ITEM 14
EXHIBIT 10.8
LOAN AGREEMENT
Dated as of February 9, 1996
among
XXXXXXXXXX HOLDING CORPORATION
as Guarantor
X. XXXXXXXXXX & CO., INC.,
PEGASUS POLYMERS INTERNATIONAL INC., and
XXXXXXXXXX INTERNATIONAL, LTD.,
as Borrowers
and
FINOVA CAPITAL CORPORATION,
as Lender
TABLE OF CONTENTS
Page
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ARTICLE VIII - DEFINITIONS............................................
1.01. Certain Defined Terms.......................................
1.02. Computation of Time Periods.................................
1.03. Accounting Terms............................................
1.04. Other Definitional Provisions...............................
1.05. Other Terms.................................................
1.06. Payments by the Borrowers...................................
ARTICLE II - AMOUNTS AND TERMS OF LOANS.............................
2.01. The Revolving Credit Facility...............................
2.02. Letters of Credit...........................................
2.03. Evidence of Indebtedness....................................
2.04. Authorized Officers and Lenders.............................
ARTICLE III - PAYMENTS AND PREPAYMENTS...............................
3.01. Prepayments; Reductions in and Reallocations of
Revolving Credit Commitments................................
3.02 Payments....................................................
3.03. Taxes.......................................................
3.04. Increased Capital...........................................
3.05. Cash Management and Cash Collateral Accounts................
3.06. Right to Remove Affected Lender.............................
ARTICLE IV - INTEREST AND FEES......................................
4.01. Interest on the Loans and Other Obligations.................
4.02. Special Provisions Governing Euro-dollar Rate Loans
4.03. Fees ....................................................
ARTICLE V - CONDITIONS TO LOANS AND LETTERS OF
CREDIT ..........................................
5.01. Conditions Precedent to the Initial Loans and
Letters of Credit ..........................................
5.02. Conditions Precedent to All Subsequent Revolving Loans,
Swing Loans and Letters of Credit...........................
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TABLE OF CONTENTS
(continued)
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ARTICLE VI - REPRESENTATIONS AND WARRANTIES..........................
6.01. Representations and Warranties of the Borrower .............
ARTICLE VII - REPORTING COVENANTS....................................
7.01. Financial Statements........................................
7.02. Events of Default...........................................
7.03. Lawsuits....................................................
7.04. Insurance...................................................
7.05. Borrowing Base Certificate..................................
7.06. ERISA Notices...............................................
7.07. Environmental Notices.......................................
7.08. Labor Matters...............................................
7.09. Public Filings and Reports..................................
7.10. Other Information...........................................
ARTICLE VIII - AFFIRMATIVE COVENANTS..................................
8.01. Corporate Existence, Etc....................................
8.02. Corporate Powers; Conduct of Business, Etc..................
8.03. Compliance with Laws, Etc...................................
8.04. Payment of Taxes and Claims; Tax Consolidation .............
8.05. Insurance...................................................
8.06. Inspection of Property; Books and Records; Discussions .....
8.07. [Intentionally omitted].....................................
8.08. ERISA Compliance............................................
8.09. Foreign Employee Benefit Plan Compliance....................
8.10. Maintenance of Property.....................................
8.11. Further Assurances; Additional Collateral...................
8.12. Landlord and Bailee Waivers.................................
8.13. Environmental Compliance....................................
8.14. Interest Rate Contracts.....................................
ARTICLE IX - NEGATIVE COVENANTS.....................................
9.01. Indebtedness................................................
9.02. Sales of Assets.............................................
9.03. Liens.......................................................
9.04. Investments.................................................
9.05. Accommodation Obligations...................................
9.06. Restricted Junior Payments..................................
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TABLE OF CONTENTS
(continued)
Page
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9.07 Conduct of Business; Subsidiaries; Acquisitions ............
9.08. Transactions with Shareholders and Affiliates ..............
9.09. Restriction on Fundamental Changes..........................
9.10. Sales and Leasebacks; Operating Leases......................
9.11. Margin Regulations; Securities Laws.........................
9.12. ERISA and Certain Employment Matters........................
9.13. Issuance or Sale of Capital Stock...........................
9.14. Constituent Documents.......................................
9.15. Fiscal Year.................................................
9.16. Cancellation of Debt; Prepayment............................
9.17. Environmental Matters.......................................
9.18. Cash Management.............................................
9.19. [Intentionally Omitted].....................................
9.20. No New Restrictions on Subsidiary Dividends.................
ARTICLE X - FINANCIAL COVENANTS....................................
10.01. Minimum Consolidated Tangible Net Worth.....................
10.02. Minimum Fixed Charge Coverage Ratio.........................
10.03. Maximum Capital Expenditures................................
ARTICLE XI - EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................
11.01. Events of Default...........................................
11.02. Rights and Remedies.........................................
11.03. Cash Collateral.............................................
11.04. License for Use of Software and Other Intellectual
Property ...................................................
ARTICLE XII - [INTENTIONALLY OMITTED]................................
ARTICLE XIII - MISCELLANEOUS..........................................
13.01. Assignments.................................................
13.02. Expenses....................................................
13.03. Indemnity...................................................
13.04. Change in Accounting Principles.............................
13.05. Setoff......................................................
13.06. Ratable Sharing.............................................
13.07. Amendments and Waivers......................................
13.08. Notices.....................................................
13.09. Survival of Warranties and Agreements.......................
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative ......
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TABLE OF CONTENTS
(continued)
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13.11 Marshalling; Payments Set Aside ............................
13.12. Severability................................................
13.13. Headings....................................................
13.14. Governing Law...............................................
13.15. [Intentionally Omitted].....................................
13.16. Successors and Assigns......................................
13.17. Certain Consents and Waivers................................
13.18. Counterparts; Effectiveness; Inconsistencies
13.19. Limitation on Agreements....................................
13.20. Confidentiality.............................................
13.21. Judgment Currency...........................................
13.22. Entire Agreement............................................
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EXHIBITS
Exhibit A-1 - Form of Collateral Access Agreement (Landlord)
Exhibit A-2 - Form of Collateral Access Agreement (Bailee)
Exhibit B - Form of Borrower Guaranty
Exhibit C - Form of Borrower Junior Security Agreement
Exhibit D - Form of Borrower Junior Pledge Agreement
(Company)
Exhibit E - Form of Company Senior Security Agreement
Exhibit F - Form of Company Junior Trademark Security
Agreement
Exhibit G - Form of Environmental Certificate
Exhibit H - Form of Holding Guaranty
Exhibit I - Form of Holding Junior Pledge Agreement
Exhibit J - Form of Holding Junior Security Agreement
Exhibit K - Form of Junior Collateral Assignment of
Acquisition
Agreement
Exhibit L - Form of Borrower Junior Pledge Agreement
(Xxxxxxxxxx International)
Exhibit M - Form of Officer's Certificate
Exhibit N - Form of Subsidiary Guaranty
Exhibit O - Form of Subsidiary Junior Security Agreement
Exhibit P - List of Closing Documents
Exhibit U - Form of Compliance Certificate
Exhibit 2.01 - Request for Advance and Disbursement
Instructions
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SCHEDULES
Schedule 1.01.1 - Payment Account
Schedule 1.01.2 - Permitted Existing Accommodation Obligations
Schedule 1.01.3 - Permitted Existing Indebtedness
Schedule 1.01.4 - Permitted Existing Investments
Schedule 1.01.5 - Permitted Existing Liens
Schedule 6.01-C - Authorized, Issued and Outstanding Capital
Stock; Subsidiaries
Schedule 6.01-D - Conflicts with Contractual Obligations and
Requirements of Law
Schedule 6.01-E - Governmental Consents
Schedule 6.01-I - Litigation; Adverse Effects
Schedule 6.01-O - Environmental Matters
Schedule 6.01-P - ERISA Matters
Schedule 6.01-R - Labor Matters
Schedule 6.01-U - Patent, Trademark & Permits
Schedule 6.01-V - Assets and Properties
Schedule 6.01-Y - Transactions with Affiliates
LOAN AGREEMENT
This Loan Agreement dated as of February 9, 1996 (as amended,supplemented
or modified from time to time, this "Agreement") is entered into among
Xxxxxxxxxx Holding Corporation, a Delaware corporation (with its successors and
permitted assigns, "Holdings"), X. Xxxxxxxxxx & Co., Inc., a New York
corporation and direct wholly-owned Subsidiary (as defined below) of Holdings
(with its successors and permitted assigns, the "Company"), Pegasus Polymers
International Inc., a Connecticut corporation and a direct wholly-owned
Subsidiary of the Company (with its successors and permitted assigns,
"Pegasus"), Xxxxxxxxxx International, Ltd., a New York corporation and a direct
wholly-owned Subsidiary of the Company (with its successors and permitted
assigns, "Xxxxxxxxxx International"; and together with the Company and Pegasus,
the "Borrowers"), and FINOVA Capital Corporation, a Delaware corporation
("Lender").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation, contingent or
otherwise, of one Person with respect to any Indebtedness of another, if the
primary purpose or intent thereof by the Person incurring the Accommodation
Obligation is to provide assurance to the obligee of such Indebtedness of
another that such Indebtedness will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders thereof
will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes co-
made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness or any
security therefor or to provide funds for the payment or discharge thereof,
agreements to maintain solvency, assets, level of income, or other financial
condition, and agreements to make payment other than for value received. The
amount of any Accommodation Obligation shall be equal to the lesser of (i) the
principal amount payable under such Accommodation Obligation (if quantifiable),
and (ii) the portion of the obligation so guaranteed or otherwise supported.
"Acquisition Agreement" means the Stock Purchase Agreement dated as of
October 30, 1995, between Holdings, as buyer, and Xxxxxxxxxx Holding
Corporation, as seller, as amended by the first amendment thereto dated as of
November 20, 1995, and as such agreement may be further amended, supplemented or
otherwise modified from time to time.
"Acquisition Documents" means the Acquisition Agreement and all other
instruments, agreements and written Contractual Obligations entered into in
connection with the Acquisition Agreement and otherwise relating thereto,
including, without limitation, the Supply Agreements (as defined in the
Acquisition Agreement), the License Agreement (as defined in the Acquisition
Agreement), the Shareholders' Agreement, the ESOP, the Retirement Plan, the
Nonvoting Common Stock Purchase Agreement and the instruments, agreements and
written Contractual Obligations entered into in connection with the Nonvoting
Common Stock Purchase Agreement.
"Affiliate" means, as to any specified Person, any other Person (i) which,
directly or indirectly, controls, is controlled by or is under common control
with, such specified Person and includes each officer or director or general
partner of such Person, (ii) which beneficially owns or holds 12.5% or more of
the Voting Stock (after giving effect to any Capital Stock which is convertible
into Voting Stock) of such specified Person or (iii) of which 12.5% or more of
the Voting Stock (after giving effect to any Capital Stock which is convertible
into Voting Stock) is beneficially owned or held by such specified Person or a
Subsidiary of such specified Person. For the purposes of this definition, (i)
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise and (ii)
Mobil Corporation shall not be deemed an Affiliate of the Company solely as a
result of its ownership interest in the Preferred Stock but only so long as it
has no representative on the board of directors of Holdings.
