interests;
(s) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Borrower has good and marketable fee simple title
to the Real Property located in Colt, Arkansas, currently leased to Borrower (or
its predecessor);
(t) Lender shall have received environmental audits of the plants and
the owned Real Property of Borrower conducted by an independent environmental
engineering firm acceptable to Lender, and in form, scope and methodology
satisfactory to Lender, upon which Lender is expressly permitted to rely
confirming (i) Borrower is in compliance with all material applicable
Environmental Laws and (ii) the absence of any material environmental problems;
(u) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Collateral Agent as loss payee and
additional insured, as applicable;
(v) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letters of counsel(s) to Borrower and Guarantor with
respect to the Financing Agreements, the security interests and liens of
Collateral Agent with respect to the Collateral, the Merger Agreements, the
effectiveness of the Mergers, the Confirmation Order and such other matters as
Lender may reasonably request; and
(w) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance reasonably satisfactory to Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
---------------------------------------------------------------------
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of
41
Credit Accommodations to Borrower, including the initial Loans and Letter of
Credit Accommodations and any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans or providing the Letter of Credit
Accommodations, or (B) the consummation of the transactions contemplated
pursuant to the terms hereof or the other Financing Agreements or (ii) has or
could reasonably be expected to have a material adverse effect on the assets or
business of Borrower or would impair the ability of Borrower or any Obligor to
perform its obligations hereunder or under any of the other Financing Agreements
or of Collateral Agent or Lender to enforce any Obligations or realize upon any
of the Collateral; and
(c) no Event of Default and no act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the making of
such Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.
SECTION 5. COLLECTION AND ADMINISTRATION
-----------------------------
5.1 Borrower's Loan Accounts. Lender shall maintain one or more loan
------------------------
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time.
5.2 Statements. Lender shall render to Borrower, each month a statement
----------
setting forth the balance in Borrower's loan account(s) maintained by Lender for
Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent fraud, mistake or manifest
errors or omissions, be considered correct and deemed accepted by Borrower and
Guarantor and conclusively binding upon Borrower and Guarantor as an account
stated except to the extent that Lender receives a written notice from Borrower
------
of any specific exceptions of Borrower thereto within thirty (30) days after the
date such statement has been mailed by Lender to Borrower. Until such time as
Lender shall have rendered to Borrower a written statement as
42
provided above, the balance in Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Lender by Borrower.
5.3 Collection of Accounts.
----------------------
(a) Borrower shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, with such banks as are acceptable to Lender
into which Borrower shall promptly deposit and direct its account debtors and
secondary obligors and other obligors to directly remit all payments on
Receivables and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. Borrower shall deliver, or cause to be delivered to
Lender, a Depository Account Control Agreement duly authorized, executed and
delivered by each bank where a Blocked Account is maintained as provided in
Section 5.3 hereof or at any time and from time to time Collateral Agent may
become Lender's customer with respect to the Blocked Accounts and promptly upon
Lender's request, Borrower shall execute and deliver such agreements or
documents as Lender may require in connection therewith. Borrower agrees that
all payments made to such Blocked Accounts or other funds received and collected
by Collateral Agent or Lender, whether in respect of the Receivables, as other
Collateral or otherwise, shall be treated as payments to Lender in respect of
the Obligations and therefore shall constitute the property of Lender to the
extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available to
Borrower, such payments will be applied (conditional upon final collection) to
the Obligations on the Business Day of receipt by Lender of immediately
available funds in the Agent Payment Account provided such payments and notice
thereof are received in accordance with Lender's usual and customary practices
as in effect from time to time and within sufficient time to credit Borrower's
loan account on such day, and if not, then on the next Business Day. For the
purposes of calculating interest on the Obligations, such payments or other
funds received will be applied (conditional upon final collection) to the
Obligations one (1) Business Day following the date of receipt of immediately
available funds by Lender in the Agent Payment Account provided such payments or
other funds and notice thereof are received in accordance with Lender's usual
and customary practices as in effect from time to time and within sufficient
time to credit Borrower's loan account on such day, and if not, then on the next
Business Day.
(c) Borrower and all of its directors, employees, agents, Subsidiaries
and other Affiliates shall, acting as trustee for Collateral Agent, receive, as
the property of Collateral Agent, any monies, checks, notes, drafts or any other
payment relating to and/or proceeds of Receivables or other Collateral which
come into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Collateral Agent. In no event shall the same be commingled with Borrower's own
funds. Borrower agrees to reimburse Collateral Agent and Lender on demand for
any amounts owed or paid to any bank at which a Blocked Account is established
or any other bank or person involved in the transfer of funds to or from the
Blocked Accounts arising out of payments by Collateral Agent or Lender to or
indemnification of such
43
bank or person in connection with such Blocked Account or any amounts received
therein or transferred therefrom. The obligation of Borrower to reimburse
Collateral Agent and Lender for such amounts pursuant to this Section 5.3 shall
survive the termination or non-renewal of this Agreement.
5.4 Payments.
--------
(a) All Obligations shall be payable to the Lender as provided in
Section 5.3 to such account or place as Lender may designate from time to time.
Lender may apply payments received or collected from Borrower or for the account
of Borrower (including, without limitation, the monetary proceeds of collections
or of realization upon any Collateral) as follows: first, to pay any fees,
-----
indemnities or expense reimbursements then due to Collateral Agent and Lender
from Borrower or Guarantor; second, to pay interest due in respect of any Loans;
------
third, to pay principal due in respect of the Loans; fourth, to pay or prepay
----- ------
any other Obligations whether or not then due, in such order and manner as
Lender determines.
(b) Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Borrower, or unless an Event of Default
shall exist or have occurred and be continuing, Lender shall not apply any
payments which it receives to any Eurodollar Rate Loans, except (A) on the
expiration date of the Interest Period applicable to any such Eurodollar Rate
Loans, or (B) in the event that there are no outstanding Prime Rate Loans and
(ii) to the extent Borrower uses any proceeds of the Loans or Letter of Credit
Accommodations to acquire rights in or the use of any Collateral or to repay any
Indebtedness use to acquire rights in or the use of any Collateral, all payments
in respect of the Obligations shall be deemed applied first to the Obligations
arising from Loans and Letter of Credit Accommodations that were not used for
such purposes and second to the Obligations arising from Loans and Letter of
Credit Accommodations used to acquire rights in or the use of any Collateral in
the chronological order in which Borrower acquired such rights or use.
(c) At Lender's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Collateral Agent or Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Collateral Agent
or Lender. Borrower shall be liable to pay to Collateral Agent and Lender, and
does hereby indemnify and hold Collateral Agent and Lender harmless for, the
amount of any such payments or proceeds surrendered or returned. This Section
5.4 shall remain effective notwithstanding any contrary action which may be
taken by Collateral Agent or Lender in reliance upon such payment or proceeds.
This Section 5.4 shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
5.5 Authorization to Make Loans. Lender is authorized to make the Loans
---------------------------
and provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from
44
anyone purporting to be any of the persons listed on Schedule 5.5 hereto or such
other persons as Borrower may at any time and from time to time designate in
writing to Lender to be authorized to request Loans or Letter of Credit
Accommodations or, at the discretion of Lender, if such Loans are necessary to
satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall be
a Business Day) and the amount of the requested Loan. Requests received after
11:00 a.m. New York City time on any day shall be deemed to have been made as of
the opening of business on the immediately following Business Day. All Loans and
Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of,
Borrower when deposited to the credit of Borrower or otherwise disbursed or
established in accordance with the instructions of Borrower or in accordance
with the terms and conditions of this Agreement.
5.6 Use of Proceeds. Borrower shall use the initial proceeds of the Loans
---------------
provided by Lender to Borrower hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrower to
Lender on or about the date hereof, (b) costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements, (c) for payments expressly provided for in the
Plan and the Confirmation Order, and (d) for Borrower's working capital and
other proper corporate purposes. All other Loans made or Letter of Credit
Accommodations provided by Lender to Borrower pursuant to the provisions hereof
shall be used by Borrower only for general operating, working capital and other
proper corporate purposes of Borrower not otherwise prohibited by the terms
hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 6. COLLATERAL REPORTING AND COVENANTS
----------------------------------
6.1 Collateral Reporting.
--------------------
(a) Borrower shall provide Lender with the following documents in a
form reasonably satisfactory to Lender:
(i) on a weekly basis or more frequently as Lender may request,
a schedule of sales made, credits issued and cash received,
(ii) on a weekly basis, perpetual inventory reports by category
and location,
(iii) on a monthly basis or more frequently as Lender may
request, (A) agings of accounts payable (including the status of payments to
owners and lessors of the leased premises of Borrower and the sales agent,
warehouses and processors used by Borrower) and (B) agings of accounts
receivable (together with a reconciliation to the previous month's general
ledger),
45
(iv) upon Lender's request, (A) copies of customer statements and
credit memos, remittance advices and reports, and copies of deposit slips and
bank statements, (B) copies of shipping and delivery documents, and (C) copies
of purchase orders, invoices and delivery documents for Inventory acquired by
Borrower, and
(v) such other reports as to the Collateral as Lender shall
reasonably request from time to time.
(b) If Borrower's or Guarantor's records or reports of the Collateral
are prepared or maintained by an accounting service, contractor, shipper or
other agent, Borrower hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports, and related documents to
Lender and to follow Lender's instructions with respect to further services at
any time that an Event of Default exists or has occurred and is continuing.
6.2 Accounts Covenants.
------------------
(a) Borrower shall notify Lender promptly of: (i) any material delay
in such Borrower's performance of any of its obligations to any account debtor
or the assertion of any claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information known to
Borrower or Guarantor relating to the financial condition of any account debtor
and (iii) any event or circumstance which, to Borrower's or Guarantor's
knowledge, would be reasonably likely to cause Lender to consider any then
existing Accounts as no longer constituting Eligible Accounts. No credit,
discount, allowance or extension, or agreement with respect to any credit,
discount, allowance or extension, shall be granted by Borrower to any account
debtor without Lender's consent, except in the ordinary course of Borrower's
------
business consistent with the current practices of Borrower as of the date hereof
and as to any such agreement so long as Lender shall have received notice
thereof to the extent required under Section 6.1 above. So long as no Event of
Default exists or has occurred and is continuing, Borrower in its discretion
shall have the right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Lender (or Collateral Agent on
behalf of Lender) shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) Without limiting the obligation of Borrower to deliver any other
information to Lender, Borrower shall promptly report to Lender any return of
Inventory by any one account debtor if the Inventory so returned in such case
has a value in excess of $250,000. At any time that Inventory is returned,
reclaimed or repossessed, the Account (or portion thereof) which arose from the
sale of such returned, reclaimed or repossessed Inventory shall not be deemed an
Eligible Account. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrower shall, upon
the request of Collateral Agent or Lender, (i) hold the returned Inventory in
trust for Collateral Agent and Lender, (ii) segregate all returned Inventory
from all of its other property, (iii) dispose of the returned Inventory solely
according to
46
Collateral Agent's or Lender's instructions in good faith, and (iv) not issue
any credits, discounts or allowances with respect thereto without Collateral
Agent's or Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice or schedule thereof delivered to Lender shall be true and complete
(other than as to de minimis amounts), (ii) no payments shall be made thereon
except payments immediately delivered to Collateral Agent and Lender pursuant to
the terms of this Agreement, (iii) no credit, discount, allowance or extension
or agreement for any of the foregoing shall be granted to any account debtor
except as reported to Lender in accordance with this Agreement and except for
credits, discounts, allowances or extensions made or given in the ordinary
course of business of Borrower consistent with the current practices of Borrower
as of the date hereof, (iv) there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing or asserted with respect thereto
except as reported to Lender in accordance with the terms of this Agreement, (v)
none of the transactions giving rise thereto will violate any applicable
foreign, Federal, State or local laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times, in Lender's name
or in the name of a nominee of Lender, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(e) Borrower shall use its best efforts to be certain that the correct
dates are written on bills of lading with respect to goods shipped by Borrower
to its customer and such bills of lading are otherwise properly completed and
duly executed by the parties issuing such bills of lading.
(f) Collateral Agent or Lender may, at any time or times that an Event
of Default exists or has occurred and is continuing, (i) notify any or all
account debtors or any other obligor that the Receivables have been assigned to
Collateral Agent and that Collateral Agent has a security interest therein and
Collateral Agent or Lender may direct any or all accounts debtors or other
obligors to make payment of Receivables directly to Collateral Agent, (ii)
extend the time of payment of, compromise, settle or adjust for cash, credit,
return of merchandise or otherwise, and upon any terms or conditions, any and
all Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any other party or parties in any way
liable for payment thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Collateral Agent and Lender shall not be
liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Collateral Agent or Lender may in good xxxxx xxxx
necessary or desirable for the protection of their respective interests. At any
time that an Event of Default exists or has occurred and is continuing, at
Collateral Agent's or Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Collateral Agent and are payable directly and only to
Collateral Agent and Borrower shall deliver to Collateral Agent or Lender such
originals of documents evidencing the sale and delivery of
47
goods or the performance of services giving rise to any Accounts as Collateral
Agent or Lender may require.
6.3 Inventory Covenants. With respect to the Inventory: (a) Borrower shall
-------------------
at all times maintain inventory records reasonably satisfactory to Lender,
keeping in all material respects correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, the cost therefor
and daily withdrawals therefrom and additions thereto; (b) Borrower shall
conduct a physical count of the Inventory of Borrower at least once each year,
but at any time or times as Lender may request on or after an Event of Default
and for so long as the same is continuing, and promptly following such physical
inventory shall supply Lender with a report in the form and with such
specificity as may be reasonably satisfactory to Lender concerning such physical
count; (c) Borrower shall not remove any Inventory from the locations set forth
or permitted herein, without the prior written consent of Lender, except for
sales of Inventory in the ordinary course of Borrower's business and except to
move Inventory directly from one location of Borrower set forth or permitted
herein to another such location and except to discard obsolete Inventory or
Inventory damaged or destroyed by casualty; (d) upon Lender's request, Borrower
shall, at its expense, no more than twice in any twelve (12) month period, but
at any time or times as Lender may request on or after an Event of Default and
for so long as the same is continuing, deliver or cause to be delivered to
Lender written reports or appraisals as to the Inventory in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender,
addressed to Lender and upon which Lender is expressly permitted to rely; (e)
Borrower shall produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws (including, but not limited to,
the requirements of the Federal Fair Labor Standards Act of 1938, as amended and
all rules, regulations and orders related thereto); (f) as between Lender and
Borrower, Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (g)
Borrower shall not sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate Borrower to
repurchase such Inventory (except in the ordinary course of business in
accordance with the customary practices of Borrower as of the date hereof; (h)
Borrower shall keep the Inventory in good and marketable condition in all
material respects (other than obsolete Inventory or Inventory lost or damaged by
any casualty or similar event); and (i) Borrower shall not, without prior
written notice to Lender, acquire or accept any Inventory on consignment or
approval.
6.4 Equipment and Real Property Covenants. With respect to the Equipment
-------------------------------------
and Real Property: (a) upon Lender's request, Borrower shall, at its expense, no
more than once in any twelve (12) month period, but at any time or times as
Lender may request on or after an Event of Default, deliver or cause to be
delivered to Lender written appraisals as to the Equipment and/or Real Property
in form, scope and methodology acceptable to Lender and by an appraiser
acceptable to Lender, addressed to Lender, and upon which Lender is expressly
permitted to rely, (b) Borrower shall keep its Equipment in good order, repair,
running and marketable condition (ordinary wear and tear excepted); (c) Borrower
shall use its Equipment and Real Property with all reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity
in all material respects with all applicable laws; (d) the Equipment is and
shall be used in Borrower's business and not for personal, family, household or
farming use; (e) Borrower shall
48
not remove any Equipment from the locations set forth or permitted herein,
except to the extent necessary to have any Equipment repaired or maintained in
the ordinary course of the business of Borrower or to move Equipment directly
from one location set forth or permitted herein to another such location; (f)
the Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Borrower assumes all responsibility and liability arising from
the use of the Equipment and Real Property.
6.5 Right to Cure. Lender may, at its option, (a) upon notice to Borrower
-------------
cure any default by Borrower under any material agreement with a third party
which affects any Collateral, the value of such Collateral or the ability of
Collateral Agent or Lender to collect, sell or otherwise dispose of such
Collateral or the rights and remedies of Lender hereunder or under any of the
other Financing Agreements or the ability of Borrower or Guarantor to perform
its obligations hereunder or under any of the other Financing Agreements, (b)
pay or bond on appeal any judgment entered against Borrower or Guarantor, (c)
discharge taxes, liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and (d) pay any amount,
incur any expense or perform any act which, in Lender's good faith judgment, is
reasonably necessary or appropriate to preserve, protect, insure or maintain the
Collateral and the rights of Collateral Agent or Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge Borrower's
account therefor, such amounts to be repayable by Borrower on demand. Lender
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of
Borrower. Any payment made or other action taken by Lender under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
6.6 Access to Premises. From time to time as requested by Lender, at the
------------------
cost and expense of Borrower, (a) Lender or its designee (including Collateral
Agent) shall have complete access to all premises of Borrower and Guarantor
during normal business hours and after reasonable prior notice to Borrower, or
at any time and without notice to Borrower if an Event of Default exists or has
occurred and is continuing, for the purposes of inspecting, verifying and
auditing the Collateral and all of Borrower's and Guarantor's books and records,
including, without limitation, the Records (but as to the costs of field
examinations conducted by Lender or Collateral Agent, subject to the limitations
set forth in Section 8.19 hereof), and (b) Borrower and Guarantor shall promptly
furnish to Collateral Agent or Lender such copies of such books and records or
extracts therefrom as Lender or Collateral Agent may reasonably request, and (c)
Lender or its designee (including Collateral Agent) may use during normal
business hours such of Borrower's and Guarantor's personnel, equipment, supplies
and premises as may be reasonably necessary for the foregoing and if an Event of
Default exists or has occurred and is continuing for the collection of Accounts
and realization of other Collateral.
SECTION 7. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower and Guarantor hereby jointly and severally represents and warrants
to Lender the following (which shall survive the execution and delivery of this
Agreement), the truth and
49
accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations by Lender to Borrower:
7.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower and
------------------------------------------------------
Guarantor are each a corporation duly organized and in good standing under the
laws of its state of incorporation and are each duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary where the failure to so qualify would have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement and the other Financing Agreements to which it is a party and the
transactions contemplated hereunder and thereunder (a) are all within Borrower's
and Guarantor's corporate powers, (b) have been duly authorized, (c) are not in
contravention of law or the terms of Borrower's or Guarantor's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower or Guarantor is a party or by which
Borrower or Guarantor or its property are bound and (d) will not result in the
creation or imposition of, or require or give rise to any obligation to grant,
any lien, security interest, charge or encumbrance upon any property of Borrower
or Guarantor. This Agreement and the other Financing Agreements to which any
Borrower or Guarantor is a party constitute legal, valid and binding obligations
of Borrower and Guarantor enforceable in accordance with their respective terms.
Borrower and Guarantor do not have any Subsidiaries except as set forth on
Schedule 7.1 to the Information Certificate.
7.2 Financial Statements; No Material Adverse Change. All financial
------------------------------------------------
statements relating to Borrower and Guarantor which have been or may hereafter
be delivered by Borrower or Guarantor to Lender have been prepared in accordance
with GAAP (except as to any interim financial statements, to the extent such
statements are subject to normal year-end adjustments and do not include any
notes), and fairly present in all material respects the financial condition and
the results of operation of Borrower and Guarantor as at the dates and for the
periods set forth therein. Except as disclosed in any financial statements
furnished by Borrower or Guarantor to Lender prior to the date of this
Agreement, there has been no material adverse change in the assets, liabilities
and condition, financial or otherwise of Borrower, since the date of the most
recent audited financial statements furnished by Borrower or Guarantor to Lender
prior to the date of this Agreement.
7.3 Chief Executive Office; Collateral Locations.
--------------------------------------------
(a) The exact legal name of Borrower and Guarantor are as set forth on
the signature page of this Agreement and in the Information Certificate.
Borrower and Guarantor have not, during the past five years, been known by or
used by 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 or assets out of the ordinary course of
business, except for the Mergers and as set forth in the Information
Certificate.
(b) Borrower and Guarantor are each an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of Borrower and Guarantor or accurately states that
50
Borrower or Guarantor has none and accurately sets forth the federal employer
identification number of Borrower and Guarantor.
(c) The chief executive office and mailing address of Borrower and
Borrower's Records and Guarantor and Guarantor's Records concerning Accounts are
located only at the address identified as such in the Information Certificate
and its only other places of business and the only other locations of
Collateral, if any, are the addresses set forth in the Information Certificate,
subject to the right of Borrower and Guarantor to establish new locations in
accordance with Section 8.2 below. The Information Certificate correctly
identifies any of such locations which are not owned by Borrower and sets forth
the owners and/or operators thereof. Borrower or Guarantor do not have their
respective chief executive offices and do not have any assets in the City of
Roanoke, Virginia.
7.4 Priority of Liens; Title to Properties. The security interests and
--------------------------------------
liens granted to Collateral Agent under the Security Agreements and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to the liens
indicated on Schedule 7.4 to the Information Certificate and the other liens
permitted under Section 8.8 hereof., provided that the security interests and
liens of Collateral Agent are not perfected as to Real Property which are not
subject to the Mortgages unless and until the recording of mortgages or other
appropriate instruments with respect thereto or as to any motor vehicles subject
to certificates of title unless and until the lien of Collateral Agent may be
noted on the applicable certificate of title as required under applicable state
law. Borrower and Guarantor have good and marketable title to all of their
respective properties and assets subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those granted to
Collateral Agent and such others as are specifically listed on Schedule 7.4 to
the Information Certificate or permitted under Section 8.8 hereof.
7.5 Tax Returns. Borrower and Guarantor have filed, or caused to be filed,
-----------
in a timely manner all material tax returns, reports and declarations which are
required to be filed by them. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Borrower and
Guarantor have paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by them, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower or Guarantor and with respect to which
adequate reserves have been set aside on its books. Adequate provision has been
made for the payment of all material accrued and unpaid Federal, State, county,
local, foreign and other taxes of Borrower and Guarantor whether or not yet due
and payable and whether or not disputed.
7.6 Litigation. Except as set forth on Schedule 7.6 to the Information
----------
Certificate, there is no present investigation by any Governmental Authority
pending, or to the best of Borrower's and Guarantor's knowledge threatened,
against or involving Borrower or Guarantor, its assets or business and there is
no action, suit, proceeding or claim by any Person pending, or to the best of
Borrower's and Guarantor's knowledge threatened, against Borrower or Guarantor
or its assets or goodwill, or against or affecting any transactions contemplated
by this Agreement, which if adversely determined against Borrower or Guarantor
would result in any material adverse change
51
in the assets or businesses of Borrower or Guarantor or would impair the ability
of Borrower or Guarantor to perform its obligations hereunder or under any of
the other Financing Agreements to which Borrower or Guarantor is a party or of
Collateral Agent or Lender to enforce any Obligations or realize upon any
Collateral.
7.7 Compliance with Other Agreements and Applicable Laws.
----------------------------------------------------
(a) Borrower and Guarantor are not in default under, or in violation
of any of the terms of, any agreement, contract, instrument, lease or other
commitment to which it is a party or by which it or any of its assets are bound
where such default or violation would have a Material Adverse Effect, except as
set forth on Schedule 7.7(a) to the Information Certificate. Borrower and
Guarantor are each in compliance in all respects with all applicable provisions
of laws, rules, regulations, licenses, permits, approvals and orders of any
foreign, Federal, State or local Governmental Authority where the failure to so
comply would have a Material Adverse Effect.
(b) Borrower has obtained all material permits, licenses, approvals,
consents, certificates, orders or authorizations of any Governmental Authority
required for the lawful conduct of its business (the "Permits"). Schedule 7.7(b)
to the Information Certificate sets forth all of the Permits issued to or held
by Borrower as of the date hereof by any Federal, State or local Governmental
Authority and any applications pending by Borrower with such Federal, State or
local Governmental Authority. The Permits constitute all permits, licenses,
approvals, consents, certificates, orders or authorizations necessary for
Borrower to own and operate its business as presently conducted or proposed to
be conducted where the failure to have such Permits would have a Material
Adverse Effect. All of the Permits are valid and subsisting and in full force
and effect. There are no actions, claims or proceedings pending or threatened
that seek the revocation, cancellation, suspension or modification of any of the
Permits.
7.8 Environmental Compliance.
------------------------
(a) Except as set forth on Schedule 7.8 to the Information
Certificate, Borrower, Guarantor and their respective Subsidiaries, have not,
and have not permitted any Subsidiary to, generate, use, store, treat,
transport, manufacture, handle, produce or dispose of any Hazardous Materials,
on or off its premises (whether or not owned by it) in any manner which at any
time violates any applicable Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the operations of
Borrower, Guarantor and their respective Subsidiaries comply in all material
respects with all Environmental Laws and all licenses, permits, certificates,
approvals and similar authorizations thereunder.
52
(b) Except as set forth on Schedule 7.8 to the Information
Certificate, there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of Borrower's and Guarantor's knowledge
threatened, with respect to (i) any non-compliance with or violation of the
requirements of any Environmental Law by Borrower, Guarantor, or any Subsidiary,
or (ii) the release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects Borrower or
Guarantor or its business, operations or assets or any properties at which
Borrower or Guarantor has transported, stored or disposed of any Hazardous
Materials, which would have a Material Adverse Effect.
(c) Except as set forth on Schedule 7.8 to the Information
Certificate, Borrower, Guarantor and their respective Subsidiaries have no
material liability (contingent or otherwise) in connection with a release, spill
or discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(d) Borrower, Guarantor, and their respective Subsidiaries have all
licenses, certificates, approvals or similar authorizations and other Permits
required to be obtained or filed in connection with the operations of Borrower,
Guarantor or Subsidiary under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are valid and in full
force and effect where the failure to have any of the foregoing would have a
Material Adverse Effect.
7.9 Capitalization. All of the issued and outstanding shares of Capital
--------------
Stock of Borrower and Guarantor are directly and beneficially owned and held as
set forth on Schedule 7.1 to the Information Certificate, have been duly
authorized and are fully paid and non-assessable, free and clear of all claims,
liens, pledges and encumbrances of any kind, except in favor of Collateral
Agent.
7.10 Employee Benefits.
-----------------
(a) Each Benefit Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Benefit Plan which is intended to qualify under Section 401(a) of the Code
has received (or each predecessor plan has received) a favorable determination
letter from the Internal Revenue Service and to the best of Borrower's and
Guarantor's knowledge, nothing has occurred which would cause the loss of such
qualification. Borrower and its ERISA Affiliates have made all required
contributions to any Benefit 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 Benefit
Plan.
(b) There are no pending or to the best of Borrower's and Guarantor's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to
53
any Benefit Plan that could reasonably be expected to result in liability of
Borrower or Guarantor in excess of $100,000. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Benefit Plan.
(c) Except as set forth on Schedule 7.10 hereto, (i) no ERISA Event
has occurred or is reasonably expected to occur; (ii) the current value of each
Benefit Plan's assets (determined in accordance with the assumptions used for
funding such Benefit Plan pursuant to Section 412 of the Code) exceed such
Benefit Plan's liabilities under Section 4001(a)(16) of ERISA; (iii) Borrower
and its ERISA Affiliates have not incurred and do not reasonably expect to
incur, any liability under Title IV of ERISA with respect to any Benefit Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
Borrower and its ERISA Affiliates have not incurred and do not reasonably expect
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 Multiemployer Plan; and (v)
Borrower and its ERISA Affiliates have not engaged in a transaction that could
be subject to Section 4069 or 4212(c) of ERISA.
7.11 Intellectual Property. Borrower and Guarantor own or license or
---------------------
otherwise have the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrower or Guarantor do not have any Intellectual Property
registered, or subject to pending applications, in the United States Patent and
Trademark Office or any similar office or agency in the United States, any State
thereof, any political subdivision thereof or in any other country, other than
those described in Schedule 7.11 to the Information Certificate and has not
granted any licenses with respect thereto other than as set forth in Schedule
7.11 to the Information Certificate. No event has occurred which permits or
would permit after notice or passage of time or both, the revocation, suspension
or termination of such rights. To the best of Borrower's and Guarantor's
knowledge, no slogan or other advertising device, product, process, method,
substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by
Borrower or Guarantor infringes any patent, trademark, servicemark, tradename,
copyright, license or other Intellectual Property owned by any other Person
presently and no claim or litigation is pending or threatened against or
affecting Borrower or Guarantor contesting its right to sell or use any such
Intellectual Property. Schedule 7.11 to the Information Certificate sets forth
all of the agreements or other arrangements of Borrower and Guarantor pursuant
to which Borrower or Guarantor has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of Borrower or Guarantor as
in effect on the date hereof. No trademark, servicemark or other Intellectual
Property at any time used by Borrower or Guarantor which is owned by another
person, or owned by Borrower or Guarantor subject to any security interest,
lien, collateral assignment, pledge or other encumbrance in favor of any person
other than Collateral Agent, is affixed to any Eligible Inventory, except to the
extent permitted under the term of the license agreements listed on Schedule
7.11 to the Information Certificate.
7.12 Labor Disputes.
--------------
54
(a) Set forth on Schedule 7.12 to the Information Certificate is a
list (including dates of termination) of all collective bargaining or similar
agreements between or applicable to Borrower and any union, labor organization
or other bargaining agent in respect of the employees of Borrower on the date
hereof.
(b) Except as set forth on Schedule 7.12 to the Information
Certificate, there is (i) no significant unfair labor practice complaint pending
against Borrower or Guarantor or, to the best of Borrower's and Guarantor's
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or, to best of Borrower's and Guarantor's knowledge, threatened against
it, and (ii) no significant strike, labor dispute, slowdown or stoppage is
pending against Borrower or Guarantor or, to the best of Borrower's and
Guarantor's knowledge, threatened against Borrower or Guarantor.