"Availability Reserves" shall have the meaning ascribed to such term from
time to time in the Senior Revolving Credit Agreement.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
xx.xx. 101 et seq.), as amended from time to time, and any successor statute.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which the Company or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Borrower Guaranty" means the Guaranty dated as of the Closing Date duly
executed and delivered to Lender by each of the Borrowers substantially in the
form of Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time.
"Borrower Junior Pledge Agreements" means (i) the Junior Pledge Agreement
dated as of the Closing Date by and between the Company and Lender and (ii) the
Junior Pledge Agreement dated as of the Closing Date by and between Xxxxxxxxxx
International and Lender, in each case in substantially the form of Exhibit L,
as each of the
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same may be amended, supplemented or otherwise modified from time to time.
"Borrower Junior Security Agreements" means (i) the Junior Security
Agreement dated as of the Closing Date by and between the Company and Lender,
(ii) the Junior Security Agreement dated as of the Closing Date by and between
Xxxxxxxxxx International and Lender, and (iii) the Junior Security Agreement
dated as of the Closing Date by and between Pegasus and Lender, in each case in
substantially the form of Exhibit C, as each of the same may be amended,
supplemented or otherwise modified from time to time.
"Borrowers" is defined in the preamble.
"Borrowing Base Certificate" shall have the meaning ascribed to such term
from time to time in the Senior Revolving Credit Agreement.
"Business Day" means a day, in the applicable local time, which is not a
Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close in New York, New York.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be classified as capital expenditures; provided, however,
(i) Capital Expenditures shall include (A) that portion of Capital Leases which
is capitalized on the consolidated balance sheet of the Company and its
Subsidiaries and (B) expenditures for Equipment which is purchased
simultaneously with the trade-in of existing Equipment owned by the Company or
any of its Subsidiaries, to the extent the gross purchase price of the purchased
Equipment exceeds the book value of the Equipment being traded in at such time;
and (ii) Capital Expenditures shall exclude expenditures made in connection with
the replacement or restoration of Property, to the extent reimbursed or financed
from insurance or condemnation proceeds.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Capital Stock", with respect to any Person, means any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Euro-dollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit
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issued by any commercial bank organized under the laws of the United States, any
state thereof, the District of Columbia, any foreign bank, or its branches or
agencies (fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Corporation (or its
successors) or P-1 (or better) by Xxxxx'x Investors Service, Inc. (or its
successors); (iii) commercial paper of United States and foreign banks and bank
holding companies and their subsidiaries and United States and foreign finance,
commercial industrial or utility companies which, at the time of acquisition,
are rated A-1 (or better) by Standard & Poor's Corporation (or its successors)
or P-1 (or better) by Xxxxx'x Investors Service, Inc. (or its successors); and
(iv) marketable direct obligations of any state of the United States of America
or any political subdivision of any such state given on the date of such
investment the highest credit rating by Xxxxx'x Investors Service, Inc. (or its
successors) and Standard & Poor's Corporation (or its successors); provided,
that the maturities of any such Cash Equivalents referred to in clauses (i)
through (iv) shall not exceed one year.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. xx.xx. 9601 et seq., any amendments thereto,
any successor statutes, and any regulations or legally enforceable guidance
promulgated thereunder.
"CERCLIS" is defined in Section 6.01(o).
"Change of Control" means (i) any change occurs in the direct or indirect
equity ownership or control of Holdings' Capital Stock resulting in (x) Persons
who control or own Holdings' Voting Stock on the Closing Date and their
respective Affiliates and (y) (A) officers of the Company and (B) members of the
Company's leadership committee, in each case who hold such positions as of the
Closing Date or who are appointed subsequent to the Closing Date in the ordinary
course of business and not in connection with any Change in Control arising
under any of the other clauses of this definition, collectively controlling or
owning less than 51% of Holdings' Voting Stock; (ii) (x) Persons who control or
own Holdings' Voting Stock on the Closing Date and their respective Affiliates
and (y) (A) officers of the Company and (B) members of the Company's leadership
committee, in each case who hold such positions as of the Closing Date or who
are appointed subsequent to the Closing Date in the ordinary course of business
and not in connection with any Change in Control arising under any of the other
clauses of this definition, shall cease to have the right to elect or designate
a majority of the board of directors of Holdings; (iii) a Person or entity or
group of Persons or entities acting in concert (other than, to the extent still
employed by the Company or its Subsidiaries, Persons that control or own
Holdings' Voting Stock on the Closing Date and that are not acting in concert
with Persons that did not control or own Holdings' Voting Stock on the Closing
Date), shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities of Holdings representing more than 20% of Holdings'
Voting Stock; (iv) four (4) members of
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the Company's leadership committee shall have left the employ of the Company
during any twelve month period (except for reasons of death or disability), (v)
the Company shall cease to own and control 100% of the outstanding Capital Stock
of Pegasus, Xxxxxxxxxx International or any other Subsidiary Guarantor; or (vi)
Holdings shall cease to own and control 100% of the outstanding Capital Stock of
the Company.
"Citibank" means Citibank, N.A., a national banking association.
"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Closing" means the date upon which the Loan is initially funded.
"Closing Date" means the date upon which the Closing occurs.
"Collateral" means all Property and interests in Property now owned or
hereafter acquired by Holdings, the Borrowers or any of their respective
Subsidiaries upon which a Lien is granted under any of the Loan Documents,
provided, that the Collateral shall not include any Receivables sold pursuant to
the Permitted Receivables Financing Program (it being understood and agreed that
the proceeds of the initial sale thereunder shall constitute part of the Junior
Collateral and shall be subject to the Intercreditor Agreement).
"Common Equity Notes" means (i) the promissory notes, substantially in the
form of Exhibit A to the Shareholders' Agreement issued to holders of Common
Stock pursuant to the Shareholders Agreement and (ii) the promissory notes
described in Section 11.3(a) of the ESOP issued to holders of Common Stock
pursuant to the ESOP.
"Common Stock" means the Common Stock, par value $0.01 per share, of
Holdings.
"Company Junior Trademark Security Agreement" means the Trademark Security
Agreement dated as of the Closing Date by and between the Company and Lender
substantially in the form of Exhibit F hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Company Senior Security Agreement" means the Senior Security Agreement
dated as of the Closing Date by and between the Company and Lender substantially
in the form of Exhibit E hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
"Compliance Certificate" is defined in Section 7.01(c).
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"Consolidated Cash Interest Expense" means, for any period, all as
determined in conformity with GAAP, (i) total interest expense and, after the
inception of the Permitted Receivables Financing Program, any discount
attributable to the payment of yield and any program, commitment, agency and
similar fees payable under the Permitted Receivables Financing Program, whether
paid or accrued (without duplication) (including the interest component of
Capital Lease obligations), of Holdings and its Subsidiaries on a consolidated
basis, including, without limitation, all recurring bank loan fees and
commissions, discounts and other fees and charges owed with respect to letters
of credit and net costs under Interest Rate Contracts, but excluding, however,
amortization of discount, interest paid in property other than cash or any other
interest expense not payable in cash, minus (ii) any net payments received
during such period under Interest Rate Contracts.
"Consolidated Fixed Charges" means, for any period, the sum of the amounts
for such period of (i) Consolidated Cash Interest Expense, (ii) scheduled
payments of principal on the Indebtedness of Holdings and its Subsidiaries
(including the principal component of Capital Lease obligations but excluding
the Obligations), (iii) cash dividends paid in respect of the Capital Stock of
Holdings and (iv) cash payments in respect of redemptions of the Capital Stock
of Holdings.
"Consolidated Net Income" means, for any period, the net earnings (or loss)
after taxes of Holdings and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"Consolidated Tangible Net Worth" means, with respect to any Person, at any
time, (i) total consolidated assets of such Person (including the capitalized
portion of Interest Rate Contracts), plus (ii) any negative cumulative foreign
exchange translation adjustments applicable to such Person, minus (iii) total
consolidated liabilities of such Person (excluding any accrued and unpaid
dividends payable on the Capital Stock of such Person), minus (iv) any positive
cumulative foreign exchange translation adjustments applicable to such Person.
There shall be excluded therefrom all General Intangibles (except goodwill, tax
refunds, tax refund claims, rights and claims against carriers, shippers,
franchises, lessors and lessees, and rights to indemnification), organizational
expenses and all unamortized debt discount and deferred charges (including
deferred taxes) and non-current pension liabilities or assets. Assets and
liabilities shall be determined in accordance with GAAP, except that investments
in and moneys due from Affiliates of the Borrowers (other than such moneys in
respect of trade accounts receivables and payables in the ordinary course of
business) shall be excluded from total consolidated assets.
"Contaminant" means any waste, pollutant, hazardous substance, radioactive
substance or material, toxic substance, hazardous waste, radioactive waste,
special waste, petroleum or petroleum-derived substance or waste, asbestos in
any form or condition, polychlorinated biphenyls ("PCBs"), or any hazardous or
toxic constituent
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thereof and includes, but is not limited to, these terms as defined in
Environmental, Health or Safety Requirements of Law.
"Constituent Document" means, (i) with respect to any corporation, (A) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such entity, and (B) the by-laws (or the equivalent governing
documents) of such entity, and (ii) with respect to any partnership (whether
limited or general), (A) the certificate of partnership (or equivalent filings),
(B) the partnership agreement (or equivalent organizational documents) of such
partnership and (C) any document setting forth the designation, amount and/or
rights, limitations and preferences of any of such partnership's partnership
interests.
"Contractual Obligation", as applied to any Person, means any provision of
any Securities issued by that Person or any indenture, mortgage, deed of trust,
security agreement, pledge agreement, guaranty, contract, undertaking, agreement
or instrument to which that Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject.
"Credit Facilities" shall have the meaning ascribed to such term from time
to time in the Senior Revolving Credit Agreement.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Currency Agreement Exposure" shall have the meaning ascribed to such term
from time to time in the Senior Revolving Credit Agreement.
"Customary Permitted Liens" means
(a) Liens (other than Environmental Liens and Liens in favor of the
PBGC) with respect to the payment of taxes, assessments or governmental
charges in all cases which are not yet due or which are not required to be
paid pursuant to Section 8.04;
(b) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, consignors, warehousemen, repairers or workmen and
other Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP;
(c) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or
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to secure the performance of bids, tenders, sales, contracts (other than
for the repayment of borrowed money), surety, appeal and performance bonds;
provided that all such Liens do not in the aggregate materially detract
from the value of any Borrower's or any of its Subsidiaries' Property or
materially impair the use thereof in the operation of the business of such
Borrower or any of such Subsidiaries;
(d) Liens arising as a result of progress payments or otherwise under
government contracts; and
(e) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of Real Property.
"Deed of Trust" means that certain Deed of Trust, Assignment of Rents and
Proceeds, and Security Agreement pursuant to which Borrower shall grant to
Lender a first priority Lien on and security interest in the Houston Facility.
"Default" means an event which, with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.
"Discounted Value" shall refer to the amount determined by discounting the
Remaining Scheduled Payment Amounts (based on the forty-eight (48) month
amortization schedule applicable to the Loan), or so many of the Remaining
Scheduled Payment Amounts as are being prepaid, in the circumstances of a
partial prepayment of the Loan, from their respective due dates to the date of a
prepayment (whether in whole or in part) of the Loan, in accordance with
accepted financial practice and at a discount factor equal to the Reinvestment
Yield.