7.13 Corporate Name; Prior Transactions. Borrower and Guarantor have not,
----------------------------------
during the past five years, been known by or used by 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 or assets out of the ordinary course of business, except as set forth
in the Information Certificate.
7.14 Restrictions on Subsidiaries. Except for restrictions contained in
----------------------------
this Agreement or any other agreement with respect to Indebtedness of Borrower
or Guarantor permitted hereunder as in effect on the date hereof, there are no
contractual or consensual restrictions on Borrower or Guarantor or any of their
respective Subsidiaries which prohibit or otherwise restrict (a) the transfer of
cash or other assets (i) between any Borrower or Guarantor and any of its
Subsidiaries or (ii) between any Subsidiaries of Borrower or Guarantor or (b)
the ability of Borrower or Guarantor to incur Indebtedness or grant security
interests to Collateral Agent in the Collateral.
7.15 Material Contracts. Schedule 7.15 to the Information Certificate sets
------------------
forth all Material Contracts to which Borrower is a party or is bound as of the
date hereof. Borrower has delivered true, correct and complete copies of such
Material Contracts to Lender on or before the date hereof. Except as set forth
on Schedule 7.15 to the Information Certificate, Borrower is not in breach of or
in default under any Material Contract and has not received any notice of the
intention of any other party thereto to terminate any Material Contract.
7.16 Confirmation Order. Borrower has delivered to Lender a complete and
------------------
correct copy of the Plan and the Confirmation Order (including all schedules,
exhibits, amendments, supplements, modifications, assignments and all other
documents delivered pursuant thereto or in connection therewith). Borrower and
Guarantor are not in default in the performance of or compliance with any
provisions of the Plan. The Plan is in full force and effect as of the date
hereof and has not been terminated, rescinded or withdrawn. The Confirmation
Order is a Final Order and is in full force and effect, and has not been
amended, modified or stayed and no appeal therefrom or request for hearing with
respect thereto is pending. All conditions to confirmation and effectiveness of
the Plan have been satisfied or validly waived pursuant to the Plan (other than
conditions consisting of the effectiveness of this Agreement). Set forth on
Schedule 7.16 hereto is
55
a true and correct (a) list of the uses with respect to all cash amounts payable
by Borrower and Guarantor on the Effective Date pursuant to the Plan and (b)
list of all payments (and the approximate due dates therefor) which may be
required to be made by Borrower and Guarantor in respect of claims pursuant to
the Plan after the Effective Date and whether such claims are or purport to be
secured claims. No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Confirmation Order and no governmental or other
action or proceeding has been commenced, seeking any injunction, restraining
order or other order which seeks to void or otherwise modify the transactions
described in the Confirmation Order.
7.17 Merger.
------
(a) Each of the Mergers is valid and effective in accordance with the
terms of the Merger Agreements, and the corporation statute of the State of
Delaware and Borrower is the surviving corporation pursuant to each of the
Mergers (other than the Holding Company Merger) and Borrower has changed its
name from Rubatex Corporation to RBX Industries, Inc. and Guarantor is the
surviving corporation pursuant to the Holding Company Merger.
(b) All actions and proceedings required by the Merger Agreements,
applicable law and regulation have been taken and the transactions required
thereunder had been duly and validly taken and consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Merger Agreements and no governmental action or
proceeding has been threatened or commenced seeking any injunction, restraining
order or other order which seeks to void or otherwise modify the transactions
described in the Merger Agreements.
(d) Borrower and Guarantor have delivered, or caused to be delivered,
to Lender, true, correct and complete copies of the Merger Agreements.
7.18 Accuracy and Completeness of Information. All information furnished by
----------------------------------------
or on behalf of Borrower or Guarantor in writing to Lender pursuant to this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading in
light of the circumstances under which they were made. No event or circumstance
has occurred which has had or could reasonably be expected to have a material
adverse affect on the businesses or assets of Borrower or Guarantor which has
not been accurately disclosed to Lender in writing.
7.19 Survival of Warranties; Cumulative. All representations and warranties
----------------------------------
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Lender on the date of each additional borrowing or other
credit accommodation hereunder and shall be conclusively presumed
56
to have been relied on by Lender regardless of any investigation made or
information possessed by Lender. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Borrower or Guarantor shall now or hereafter give, or cause to
be given, to Lender.
SECTION 8. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
8.1 Maintenance of Existence. Borrower and Guarantor shall at all times
------------------------
preserve, renew and keep in full force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and effect
all Permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on its business as presently or proposed to be
conducted. Borrower and Guarantor shall give Lender thirty (30) days' prior
written notice of any proposed change in its corporate name or any
reincorporation of Borrower or Guarantor or other transaction which has the
effect of changing the jurisdiction of incorporation of any Borrower or
Guarantor. The notice of any such proposed change shall, in the case of a change
in its corporate name, set forth the new name and in other cases the new
jurisdiction of incorporation and such other information with respect to the
transaction as may be required by Lender and Borrower or Guarantor shall deliver
to Lender a copy of the amendment to the certificate of incorporation of
Borrower or Guarantor providing for the name change certified by the Secretary
of State of the jurisdiction of incorporation of Borrower or Guarantor as soon
as it is available and such other information as Lender may require. In no event
shall the foregoing be construed as a consent to any such transaction to the
extent not otherwise permitted herein.
8.2 New Collateral Locations. Borrower and Guarantor may open any new
------------------------
location within the continental United States provided Borrower and Guarantor
(a) give Lender thirty (30) days' prior written notice of the intended opening
of any such new location and (b) execute and deliver, or cause to be executed
and delivered, to Lender such agreements, documents, and instruments as Lender
may deem reasonably necessary or desirable to protect the interests of Lender
and Collateral Agent in the Collateral at such location.
8.3 Compliance with Laws, Regulations, Etc.
--------------------------------------
(a) Borrower and Guarantor shall, and shall cause any Subsidiary to,
at all times, comply with all laws, rules, regulations, licenses, approvals,
orders and other Permits applicable to it and duly observe all requirements of
any foreign, Federal, State or local Governmental Authority, including ERISA,
the Code, the Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, and all statutes, rules, regulations,
orders, permits and stipulations relating to environmental pollution and
employee health and safety, including all of the Environmental Laws where the
failure to so comply would have a Material Adverse Effect.
57
(b) Borrower and Guarantor shall establish and maintain, at their
expense, a system to assure and monitor its continued compliance with all
Environmental Laws in all of its operations, which system shall include annual
reviews of such compliance by employees or agents of Borrower and Guarantor who
are familiar with the requirements of the Environmental Laws. Copies of all
environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations shall be promptly furnished, or caused to be furnished,
by Borrower and Guarantor to Lender. Borrower and Guarantor shall take prompt
and appropriate action to respond to any non-compliance with any of the
Environmental Laws and shall regularly report to Lender on such response.
(c) Borrower and Guarantor shall give both oral and written notice to
Lender immediately upon Borrower's or Guarantor's receipt of any notice of, or
Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the occurrence
of any event involving the material release, spill or discharge, threatened or
actual, of any Hazardous Material or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or notice with respect to: (A) any
material non-compliance with or violation of any Environmental Law by Borrower
or Guarantor or (B) the material release, spill or discharge, threatened or
actual, of any Hazardous Material or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials other than in accordance with applicable Environmental Laws
or (D) any other environmental, health or safety matter, which affects Borrower
or Guarantor or its business, operations or assets or any properties at which
Borrower or Guarantor transported, stored or disposed of any Hazardous
Materials.
(d) Without limiting the generality of the foregoing, whenever Lender
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of Borrower or Guarantor in order to avoid
any non-compliance, with any Environmental Law, Borrower or Guarantor shall, at
Lender's request and Borrower's and Guarantor's expense: (i) cause an
independent environmental engineer reasonably acceptable to Lender to conduct
such tests of the site where Borrower's or Guarantor's non-compliance or alleged
non-compliance with such Environmental Laws has occurred as to such
non-compliance and prepare and deliver to Lender a report as to such
non-compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's or Guarantor's
response thereto or the estimated costs thereof, shall change in any material
respect.
(e) Borrower and Guarantor shall indemnify and hold harmless Lender,
its directors, officers, employees, agents (including Collateral Agent),
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including attorneys'
fees and legal expenses) directly or indirectly arising out of or attributable
to the use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of Borrower or Guarantor and the
preparation and implementation of any closure, remedial or other required plans,
other than for any such losses, claims, damages, liabilities, costs and expenses
arising directly out of any act by
58
Lender or its agent (including Collateral Agent) or representatives on any
premises of Borrower or Guarantor with respect to a Hazardous Material that
constitutes gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction. All
representations, warranties, covenants and indemnifications in this Section 8.3
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
8.4 Payment of Taxes and Claims. Borrower and Guarantor shall, and
---------------------------
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to Borrower,
Guarantor or such Subsidiary, as the case may be, and with respect to which
adequate reserves have been set aside on its books. Borrower and Guarantor shall
be liable for any tax or penalties imposed on Lender or Collateral Agent as a
result of the financing arrangements provided for herein and Borrower and
Guarantor agree to indemnify and hold Lender and Collateral Agent harmless with
respect to the foregoing, and to repay to Lender or Collateral Agent on demand
the amount thereof, and until paid by Borrower such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
-------- ----
construed to require Borrower or Guarantors to pay any income or franchise taxes
attributable to the income of Lender or Collateral Agent from any amounts
charged or paid hereunder to Lender or Collateral Agent. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
8.5 Insurance. Borrower and Guarantor shall, at all times, maintain, or
---------
cause to be maintained, with reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as to form,
amount and insurer. Borrower and Guarantor shall furnish certificates, policies
or endorsements to Lender as Lender shall require as proof of such insurance,
and, if Borrower or Guarantor fails to do so, Lender is authorized, but not
required, to obtain such insurance at the expense of Borrower. All such policies
shall provide for at least thirty (30) days' prior written notice to Collateral
Agent of any cancellation or reduction of coverage and that Collateral Agent may
act as attorney for Borrower or Guarantor in obtaining, and at any time an Event
of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrower and Guarantor shall cause
Collateral Agent to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance policies and
Borrower and Guarantor shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance satisfactory to
Lender. Such lender's loss payable endorsements shall specify that the proceeds
of such insurance shall be payable to Collateral Agent as its interests may
appear and further specify that Collateral Agent shall be paid regardless of any
act or omission by Borrower, Guarantor or any of their Affiliates. At its
option, Collateral Agent or Lender may apply any insurance proceeds received by
Collateral Agent or Lender at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in
accordance with the terms hereof or hold such proceeds as cash collateral for
the Obligations.
59
8.6 Financial Statements and Other Information.
------------------------------------------
(a) Borrower and Guarantor shall, and shall cause any Subsidiary to,
keep proper books and records in which true and complete entries shall be made
of all dealings or transactions of or in relation to the Collateral and the
businesses of Borrower and Guarantor and their Subsidiaries in accordance with
GAAP and Borrower and Guarantor shall furnish or cause to be furnished to
Lender: (i) within thirty (30) days after the end of each fiscal month, monthly
unaudited consolidated financial statements and unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss, statements of cash flow and statements of shareholders'
equity), all in reasonable detail, fairly presenting in all material respects
the financial position and the results of the operations of Guarantor and its
Subsidiaries as of the end of and through such fiscal month and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements and unaudited consolidating financial statements of
Guarantor and its Subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Guarantor and its Subsidiaries as of the end of
and for such fiscal year, together with the opinion of independent certified
public accountants, which accountants shall be an independent accounting firm
selected by Borrower and reasonably acceptable to Lender, that such financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the results of operations and financial condition of Guarantor
and its Subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Lender in writing of the details
of (i) any loss, damage, investigation, action, suit, proceeding or claim
relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise,
(ii) any Material Contract being terminated or amended or any new Material
Contract entered into (in which event Borrower shall provide Lender with a copy
of such Material Contract), (iii) any order, judgment or decree in excess of
$250,000 shall have been entered against Borrower or any of its properties or
assets, (iv) any notification of violation of laws or regulations received by
Borrower, (v) any ERISA Event, and (vi) the occurrence of any Event of Default
or act, condition or event which, with notice or the passage of time or giving
of notice or both, would constitute an Event of Default.
(c) Borrower and Guarantor shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports which
Borrower or Guarantor sends to its stockholders generally and copies of all
reports and registration statements which Borrower files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Borrower and Guarantor shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information respecting the
Collateral and the businesses of Borrower and Guarantor, as Lender may, from
time to time, reasonably request, except that Borrower or Guarantor shall not be
------ ----
required to furnish to Lender any correspondence between
60
Borrower or Guarantor and its counsel which is subject to attorney-client
privilege if the effect of furnishing such correspondence to Lender would result
in the waiver of the attorney-client privilege as to such correspondence so
furnished to Lender, provided, that, as to any such correspondence, promptly
-------- ----
upon Lender's request, Borrower and Guarantor shall provide to Lender an opinion
letter, in form and substance satisfactory to Lender, stating that such
correspondence is subject to the attorney-client privilege and furnishing it to
Lender would constitute a waiver of the attorney-client privilege as to such
correspondence. Lender is hereby authorized to deliver a copy of any financial
statement or any other information relating to the businesses of Borrower and
Guarantor to any court or other Governmental Authority or to any participant or
assignee or prospective participant or assignee. Borrower and Guarantor hereby
irrevocably authorizes and directs all accountants or auditors to deliver to
Collateral Agent and Lender, at Borrower's expense, copies of the financial
statements of Borrower and Guarantor and any reports or management letters
prepared by such accountants or auditors on behalf of Borrower and Guarantor and
to disclose to Collateral Agent and Lender such information as they may have
regarding the businesses of Borrower and Guarantor. Any documents, schedules,
invoices or other papers delivered to Collateral Agent or Lender may be
destroyed or otherwise disposed of by Lender or Collateral Agent (as the case
may be) one (1) year after the same are delivered to Lender or Collateral Agent
(as the case may be), except as otherwise designated by Borrower to Lender and
Collateral Agent in writing.
8.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower and
-------------------------------------------------------
Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly.
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person except, for,
------ ---
(i) sales of Inventory in the ordinary course of business,
(ii) the sale of any of the Bedford Real Estate; provided, that,
-------- ----
as to each such sale, each of the following conditions is satisfied as
determined by Lender: (A) Lender shall have received not less than ten (10)
Business Days' prior written notice of the proposed sale by Borrower of such
property, which notice shall set forth in reasonable detail satisfactory to
Lender, the parties to such sale, the purchase price and the manner of payment
thereof, the total amount of all cash or other proceeds (including the Net Cash
Proceeds) which it is anticipated will be payable to Borrower with respect to
such sale, the total estimated costs related to such sale and such other matters
as Lender may request, (B) all of the proceeds from any such sale shall be paid
directly to Lender on the date of the transfer of ownership or operation of such
Real Property or any interest therein (or such earlier date as such amounts may
be payable to Borrower), (C) the Net Cash Proceeds received by Lender on the
date of the transfer of ownership or operation of any of such Real Property (or
any interest therein) shall be not less than the amount set forth on Schedule
8.7 hereto with respect to such Real Property being sold, (D) fifty (50%)
percent of all of such Net Cash Proceeds up to a maximum amount of $2,500,000
shall be held by Lender as cash collateral
61
for all of the Obligations (which cash collateral shall constitute part of the
Collateral, may be held by Lender in an account designated by Lender for such
purpose in its books and records, may be commingled with Lender's own funds and
in respect of which, so long as no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred, Borrower shall receive a credit to its
loan account on a monthly basis at a rate equal to three (3%) percent per annum
less than the Prime Rate, adjusted effective on the first day of the month after
any change in such Prime Rate is announced based on the Prime Rate in effect on
the last day of the month in which any such change occurs as calculated by
Lender and calculated based on a three hundred sixty (360) day year and actual
days elapsed), provided, that, in no event shall Borrower be required to pay (or
-------- ----
be charged) any interest or other amounts to Lender in respect of such cash
collateral, (E) fifty (50%) percent of all of such Net Cash Proceeds (and any
amounts in excess of the $2,500,000 of cash collateral to be held by Lender as
provided above) shall be applied to Obligations arising pursuant to the
Revolving Loans, (F) such sale shall be on commercially reasonable prices and
terms in a bona fide arms'-length transaction with a person that is not an
---- ----
Affiliate, (G) Borrower shall not incur any liabilities in connection with such
sales except as permitted herein, (H) as of the date of such sale and after
giving effect thereto, no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred and be continuing;
(iii) the sale by Borrower of any Equipment or Real Property
(other than the Bedford Real Estate), provided, that, as to any such sale each
-------- ----
of the following conditions is satisfied as determined by Lender: (A) Lender
shall have received not less than ten (10) Business Days' prior written notice
of the proposed sale by Borrower of such property, which notice shall set forth
in reasonable detail satisfactory to Lender, the parties to such sale, the
Equipment or Real Property to be sold, the purchase price and the manner of
payment thereof, the total amount of all cash or other proceeds (including the
Net Cash Proceeds) which it is anticipated will be payable to Borrower with
respect to such sale, the total estimated costs related to such sale and such
other matters as Lender may request, (B) all proceeds from any such sale shall
be paid to Lender on the date of the transfer of ownership or operation of such
Equipment or Real Property (or such earlier date as such amounts may be payable
to Borrower), (C) the amount payable to Borrower in respect of the purchase
price for such Equipment or Real Property (as the case may be) and the amount of
the Net Cash Proceeds received by Lender on the date of the transfer of
ownership or operation of such Equipment or Real Property (or any interest
therein) shall be not less than the Minimum Sale Price for such Equipment or
Real Property, (D) such sale shall be on commercially reasonable prices and
terms in a bona fide arms'-length transaction with a person that is not an
---- ----
Affiliate, (E) all of the Net Cash Proceeds of any such sale shall be paid
directly to Lender and shall be applied as a mandatory prepayment in respect of
the installments of principal of the Term Loan in the inverse order of maturity,
(F) Borrower shall not incur any liabilities in connection with such sales
except as permitted herein, (G) as of the date of such sale and after giving
effect thereto, no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and be continuing;
(iv) the grant by Borrower after the date hereof of a
non-exclusive license to any person for the use of any Intellectual Property
consisting of trademarks or patents owned by
62
Borrower, provided, that, as to each and all of such licenses, each of the
-------- ----
following conditions is satisfied as determined by Lender: (A) at the time of
the grant of the license and after giving effect thereto, no Event of Default,
or act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be continuing,
(B) the rights of the licensee in the trademarks or patents subject to such
license shall be subject and subordinate in all respects to the rights therein
of Collateral Agent, (C) such licenses shall not include any limitations or
restrictions on the use of such trademarks or patents by Borrower or Guarantor
or which would limit or restrict the ability of Lender to use such trademarks or
patents pursuant to its rights hereunder or under any of the other Financing
Agreements or to sell or otherwise realize on such trademarks or patents, except
as Lender may otherwise agree in writing and (D) Lender shall have received
true, correct and complete copies of the executed license agreement, promptly
after the execution thereof;
(v) the issuance and sale by Borrower of Capital Stock in
accordance with the terms of the Plan and the issuance and sale by Borrower or
Guarantor of Capital Stock of Borrower or Guarantor after the date hereof,
provided, that, (A) as to any issuance and sale after the date hereof, Lender
-------- ----
shall have received not less than ten (10) Business Days' prior written notice
of such issuance and sale by Borrower or Guarantor, which notice shall specify
the parties to whom such shares are to be sold, the terms of such sale, the
total amount which it is anticipated will be realized from the issuance and sale
of such stock and the net cash proceeds which it is anticipated will be received
by Borrower or Guarantor from such sale, (B) Borrower or Guarantor shall not be
required to pay any dividends or repurchase or redeem such Capital Stock or make
any other payments in respect thereof, unless otherwise permitted in Section
8.11 hereof, (C) the terms of such Capital Stock, and the terms and conditions
of the purchase and sale thereof, shall not include any terms that limit the
right of Borrower to request or receive Loans or Letter of Credit Accommodations
or to amend or modify any of the terms and conditions of this Agreement or any
of the other Financing Agreements or otherwise in any way relate to or affect
the arrangements of Borrower or Guarantor with Lender or are more restrictive or
burdensome to Borrower or Guarantor than the terms of any Capital Stock in
effect on the date hereof, (D) all proceeds from any such issuance and sale by
Borrower or Guarantor after the date hereof shall be paid to Lender for
application to the Obligations in such order and manner as Lender may determine
and (E) as of the date of such issuance and sale and after giving effect
thereto, no Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default shall exist or have
occurred and be continuing;
(vi) the issuance of Capital Stock of Borrower or Guarantor
consisting of common stock pursuant to a stock option plan or 401(k) plan of
Borrower or Guarantor for the benefit of its employees, directors and
consultants, provided, that, (A) in no event shall Borrower or Guarantor be
-------- ----
required to issue, or shall Borrower or Guarantor issue, Capital Stock pursuant
to such stock option plan or 401(k) plan which would result in a Change of
Control or other Event of Default and (B) Borrower shall give Lender prior
written notice of the material terms of such stock option plan and such other
information with respect thereto as Lender may reasonably request,
(c) wind up, liquidate or dissolve; or
63
(d) agree to do any of the foregoing.
8.8 Encumbrances. Borrower and Guarantor shall not, and shall not permit
------------
any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including, without limitation,
the Collateral, except:
------
(a) liens and security interests of Collateral Agent, provided, that,
-------- ----
to the extent such liens and security interests on the Collateral are held for
the benefit of the holders of the Senior Secured Notes or the Senior Secured
Note Trustee, such interests shall be subject and subordinate in all respects to
the liens and security interests of Collateral Agent to the extent held for the
benefit of Lender;
(b) liens securing the payment of taxes, either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or Guarantor and with
respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of Borrower's or Guarantor's
business (including carriers', warehousemen's, materialmen's and mechanics'
liens) to the extent: (i) such liens secure Indebtedness or obligations which
are not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower or
Guarantor, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books;
(d) pledges and deposits of cash by Borrower or Guarantor after the
date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Borrower and Guarantor as of the date
hereof;
(e) pledges and deposits of cash by Borrower after the date hereof to
secure the performance of tenders, bids, leases, trade contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business consistent with the
current practices of Borrower and Guarantor as of the date hereof; provided,
--------
that, in connection with any performance bonds issued by a surety or other
----
person, the issuer of such bond shall have waived in writing any rights in or
to, or other interest in, any of the Collateral in an agreement, in form and
substance satisfactory to Lender;
(f) liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by Borrower or Guarantor located on the premises
of Borrower or Guarantor (but not in connection with, or as part of, the
financing thereof) from time to time in the ordinary course of business and
64
consistent with current practices of Borrower and Guarantor in effect on the
date hereof and the precautionary UCC financing statement filings in respect
thereof;
(g) zoning restrictions, easements, reservations, exceptions,
encroachments, rights of way, licenses, covenants and other restrictions or
encumbrances affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
businesses of Borrower as presently conducted thereon or materially impair the
value of the Real Property which may be subject thereto;
(h) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on real estate (including improvements
thereto) arising after the date hereof; provided, that, (i) in no event shall
-------- ----
the aggregate amount of the Indebtedness secured by such security interests or
mortgages incurred in the fiscal year of Borrower ending December 31, 2001
exceed $2,000,000, or in the fiscal year of Borrower ending December 31, 2002
exceed $3,000,000, or in the fiscal year of Borrower ending December 31, 2003
exceed $5,000,000, or in any fiscal year thereafter exceed $1,000,000, provided,
that, to the extent that the amount of such Indebtedness incurred by Borrower in
any fiscal year is less than the amount otherwise permitted under this Section,
the amount of such Indebtedness which may be incurred in the immediately
following fiscal year shall be increased by such amount, up to a maximum such
increase of $2,000,000 as to Indebtedness not incurred in the fiscal year of
Borrower ending December 31, 2001 and up to a maximum for such increase of
$1,000,000 in any fiscal year thereafter, (ii) such security interests and
mortgages shall not apply to any property of Borrower other than the Equipment
or real estate so acquired, and (iii) the Indebtedness secured thereby shall not
exceed the cost of the Equipment or real estate so acquired, as the case may be;
and
(i) security interests and liens in existence on the date hereof
which are set forth on Schedule 7.4 hereto.
8.9 Indebtedness. Borrower and Guarantor shall not, and shall not permit
------------
any Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, except for:
------
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to the
extent incurred or secured by liens (including Capital Leases) permitted under
Section 8.8(h) hereof;
(c) Indebtedness of Guarantor evidenced by or arising under the
Senior Secured Notes as in effect on the date hereof, provided, that:
-------- ----
(i) the aggregate principal amount of such Indebtedness shall
not exceed $25,000,000 (plus any principal arising pursuant to the payment of
interest by incurring additional Indebtedness having substantially the same
terms as the Senior Secured Notes as in effect on the date hereof), less the
aggregate amount of all repayments, repurchases or redemptions, whether
65
optional or mandatory, in respect thereof, plus interest thereon at the rate
provided for in the Senior Secured Notes as in effect on the date hereof,
(ii) Borrower and Guarantor shall not, directly or indirectly, make
any payments in respect of such Indebtedness, except that Guarantor may
regularly scheduled payments of interest in the form of additional indebtedness
with substantially the same terms as the Senior Secured Notes (as in effect on
the date hereof) in accordance with the terms of the Senior Secured Indenture as
in effect on the date hereof until after the date that is the third anniversary
of the date of this Agreement and thereafter in cash as provided in the Senior
Secured Notes as in effect on the date hereof, with the entire principal balance
payable on the date which is the fifth anniversary of the date hereof provided,
--------
that, Guarantor may make regularly scheduled payments of interest when due in
----
accordance with the terms of the Senior Secured Notes (as in effect on the date
hereof) in cash or other immediately available funds after the first anniversary
of the date hereof, provided, that, as to any such payment Lender shall have
-------- ----
notified the Senior Secured Note Trustee in writing that each of the following
conditions is satisfied:
(A) no Event of Default, or act, condition or event which with
notice or passage of time would constitute an Event of Default, shall exist or
have occurred (provided, that, any such notice by Lender to Note Trustee shall
-------- ----
not be deemed a waiver of any such Event of Default which may exist or a waiver
or release of any rights or remedies of Lender or Collateral Agent pursuant to
any such Event of Default or otherwise);
(B) as of the date of any such payment, the Excess Availability
shall have been not less than $5,000,000 for each of the immediately preceding
thirty (30) consecutive days; and
(C) as of the date of any such payment and after giving effect
thereto, the Excess Availability shall be not less than $5,000,000;
(iii) Borrower and Guarantor shall not, directly or indirectly, (A)
amend, modify, alter or change in any material respect any terms of such
Indebtedness or any of the Senior Secured Notes, the Senior Secured Note
Indenture or any related agreements, documents or instruments, except that
------ ----
Guarantor may, after prior written notice to Lender, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness other than pursuant to payments thereof, or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose,
(iv) nothing contained in this Section 8.9(c)(ii) shall be construed
to limit the right of Borrower or Guarantor to make, and the Senior Secured Note
Trustee to accept, payments required to be made by Borrower or Guarantor under
the Senior Secured Note Indenture (as in effect on the date hereof) to Senior
Secured Note Trustee solely for the account of Senior Secured Note Trustee and
for its own benefit which payments are to be retained by Senior Secured Note
66
Trustee (and are not made to Senior Secured Note Trustee for distribution to any
holder of any Senior Secured Notes), and
(v) Borrower and Guarantor shall furnish to Lender all notices
or demands in connection with such Indebtedness received by Borrower or
Guarantor or on its behalf, promptly after receipt thereof or sent by Borrower
or Guarantor or on its behalf concurrently with the sending thereof;
(d) unsecured Indebtedness of Borrower, Guarantor or Subsidiary of
Borrower or Guarantor to Borrower, Guarantor or Subsidiary arising after the
last day of the month immediately prior to the date hereof pursuant to loans
permitted under Section 8.10(j) hereof,
(e) Indebtedness of Borrower, Guarantor or any of their respective
Subsidiaries under interest rate swap agreements, interest rate cap agreements,
interest rate collar agreements, interest rate exchange agreements or similar
contractual arrangements intended to protect a Person against fluctuations in
interest rates and currency swap agreements, forward currency purchase
agreements or similar contractual arrangements intended to protect a Person
against fluctuations in currency exchange rates; provided, that, such
-------- ----
arrangements are with banks or other financial institutions that have combined
capital and surplus and undivided profits of not less than $250,000,000 and are
not for speculative purposes and such Indebtedness shall be unsecured;
(f) Indebtedness arising pursuant to guarantees permitted under
Section 8.10 hereof;
(g) Indebtedness of Borrower or Guarantor (or any of their respective
Subsidiaries) set forth on Schedule 8.9 to the Information Certificate;
provided, that, (i) Borrower, Guarantor or Subsidiary (as the case may be) may
-------- ----
only make regularly scheduled payments of principal, interest and fees, if any,
in respect of such Indebtedness in accordance with the terms of the agreement or
instrument evidencing or giving rise to such Indebtedness as in effect on the
date hereof, (ii) Borrower, Guarantor or Subsidiary (as the case may be) shall
not, directly or indirectly, (A) amend, modify, alter or change in any material
respect the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, except, that, Borrower,
------ ----
Guarantor or Subsidiary may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or to make any
covenants contained therein less restrictive or burdensome as to Borrower and
Guarantor or otherwise more favorable to Borrower and Guarantor or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, (iii) Borrower and
Guarantor shall furnish to Lender all notices or demands in connection with such
Indebtedness received by Borrower or Guarantor or on its behalf, promptly after
the receipt thereof or sent by any Borrower or Guarantor or on its behalf
concurrently with the sending thereof.