"DOL" means the United States Department of Labor and any Person succeeding
to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"EBITDA" means, for any period on a consolidated basis for Holdings and its
Subsidiaries, (i) the sum of the amounts for such period of (A) Consolidated Net
Income, (B) depreciation, amortization expense and other non-cash charges, (C)
Consolidated Cash Interest Expense, (D) charges for federal, state, local and
foreign income taxes, (E) extraordinary losses which have been deducted in the
determination of Consolidated Net Income, (F) other non-operating expenses
(including discounts and expenses under the Permitted Receivables Financing
Program) not otherwise included in Consolidated Net Income, (G) non-recurring,
non-operating expenses, (H) discretionary bonuses and profit sharing (to the
extent paid in Capital Stock of Holdings) and non-cash deferred compensation
expenses, net of any cash payments made in respect thereof and (I) ESOP
contribution expense, minus (ii) the sum of (A) extraordinary gains not already
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excluded from the determination of Consolidated Net Income, (B) income tax
credits and (C) non-recurring, non-operating income.
"Environmental Certificate" shall mean that certain Environmental
Certificate with Representations, Covenants, and Warranties, substantially in
the form of Exhibit G hereto, from the Company in favor of Lender with respect
to Houston Facility.
"Environmental, Health or Safety Requirements of Law" means all valid and
enforceable Requirements of Law derived from or relating to federal, state,
local and foreign laws, regulations, orders, ordinances, rules, permits,
licenses or other binding determination of any Governmental Authority relating
to or addressing the environment, health or safety, including but not limited to
any law, regulation, or order relating to the use, handling, or disposal of any
Contaminant, any law, regulation, or order relating to Remedial Action and any
law, regulation, or order relating to workplace or worker safety and health, and
such Requirements of Law as are promulgated by the specifically authorized
Persons responsible for administering such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for any (i) liabilities under any Environmental, Health or Safety Requirement of
Law, or (ii) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant into
the environment.
"Environmental Property Transfer Acts" means any applicable Requirement of
Law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any Property or the transfer, sale or
lease of any Property or deed or title for any Property for environmental
reasons, including, but not limited to, any so-called "Environmental Cleanup
Responsibility Act", "Responsible Transfer Act", or "Industrial Site Recovery
Act".
"Equipment" means, with respect to any Person, all of such Person's present
and future equipment (as defined in the Uniform Commercial Code).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means (i) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as Holdings or the Company; (ii) a partnership or other
trade or business (whether or not incorporated) which is under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with
Holdings or the Company; (iii) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as Holdings
or the Company, any corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above; and (iv) any other Person
which is required to be aggregated with Holdings or the Company
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pursuant to regulations promulgated under Section 414(o) of the Internal Revenue
Code.
"ESOP" means the X. Xxxxxxxxxx & Co., Inc. Deferred Profit Sharing and
Employee Stock Ownership Plan, effective as of December 1, 1995, as the same may
be amended, supplemented or otherwise modified from time to time, subject in
each case to Section 9.16.
"Event of Default" means any of the occurrences set forth in Section 11.01
after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any Governmental Authority succeeding to its functions.
"Financial Officer" means, with respect to Holdings or any Borrower, the
chief financial officer, treasurer, controller or other officer or member of
management of Holdings or such Borrower with significant responsibility for the
financial affairs of Holdings or such Borrower.
"Finsub" means a corporation organized under the laws of a state of the
United States of America which is a special purpose Wholly Owned Subsidiary of
the Company formed solely for the purpose of engaging in the Permitted
Receivables Financing Program.
"Fiscal Year" means the fiscal year of the Borrower, which shall be the 12-
month period ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any period, the ratio
of (i) EBITDA for such period, minus Capital Expenditures for such period, minus
cash taxes for such period, to (ii) Consolidated Fixed Charges for such period.
"Foreign Employee Benefit Plan" means any employee benefit plan as defined
in Section 3(3) of ERISA which is maintained or contributed to for the benefit
of the employees of the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates, but which is not covered by ERISA pursuant to Section 4(b)(4) of
ERISA.
"Foreign Pension Plan" means any Foreign Employee Benefit Plan which under
applicable local law is required to be funded through a trust or other funding
vehicle.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such other statements by such other entity as may be in general use
by significant segments of the accounting profession as in effect on the date of
the most recent audited financial
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statements of Holdings and its Subsidiaries delivered to the Lender prior to the
Closing Date (unless otherwise specified pursuant to Section 13.04).
"General Intangibles" means, with respect to any Person, all of such
Person's present and future general intangibles (as defined in Section 9-106 of
the Uniform Commercial Code).
"Good Funds" means Dollars deposited to the Payment Account in federal
funds at or before 3:00 p.m., New York, New York time, on any Business Day.
"Governmental Authority" means any nation or government, any xxxxxxx,
xxxxx, xxxxxxxx, xxxxxxxxx, local or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, Lender.
"Holdings" is defined in the preamble.
"Holdings Guaranty" means the Guaranty dated as of the Closing Date duly
executed and delivered to Lender by Holdings substantially in the form of
Exhibit H hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"Holdings Junior Pledge Agreement" means the Pledge Agreement dated as of
the Closing Date by and between Holdings and Lender substantially in the form of
Exhibit I hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"Holdings Junior Security Agreement" means the Security Agreement dated as
of the Closing Date by and between Holdings and Lender substantially in the form
of Exhibit J hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Houston Facility" means that parcel of the Real Property owned by the
Company and located at 00000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx,
together with all improvements, machinery, Equipment, fixtures and goods (other
than Inventory, any reversionary interest in Inventory, and any goods that are
returned that constitute Inventory) located thereon, and any software used in
connection with such machinery, Equipment, fixtures, and goods, any of which is
the Property of any Borrower.
"Indebtedness", as applied to any Person, at any time, shall mean, without
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duplication, (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) in respect of obligations (A) to redeem,
repurchase or exchange for cash any Securities at a fixed or determinable date,
at the option of another Person or upon the occurrence of a condition not solely
within the control of such Person, as of the time such payment date becomes
fixed or determined, such option is exercised or such condition is satisfied, as
the case may be, or (B) to pay cash dividends in respect of any stock, (iii)
with respect to letters of credit issued for such Person's account, (iv) to pay
the deferred purchase price of property or services, except (A) accounts payable
and accrued expenses arising in the ordinary course of business and (B) any
obligation arising solely in respect of the conversion in the ordinary course of
business of any current liability into a long-term obligation in a like amount
and bearing interest at a rate not in excess of a market rate of interest, (v)
in respect of Capital Leases, (vi) which are Accommodation Obligations, (vii)
upon which interest charges are customarily paid (including zero coupon
instruments but excluding obligations referred to in clauses (iv)(A) or (iv)(B)
above) or (viii) under conditional sale or other title retention agreements
relating to property purchased by such Person; (b) all indebtedness, obligations
or other liabilities of such Person or others secured by a Lien on any property
of such Person, whether or not such indebtedness, obligations or liabilities are
assumed by such Person, all as of such time (it being understood that if
recourse with respect to such indebtedness, obligations or liabilities is
limited to such property, such indebtedness, obligations or other liabilities
shall be limited to the fair market value of such property); (c) all
indebtedness, obligations or other liabilities of such Person in respect of
Interest Rate Contracts and Currency Agreements, net of liabilities owed to such
Person by the counterparties thereon; and (d) all contingent Contractual
Obligations with respect to any of the foregoing.
"Indemnitee" is defined in Section 13.03.
"Indemnified Matter" is defined in Section 13.03.
"Initial Projections" means the financial projections initially dated
November 2, 1995 and updated on February 8, 1996 with respect to Holdings and
its Subsidiaries delivered by Holdings to Lender on or prior to the Closing
Date.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of the
Closing Date between the Revolving Credit Agent (as agent for the Senior
Revolving Lenders) and Lender, as the same may be amended, supplemented or
otherwise modified from time to time.
"Interest Rate Contract" means any interest rate exchange, swap, collar,
future, protection, cap, floor or similar agreements providing interest rate
protection.
"Interest Rate Contract Exposure" shall have the meaning ascribed to such
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term from time to time in the Senior Revolving Credit Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, any successor statute and
any regulations or guidance promulgated thereunder.
"Inventory" means, with respect to any Person, all of such Person's present
and future (i) inventory (as defined in Section 9-109(4) of the Uniform
Commercial Code) (including unbilled accounts receivable), (ii) goods,
merchandise and other personal Property furnished or to be furnished under any
contract of service or intended for sale or lease, and all goods consigned by
such Person and all other items which have previously constituted Equipment but
are then currently being held for sale or lease in the ordinary course of such
Person's business, (iii) raw materials, work-in-process and finished goods, (iv)
materials and supplies of any kind, nature or description used or consumed in
such Person's business or in connection with the manufacture, production,
packing, shipping, advertising, finishing or sale of any of the Property
described in clauses (i) through (iii) above, (v) goods in which such Person has
a joint or other interest to the extent of such Person's interest therein or
right of any kind (including, without limitation, goods in which such Person has
an interest or right as consignee), and (vi) goods which are returned to or
repossessed by such Person; in each case whether in the possession of such
Person, a bailee, a consignee, or any other Person for sale, storage, transit,
processing, repair, use or otherwise, and any and all documents for or relating
to any of the foregoing.
"Investment" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of Securities, or of a beneficial interest in
Securities issued by or other equity ownership interest in any other Person,
(ii) any purchase by that Person of all or a significant part of the assets of a
business conducted by another Person, (iii) any loan, advance (other than
prepaid expenses, accounts receivable, advances to employees and similar items
made or incurred in the ordinary course of business), or capital contribution by
that Person to any other Person, including all Indebtedness to such Person
arising from a sale of property by such Person other than in the ordinary course
of its business and (iv) any accounts (including, without limitation, any such
deposit, cash collateral and investment accounts) with banks or other financial
institutions.
"IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.
"Issuing Bank" and "Issuing Banks" shall each have the meaning ascribed to
such term from time to time in the Senior Revolving Credit Agreement.
"Junior Collateral" means all Collateral except the Senior Collateral, to
the extent such assets are located within the United States.
"Junior Collateral Access Agreement" means (a) a landlord waiver (with a
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copy of the relevant Lease attached) with respect to personal property located
at real property leased by the Company or its Subsidiaries, substantially in the
form of Exhibit A-1 (with such modifications as Lender may approve in its sole
discretion) and (b) a bailee waiver with respect to personal property maintained
in a warehouse or with another bailee, substantially in the form of Exhibit A-2
(with such modifications as Lender may approve in its sole discretion).
"Junior Collateral Assignment of Acquisition Agreement" means the Junior
Collateral Assignment of Acquisition Agreement dated as of the Closing Date by
and between Holdings and Lender, substantially in the form of Exhibit K hereto,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Junior Security Documents" means those documents pursuant to which any of
the Borrowers shall xxxxx x Xxxx on any of the Junior Collateral in favor of
Lender, including without limitation the Borrower Junior Security Agreements,
the Holdings Junior Security Agreement, the Company Junior Trademark Security
Agreement, the Holdings Junior Pledge Agreement, the Borrower Junior Pledge
Agreements, the Subsidiary Junior Security Agreements, the Junior Collateral
Assignment of Acquisition Agreement, and the Junior Collateral Access
Agreements.
"Knowledge" (and the related term "Know") means, with respect to Holdings'
or any Borrower's knowledge, the knowledge of a Responsible Person of Holdings
or such Borrower.
"Leases" means those leases, tenancies or occupancies entered into by
Holdings, any Borrower or any of the Borrowers' respective Subsidiaries, as
tenant, sublessor or sublessee either directly or as the successor in interest
to the Company or any of its Affiliates.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses and damages with respect to or arising out of any of
the following: personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton injury,
damage or threat to the environment, natural resources or public health or
welfare, costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of or associated with investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, voluntary
disclosures made to, or settlements with, the United States Government or any
foreign government or any political subdivision thereof, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future,
including interest, if any, thereon.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority, title retention or
other security agreement or preferential arrangement (including, without
limitation, any negative pledge
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arrangement and any agreement to provide equal and ratable security) of any kind
or nature whatsoever in respect of any property of a Person intended to assure
payment of any Indebtedness, obligation or other liability, whether granted
voluntarily or imposed by law, and includes the interest of a lessor under a
Capital Lease or under any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing
statement or similar notice (other than a financing statement filed by a "true"
lessor pursuant to ss. 9-408 of the Uniform Commercial Code), naming the owner
of such property as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction, but does not include the interest of a
lessor under an Operating Lease.
"Loan" means the Eight Million Dollar ($8,000,000.00) senior term loan from
Lender to Borrowers made pursuant to this Agreement and evidenced by the Notes.
"Loan Documents" means this Agreement, the Notes, the Deed of Trust, the
Environmental Certificate, the Holdings Guaranty, the Borrower Guaranty, the
Subsidiary Guaranty, the Company Senior Security Agreement, the Borrower Junior
Security Agreements, the Holdings Junior Security Agreement, the Company Junior
Trademark Security Agreement, the Holdings Junior Pledge Agreement, the Borrower
Junior Pledge Agreements, the Subsidiary Junior Security Agreements, the Junior
Collateral Assignment of Acquisition Agreement, the Junior Collateral Access
Agreements, the Intercreditor Agreement, the other documents executed or
delivered pursuant to Section 5.01(a) by Holdings, the Company or any Subsidiary
of the Company, and all other instruments, agreements and written Contractual
Obligations between any Borrower or any Subsidiary of any Borrower, on the one
hand, and Lender, on the other hand, in each case delivered to Lender before, on
or after the Closing Date pursuant to or in connection with the transactions
(including, without limitation, the cash management arrangements) contemplated
hereby. The Loan Documents shall not include the Permitted Receivables
Transaction Documents.
"Loan Year" means each period from the Closing Date, or from any annual
anniversary of the Closing Date, through the day preceding the immediately
succeeding annual anniversary of the Closing Date.
"Make Whole Premium" shall equal the excess, if any, of (a) the Discounted
Value immediately prior to any prepayment of that portion of the Loan which is
being prepaid over (b) the principal balance of the Loan being prepaid as of the
date of any such prepayment. Expressed mathematically, the difference, if
greater than zero arising when the amount determined pursuant to clause (b) of
the preceding sentence is subtracted from the amount determined pursuant to
clause (a) of the preceding sentence.
"Margin Stock" means "margin stock" as such term is defined in Regulation U
and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (i) the
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business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrowers, taken as a whole, (ii) the ability of
Holdings or any of the Borrowers to perform their respective material
obligations under the Loan Documents or (iii) the ability of Lender to enforce
the Loan Documents.
"Maturity Date" means March 1, 2000.
"Xxxxxxxxxx International" is defined in the preamble.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by any Borrower or any ERISA Affiliate.
"Net Cash Proceeds" shall have the meaning ascribed to such term from time
to time in the Senior Revolving Credit Agreement.
"Nonvoting Common Stock" means the Nonvoting Common Stock, par value $0.01
per share, of Holdings.
"Nonvoting Common Stock Purchase Agreement" means the Common Stock Purchase
Agreement dated as of the Closing Date between Citicorp North America, Inc. and
Holdings.
"Note A" means that certain Promissory Note A, in the original principal
amount of $2,560,000, made jointly and severally by Borrowers and payable to the
order of Lender.
"Note A Interest Rate" means a fixed annual rate of interest equal to eight
and two-tenths percent (8.20%) per annum. Interest on Note A shall be calculated
on the basis of a year of 360 days and charged for the actual number of days
elapsed.
"Note B" means that certain Promissory Note B, in the original principal
amount of $5,440,000, made jointly and severally by Borrowers and payable to the
order of Lender.
"Note B Interest Rate" means a fixed annual rate of interest equal to nine
and seven-tenths percent (9.70%) per annum. Interest on Note B shall be
calculated on the basis of a year of 360 days and charged for the actual number
of days elapsed.
"Notes" means, collectively, Note A and Note B, and all amendments thereto,
replacements thereof and substitutions therefor.
"NPL" is defined in Section 6.01(o).
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"Obligations" means, to the extent arising hereunder, under the Notes or
under any other Loan Document, the Loan, all advances, debts, liabilities,
obligations, covenants and duties owing by Holdings, any Borrower, or any
Subsidiary Guarantor to Lender, any Affiliate of Lender, or any Person entitled
to indemnification pursuant to Section 13.03, of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other instrument,
whether or not for the payment of money, whether arising (i) by reason of (A) an
extension of credit, (B) loan, (C) guaranty or (D) indemnification or (ii) in
any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other sum chargeable to Holdings, any Borrower, or any
Subsidiary Guarantor hereunder or under any other Loan Document.
"Officer's Certificate" means, as to a corporation, a certificate executed
on behalf of such corporation by an officer or director of such corporation and,
with respect to Holdings, any Borrower or any Subsidiary Guarantor,
substantially in the form of Exhibit M.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"Paid In Full", "Pay In Full" and "Payment In Full" means, with respect to
the Obligations of any Borrower or Subsidiary Guarantor (other than, as of any
date of payment, Obligations which are contingent and unliquidated and not then
due and owing and which, pursuant to Section 13.09, survive the making and
repayment of the Loan), the payment in full in cash of such Obligations.
"Payment Account" means that certain account of Lender into which payments
in respect of Obligations shall be made. The Payment Account as of the Closing
Date is set forth on Schedule 1.01.1.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Pegasus" is defined in the preamble.
"Pegasus Benelux" means Pegasus Polymers Benelux, Inc., a Delaware
corporation.
"Pegasus Coordination" means Pegasus Polymers International Coordination,
Inc., a Delaware corporation.
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"Permits" means any permit, approval, authorization license, variance,
exemption, no-action letter or permission required from a Governmental Authority
under an applicable Requirement of Law.
"Permitted Existing Accommodation Obligations" means those Accommodation
Obligations of the Company and its Subsidiaries identified as such on Schedule
1.01.2.
"Permitted Existing Indebtedness" means the Indebtedness of the Company and
its Subsidiaries identified as such on Schedule 1.01.3.
"Permitted Existing Investments" means those Investments identified as such
on Schedule 1.01.4.
"Permitted Existing Liens" means the Liens on assets of the Company or any
of its Subsidiaries identified as such on Schedule 1.01.5.
"Permitted Receivables Financing Program" means a receivables financing
program providing, among other things, for (i) the sales to the Company by
certain of its Subsidiaries of Receivables originated by such Subsidiaries, (ii)
the sale by the Company or any of its Subsidiaries to Finsub of such
Receivables, and (iii) the transfer of such Receivables by Finsub to a special
purpose trust or corporation which is not an Affiliate of the Company or Finsub;
provided that (y) all terms and conditions of such program shall have obtained
all necessary approvals of the Senior Revolving Lenders and (z) the Capital
Stock of Finsub and any promissory notes issued by Finsub to the Borrowers in
connection with such program shall have been pledged to Lender, subject to the
first priority Lien in favor of the Senior Revolving Lenders, pursuant to the
Loan Documents as additional security for the Obligations. Any such Capital
Stock of Finsub and any Promissory Notes issued by Finsub so pledged to Lender
shall be included within the Junior Collateral.
"Permitted Receivables Transaction Documents" means the documents approved
in writing by Lender and executed and delivered in connection with the Permitted
Receivables Financing Program, as such documents may be amended, supplemented or
otherwise modified from time to time.
"Permitted Subordinated Indebtedness" means unsecured Indebtedness that is
subordinated to the Obligations, the terms of which (including, without
limitation, terms relating to principal amount, interest, maturity, covenants,
subordination and cross-default) and all documentation relating thereto have
been approved by Lender in writing.
"Person" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, or any Governmental
Authority.
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"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which any Borrower or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Preferred Stock" means the Series A Preferred Stock, par value $0.01 per
share, issued by Holdings to Xxxxxxxxxx Holding Corporation (or a Mobil
Affiliate (as defined in the Acquisition Agreement)) pursuant to the Acquisition
Agreement, with a liquidation preference not exceeding $10,000,000.
"Prepayment Premium" shall have the meaning set forth in Section 2.06.
"Prime Rate" means that rate of interest announced publicly by Citibank as
its base borrowing rate, as it exists from time to time, notwithstanding the
fact that some Persons may borrow money at less than the Prime Rate.
"Property" means any Real Property or personal property, plant, building,
facility, structure, underground storage tank or unit, Equipment, Inventory,
General Intangible, Receivable, or other asset owned, leased or operated by any
Borrower or any of its Subsidiaries, as applicable (including any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"Protective Advance" is defined in Section 11.02(e).
"Real Property" means, with respect to any Person, all of such Person's
present and future right, title and interest (including, without limitation, any
leasehold estate) in real property. As of the Closing Date, the only piece of
real property owned in fee simple by any Borrower was the Houston Facility.
"Receivables" means, with respect to any Person, all of such Person's
present and future (i) accounts (as defined in the Section 9-106 of the Uniform
Commercial Code), (ii) accounts receivable, (iii) rights to payment for goods
sold or leased or for services rendered (except those evidenced by instruments
or chattel paper), whether or not earned by performance, (iv) all rights in any
merchandise or goods which any of the same may represent, and (v) all rights,
title, security, insurance, letters of credit and guaranties with respect to
each of the foregoing, including, without limitation, any right of stoppage in
transit.
"Registration Statement" means Holdings' Registration Statement on Form S-1
under the Securities Act of 1933 (Registration No. 33-99754), as amended,
relating to the offering by Holdings to certain Persons of up to 2,000,000
shares of Common Stock.
"Regulation G" means Regulation G of the Federal Reserve Board as in effect
from time to time.
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"Regulation U" means Regulation U of the Federal Reserve Board as in effect
from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in effect
from time to time.
"Reinvestment Yield" shall mean the rates shown under the column heading
"Ask Yld." for "Govt. Bonds & Notes" in the "Treasury Bonds, Notes & Bills"
Section of The Wall Street Journal - Western Edition published on the Business
Day prior to the date of any proposed prepayment of the Loan for the government
bond or note with a maturity date having the closest matching maturity to the
Weighted Average Life to Maturity, or, if there are more than one government
bonds or notes with a maturity date having the closest matching maturity to the
Weighted Average Life to Maturity, the highest of the rates shown in the "Ask
Yld." column for any such bond or note, plus four percent (4.0%).
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment.
"Remaining Scheduled Payment Amount" shall mean the amount of each
scheduled payment of principal of and interest on either Note A or Note B, as
applicable, that would be due on or after the date of a prepayment of the Loan
if no payment of the Loan were made prior to its scheduled due date, or as to
any partial prepayment of the Loan, the amount of each scheduled payment of
principal of and interest on either Note A or Note B, as applicable, that would
be due on or after the date of a partial prepayment of the Loan, if no such
partial payment of the Loan were made prior to its scheduled due date.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment; or
(ii) investigate and determine if a remedial response is needed and to design
such a response and post-remedial investigation, monitoring, operation and
maintenance and care.