8.10 Loans, Investments, Guarantees, Etc. Borrower and Guarantor shall not,
-----------------------------------
and shall not permit any Subsidiary to, directly or indirectly, make or permit
to exist any loans or advance money or property to any Person, or invest in (by
capital contribution, dividend or otherwise) or
67
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the Indebtedness,
performance, obligations or dividends of any Person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:
------
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) no
-------- ----
Loans are then outstanding and (ii) as to any of the foregoing, unless waived in
writing by Lender, Borrower and Guarantor shall take such actions as are deemed
necessary by Lender to perfect the security interest of Lender in such
investments, including the execution and delivery of an Investment Property
Control Agreement by the person then in possession of such investments;
(c) the guarantee by Guarantor of the Obligations of Borrower in
favor of Lender;
(d) the existing equity investments of Borrower and Guarantor in its
Subsidiaries as set forth on Schedule 7.1 to the Information Certificate and the
existing investment of Borrower (as successor by merger to Rubatex) in NeoCork
Technologies, L.L.C., provided, that, in each case, Borrower and Guarantor shall
-------- ----
not have any obligation to make any other or further investment or incur any
liability in connection with any such investment;
(e) stock or obligations issued to Borrower or Guarantor by any
Person (or the representative of such Person) in respect of Indebtedness or
other obligations of such Person owing to Borrower or Guarantor in connection
with the insolvency, bankruptcy, receivership or reorganization of such Person
or a composition or readjustment of the debts of such Person or settlement or
compromise of past due Accounts; provided, that, the original of any such stock
-------- ----
or instrument evidencing such obligations shall be promptly delivered to
Collateral Agent, upon Lender's request, together with such stock power,
assignment or endorsement by Borrower or Guarantor as Lender may request;
(f) obligations of account debtors to Borrower or Guarantor (or any
of their respective Subsidiaries) arising from Accounts which are past due
evidenced by a promissory note made by such account debtor payable to Borrower,
Guarantor or Subsidiary (as the case may be); provided, that, promptly upon the
-------- ----
receipt of the original of any such promissory note by Borrower, Guarantor or
Subsidiary (as the case may be) such promissory note shall be endorsed to the
order of Collateral Agent, by Borrower, Guarantor or Subsidiary (as the case may
be) and promptly delivered to Collateral Agent as so endorsed;
(g) loans or advances by Borrower, Guarantor or any of their
respective Subsidiaries to any of its employees, after the date hereof, not to
exceed the principal amount of $300,000 in the aggregate at any time outstanding
in the ordinary course of Borrower's, Guarantor's or Subsidiary's business for
reasonable and necessary work-related travel and other ordinary business
expenses to be incurred by such employees in connection with their employment
with Borrower, Guarantor or Subsidiary, as the case may be;
68
(h) any investments of Borrower, Guarantor or any of their respective
Subsidiaries in interest rate swap agreements, interest rate cap agreements,
interest rate collar agreements, interest rate exchange agreements or similar
contractual arrangements intended to protect a Person against fluctuations in
interest rates and currency swap agreements, forward currency purchase
agreements or similar contractual arrangements intended to protect a Person
against fluctuations in currency exchange rates provided, that, such
-------- ----
arrangements are with banks or other financial institutions that have combined
capital and surplus and undivided profits of not less than $250,000,000 and are
not for speculative purposes and are unsecured;
(i) the guarantee by Borrower of the Indebtedness of Guarantor
evidenced by or arising under the Senior Secured Notes, in each case to the
extent such Indebtedness is permitted under, and in all respects subject to,
Section 8.9 hereof, as such guarantee is in effect on the date hereof;
(j) loans by Borrower to Guarantor or by Guarantor to Borrower after
the date hereof, provided, that,
-------- ----
(i) as to all of such loans, (A) within thirty (30) days after
the end of each fiscal month, Borrower shall provide to Lender a report in form
and substance satisfactory to Lender of the outstanding amount of such loans as
of the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Lender upon its request to hold as
part of the Collateral, with such endorsement and/or assignment by the payee of
such note or other instrument as Lender may require, and (C) as of the date of
any such loan and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred and be continuing,
(ii) as of the date of any such loan by Borrower to Guarantor,
and after giving effect thereto, the Excess Availability shall be not less than
$10,000,000, except that any such loan, the proceeds of which are used by
Guarantor only to make a regularly scheduled payment of interest in cash or
other immediately available funds due substantially contemporaneously with the
making of such loan in respect of the Indebtedness evidenced by the Senior
Secured Notes permitted under Section 8.9(c) hereof, shall be subject to Excess
Availability being in the amounts required for such payments by Guarantor under
Section 8.9(c) hereof;
(iii) as to loans by Guarantor to Borrower, (A) the Indebtedness
arising pursuant to such loan shall be subject to, and subordinate in right of
payment to, the right of Lender to receive the prior final payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Lender, (B) promptly upon Lender's request, Lender shall have
received a subordination agreement, in form and substance satisfactory to
Lender, providing for the terms of the subordination in right of payment of such
Indebtedness of Borrower to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by such
69
Guarantor and Borrower, and (C) Borrower shall not, directly or indirectly make,
or be required to make, any payments in respect of such Indebtedness prior to
the end of the then current term of this Agreement;
(k) the existing loans, advances and guarantees set forth on Schedule
8.10 to the Information Certificate, provided, that, as to such loans, advances
-------- ----
and guarantees, (i) Borrower, Guarantor, or their respective Subsidiaries, as
the case may be, shall not, directly or indirectly, (A) amend, modify, alter or
change in any material respect the terms of such loans, advances or guarantees
or any agreement, document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise acquire such
guarantee or set aside or otherwise deposit or invest any sums for such purpose
(except as expressly required pursuant to the terms thereof or pursuant to
regularly scheduled payments permitted herein) and (ii) Borrower shall furnish
to Lender all notices or demands in connection with such loans, advances or
guarantees received by any Borrower, Guarantor or Subsidiary or on its behalf,
promptly after the receipt thereof or sent by any Borrower, Guarantor or
Subsidiary or on its behalf, concurrently with the sending thereof.
8.11 Dividends and Redemptions. Borrower and Guarantor shall not, and shall
-------------------------
not permit any of their respective Subsidiaries to, directly or indirectly,
declare or pay any dividends on account of any shares of class of Capital Stock
of Borrower or Guarantor (or Subsidiary) now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration other than common stock or apply or set apart any
sum, or make any other distribution (by reduction of capital or otherwise) in
respect of any such shares or agree to do any of the foregoing, except that any
------ ----
Subsidiary of Borrower may pay dividends to Borrower.
8.12 Transactions with Affiliates. Borrower and Guarantor shall not, and
----------------------------
shall not permit any Subsidiary to, directly or indirectly,
(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director, agent or other Affiliate of
Borrower or Guarantor, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's, Guarantor's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to Borrower, Guarantor or
such Subsidiary, as the case may be, than Borrower, Guarantor or such
Subsidiary, as the case may be, would obtain in a comparable arm's length
transaction with a person who is not an Affiliate; or
(b) make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any officer,
employee, shareholder, director or other Affiliate of Borrower or Guarantor,
except: (i) compensation to officers, employees and directors for services
------
rendered to Borrower, Guarantors or any of their respective Subsidiaries in the
ordinary course of business consistent with the current practices of Borrower,
Guarantors or any of their respective Subsidiaries as of the date hereof, and
(ii) Borrower may repay the
70
Indebtedness of Borrower or Guarantor to any other Borrower or Guarantor to the
extent permitted under Section 8.10 hereof.
8.13 Compliance with ERISA. Borrower and Guarantor shall, and shall
---------------------
cause each of its ERISA Affiliates to, except as set forth on Schedule 7.10 to
the Information Certificate: (a) maintain each Benefit Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal and State law; (b) cause each Benefit Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate any
of such Benefit Plans so as to incur any liability to the Pension Benefit
Guaranty Corporation in an amount in excess of $100,000; (d) not allow or suffer
to exist any prohibited transaction involving any of such Benefit Plans or any
trust created thereunder which would subject any Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA in an amount in excess of
$100,000; (e) make all required contributions to any Benefit Plan which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
terms of such Benefit Plan; (f) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such Benefit
Plan; or (g) not allow or suffer to exist any occurrence of a reportable event
or any other event or condition which presents a material risk of termination by
the Pension Benefit Guaranty Corporation of any such Benefit Plan that is a
single employer plan, which termination could result in any liability to the
Pension Benefit Guaranty Corporation.
8.14 Adjusted Tangible Net Worth. Borrower and its Subsidiaries shall,
---------------------------
at all times, maintain Adjusted Tangible Net Worth of not less than negative
$24,500,000. For purposes of this Section 8.14, the calculation of Adjusted
Tangible Net Worth shall be done without regard to the effects of "fresh start"
accounting on the amounts of the assets and liabilities of Borrower and shall be
based on GAAP as applied to Borrower and its Subsidiaries immediately prior to
giving effect to the principles of "fresh start" accounting.
8.15 Minimum Excess Availability. The amount of Excess Availability
---------------------------
shall, at all times, be equal to or greater than $5,000,000, provided, that, (a)
-------- ----
such $5,000,000 shall be reduced to $2,500,000 effective as of the date that
each of the following conditions is satisfied as determined by Lender: (i)
Lender shall have received the audited consolidated financial statements of
Borrower and its Subsidiaries for the fiscal year of Borrower ending December
31, 2001, together with the unqualified opinion of the independent certified
public accountants of Borrower with respect thereto in accordance with Section
8.6 hereof, (ii) the EBITDA of Borrower and its Subsidiaries for such fiscal
year based on such audited financial statements shall be not less than
$7,250,000, (iii) no Event of Default, or act, condition or event which with
notice of passage of time or both would constitute an Event of Default, shall
exist or have occurred on or before the date of reduction, (iv) as of the date
of such reduction, the Excess Availability shall be not less than $7,500,000 and
(b) in the event that each of the conditions set forth in Section 8.15(a) have
been satisfied and the $5,000,0000 reduced to $2,500,000, such $2,500,000 shall
be reduced to zero and this Section 8.15 of no further force and effect, if each
of the following conditions is satisfied as determined by Lender on and after
the date which is one hundred eighty (180) days after the effective date of the
reduction pursuant to Section 8.15(a): (i) the EBITDA of Borrower and its
Subsidiaries for the period from January 1, 2002 through and including the month
end immediately prior to the
71
effective date of such reduction pursuant to this Section 8.15(b) shall be not
less than the amount set forth on Schedule 8.15 hereto for such fiscal month
end, as set forth in the financial statements received by Lender for such period
in accordance with Section 8.6 hereof, (ii) no Event of Default, or act,
condition or event which with notice of passage of time or both would constitute
an Event of Default, shall exist or have occurred on or before the date of
reduction, (iii) as of the date of such reduction, the Excess Availability shall
be not less than $7,500,000 and (iv) each of the other conditions set forth in
this Section 8.15(b) shall have been satisfied by no later December 31, 2002.
The calculation of EBITDA of Borrower and its Subsidiaries for purposes of this
Section 8.15 shall be without regard to the effects of "fresh start" accounting
principles as the same may be applied to Borrower. Upon Lender's request,
Borrower shall provide to Lender a reconciliation of the calculation of EBITDA
for the applicable period as between the financial statements of Borrower after
giving effect to "fresh start" accounting principles and the financial
statements of Borrower without giving effect to "fresh start" accounting
principles.
8.16 End of Fiscal Years; Fiscal Quarters. Borrower and Guarantor
------------------------------------
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on December 31 of each year and (b) fiscal
quarters to end on March 31, June 30, September 30 and December 31 of each year.
8.17 Change in Business. Borrower and Guarantor shall not engage in any
------------------
business other than the business of Borrower or Guarantor on the date hereof and
any business reasonably related, ancillary or complimentary to the business in
which Borrower or Guarantor is engaged on the date hereof.
8.18 Limitation of Restrictions Affecting Subsidiaries. Borrower shall
-------------------------------------------------
not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower or Guarantor to (a) pay dividends or make other
distributions or pay any Indebtedness owed to Borrower or Guarantor or any
Subsidiary of Borrower; (b) make loans or advances to Borrower, Guarantor or any
Subsidiary of Borrower or Guarantor, (c) transfer any of its properties or
assets to Borrower or Guarantor or any Subsidiary of Borrower or Guarantor; or
(d) create, incur, assume or suffer to exist any lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than
encumbrances and restrictions arising under (i) applicable law, (ii) this
Agreement, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of Borrower, Guarantor or any of its
Subsidiaries, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of Borrower or Guarantor or
its Subsidiary, (v) any agreement relating to permitted Indebtedness incurred by
a Subsidiary of Borrower or Guarantor prior to the date on which such Subsidiary
was acquired by Borrower and outstanding on such acquisition date, and (vi) the
extension or continuation of contractual obligations in existence on the date
hereof; provided, that, any such encumbrances or restrictions contained in such
-------- ----
extension or continuation are no less favorable to Lender than those
encumbrances and restrictions under or pursuant to the contractual obligations
so extended or continued.
72
8.19 Business Plan Evaluations. Without limiting any other rights
-------------------------
or remedies of Lender hereunder or under any of the other Financing Agreements,
in addition to, and not in limitation of, any other information which Lender may
be entitled to receive hereunder or otherwise, promptly upon Lender's request,
at any time and from time to time as provided below, Borrower shall retain a
third party specified by Lender, or at Lender's option, Lender may retain such
third party, in either case at Borrower's cost and expense, to conduct an
evaluation and review of Borrower, its business, assets, operations (including
personnel) and financial performance, including but not limited to, a review of
the performance of Borrower with respect to its business plan as provided to
Lender prior to the date hereof, and to prepare such studies and reports with
respect thereto as Lender may specify, in the event that either (a) the EBITDA
of Borrower and its Subsidiaries for the fiscal year ending December 31, 2001 is
less than $7,250,000 (with such EBITDA calculated without regard to the
application of "fresh start" accounting principles thereto), or (b) the Excess
Availability shall be less than $7,500,000 as of any date ten (10) days before
or after the date of the receipt by Lender of the audited consolidated financial
statements of Borrower and its Subsidiaries for the fiscal year of Borrower
ending December 31, 2001 or (c) at any time, the EBITDA of Borrower and its
Subsidiaries (with such EBITDA calculated without regard to the application of
"fresh start" accounting principles thereto) for any period indicated on
Schedule 8.19 hereto is less than the amount set forth on Schedule 8.19 hereto
for such fiscal period or (d) the Excess Availability shall be less than
$7,500,000 as of any date ten (10) days before or after the date which is one
hundred eighty (180) days after the date of the receipt by Lender of the audited
financial statements of Borrower and its Subsidiaries for the fiscal year of
Borrower ending December 31, 2001, together with the opinion of the independent
certified public accountants of Borrower with respect thereto or (e) any Event
of Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default shall exist or have occurred. Borrower
and Guarantor shall, and shall cause their respective officers, directors,
employees and agents, to cooperate with the third party conducting such
evaluation and studies, including promptly providing such information to such
third party as it may request.