"Reportable Event" means any of the events described in Section 4043 of
ERISA.
"Requirements of Law" means, as to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule or
regulation, or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject including,
without limitation, the Securities Act, the Securities Exchange Act, Regulations
G, U and X, ERISA, the Fair Labor Standards Act and any similar statute of any
foreign government or any political subdivision thereof and
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any certificate of occupancy, zoning ordinance, building, or land use
requirement or Permit or labor or employment rule or regulation, including
Environmental, Health or Safety Requirements of Law.
"Responsible Person" means (i) with respect to any Borrower, any Financial
Officer of such Borrower or any other officer of such Borrower which is also a
member of the leadership committee of the Company and (ii) solely in the case of
the Company, any member of the leadership committee of the Company.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
Holdings or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in (x) shares of, or options or warrants (which do not
contain put or call rights) with respect to, that class of stock and/or (y)
shares of any class of stock which is junior to that class of stock, provided
that such shares do not constitute Indebtedness, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of
Holdings or any of its Subsidiaries now or hereafter outstanding, (iii) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock of Holdings or any of its Subsidiaries now
or hereafter outstanding and (iv) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with respect to, and
any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to any Indebtedness which by
its terms is subordinated to the Obligations, including, without limitation, the
Permitted Subordinated Indebtedness.
"Retirement Plan" means the X. Xxxxxxxxxx & Co., Inc. Employees' Retirement
Plan, amended and restated as of January 1, 1994, as the same may be amended,
supplemented or otherwise modified from time to time, subject in each case to
Section 9.16.
"Revolving Credit Agent" means, initially Citicorp USA, Inc., a Delaware
corporation, the "Agent" under the Senior Revolving Credit Agreement, and
Citibank Canada, a Canadian chartered bank, as the "Canadian Agent," and
thereafter the then acting "Agent" or "Canadian Agent," as such Person is
determined in accordance with the Senior Revolving Credit Agreement.
"Revolving Credit Availability" shall have the meaning ascribed to such
term from time to time in the Senior Revolving Credit Agreement.
"Revolving Credit Commitments" shall have the meaning ascribed to such term
from time to time in the Senior Revolving Credit Agreement.
"Sale and Leaseback Transaction" means, with respect to any Person, any
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direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person and is thereafter leased back from the purchaser thereof by such
Person.
"Securities" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or any certificates of interest, shares,
or participation in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Senior Collateral" means the Houston Facility.
"Senior Revolving Credit Agreement" means that certain Credit Agreement
dated of even date herewith by and among Holdings, Borrowers, X. Xxxxxxxxxx &
Co. (Canada) Limited, the various institutions from time to time a party thereto
as "Lenders", the various institutions from time to time party thereto as the
Issuing Banks, and the Revolving Credit Agent, as the same may from time to time
be amended, renewed, supplemented or otherwise modified at the option of the
parties thereto, and any other agreements pursuant to which any of the
indebtedness, commitments, obligations, costs, expenses, fees, reimbursements
and other indemnities payable or owing thereunder may be refinanced,
restructured, renewed, extended, refunded or replaced, as any such other
agreements may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified.
"Senior Revolving Lenders" means, collectively, the various institutions at
any given time a party to the Senior Revolving Credit Agreement, whether such
institutions are party thereto in the capacity as "Lender" thereunder, Issuing
Bank, or both.
"Senior Revolving Loan Documents" shall have the meaning ascribed to the
term "Senior Loan Documents" as set forth in the Intercreditor Agreement.
"Senior Revolving Obligations" shall mean the obligations of Borrowers, or
any of Borrowers, or of Holdings, to any of the Senior Revolving Lenders,
whether arising pursuant to the Senior Revolving Credit Agreement or any of the
other Senior Revolving Loan Documents, to the extent such obligations are
included within the defined term "Senior Loan Obligations" under the
Intercreditor Agreement.
"Senior Security Documents" mean those documents pursuant to which the
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Company shall grant to Lender a Lien on and security interest in the Senior
Collateral, including without limitation the Deed of Trust and the Company
Senior Security Agreement.
"Shareholders' Agreement" means the Shareholders' Agreement dated as of
January 31, 1996 among Holdings and certain holders of shares of Common Stock.
"Solvent", when used with respect to any Person, means that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(d) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"Subsidiary Guarantor" means each Subsidiary of the Company which is a
party to the Subsidiary Guaranty.
"Subsidiary Guaranty" means the Guaranty dated as of the Closing Date duly
executed and delivered to Lender by Pegasus Benelux and Pegasus Coordination
substantially in the form of Exhibit N hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
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"Subsidiary Investment Basket" means, for any Fiscal Year, an amount equal
to (i) $2,000,000, plus (ii) the Unused Stock Proceeds Carryover Amount as of
the last day of the immediately preceding Fiscal Year, plus (iii) fifty percent
(50%) of the aggregate amount of Net Cash Proceeds received by Holdings in
connection with the sale of its Capital Stock (after March 31, 1996) during the
then current Fiscal Year. For purposes of this definition "Unused Stock Proceeds
Carryover Amount" means, as of the last day of any Fiscal Year during the term
of this Agreement, (i) fifty percent (50%) of the aggregate amount of Net Cash
Proceeds received by Holdings in connection with the sale of its Capital Stock
(after March 31, 1996) as of such date, minus (ii) for such Fiscal Year and each
preceding Fiscal Year during the term of this Agreement, an amount equal to the
excess, if any, of (1) all intercompany loans to, Investments in and
capitalizations of Subsidiaries of the Company (other than Borrowers) made
during such Fiscal Year (or such preceding Fiscal Year) over (2) $2,000,000
(except as otherwise permitted by this Agreement). For purposes of this
calculation, the term of this Agreement shall be deemed to include all of Fiscal
Year 1996.
"Subsidiary Junior Security Agreements" means (i) the Security Agreement
dated as of the Closing Date duly executed and delivered to Lender by Pegasus
Benelux and (ii) the Security Agreement dated as of the Closing Date duly
executed and delivered to Lender by Pegasus Coordination, in each case in
substantially the form of Exhibit O hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Taxes" is defined in Section 2.11.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which such Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii)
the imposition of an obligation on any Borrower or any ERISA Affiliate under
Section 4041 of ERISA to provide affected parties written notice of intent to
terminate a Benefit Plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the institution by the PBGC or any similar foreign Governmental
Authority of proceedings to terminate a Benefit Plan or a Foreign Pension Plan;
(v) any event or condition which would reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (vi) a foreign Governmental Authority shall
appoint or institute proceedings to appoint a trustee to administer any Foreign
Pension Plan; or (vii) the partial or complete withdrawal of any Borrower or any
ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrowers in connection with the execution, delivery and performance of the Loan
Documents and the Acquisition Documents.
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"Transaction Documents" means the Loan Documents, the Acquisition
Documents, the Senior Revolving Loan Documents and all other agreements or
instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto or in connection herewith or therewith or any of the
transactions contemplated hereby or thereby.
"Triggering Event" shall have the meaning given such term in the
Intercreditor Agreement.
"Uniform Commercial Code" means the Uniform Commercial Code as enacted in
the State of New York, as it may be amended from time to time.
"Voting Stock" means, with respect to any Person, securities with respect
to any class or classes of Capital Stock of such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the board of directors of such Person.
"Weighted Average Life to Maturity" shall mean the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) the sum of
the products obtained by multiplying each remaining scheduled payment of
principal under the Loan by the number of years (calculated to the nearest
one-twelfth year) which will elapse between the date of a prepayment of the Loan
and the scheduled due date of such remaining scheduled principal payments, by
(ii) the outstanding principal balance of the Loan on such prepayment date. With
respect to any partial prepayment of the Loan, the foregoing formula shall be
calculated by reference to the remaining scheduled principal payments being
prepaid and dividing by that portion of the principal balance of the Loan which
is being prepaid.
"Wholly Owned Subsidiary" means any direct, wholly owned Subsidiary of the
Company with respect to which Lender has (i) a second priority Lien (subject
only to a Lien in favor of the Senior Revolving Lenders) on the Capital Stock of
such Subsidiary and (ii) a second priority Lien (subject only to a Lien in favor
of the Senior Revolving Lenders and to Customary Permitted Liens) on the
Receivables, Inventory and General Intangibles of such Subsidiary, in each case
as security for the Obligations.
1.02. Computation of Time Periods. In this Agreement, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding". Periods of days referred to in this Agreement shall be counted in
calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no
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numerically corresponding day in the calendar month during which such period is
to end), such period shall, unless otherwise expressly required by the other
provisions of this Agreement, end on the last day of the calendar month.
1.03. Accounting Terms. Subject to Section 13.04, for purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.
1.04. Other Definitional Provisions. References to the "preamble",
"Articles", "Sections", "subsections", "Schedules" and "Exhibits" shall be to
the preamble, Articles, Sections, subsections, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided. The
words "hereof", "herein", and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
1.05. Other Terms. All other terms contained herein shall, unless the
context indicates otherwise, have the meanings assigned to such terms by the
Uniform Commercial Code to the extent the same are defined therein.
1.06. Payments by the Borrowers. All payments made by the Borrowers in
respect of principal and interest on the Loan, or any other payment in respect
of the Obligations, shall be made in Dollars.
ARTICLE II
LOAN AND TERMS OF PAYMENT
2.01. Loan.
(a) Loan. The Loan shall be two term loans, evidenced by the Notes, to
be made by Lender to Borrowers in the aggregate original principal amount
of $8,000,000.
(b) Reborrowing. Borrowers shall not be entitled to reborrow any
portion of the principal balance of the Loan that is repaid or prepaid.
(c) Disbursement of Loan on Closing Date. On the Closing Date,
provided no Default or Event of Default shall exist and that all of the
terms and conditions set forth in Article V shall have been satisfied,
Lender shall make the Loan to Borrowers, the proceeds of which shall be
disbursed in accordance with the instructions set forth on Exhibit 2.01(c)
(the "Request for Advance and Disbursement Instructions").
(d) Notification re Closing. Borrowers shall provide Lender with at
least forty-eight (48) hours prior written notice of the Closing (or such
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shorter period of time as may be acceptable to Lender), to enable Lender to
arrange for the availability of funds. In the event the Closing does not
take place on the date specified in Borrower's notice to Lender, Borrower
agrees to reimburse Lender for Lender's costs to maintain the necessary
funds available for the Closing, at the rate of interest applicable to each
of the Notes, for the number of days which elapse between the date
specified in Borrower's notice and the date upon which the Closing actually
occurs (which number of days shall not include the date specified in
Borrower's notice, but shall include the Closing Date).
2.02. Interest.
(a) Interest Rate. Except as provided in Section 2.05, the Obligations
shall bear interest at the Note A Interest Rate, with respect to the
outstanding principal balance from time to time of Note A, and at the Note
B Interest Rate, with respect to the outstanding principal balance from
time to time of Note B.
(b) Interest Computation. Interest shall be computed on the basis of a
year consisting of 360 days and charged for the actual number of days
during the period for which interest is being charged.
(c) Interest Payments. Interest accrued on the Loan shall be payable
in arrears (A) on the first Business Day of each calendar month, commencing
March 1, 1996, for the preceding calendar month, commencing on the first
such day following the making of the Loan and (B) if not theretofore paid
in full, at maturity (whether on the Maturity Date, by acceleration, or
otherwise) of the Loan.
(d) Maximum Interest. Notwithstanding any provision to the contrary
herein contained, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrowers to Lender in excess of
the maximum contract rate of interest permitted by applicable law. Lender
and Borrowers have agreed that the internal laws of the State of New York
shall govern the relationship between them, but in the event of a final
adjudication to the contrary, Borrowers shall be obligated to pay, nunc pro
tunc, to Lender only such interest as then shall be permitted by the laws
of the state found to govern the contract relationship between Lender and
Borrowers. In the event the choice of Borrowers and Lender to have the Loan
be governed by the laws of the State of New York is not given effect in a
final adjudication on the matter, Borrowers and Lender hereby designate, as
their first alternate choice for the law which shall govern the Loan and
the transactions contemplated by this Agreement, the laws of the State of
Arizona. All interest found in excess of that rate of interest allowed and
collected by Lender shall be applied to the principal balance in such
manner as to prevent the payment and collection of interest in excess of
the rate permitted by
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applicable law.
2.03. Payment of Principal. Principal on each of Note A and Note B shall be
payable on the first Business Day of the month, commencing April 1, 1996, and on
the first Business Day of each month thereafter. The monthly principal
installment with respect to each Note for the first forty-seven (47) monthly
payments shall be equal to the principal installment under a seventy-two (72)
month equal monthly payment (principal and interest) amortization schedule,
based upon the original principal balance of each Note and the interest rate
applicable thereto. The interest element of each monthly installment shall be
determined in accordance with Section 2.02 or Section 2.05, as applicable. Any
and all remaining principal, and any other sums due and owing pursuant to the
Loan Documents, plus accrued and unpaid interest thereon, shall be due and
payable on March 1, 2000, the forty- eighth (48th) monthly installment date (the
"Maturity Date" ).
2.04. Late Charges. If a payment of principal or interest to be made
pursuant to this Loan Agreement becomes past due for a period in excess of five
(5) Business Days, Borrowers shall pay on demand to Lender a late charge of one
percent (1%) of the amount of such overdue payment. The foregoing
notwithstanding, no late charge shall be payable by Borrower hereunder if
interest shall be accruing pursuant to Section 2.05.
2.05. Default Interest. Notwithstanding the rates of interest specified in
Section 2.02 or elsewhere herein, and to the extent permitted by applicable law,
effective immediately upon the occurrence of any Event of Default and for as
long thereafter as such Event of Default shall be continuing, the principal
balance of the Loan and all other Obligations then outstanding shall bear
interest at a rate which is two percent (2.0%) per annum in excess of the rate
of interest otherwise applicable to the Loan and Obligations from time to time.
2.06. Prepayments.
(a) Prepayment of the Loan. Borrowers may voluntarily prepay the
principal balance of the Loan, including all amounts due under both Notes,
in whole (as to both Notes), but not in part, at any time, subject to the
following conditions:
(i) not less than thirty (30) days prior to the date upon which
Borrowers desire to make such prepayment, Borrowers shall deliver to
Lender written notice of their intention to prepay, which notice shall
state the prepayment date and shall become irrevocable five (5) days
prior to the stated prepayment date; and
(ii) Borrowers shall pay to Lender, concurrently with
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such prepayment, (I) a prepayment premium (the "Prepayment Premium")
equal to (A) one percent (1%) of the amount prepaid if such prepayment
is made during the Loan Year beginning on the Closing Date, (B) one
percent (1%) of the amount prepaid if such prepayment is made during
the Loan Year beginning on the first anniversary of the Closing Date,
and (C) zero percent (0%) of the amount prepaid if such prepayment is
made after the second anniversary of the Closing Date; (II) accrued
and unpaid interest through the date of such prepayment on the
principal balance being prepaid; and (III) any and all of the other
Obligations then due which remain unpaid.
(b) Make Whole Premium. In the event that Borrower elects that the
Note A Interest Rate shall be a fixed rate, then any prepayment applicable
to Note A, shall be accompanied by a payment equal to the Make Whole
Premium calculated in respect of such prepayment. Any prepayment applicable
to Note B shall be accompanied by a payment equal to the Make Whole Premium
calculated in respect of such prepayment.
(c) Involuntary Prepayment. Any payment of the principal balance of
the Loan received by Lender resulting from the exercise by Lender of any
remedy available to Lender subsequent to the occurrence of an Event of
Default and the acceleration of the Obligations shall be deemed to be a
prepayment subject to the provision of this Section 2.06, and the
applicable Prepayment Premium (calculated in accordance with subsection
2.06(a)(ii)) and any other payment required under subsection 2.06(a)(ii)
shall be payable on demand with respect to such payment.
2.07. Application of Prepayments. Prepayments received by Lender shall be
applied in the following order of priority: (i) first, to the payment of accrued
and unpaid interest on the portion of the principal balance of the Loan that is
being repaid, pro rata as between Note A and Note B to the extent of available
funds, (ii) next, to the payment of any other Obligations then due other than
the principal balance and accrued and unpaid interest on the principal balance
of the Loan, (iii) next, to the principal amount due with respect to Note B on
the Maturity Date, until such amount has been paid in full, (iv) next, to the
principal amount due with respect to Note A on the Maturity Date, until such
amount has been paid in full, (v) next, to the payment of regularly scheduled
installments of the principal balance of Note B, in the inverse order of the
maturity of such installments, until Note B shall have been paid in full, and
(vi) last, to the payment of regularly scheduled installments of the principal
balance of Note A, in the inverse order of the maturity of such installments,
until Note A has been paid in full.
2.08. Payments on Non-Business Days. Whenever any payment to be made by a
Borrower hereunder or under the Notes is stated to be due on a day which is not
a Business Day, the payment shall instead be due on the next succeeding Business
Day,
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and any such extension of time shall be included in the computation of the
payment of interest and fees hereunder.
2.09. Method of Payment; Good Funds. All payments to be made by Borrowers
pursuant to the Loan Documents shall be made by wire transfer to the account of
Lender at the Payment Account, or to such other account as Lender shall notify
Borrowers. Payment shall not be deemed to have been received by Lender until
Lender is in receipt of Good Funds.
2.10. Authorized Officers and Lenders. On the Closing Date and from time to
time thereafter, the Borrowers shall deliver to Lender an Officers' Certificate
setting forth the names of the officers, employees and agents authorized to act
for the Borrowers in respect of all matters relating to the Loan Documents.
Lender shall be entitled to rely conclusively on such officer's or employee's
authority until Lender receives written notice to the contrary. In addition,
Lender shall be entitled to rely conclusively on any written notice sent to it
by telecopy. Lender shall have no duty to verify the authenticity of the
signature appearing on, or any telecopy or facsimile of, any document, and,
Lender shall have no duty to verify the identity of any person representing
himself or herself as one of the officers, employees or agents authorized to
make such request or otherwise to act on behalf of the Borrowers. Lender shall
incur any liability to the Borrowers or any other Person in acting upon any
telecopy or facsimile or telephonic notice referred to above which Lender
reasonably believes to have been given by a duly authorized officer or other
person authorized to act on behalf of the Borrowers.
2.11. Taxes.
(a) Payment of Taxes. Any and all payments by the Borrowers hereunder
or under any Note or other document evidencing any Obligations shall be
made free and clear of and without reduction for any and all taxes, levies,
imposts, deductions, charges, withholdings, and all stamp or documentary
taxes, excise taxes, ad valorem taxes and other taxes imposed on the value
of the Property, charges or levies which arise from the execution, delivery
or registration, or from payment or performance under, or otherwise with
respect to, any of the Loan Documents or the Obligations and all other
liabilities with respect thereto, excluding taxes imposed on its income,
capital, profits or gains and franchise taxes imposed on it by (i) the
United States, (ii) the Governmental Authority of any jurisdiction (or any
political subdivision thereof) in which Lender's principal place of
business is located, (iii) the Governmental Authority in which Lender is
organized, managed and controlled or any political subdivision thereof or
(iv) any political subdivision of the United States, unless such taxes are
imposed solely as a result of such Lender's performance of any of the Loan
Documents in such political subdivision and such Lender would not otherwise
be subject to tax by such political subdivision (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If a Borrower
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shall be required by law to withhold or deduct any Taxes from or in respect
of any sum payable hereunder or under any such Note or document to Lender,
(x) the sum payable to Lender shall be increased as may be necessary so
that after making all required withholding or deductions (including
withholding or deductions applicable to additional sums payable under this
Section 2.11) Lender receives an amount equal to the sum it would have
received had no such withholding or deductions been made, (y) such Borrower
shall make such withholding or deductions, and (z) such Borrower shall pay
the full amount withheld or deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) Indemnification. The Borrowers, jointly and severally agree to
indemnify Lender against, and reimburse Lender on demand for, the full
amount of all Taxes (including, without limitation, any Taxes imposed by
any Governmental Authority on amounts payable under this Section 2.11 and
any additional income or franchise taxes resulting therefrom) incurred or
paid by Lender or its Affiliates and any liability (including penalties,
interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable (other than any liability that results from the gross negligence or
willful misconduct of Lender, whether or not such Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority). A certificate as to any additional amount payable to any Person
under this Section 2.11 submitted by it to the Borrower shall, absent
manifest error, be final, conclusive and binding upon all parties hereto.
Lender agrees (i) within a reasonable time after receiving a written
request from the Company, to provide the Company with such certificates as
are reasonably required, and (ii) take such other actions as are reasonably
necessary to claim such exemptions as Lender or any Affiliate of Lender may
be entitled to claim in respect of all or a portion of any Taxes which are
otherwise required to be paid or deducted or withheld pursuant to this
Section 2.11 in respect of any payments under this Agreement or under the
Notes. If Lender receives a refund in respect of any Taxes for which Lender
has received payment from a Borrower hereunder, it shall promptly apply
such refund (including any interest received by Lender from the taxing
authority with respect to the refund with respect to such Taxes) to the
Obligations of such Borrower, net of all out-of-pocket expenses of Lender;
provided that such Borrower, upon the request of Lender, agrees to
reimburse such refund (plus penalties, interest or other charges) to Lender
in the event Lender is required to repay such refund.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes pursuant to this Section 2.11 by any Borrower or any of the
Borrowers' Subsidiaries, the Company will furnish to Lender at its request,
at its address referred to in Section 13.08, a copy of a receipt, if any,
or other documentation reasonably satisfactory to Lender, evidencing
payment thereof. The
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Borrowers shall furnish to Lender, within thirty (30) days after the
request of Lender from time to time, an Officer's Certificate stating that
all Taxes of which they are aware are due have been paid and that no
additional Taxes of which it is aware are due.
ARTICLE III
NOTE, SECURITY AND GUARANTIES
3.01 Notes. The Loan shall be evidenced by Note A and Note B executed by
Borrowers (the "Notes").
3.02 Security. The Obligations shall be secured by the Senior Collateral
and the Junior Collateral.
3.03 Guaranties. In consideration for Lender providing financing to
Borrowers, Holdings, the Company and the Subsidiary Guarantors shall jointly and
severally guarantee all obligations of Borrowers to Lender under the Loan
Documents, pursuant to the Holdings Guaranty, the Company Guaranty, and the
Subsidiary Guaranty.