8.20 Costs and Expenses. Borrower and Guarantor shall pay to Lender
------------------
on demand all reasonable costs, expenses, filing fees and taxes paid or payable
in connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's or Collateral Agent's rights in the Collateral, this
Agreement, the other Financing Agreements and all other documents related hereto
or thereto, including any amendments, supplements or consents which may
hereafter be contemplated (whether or not executed) or entered into in respect
hereof and thereof, including, but not limited to: (a) all costs and expenses of
filing or recording (including Uniform Commercial Code financing statement
filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (b) costs and expenses and fees for
insurance premiums for insurance coverage paid by Lender or Collateral Agent as
permitted hereunder, inspections, appraisal fees and search fees; (c) all
insurance premiums, appraisal fees and search fees; (d) costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Lender's
customary charges and fees with respect thereto; (e) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (f) costs and expenses of preserving and protecting the
Collateral; (g) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the
73
security interests and liens of Collateral Agent or Lender, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Collateral Agent or Lender arising out of the transactions
contemplated hereby and thereby (including, without limitation, preparations for
and consultations concerning any such matters); (h) all out-of-pocket expenses
and costs heretofore and from time to time hereafter incurred by Collateral
Agent or Lender during the course of periodic field examinations of the
Collateral and Borrower's and Guarantor's operations, plus a per diem charge at
the rate of $750 per person per day for Collateral Agent's or Lender's examiners
in the field and office (provided, that, so long as at the time any such field
examination is conducted no Event of Default or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred, Borrower shall not be required to pay such per
diem charge for Collateral Agent's or Lender's examiners for more than five (5)
field examinations in any twelve (12) month period); and (i) the fees and
disbursements of counsel (including legal assistants) to Collateral Agent or
Lender in connection with any of the foregoing.
8.21 Further Assurances. At the request of Lender at any time and from
------------------
time to time, Borrower and Guarantor shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral of Collateral Agent and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Lender may at any time and from time to time request
a certificate from an officer of Borrower representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied in all material respects. In the event of such
request by Lender, Lender may, at its option, cease to make any further Loans or
provide any further Letter of Credit Accommodations until Lender has received
such certificate and, in addition, Lender has determined that such conditions
are satisfied in all material respects.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES
------------------------------
9.1 Events of Default. The occurrence or existence of any one or more
-----------------
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay when due any of the Obligations
or (ii) Borrower, Guarantor, or any Subsidiary fails to perform any of the
covenants contained in Sections 8.2, 8.3, 8.4. 8.6, 8.13, 8.16, 8.17 and 8.18 of
this Agreement and such failure shall continue for ten (10) days; provided that,
-------- ----
such ten (10) day period shall not apply in the case of: (A) any failure to
observe any such covenant which is not capable of being cured at all or within
such ten (10) day period or which has been the subject of a prior failure within
a six (6) month period or (B) an intentional breach of Borrower, Guarantor or
any Subsidiary of any such covenant or (iii) Borrower, Guarantor, any Subsidiary
or other Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than those described in Section 9.1(a)(i) and 9.1(a)(ii) above;
74
(b) any representation, warranty or statement of fact made by
Borrower or Obligor to Lender in this Agreement, the other Financing Agreements
or any other agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of
the material terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $500,000 in any one case or in excess of
$1,000,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of forty-five (45) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Borrower or
any Obligor which has or is reasonable likely to have a Material Adverse Effect
or any attachment, garnishment or execution is rendered against Collateral
having a value in excess of $500,000 in the aggregate or the Blocked Accounts;
(e) Borrower or Guarantor dissolves or suspends or
discontinues doing business;
(f) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect (other than to the extent of
the retention of jurisdiction by the Bankruptcy Court with respect to the
Chapter 11 Cases) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed by
Borrower or Guarantor or for all or any part of its property;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect (other than to the extent of
the retention of jurisdiction by the Bankruptcy Court with respect to the
Chapter 11 Cases) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed
against Borrower or Guarantor or all or any part of its property and such
petition or application is not dismissed within thirty (30) days after the date
of its filing or Borrower or Guarantor shall file any answer admitting or not
contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) any default or event of default under any agreement,
document or instrument relating to any Indebtedness owing by Borrower or
Guarantor to any person other than Lender, in any case in an amount in excess of
$500,000, which default continues for more than the applicable cure period, if
any, with respect thereto, or any default by any Borrower or Guarantor under the
Plan, the Confirmation Order, the Senior Secured Note Indenture or the Senior
Secured Notes or
75
any Material Contract or other obligation to any person other than Lender, which
default continues for more than the applicable cure period, if any, with respect
thereto;
(i) any failure by Borrower or Guarantor to observe or
perform any of the material terms or conditions of any material order or
stipulation entered by or with the Bankruptcy Court in the Chapter 11 Cases
applicable to it;
(j) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of any Borrower in an aggregate
amount in excess of $500,000;
(k) the indictment by any Governmental Authority, or as
Lender may reasonably and in good faith determine, the threatened indictment by
any Governmental Authority of Borrower of which Borrower, Obligor or Lender
receives notice, in either case, as to which there is a reasonable possibility
of an adverse determination, in the good faith determination of Lender, under
any criminal statute, or commencement or threatened commencement of criminal or
civil proceedings against Borrower, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of (i) any of the
Collateral having a value in excess of $500,000 or (ii) any other property of
Borrower which is necessary or material to the conduct of its business;
(l) any Change of Control;
(m) there shall be a material adverse change in the business
or assets of Borrower or any Obligor after the date hereof (but the foregoing
shall not be construed to include any event affecting the industry of Borrower
generally except to the extent such event has a Material Adverse Effect); or
(n) there shall be an event of default under any of the
other Financing Agreements.
9.2 Remedies.
--------
(a) At any time an Event of Default exists or has occurred
and is continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the UCC and other applicable law, all
of which rights and remedies may be exercised without notice to or consent by
Borrower or any Obligor, except as such notice or consent is expressly provided
for hereunder or required by applicable law. All rights, remedies and powers
granted to Collateral Agent or Lender hereunder, under any of the other
Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Lender's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any of
the other Financing Agreements. Collateral Agent or Lender may, at any time or
times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
76
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
-------- ----
Event of Default described in Sections 9.1(f) and 9.1(g), all Obligations shall
automatically become immediately due and payable), and/or (ii) terminate this
Agreement.
(c) For the purpose of enabling Lender or Collateral Agent to
exercise the rights and remedies hereunder, Borrower and Guarantor hereby grants
to Lender and Collateral Agent, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to Borrower or Guarantor) to use, assign, license or sublicense any
of the trademarks, service-marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other Intellectual
Property and General Intangibles now owned or hereafter acquired by Borrower or
Guarantor, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
(d) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including reasonable attorneys' fees and legal expenses.
(e) Without limiting the foregoing, (i) upon the occurrence of
an Event of Default or an act, condition or event which with notice or passage
of time or both would constitute an Event of Default, and for so long as the
same is continuing, Lender may, at its option, without notice, cease making
Loans or arranging for Letter of Credit Accommodations or reduce the lending
formulas or amounts of Loans and Letter of Credit Accommodations available to
Borrower and/or (ii) upon the occurrence of an Event of Default and for so long
as the same is continuing, Lender may, at its option, terminate any provision of
this Agreement providing for any future Loans or Letter of Credit Accommodations
to be made by Lender to Borrower.
SECTION 10. ACKNOWLEDGMENT AND RESTATEMENT
------------------------------
10.1 Existing Obligations. Borrower and Guarantor each hereby
--------------------
acknowledges, confirms and agrees that Borrower and Guarantor are indebted to
Lender for loans and advances to Borrower under the Existing Agreements, as of
the close of business on August 23, 2001, in the aggregate principal amount of
$14,639,424.40 and the aggregate amount of $1,128,884 in respect of Letter of
Credit Accommodations (as defined in the Existing Agreements), together with all
interest accrued and accruing thereon (to the extent applicable), and all fees,
costs, expenses and other charges relating thereto, all of which are
unconditionally owing by Borrower and Guarantor to Lender, without offset,
defense or counterclaim of any kind, nature or description whatsoever.
77
10.2 Acknowledgment of Security Interests.
------------------------------------
(a) Borrower and Guarantor each hereby acknowledges, confirms
and agrees that Lender has and Collateral Agent on behalf of Lender shall
continue to have a security interest in and lien upon the Collateral heretofore
granted to Lender pursuant to the Existing Agreements to secure the Obligations,
as well as any Collateral granted under this Agreement or under any of the other
Financing Agreements or otherwise granted to or held by Collateral Agent or
Lender.
(b) The liens and security interests of Collateral Agent in
the Collateral shall be deemed to be continuously granted and perfected from the
earliest date of the granting and perfection of such liens and security
interests to Lender, whether under the Existing Agreements, this Agreement or
any of the other Financing Agreements.
10.3 Existing Agreements. Borrower and Guarantor each hereby
-------------------
acknowledges, confirms and agrees that: (a) the Existing Agreements have been
duly executed and delivered by Borrower and Guarantor and are in full force and
effect as of the date hereof and (b) the agreements and obligations of Borrower
and Guarantor contained in the Existing Agreements constitute the legal, valid
and binding obligations of Borrower and Guarantor enforceable against it in
accordance with their respective terms and Borrower and Guarantor each has no
valid defense to the enforcement of such obligations and (c) Lender (and
Collateral Agent on behalf of Lender) are entitled to all of the rights and
remedies provided for in the Existing Agreements.
10.4 Restatement.
-----------
(a) Except as otherwise stated in Section 10.2 hereof and this
Section 10.4, as of the date hereof, the terms, conditions, agreements,
covenants, representations and warranties set forth in the Existing Agreements
are hereby amended and restated in their entirety, and as so amended and
restated, replaced and superseded, by the terms, conditions, agreements,
covenants, representations and warranties set forth in this Agreement and the
other Financing Agreements, except that nothing herein or in the other Financing
------
Agreements shall impair or adversely affect the continuation of the liability of
Borrower or Guarantor for the Obligations heretofore incurred during the Chapter
11 Cases (as predecessors to Borrower and Guarantor) and the security interests,
liens and other interests in the Collateral heretofore granted, pledged and/or
assigned by Borrower and Guarantor (including during the Chapter 11 Cases), as
predecessors to Borrower or Guarantor or otherwise, to Lender, which on and
after the date hereof shall be deemed to have been granted to Collateral Agent.
The amendment and restatement contained herein shall not, in any manner, be
construed to constitute payment of, or impair, limit, cancel or extinguish, or
constitute a novation in respect of, the Indebtedness and other obligations and
liabilities of Borrower or Guarantor evidenced by or arising under the Existing
Agreements, and the liens and security interests of Lender securing such
Indebtedness and other obligations and liabilities, which shall not in any
manner be impaired, limited, terminated, waived or released, but shall continue
in full force and effect in favor of Collateral Agent for the benefit of Lender.
(b) The principal amount of the Loans and the amount of the
Letters of Credit Accommodations outstanding as of the date hereof under the
Existing Agreements shall be
78
allocated to the Loans and Letter of Credit Accommodations hereunder in such
manner and in such amounts as Lender shall determine.
10.5 Release. Borrower and Guarantor each for itself and its successors
-------
and assigns does hereby remise, release, discharge and hold Lender, its
officers, directors, agents and employees and their respective predecessors,
successors and assigns harmless from all claims, demands, debts, sums of money,
accounts, damages, judgments, financial obligations, actions, causes of action,
suits at law or in equity, of any kind or nature whatsoever, whether or not now
existing or known, which Borrower, Guarantor or their respective successors or
assigns has had or may now or hereafter claim to have against Lender or its
officers, directors, agents and employees and their respective predecessors,
successors and assigns in any way arising from or connected with the Existing
Agreement or the arrangements set forth therein or transactions thereunder up to
and including the date hereof, except to the extent Borrower shall notify Lender
------
in writing of any specific exceptions to charges for interest, fees, costs and
expenses set forth in the most recent monthly statement of Borrower's loan
account sent by Lender to Borrower prior to the date hereof pursuant to the
Existing Agreements within thirty (30) days after the date hereof.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
---------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
--------------------------------------------------------------
Waiver.
------
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent provided therein) and any dispute arising out of the relationship between
the parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New York (without giving effect to
principles of conflicts of law).
(b) Borrower, Guarantor and Lender irrevocably consent and
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York in New York County and the United States District Court for the
Southern District of New York and waive any objection based on venue or forum
-----
non conveniens with respect to any action instituted therein arising under this
--- ----------
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lender shall have the right to bring any action or
proceeding against Borrower, Guarantor or its property in the courts of any
other jurisdiction which Lender deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Borrower,
Guarantor or its property).
(c) Borrower and Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return
79
receipt requested) directed to its address set forth on the signature pages
hereof and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Lender's option,
by service upon Borrower or Guarantor in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, Borrower
or Guarantor shall appear in answer to such process, failing which Borrower or
Guarantor shall be deemed in default and judgment may be entered by Lender
against Borrower or Guarantor for the amount of the claim and other relief
requested.
(d) BORROWER, GUARANTOR AND LENDER EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR
THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
GUARANTOR AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT BORROWER, GUARANTOR OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender and Collateral Agent shall not have any liability
to Borrower or Guarantor (whether in tort, contract, equity or otherwise) for
losses suffered by Borrower or Guarantor in connection with, arising out of, or
in any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Collateral Agent or Lender (as the case may be), that the losses were
the result of acts or omissions constituting gross negligence, willful
misconduct or bad faith. In any such litigation, Lender and Collateral Agent
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement.
11.2 Waiver of Notices. Borrower and Guarantor hereby expressly
-----------------
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices, of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrower or Guarantor which
Lender or Collateral Agent may elect to give shall entitle Borrower or Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any
----------------------
provision hereof shall be amended, modified, waived or discharged orally or by
course of conduct, but only by a written
80
agreement signed by an authorized officer of Lender, and as to amendments or
modifications, also signed by an authorized officer of Borrower and Guarantor.
Lender and Collateral Agent shall not, by any act, delay, omission or otherwise
be deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Collateral Agent or Lender of any
right, power and/or remedy on any one occasion shall not be construed as a bar
to or waiver of any such right, power and/or remedy which Collateral Agent or
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.