3.04 Perfection of Lien on Junior Collateral. Upon the occurrence of a
Triggering Event, Lender shall be permitted to perfect its Lien on and security
interest in the Junior Collateral. Prior to the occurrence of a Triggering
Event, Lender shall hold, but shall not be permitted to file or record, those
documents and instruments, including without limitation, UCC-1 Financing
Statements, necessary for Lender to perfect its Lien on the Junior Collateral.
Lender agrees that it shall only file the foregoing documents or instruments in
accordance with the provisions of the Intercreditor Agreement.
ARTICLE IV
FEES
4.01. Closing Fee. On the Closing Date, Borrowers shall pay to Lender a
"Closing Fee" in the aggregate amount of $80,000, representing one percent (1%)
of the original principal balance of the Loan.
4.02. Loan Maintenance Fees. Borrowers shall pay to Lender the following
"Loan Maintenance Fees" throughout the life of the Loan, payable on the first
Business Day of each month: $8,333 per month commencing April 1, 1996, and
ending March 1, 1997; $6,667 per month commencing April 1, 1997, and ending
March 1, 1998; $5,000 per month commencing April 1, 1998 and ending March 1,
1999; and $3,333 commencing April 1, 1999, and ending March 1, 2000. In the
event Borrowers prepay the Loan in its entirety, Borrower shall not be liable
for the payment of any Loan Maintenance Fees beyond the date of actual
prepayment of the Loan, provided that Borrower shall have paid the Prepayment
Premium set forth in Section 2.06(a) and the Make Whole Premium set forth in
Section 2.06(b).
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4.03. Calculation and Payment of Fees. All fees shall be payable in
addition to, and not in lieu of, interest, expense reimbursements,
indemnification and other Obligations. Fees shall be payable to the applicable
Payment Account. All fees payable hereunder shall be fully earned and
nonrefundable when paid. All fees specified or referred to herein due to Lender
including, without limitation, those referred to in this Article IV, shall bear
interest, if not paid when due, at the interest rate for Loan in accordance with
Section 2.05, shall constitute Obligations and shall be secured by the
Collateral.
ARTICLE V
CONDITIONS PRECEDENT TO LOAN
5.01. Conditions Precedent to the Loan. The obligation of Lender on the
Closing Date to make the Loan is subject to the satisfaction of all of the
following conditions precedent:
(a) Documents. Lender shall have received on or before the Closing
Date all of the following:
(i) this Agreement, the Notes and all other agreements, documents
and instruments (other than items designated as "post-closing" items)
described in the List of Closing Documents attached hereto and made a
part hereof as Exhibit P, each duly executed where appropriate and in
form and substance satisfactory to Lender and in sufficient copies for
Lender; without limiting the foregoing, the Borrowers hereby direct
their counsel, (A) XxXxxxxxx, Will & Xxxxx and (B) each of its other
counsel listed in such List of Closing Documents to prepare and
deliver to Lender and Xxxxxxx & Xxxxxxx, the opinions referred to in
such List of Closing Documents with respect to such counsel;
(ii) the Company's historical financial statements as of
September 30, 1995, and as of each succeeding month-end date for which
such financial statements are available prior to the Closing Date,
accompanied by appropriate pro forma financial statements as of
December 31, 1995, as well as a pro forma estimated balance sheet of
Holdings and its Subsidiaries as of the Closing Date, giving effect to
the transactions contemplated in the Transaction Documents, and the
Initial Projections; and
(iii) such additional documentation as Lender may reasonably
request.
(b) Collateral Information; Perfection of Liens. Lender shall have
received complete and accurate information from the Company with respect
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to the name and the location of the principal place of business and chief
executive office for the Company and each of its Subsidiaries; all Uniform
Commercial Code and other filing and recording fees and taxes shall have
been paid or duly provided for; and Lender shall have received evidence to
the satisfaction of Lender that all Liens granted to Lender with respect to
all Collateral are valid and effective and, upon the filing of the duly
executed Uniform Commercial Code financing statements which shall have been
delivered to Lender (in the case of such financing statements for Texas,
and, to the extent not prohibited by any Contractual Obligation of Mobil
Corporation or any of its Subsidiaries, prior to the Closing Date in time
to have such statements filed with the relevant filing office at least two
(2) Business Days prior to the Closing Date), will be perfected and of
first priority, except as otherwise permitted under this Agreement. All
certificates representing Capital Stock included in the Collateral shall
have been delivered to the Revolving Credit Agent (with duly executed stock
powers, as appropriate) and all instruments included in the Collateral
shall have been delivered to the Revolving Credit Agent (duly endorsed to
the Revolving Credit Agent), in the manner required by the Senior Revolving
Credit Agreement.
(c) Acquisition Agreement and Related Matters. Lender shall be
satisfied that: (i) the Acquisition Agreement and all other Acquisition
Documents which are to be entered into as of or prior to the Closing Date
shall have been duly approved and executed and delivered by the parties
thereto, (ii) the Registration Statement shall have been declared effective
by the Securities and Exchange Commission, (iii) shares of Common Stock
and/or Nonvoting Common Stock shall have been purchased in accordance with
the Registration Statement and/or the Nonvoting Common Stock Purchase
Agreement for an aggregate purchase price of not less than $15,000,000,
(iv) Holdings shall have issued the Preferred Stock to Xxxxxxxxxx Holding
Corporation (or a Mobil Affiliate (as defined in the Acquisition
Agreement)) for an aggregate purchase price of not less than $10,000,000,
(v) the Senior Revolving Obligations shall have been funded, (vi) all
conditions precedent to closing under the Acquisition Agreement and the
other Acquisition Documents which are to be entered into as of or prior to
the Closing Date have been met (or waived) and such documents are, or
simultaneously with the execution hereof, shall be, in full force and
effect, and (vii) good and marketable title to the Capital Stock of the
Company purported to be transferred by the terms of the Acquisition
Agreement and the Acquisition Documents, free and clear of all Liens, has
been transferred to Holdings on terms satisfactory to Lender.
(d) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall exist, and Lender shall not have
received any notice that any action, suit, investigation, litigation or
proceeding is 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
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making of the Loan on the Closing Date or (B) the consummation of the
transactions contemplated pursuant to the Transaction Documents or (ii)
would be reasonably expected to impose or result in the imposition of a
Material Adverse Effect.
(e) No Change in Condition. No change deemed material by the Lender,
in its opinion, in the condition (financial or otherwise), business,
performance, assets, operations or prospects of Holdings, the Company, or
any of the Company's Subsidiaries shall have occurred that would (i) cause
the Initial Projections to be unreasonable in light of then current
circumstances, (ii) have a material adverse effect on the ability of
Holdings and the Borrowers to perform their material obligations under the
Loan Documents or (iii) have a material adverse effect on the ability of
Lender to enforce the Loan Documents.
(f) No Default. No Event of Default or Default shall have occurred and
be continuing or would result from the making of the Loan.
(g) Representations and Warranties. All of the representations and
warranties contained in Section 6.01 and in any of the other Loan Documents
shall be true and correct on and as of the Closing Date, both before and
immediately after giving effect to the making of the Loan.
(h) Fees and Expenses Paid. There shall have been paid to Lender all
fees (including, without limitation, the reasonable legal fees of counsel
to Lender and local counsel to Lender) due and payable on or before the
Closing Date, and all expenses (including, without limitation, legal
expenses) due and payable on or before the Closing Date.
(i) Closing Date. The Closing Date shall have occurred on or prior to
February 12, 1996.
(j) Consents, Etc. Except as set forth on Schedule 6.01-E, each of
Holdings, the Company and the Company's Subsidiaries shall have received
all material consents and authorizations required pursuant to any material
Contractual Obligation with any other Person and shall have obtained all
material Permits of, and effected all notices to and filings with, any
Governmental Authority as may be necessary to allow each of Holdings, the
Company, and the Company's other Subsidiaries lawfully (A) to execute,
deliver and perform, in all material respects, their respective obligations
hereunder, under the other Transaction Documents to which each of them is,
or shall be, a party and each other agreement or instrument to be executed
and delivered by each of them pursuant thereto or in connection therewith
and (B) to create and perfect the Liens on the Collateral to be owned by
each of them in the manner and for the purpose contemplated by the Loan
Documents. No such consent or authorization shall impose any conditions
upon
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Holdings, the Company, or any of the Company's Subsidiaries that are not
acceptable to the Lender.
(k) Transaction Costs. The Borrowers and Holdings shall have paid and
be obligated to pay not more than $6,600,000 in Transaction Costs.
(l) Environmental Review. Lender shall have been provided with a
written report or written reports of a Phase II investigation or
investigations conducted by ATEC Associates, Inc., identifying potential
environmental Liabilities and Costs to which Holdings, the Company and the
Company's Subsidiaries may be subject, in form and substance satisfactory
to Lender.
(m) Availability. As of the Closing Date, Borrowers shall have minimum
borrowing availability under the Senior Revolving Credit Agreement, after
giving effect to the funding of all amounts under the Senior Revolving
Obligations to be advanced on the Closing Date, of not less than
$17,000,000.
(n) Pension Obligations. Lender shall have reviewed and found
satisfactory any matters with respect to unfunded or underfunded balances
in Borrower's Plans, including without limitation matters relative to the
priority of any potential Lien in favor of such Plan which may be imposed
by law, and, to the extent that Lender shall have concluded that any such
potential Lien may take precedence or priority over the Lien in favor of
Lender with respect to the Collateral, Lender shall be permitted to require
that an Availability Reserve be established prior to the Closing Date, in
the amount satisfactory to Lender with respect to such unfunded and
underfunded pension liabilities.
(o) Senior Revolving Loan Documents. Lender shall have reviewed and
found satisfactory all terms and conditions of the Senior Revolving Loan
Documents.
(p) Preferred Stock. Lender shall have reviewed and found satisfactory
all terms and conditions of the Preferred Stock.
(q) Searches. Lender shall have reviewed and found satisfactory UCC,
tax lien, litigation, and judgment searches for each Borrower.
(r) Corporate Structure. Lender shall have reviewed and found
satisfactory a corporate equity structure of Holdings, the Company, and its
Subsidiaries.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
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6.01. Representations and Warranties of the Borrowers. In order to induce
Lender to enter into this Agreement and to make the Loan and the other financial
accommodations to the Borrowers described herein, each of Holdings and the
Borrowers, hereby represents and warrants to Lender as of the Closing Date that
the following statements are true, correct and complete:
(a) Organization; Corporate Powers. Each of Holdings, the Company and
the Company's Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which failure to be so qualified and in good standing has or is reasonably
likely to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority to own, operate and encumber its Property and
to conduct its business in all material respects as presently conducted.
(b) Authority.
(i) Each of Holdings, the Company and the Company's Subsidiaries
has the requisite corporate power and authority to execute, deliver
and perform each of the Loan Documents to which it is a party.
(ii) The execution, delivery and performance, as the case may be,
of each of the Loan Documents which have been executed and to which
any of Holdings, the Company or any of the Company's Subsidiaries is a
party and the consummation of the transactions contemplated thereby,
have been duly approved by each of the boards of directors and (to the
extent required by law) the shareholders of Holdings, the Company and
such Subsidiary, respectively, and such approvals have not been
rescinded, revoked or modified in any material respect. No other
corporate action or proceedings on the part of Holdings, the Company
or any of the Company's Subsidiaries is necessary to consummate such
transactions.