11.4 Waiver of Counterclaims. Borrower and Guarantor each waives all
-----------------------
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Borrower and Guarantor shall indemnify and hold
---------------
Collateral Agent, Lender, and their respective directors, agents, employees and
counsel, harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses imposed on, incurred by or asserted against any
of them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including, without limitation, amounts paid in
settlement, court costs, and the reasonable fees and expenses of counsel, except
for such losses, claims, damages, liabilities, costs or expenses resulting from
the gross negligence, wilful misconduct or bad faith of Collateral Agent or
Lender, or their respective directors, agents, employees or counsel. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Borrower and Guarantor shall pay the maximum portion which it is permitted to
pay under applicable law to Lender in satisfaction of indemnified matters under
this Section. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
12.1 Term.
----
81
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date") and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Lender or Borrower may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
-------- ----
this Agreement and all other Financing Agreements must be terminated
simultaneously. In addition, Borrower may terminate this Agreement at any time
upon ten (10) days prior written notice to Lender (which notice shall be
irrevocable) and Lender may terminate this Agreement at any time upon an Event
of Default. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Lender, in full, all outstanding and
unpaid Obligations that are not contingent and shall furnish cash collateral, if
any, to Lender (or at Lender's option, a letter of credit issued for the account
of Borrower and at Borrower's cost and expense, in form and substance
satisfactory to Lender, by an issuer acceptable to Lender and payable to Lender
as beneficiary) in such amounts as Lender determines in good faith are
reasonably necessary to secure Lender from loss, cost, damage or expense,
including reasonable attorneys' fees and legal expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment. The amount of such cash collateral (or letter of credit,
as Lender may determine) as to any Letter of Credit Accommodations shall be in
the amount equal to one hundred ten (110%) percent of the amount of the Letter
of Credit Accommodations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations and
cash collateral, if any, shall be remitted by wire transfer in Federal funds to
such bank account of Lender, as Lender may, in its discretion, designate to
Borrower for such purpose. Interest shall be due until and including the next
Business Day, if the amounts so paid by Borrower to the bank account designated
by Lender are received in such bank account later than 12:00 noon, New York City
time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower or Guarantor of its respective
duties, obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and the continuing security interest of Lender in the Collateral and the
rights and remedies of Lender hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, Borrower and Guarantor each
waives any rights it may have under the UCC (or any replacement section) to
demand the filing of termination statements with respect to the Collateral, and
Lender and Collateral Agent shall not be required to send such termination
statements to Borrower or Guarantor, or to file them with any filing office,
unless and until this Agreement shall have been terminated in accordance with
its terms and all Obligations paid in full in immediately available funds.
(c) In the event that this Agreement is terminated prior to
the end of the then current term thereof for any reason, in view of the
impracticality and extreme difficulty of
82
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrower
agrees to pay to Lender, upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is effective
in the period indicated:
-------------------------------------------------------------------------
Amount Period
------ ------
-------------------------------------------------------------------------
(i) Two (2%) percent of the From the date hereof to and including
Maximum Credit the first anniversary of the date
hereof
-------------------------------------------------------------------------
(ii) One (1%) percent of the From and after the first anniversary
Maximum Credit of the date hereof and on or prior to
the second anniversary of the date
hereof
-------------------------------------------------------------------------
(iii) One-half (1/2%) percent From and after the second anniversary
of the Maximum Credit of the date hereof and prior to the
third anniversary of the date hereof.
-------------------------------------------------------------------------
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower and
Guarantor agree that it is reasonable under the circumstances currently
existing. In addition, Lender shall be entitled to such early termination fee
upon the occurrence of any Event of Default described in Sections 9.1(f) and
9.1(g) hereof, even if Lender does not exercise its right to terminate this
Agreement, but elects, at its option, to provide financing to Borrower or permit
the use of cash collateral under the United States Bankruptcy Code. The early
termination fee provided for in this Section 12.1 shall be deemed included in
the Obligations.
(d) Notwithstanding anything to the contrary contained in Section
12.1(c), in the event of the termination of this Agreement by Borrower prior to
the end of the then current term or renewal term of this Agreement and the full
and final repayment of all of the Obligations and the receipt by Lender of cash
collateral (or letter of credit) all as provided in Section 12.1(a) above prior
to the end of such term, Borrower shall not be required to pay to Lender an
early termination fee if such payments are made to Lender with the initial
proceeds of a revolving credit facility and term loan provided by First Union
National Bank to Borrower (where Lender is not the agent) to replace the working
capital facility being provided by Lender to Borrower pursuant to the terms of
this Agreement.
12.2 Interpretative Provisions.
-------------------------
(a) All terms used herein which are defined in Article 1, Article 8
or Article 9 of the UCC shall have the meanings given therein as it is in effect
on the date hereof unless otherwise defined in this Agreement.
83
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to Borrower or Guarantor pursuant to the
definitions set forth in the recitals hereto shall include its successors and
assigns. All references to Lender pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their respective
successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) The term "good faith" when used in this Agreement shall mean
"honesty in fact in the conduct or transaction concerned." Borrower and
Guarantor shall have the burden of proving any lack of good faith on the part of
Lender alleged by them at any time.
(g) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 10.3 or is
cured in a manner satisfactory to Lender, if such Event of Default is capable of
being cured as determined by Lender.
(h) 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 of Borrower or Guarantor most
recently received by Lender prior to the date hereof.
(i) 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".
(j) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
84
(k) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements 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.
(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Lender and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
12.3 Notices. All notices, requests and demands hereunder shall be in
-------
writing and (a) made to Lender at its address set forth on the signature pages
hereof and to Borrower at its chief executive office set forth on the signatures
pages hereof, or to such other address as either party may designate by written
notice to the other in accordance with this provision, and (b) deemed to have
been given or made: if delivered in person, immediately upon delivery; if by
telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.
12.4 Partial Invalidity. If any provision of this Agreement is held to
------------------
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.5 Successors. This Agreement, the other Financing Agreements and
----------
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Lender, Borrower, Guarantor and their
respective successors and assigns, except that Borrower and Guarantor may not
assign their rights under this Agreement, the other Financing Agreements and any
other document referred to herein or therein without the prior written consent
of Lender. Lender may, after notice to Borrower, assign its rights and delegate
its obligations under this Agreement and the other Financing Agreements and
further may assign, or sell participations in, all or any part of the Loans, the
Letter of Credit Accommodations or any other interest herein to another
financial institution or other person, in which event, the assignee or
participant shall have, to the extent of such assignment or participation, the
same rights and benefits as it would have if it were the Lender hereunder,
except as otherwise provided by the terms of such assignment or participation.
12.6 Confidentiality.
---------------
(a) Lender shall use all reasonable efforts to keep confidential, in
accordance with its customary procedures for handling confidential information
and safe and sound lending practices,
85
any non-public information supplied to it by Borrower pursuant to this Agreement
which is clearly and conspicuously marked as confidential at the time such
information is furnished by Borrower to Lender, provided, that, nothing
-------- ----
contained herein shall limit the disclosure of any such information: (i) to the
extent required by statute, rule, regulation, subpoena or court order, (ii) to
bank examiners and other regulators, auditors and/or accountants, (iii) in
connection with any litigation to which Lender is a party, (iv) to any assignee
or participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) shall have first been
advised in writing to treat such information as confidential, or (v) to counsel
for Lender or any participant or assignee (or prospective participant or
assignee).
(b) In no event shall this Section 12.6 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower, Guarantor
or any third party without breach of this Section 12.6 or otherwise become
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Lender on a non-confidential basis from a person
other than Borrower or Guarantor, (iii) require Lender to return any materials
furnished by Borrower or Guarantor to Lender or (iv) prevent Lender from
responding to routine informational requests in accordance with the Code of
-------
Ethics for the Exchange of Credit Information promulgated by The Xxxxxx Xxxxxx
---------------------------------------------
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Lender under this Section 12.6 shall
supersede and replace the obligations of Lender under any confidentiality letter
signed prior to the date hereof.
12.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by Lender, Borrower and Guarantor in separate counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement.
12.8 Entire Agreement. This Agreement, the other Financing Agreements,
----------------
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
86
IN WITNESS WHEREOF, Lender, Borrower and Guarantor have caused these
presents to be duly executed as of the day and year first above written.
CONGRESS FINANCIAL CORPORATION
By: /s/Xxxxx X. Xxxxxx
------------------
Title: SVP
---
Address:
-------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RBX CORPORATION RBX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
--------------------------------- -------------------
Title: CRO and President Title: CRO and President
------------------------------ -----------------
Chief Executive Office: Chief Executive Office:
---------------------- ----------------------
0000 Xxxxxxxxxx Xxxxx 0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
EXHIBIT A
INFORMATION CERTIFICATE
OF
RBX INDUSTRIES, INC.
AND
RBX CORPORATION
Dated: As of August 27, 2001
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
In connection with certain financing provided or to be provided by you
("Lender"), each of the undersigned (individually, a "Company" and,
collectively, the "Companies") jointly and severally represents and warrants to
Lender the following information about it, its organizational structure and
other matters of interest to Lender (capitalized terms used herein and not
specifically defined shall have the meaning given such terms in the Loan
Agreement):
1. The full and exact name of each Company as set forth in its certificate
of incorporation (or its certificate of formation or other
organizational document filed with the applicable state governmental
authority, as the case may be) is as follows:
RBX Corporation
RBX Industries, Inc.
2. Each Company uses and owns the following trade name(s) in the operation
of its business (e.g., billing, advertising, etc.; note: do not include
names which are product names only):
Company Trade Names
------- -----------
RBX Corporation RBX
RBX Industries, Inc. Rubatex
Rubatex Corporation
Xxxxxxxx Manufacturing Company
OleTex, Inc.
Midwest Rubber Custom Mixing Corporation
Xxxxxx-Xxxxx Rubber Custom Mixing Corp
3. Each Company is a registered organization of the following type:
Company Type
------- ----
RBX Corporation corporation
RBX Industries, Inc. corporation
4. Each Company was organized on the date indicated for such company
below, under the laws of the State indicated below for such Company,
and each Company is in good standing under the laws of such State.
Date of Jurisdiction of
Company Organization Organization
------- ------------ ------------
RBX Corporation September 25, 1995 Delaware
RBX Corporation September 25, 1990 Delaware
n/k/a RBX Industries, Inc.
5. The organizational identification number of each Company issued by its
jurisdiction of organization is as set forth below (or if none is
issued by the jurisdiction of organization indicate "none"):
Company ID No.
------- ------
RBX Corporation 25448-09
RBX Corporation n/k/a RBX Industries, Inc. 22420-88
6. The Federal Employer Identification Number of each Company is as
follows:
Company FEIN
------- ----
RBX Corporation 94 - 3231901
RBX Industries, Inc. 54 - 1563245
7. Each Company is duly qualified and authorized to transact business as a
foreign organization in the following states and is in good standing in
such states:
Company Trade Names
------- -----------
RBX Corporation None
RBX Industries, Inc. Arkansas
California
Georgia
Missouri
North Carolina
Texas
Virginia
8. Since the date of its organization, the name of each Company as set
forth in its organizational documentation as filed of record with the
applicable state authority has been changed as follows:
Company Date Prior Name
------- ---- ----------
RBX Corporation N/A N/A
RBX Industries, Inc. August 16, 2001 Rubatex Corporation
December 17, 1990 RBX - Rubatex, Inc.
9. Since the date of its organization, each Company has made or entered
into the following mergers or acquisitions:
Company Merger/Acquisition Date
------- ------------------ ----
RBX Corporation 1. Merger with RBX Group, Inc. August 16, 2001
---------------
2. Acquisition of Ensolite Division of June 10, 1997
Uniroyal Technology Corporation
RBX Industries, Inc. 1. Merger with Xxxxxxxx Manufacturing August 16, 2001
--------------------
Company, Inc., Oletex, Inc., Midwest
Rubber Customer Mixing Corp., Waltex
Corporation, UPR Disposition, Inc.,
Xxxxxx Xxxxx Rubber Custom Mixing Corp.,
Universal Rubber Company
2. Acquisition of Ensolite Division of June 10, 1997
Uniroyal Technology Corporation
10. The chief executive office and mailing address of each Company is
located at the address indicated for such Company on Schedule 7.3
hereto.
11. The books and records of each Company pertaining to accounts, contract
rights, inventory, and other assets are located at the addresses
indicated for such Company on Schedule 7.3 hereto.
12. Each Company has other places of business and/or maintains inventory or
other assets only at the addresses (indicate whether locations are
owned, leased or operated by third parties and if leased or operated by
third parties, their name and address) indicated for such Company on
Schedule 7.3 hereto.
13. The places of business or other locations of any assets used by each
Company during the last four (4) months other than those listed above
are as indicated for such Company on Schedule 7.3 hereto.
14. Each Company's assets are owned and held free and clear of liens,
mortgages, pledges, security interests, encumbrances or charges except
as set forth on Schedule 7.4 hereto.
15. There are no judgments or litigation pending by or against any Company,
its subsidiaries and/or affiliates or any of its officers/principals
which, if adversely determined against such Company would result in any
Material Adverse Effect (as defined in the Loan Agreement), except as
set forth on Schedule 7.6 hereto.
16. The Companies are not in default under, or in violation of any of the
terms of, any agreement, contract, instrument, lease or other
commitment to which it is a party or by which it or any of its assets
are bound where such default or violation would have a Material Adverse
Effect (as such term is defined in the Amended and Restated Loan
Agreement, dated of even date herewith, by and among Lender and each of
the Companies (the "Loan Agreement"), except as set forth on Schedule
7.7.(a) hereto.
17. The Companies have obtained all material permits, licenses, approvals,
consents, certificates, orders or authorizations of any Governmental
Authority (as defined in the Loan Agreement) required for the lawful
conduct its business (the "Permits"). Schedule 7.7(b) hereto sets forth
all of the Permits issued to or held by the Companies as of the date
hereof by any Federal, State or local Governmental Authority and any
applications pending by the Companies with such Federal, State or local
Governmental Authority.
18. Each Company is in compliance with all environmental laws applicable to
its business or operations except as set forth on Schedule 7.8 hereto
and Schedule 7.8 hereto contains all other information as required by
Section 7.8 of the Loan Agreement.
19. No Company has any deposit accounts, investment accounts, securities
account or similar accounts with any bank, savings and loan or other
financial institution, except as set forth on Schedule 2.3(d) hereto
for the purposes and of the types indicated therein.
20. No Company owns or licenses any trademarks, patents, copyrights or
other intellectual property, except as set forth on Schedule 7.11
hereto (indicate type of intellectual property and whether owned or
licensed, registration number, date of registration, and, if licensed,
the name and address of the licensor).
21. Each Company is affiliated with, or has ownership in, the corporations
(including subsidiaries) and other organizations set forth on Schedule
7.1 hereto.
22. The names of the stockholders (or members or partners, including
general partners and limited partners) of each Company and their
holdings are as set forth on Schedule 7.1 hereto (if stock or other
interests are widely held indicate only holders owning 10% or more of
the voting stock or other interests).
23. No Company is a party to or bound by an collective bargaining or
similar agreement with any union, labor organization or other
bargaining agent except as set forth on Schedule 7.12 hereto (indicate
date of agreement, parties to agreement, description of employees
covered, and date of termination).
24. No Company is a party to or bound by any "material contract" except as
set forth on Schedule 7.15 hereto. For this purpose a "material
contract" means any contract or other agreement. written or oral, of
such Company involving monetary liability of or to any Person in an
amount in excess of $1,000,000 in any fiscal year and any other
contract or other agreement, whether written or oral, to which such
Company is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto would have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations or prospects of such Company or the validity or
enforceability of any agreements of such Company with Lender or any of
the rights and remedies of Lender under any of such agreements.
25. No Company has any "indebtedness" other than as permitted in the Loan
Agreement. For this purpose, the term "indebtedness" means any
liability, whether or not contingent, in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the
assets of such Company or only to a portion thereof) or evidenced by
bonds, notes, debentures or similar instruments; representing the
balance deferred and unpaid of the purchase price of any property or
services (except any such balance that constitutes an account payable
to a trade creditor (whether or not an Affiliate) created, incurred,
assumed or guaranteed by such Company in the ordinary course of
business of such Person in connection with obtaining goods, materials
or services that is not overdue by more than ninety (90) days, unless
the trade payable is being contested in good faith); all obligations as
lessee under leases which have been, or should be, in accordance with
generally accepted accounting principles recorded as capital leases;
any contractual obligation, contingent or otherwise, of such Company to
pay or be liable for the payment of any indebtedness described in this
definition of another party, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to
purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds
for the payment or discharge thereof, or to maintain solvency, assets,
level of income, or other financial condition; all obligations with
respect to redeemable stock and redemption or repurchase obligations
under any Capital Stock or other equity securities issued by such
Person; all reimbursement obligations and other liabilities of such
Company with respect to surety bonds (whether bid, performance or
otherwise), letters of credit, banker's acceptances or similar
documents or instruments issued for such Company's account; and all
indebtedness of such Company in respect of indebtedness of another
party for borrowed money or indebtedness of another party otherwise
described in this definition which is secured by any consensual lien,
security interest, collateral assignment, conditional sale, mortgage,
deed of trust, or other encumbrance on any asset of such Company,
whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Company, all as of such
time.
26. No Company has made any loans or advances or guaranteed or otherwise
become liable for the obligations of any others, except as set forth on
Schedule 8.10 hereto.
27. No Company has any chattel paper (whether tangible or electronic) or
instruments as of the date hereof, except as follows:
None.
28. No Company is the beneficiary or otherwise entitled to any right to
payment under any letter of credit, banker's acceptance or similar
instrument as of the date hereof, except as follows:
None.
29. No Company has any commercial tort claims as of the date hereof, except
as follows:
None.
30. There is no provision in the certificate of incorporation, certificate
of formation, articles of organization, by-laws or operating agreement
of any Company (as applicable) or the other organizational documents of
such Company, or in the laws of the State of its organization,
requiring any vote or consent of it shareholders, members or other
holders of the equity interests therein to borrow or to authorize the
mortgage or pledge of or creation of a security interest in any assets
of such Company or any subsidiary. Such power is vested exclusively in
its Board of Directors (or in the case of a limited partnership, the
general partner that is the signatory hereto, or in the case of a
limited liability company, the manager that is the signatory hereto).
31. The officers of each Company and their respective titles are as
follows:
Company Name Title
------- ---- -----
RBX Corporation Xxxxxx X. Xxxxx Chief Restructuring Officer &
President
RBX Industries, Inc. Xxxxxxx X. Xxxxxxxx Executive Vice President
Xxxx X. Xxxxxxx Exec. V.P., CFO & Treasurer
Xxxxx X. Xxxxxxxxxx V.P. - Admin & Corp Secretary
Xxxxxx X. Xxxxxx V.P. - Information Systems
Xxxxxx X. Xxxxxxxxx V.P. - Finance
RBX Corporation ONLY Xxxx X. Xxxxx V.P. - Technology
RX Industries, Inc. ONLY Xxxxxx X. Xxxxx V.P. - Manufacturing
Xxx X. Xxxxxxx V.P. - Integrated Supply Chain
Xxxxxxx X. Xxxxx Vice President
Xxxx X. Xxxxxxxx Vice President. & General Manager
The following will have signatory powers as to all transactions of each
Company with Lender:
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxxx
32. The members of the Board of Directors of each Company (or, if the
Company is a limited partnership, the general partner or, if the
Company is a limited liability company, the managers) are:
Company Directors
------- ---------
RBX Corporation and Xxxxxx X. Xxxxx
RBX Industries, Inc. Xxxxxx X. Xxxxxxx, Xx.
Xxxx Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx
33. At the present time, there are no delinquent taxes due (including, but
not limited to, all payroll taxes, personal property taxes, real estate
taxes or income taxes) except as follows:
----------------------------------------------------------------------------------------------------------------------
Prepetition Prepetition Total
Real Estate Personal Prepetition
Creditor Mailing Address Tax Property Tax Taxes Vendor #
----------------------------------------------------------------------------------------------------------------------
Box 368
Catawba County Tax Collector Xxxxxx, XX 00000 54,314.76 113,366.49 167,681.25 CANC25
----------------------------------------------------------------------------------------------------------------------
X.X. Xxx 000000
Xxxx xx Xxxxxx Xxxxxx, XX 00000 - 5,691.70 5,691.70 CDTX01
----------------------------------------------------------------------------------------------------------------------
X.X. Xxx 0000
Xxxxx Xx Xxxxxxx, XX
City of Xxxxx Xx Xxxxxxx 00000 - 12.00 12.00 CICA01
----------------------------------------------------------------------------------------------------------------------
00 Xxxx Xxxxxxx Xxxxxx
City of Tallapoosa Xxxxxxxxxx, XX 00000 3,841.34 10,919.19 14,760.53 HHT025
----------------------------------------------------------------------------------------------------------------------
X.X. Xxx 00000
Collector of Revenue Xxxxxxx, XX 00000 - 501.75 501.75 COMO02
----------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx, Treasurer of P.O. Box 807
Bedford VA Xxxxxxx, XX 00000 13,179.22 262,239.91 275,419.13 CJVA01
----------------------------------------------------------------------------------------------------------------------
X.X. Xxx 000
Xxxxxxxx Co. Tax Commissioner Xxxxxxxx, XX 00000 14,938.13 42,462.40 57,400.53 HHH144
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx, Collector St. P.O. Box 1817
Xxxxxxx County, Arkansas Xxxxxx Xxxx, XX 00000 25,523.09 23,375.58 48,898.67 DAAR03
----------------------------------------------------------------------------------------------------------------------
0000 Xxxxxxxx, Xxxxx
Xxxxxxx Independent School X-000
Xxxxxxxx Xxxxxxx, XX 00000 - 764.91 764.91 HITX01
----------------------------------------------------------------------------------------------------------------------
000 X. Xxxxxxx Xxxxxx
City of Portland Xxxxxxxx, XX 00000 - 32.19 32.19 CITN01`
----------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxxxxx, Tax
Assessor-Collector, Dallas X.X. Xxx 0000
Xxxxxx, Xxxxx Xxxxxxx, XX 00000 - 697.61 697.61 PBTX01
----------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx, Tax
Assessor-Collector, Dallas X.X. Xxx 000000
Xxxxxx, Xxxxx Xxxxxx, XX 00000 - 1,299.36 1,299.36 DATX01
----------------------------------------------------------------------------------------------------------------------
TOTAL: 111,796.54 461,363.09 573,159.63
----------------------------------------------------------------------------------------------------------------------
34. Certified Public Accountants for each Company is the firm of:
Name: Deloitte & Touche
Address: 000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000-0000
Partner Handling Relationship: Xxxx X. Xxxxxxxx, Xx.
Were statements uncertified for any fiscal year? No.
Lender shall be entitled to rely upon the foregoing in all respects and each of
the undersigned is duly authorized to execute and deliver this Information
Certificate on behalf of the Company for which he or she is signing.
Very truly yours,
RBX Corporation
By:/s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, President
RBX Industries, Inc.
By:/s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, President
EXHIBIT B
TO
AMENDED AND RESTATED LOAN AGREEMENT
FORM OF
PURCHASE MONEY TERM NOTE
------------------------
$
------------------------ ------------------------
, 20
------------------ -----
FOR VALUE RECEIVED, RBX INDUSTRIES, INC., a Delaware corporation (the
"Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION, a Delaware corporation ("Payee"), at the offices of Payee
at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place
as the Payee or any holder hereof may from time to time designate, the principal
sum of ______________________ DOLLARS ($_______) in lawful money of the United
States of America and in immediately available funds, in sixty (60) consecutive
monthly installments (or earlier as hereinafter provided) on the first day of
each month commencing ___________________, 20_, of which the first fifty-nine
(59) installments shall each be in the amount of
__________________________DOLLARS ($_______), and the last installment shall be
in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee on
the unpaid principal balance hereof at the Interest Rate. Such interest shall be
paid in like money at said office or place from the date hereof, commencing
____________________, 20_ and on the first day of each month thereafter until
the indebtedness evidenced by this Note is paid in full. Interest payable upon
and after an Event of Default or termination or non-renewal of the Loan
Agreement shall be payable upon demand.
For purposes hereof, (a) subject to clauses (i) and (ii) below, the
term "Interest Rate" shall mean, as to Prime Rate Term Loans, a rate equal to
one (1%) percent per annum in excess of the Prime Rate, and as to Eurodollar
Rate Term Loans, a rate equal to three and three-quarters (3 3/4%) percent per
annum in excess of the Adjusted Eurodollar Rate (determined as provided in the
Loan Agreement); provided, that, (i) subject to clause (ii) below, effective as
-------- ----
of the first (1st ) day of the second month of each fiscal quarter (commencing
with the fiscal quarter ending on or about December 31, 2001) the Interest Rate
payable by Debtor shall be increased or decreased, as the case may be, (A) as to
Prime Rate Term Loans, to the rate equal to the Applicable Margin for the "Prime
Rate Term Loans" category set forth in the definition of the term Applicable
Margin on a per annum basis in excess of the Prime Rate, and, (B) as to
Eurodollar Rate Term Loans, to the rate equal to the Applicable Margin for the
"Eurodollar Term Loans" category set forth in the definition of the term
Applicable Margin on a per annum basis in excess of the Adjusted Eurodollar Rate
and (ii) notwithstanding anything to the contrary contained above, the
Applicable Margin otherwise used to calculate the Interest Rate for Prime Rate
Term Loans and Eurodollar Rate Term Loans shall be the highest percentage set
forth in the definition of the term Applicable Margin for each of the "Prime
Rate Term Loans" and
"Eurodollar Term Loans" categories, respectively, set forth in such definition
(without regard to the amount of Quarterly Average Excess Availability (as such
term is defined in the Loan Agreement)) plus two (2%) percent per annum, at
Payee's option, after notice to Debtor, for the period (A) from and after the
effective date of termination of the Loan Agreement until Payee has received
full and final payment of all outstanding and unpaid Obligations which are not
contingent and cash collateral (or an acceptable letter of credit) in the
amounts and on the term required under Section 12.1 of the Loan Agreement for
contingent Obligations (notwithstanding entry of a judgment against Debtor) and
(B) from and after the date of the occurrence of an Event of Default for so long
as such Event of Default is continuing, (b) the term "Prime Rate" shall mean the
rate from time to time publicly announced by First Union National Bank, or its
successors, from time to time, as its prime rate, whether or not such announced
rate is the best rate available at such bank, (c) the term "Event of Default"
shall mean an Event of Default as such term is defined in the Loan Agreement,
and (d) the term "Loan Agreement" shall mean the Amended and Restated Loan
Agreement, dated August 27, 2001, by and among Payee, Debtor and RBX
Corporation, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. Unless otherwise defined
herein, all capitalized terms used herein shall have the meaning assigned
thereto in the Loan Agreement.
The Interest Rate payable hereunder shall increase or decrease by an
amount equal to each increase or decrease, respectively, in the Prime Rate,
effective on the first day of the month after any change in the Prime Rate is
announced. The increase or decrease shall be based on the Prime Rate in effect
on the last day of the month in which any such change occurs. Interest shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. In no event shall the interest charged hereunder exceed the maximum
permitted under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the Loan
Agreement to evidence a Purchase Money Tern Loan by Payee to Debtor. This Note
is secured by the Collateral described in the Loan Agreement and the Security
Agreements (as such term is defined in the Loan Agreement), and all notes,
guarantees, security agreements and other agreements, documents and instrument
now or at any time hereafter executed and/or delivered by Debtor or any other
party in connection therewith (all of the foregoing, together with the Loan
Agreement and the Security Agreements, as the same now exist or may, hereafter
be amended, modified, supplemented, renewed, extended, restated or replaced,
being collectively referred to herein as the "Financing Agreements"), and is
entitled to all of the benefits and rights thereof and of the other Financing
Agreements. At the time any payment is due hereunder, at its option, Payee may
charge the amount thereof to any account of Debtor maintained by Payee.
If any payment of principal or interest is not made when due hereunder,
or if any other Event of Default shall occur for any reason, or if the Loan
Agreement shall be terminated or not renewed for any reason whatsoever, then and
in any such event, in addition to all rights and remedies of Payee under the
Financing Agreements, applicable law or otherwise; all such rights and remedies
being cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Loan
Agreement and the other Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable Interest Rate stated above until the
indebtedness evidenced by this Note is paid in full, plus the costs and expenses
of collection hereof, including, but not limited to, attorneys' fees and legal
expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of
any kind, (ii) agrees that it will not be necessary for Payee to first institute
suit in order to enforce payment of this Note and (iii) consents to any one or
more extensions or postponements of time of payment, release, surrender or
substitution of collateral security, or forbearance or other indulgence, without
notice or consent. The pleading of any statute of limitations as a defense to
any demand against Debtor is expressly hereby waived by Debtor. Upon any Event
of Default or termination or non-renewal of the Loan Agreement, Payee shall have
the right, but not the obligation to setoff against this Note all money owed by
Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
The validity, interpretation and enforcement of this Note and the other
Financing Agreements and any dispute arising in connection herewith or therewith
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
Debtor irrevocably consents and submits to the non-exclusive
jurisdiction of the Supreme Court of the State of New York for New York County
and the United States District Court for the Southern District of New York,
whichever Lender may elect, and waives any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under this Note
or any of the other Financing Agreements or in any way connection with or
related or incidental to the dealings of Debtor and Payee in respect of this
Note or any of the other Financing Agreements or the transactions related hereto
or thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agrees that any dispute arising out
of the relationship between Debtor and Payee or the conduct of such persons in
connection with this Note or otherwise shall be heard only in the courts
described above (except that Payee shall have the right to bring any action or
proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
Debtor hereby waives personal service of any and all process upon it
and consents that all such service of process may be made by certified mail
(return receipt requested) directed to it and service so made shall be deemed to
be completed five (5) days after the same shall have been so deposited in the
U.S. mails, or, at Payee's option, by service upon Debtor in any other manner
provided under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE
IN RESPECT OF THIS NOTE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY.
The execution and delivery of this Note has been authorized by the
Board of Directors and by any necessary vote or consent of the stockholders of
Debtor. Debtor hereby authorizes Payee to complete this Note in any particulars
according to the terms of the loan evidenced hereby.
This Note shall be binding upon the successors and assigns of Debtor
and inure to the benefit of Payee and its successors, endorsees and assigns.
Whenever used herein, the term "Debtor" shall be deemed to include its
successors and assigns and the term "Payee" shall be deemed to include its
successors, endorsees and assigns. If any term or provision of this Note shall
be held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
RBX INDUSTRIES, INC,
By:
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Title:
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