(iii) Each of the Loan Documents to which Holdings, the Company
or any of the Company's Subsidiaries is a party has been duly
executed, or delivered on behalf of Holdings, the Company or such
Subsidiary, as the case may be, and constitutes its legal, valid and
binding obligation, enforceable against such Person in accordance with
its terms (except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and
other laws affecting the enforcement of creditors' rights generally
and to the effect of general equitable principles (whether considered
in a proceeding in equity or at law)) and is in full force and effect.
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(c) Subsidiaries; Ownership of Capital Stock. Schedule 6.01-C (i)
contains a diagram indicating the corporate structure of Holdings, the
Company, the Company's Subsidiaries and any other Affiliate thereof in
which Holdings, the Company or any of the Company's Subsidiaries holds an
equity interest as of the Closing Date after giving effect to the
transactions contemplated in the Transaction Documents; and (ii) accurately
sets forth as of the Closing Date after giving effect to the transactions
contemplated in the Transaction Documents (A) the correct legal name, the
jurisdiction of incorporation, and Employer Identification Number of each
of Holdings, the Company and the Company's Subsidiaries, and the
jurisdictions in which each of Holdings, the Company and the Company's
Subsidiaries is qualified to transact business as a foreign corporation,
(B) the authorized, issued and outstanding shares of each class of Capital
Stock of Holdings, the Company and each of the Company's Subsidiaries and
the owners of such shares, and (C) a summary of the direct and indirect
partnership, joint venture, or other equity interests, if any, of Holdings,
the Company and each Subsidiary of the Company in any Person that is not a
corporation. None of the issued and outstanding Capital Stock of Holdings,
the Company or any of the Company's Subsidiaries is subject to any vesting,
redemption, or repurchase agreement, and there are no warrants or options
outstanding with respect to such Capital Stock except as provided in the
ESOP, the Shareholders' Agreement and the Nonvoting Common Stock Purchase
Agreement. The outstanding Capital Stock of Holdings, the Company and each
of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and is not Margin Stock.
(d) No Conflict. The execution, delivery and performance of each of
the Loan Documents to which Holdings, the Company or any of the Company's
Subsidiaries is a party do not and shall not (i) conflict with the
Constituent Documents of Holdings, the Company or any such Subsidiary, (ii)
to the best Knowledge of Holdings and its Subsidiaries, constitute a
tortious interference with any Contractual Obligation of any Person, (iii)
except as set forth on Schedule 6.01-D conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a default
under any material Requirement of Law or any Transaction Document or other
material Contractual Obligation of Holdings, the Company or any such
Subsidiary, or require the termination of any Transaction Document or other
material Contractual Obligation, (iv) result in or require the creation or
imposition of any Lien whatsoever upon any of the Property or assets of
Holdings, the Company or any such Subsidiary, other than Liens contemplated
by the Loan Documents and the Senior Revolving Loan Documents, or (v)
require any approval of Holdings', the Company's or any such Subsidiary's
shareholders that has not been obtained.
(e) Governmental Consents, etc. Except as set forth on Schedule
6.01-E, the execution, delivery and performance of each of the Loan
Documents (or, solely as of the Closing Date, the other Transaction
Documents
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executed and delivered on such date) to which Holdings, the Company or any
of the Company's Subsidiaries is a party do not and shall not require any
registration with, consent or approval of, or notice to, or other action
to, with or by any Governmental Authority, except (i) filings, consents or
notices which have been made, obtained or given, or, in a timely manner,
shall be made, obtained, or given, (ii) filings necessary to create or
perfect security interests in the Collateral, (iii) routine filings made in
the ordinary course of business and (iv) non-essential filings contemplated
by the Transaction Documents but not necessary to consummate the
transactions contemplated thereby. None of Holdings, the Company or any of
the Company's Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, or the Investment Company Act of 1940, or any other federal
or state statute or regulation which limits its ability to incur
indebtedness or its ability to consummate the transactions contemplated in
the Loan Documents.
(f) Accommodation Obligations; Contingencies. Except as set forth on
Schedule 1.01.2, none of Holdings, the Company or any of the Company's
Subsidiaries has any Accommodation Obligation, contingent liability or
liability for any Taxes, long-term lease or commitment, not reflected in
its financial statements delivered to Lender on or prior to the Closing
Date or otherwise disclosed to Lender in the other Schedules hereto, which
shall have or is reasonably likely to have a Material Adverse Effect.
(g) Restricted Junior Payments. None of Holdings, the Company or any
of the Company's Subsidiaries has directly or indirectly declared, ordered,
paid or made or set apart any sum or Property for any Restricted Junior
Payment or agreed to do so, except as permitted pursuant to Section 9.06
hereof.
(h) Financial Position. The Initial Projections, the pro forma
financial statements referred to in Section 5.01(a)(ii) and each of the
Company's business plans and all other financial projections and related
materials and documents delivered to Lender pursuant hereto were prepared
in good faith and are based upon facts and assumptions that are reasonable
in light of the then current and foreseeable business conditions and
prospects of the Company and represent management's opinion of the
Company's projected financial performance based on the information
available to Holdings and the Company at the time so furnished.
(i) Litigation; Adverse Effects. Except as set forth in Schedule
6.01-I, there is no action, suit, audit, proceeding, allegation of
defective pricing, investigation or arbitration (or series of related
actions, suits, proceedings, allegations, investigations or arbitrations)
before or by any Governmental Authority or private arbitrator pending or,
to the Knowledge of Holdings, the Company or any of the Company's
Subsidiaries, threatened against Holdings, the Company or any of the
Company's Subsidiaries or any Property of any of them (i) challenging
-40-
the validity or the enforceability of any of the Transaction Documents or
(ii) which shall have or is reasonably likely to have a Material Adverse
Effect. None of Holdings, the Company or any of the Company's Subsidiaries
is (A) in violation of any applicable Requirements of Law which violation
shall have or is reasonably likely to result in a Material Adverse Effect,
or (B) subject to or in default with respect to any judgment, writ,
injunction, restraining order or order of any nature, decree, rule or
regulation of any court or Governmental Authority, in each case which shall
have or is reasonably likely to have a Material Adverse Effect.
(j) No Material Adverse Change. Except as contemplated in the
Registration Statement, since December 31, 1994 there has occurred no event
which shall have or is reasonably likely to have a Material Adverse Effect.
(k) Payment of Taxes. All tax returns and reports of each of Holdings,
the Company and the Company's Subsidiaries required to be filed have been
timely filed, and all taxes, assessments, fees and other governmental
charges thereupon and upon their respective Property, assets, income and
franchises which are shown in such returns or reports to be due and payable
have been paid other than such taxes, assessments, fees and other
governmental charges (i) which are being contested in good faith by
Holdings, the Company or such Subsidiary, as the case may be, by
appropriate proceedings diligently instituted and conducted and (ii) with
respect to which a reserve or other appropriate provision, if any, as is
required in conformity with GAAP shall have been made. Neither the Company
nor Holdings has any Knowledge of any proposed tax assessment against
Holdings, the Company or any of the Company's Subsidiaries that shall have
or is reasonably likely to have a Material Adverse Effect.
(l) Performance. None of Holdings, the Company or any of the Company's
Subsidiaries has received notice or has actual Knowledge that (i) it is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual
Obligation applicable to it, or (ii) any condition exists which, with the
giving of notice or the lapse of time or both, would constitute a default
with respect to any such Contractual Obligation, in each case, except where
such default or defaults, if any, shall not have or are not reasonably
likely to have a Material Adverse Effect.
(m) Disclosure. The representations and warranties of each of
Holdings, the Company and the Company's Subsidiaries contained in the Loan
Documents and, solely as of the Closing Date, the other Transaction
Documents and the Registration Statement, and all certificates and
documents delivered to Lender pursuant to the terms hereof and the other
Loan Documents, do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which and
the time at which they were made, not misleading,
-41-
provided that (a) the statements contained in the Registration Statement
describing documents and agreements are summary only and as such are
qualified in their entirety by reference to such documents and agreements,
(b) to the extent any such information in the Registration Statement was
based upon or constitutes a forecast or projection, each of Holdings, the
Company and the Company's Subsidiaries represents only that it acted in
good faith and utilized reasonable assumptions, due and careful
consideration and the best information Known to it at the time in the
preparation of such information and (c) as to the information and
representations and warranties in the Registration Statement and other
certificates and documents attached as exhibits thereto that is specified
as having been supplied by third parties, each of Holdings, the Company and
the Company's Subsidiaries represents only that it is not aware of any
material misstatement therein or omission therefrom. Neither Holdings nor
the Company has intentionally withheld any fact from Lender in regard to
any matter which shall have or is reasonably likely to have a Material
Adverse Effect.
(n) Requirements of Law. Each of Holdings, the Company and the
Company's Subsidiaries is in compliance with all Requirements of Law
applicable to it and its business, in each case where the failure to so
comply individually or in the aggregate shall have or is reasonably likely
to have a Material Adverse Effect.
(o) Environmental Matters. Except as set forth in Schedule 6.01-O:
(i) the operations of Holdings, the Company and the Company's
Subsidiaries comply with all applicable Environmental, Health or
Safety Requirements of Law where failure to so comply has or is
reasonably likely to have a Material Adverse Effect;
(ii) Holdings, the Company and each of the Company's Subsidiaries
have obtained or have taken appropriate steps, as required by
Environmental, Health or Safety Requirements of Law, to obtain all
material environmental, health and safety Permits necessary for their
respective operations, and all such Permits are in good standing and
each of Holdings, the Company and each of the Company's Subsidiaries
are currently in compliance with such Permits where failure to so
comply has or is reasonably likely to have a Material Adverse Effect;
(iii) to the Company's Knowledge, none of Holdings, the Company
or the Company's Subsidiaries or any of their respective operations or
present or past Property are subject to any investigation or any
judicial or administrative proceeding, order, judgment, settlement,
decree, or other agreement alleging, respecting or addressing (i) a
violation of any
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Environmental, Health or Safety Requirement of Law where such
violation has or is reasonably likely to have a Material Adverse
Effect; (ii) any Remedial Action where such Remedial Action has or is
reasonably likely to have a Material Adverse Effect; or (iii) any
Claims or Liabilities and Costs arising from the Release or threatened
Release of a Contaminant into the environment where such Claims or
Liabilities and Costs has or is reasonably likely to have a Material
Adverse Effect, nor has Holdings, the Company or any of the Company's
Subsidiaries received any notice of the foregoing;
(iv) to the Company's Knowledge, none of Holdings, the Company or
the Company's Subsidiaries is the owner or operator of any Property
which has any of the following which could result in a liability that
is reasonably likely to have a Material Adverse Effect:
(A) any past or present on-site generation, treatment,
recycling, storage or disposal of any hazardous waste, as that
term is defined under 40 C.F.R. Part 261 or any state or local
equivalent or any similar statute of Canada, the United Kingdom,
another foreign jurisdiction, or political subdivision thereof;
(B) any past or present landfill, waste-pile, underground
storage tank or surface impoundment;
(C) any asbestos-containing material or suspected
asbestos-containing material; or
(D) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other Equipment;
(v) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, no Environmental Lien has attached to any
Property of Holdings, the Company or any of the Company's
Subsidiaries;
(vi) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, there have been no Releases of any
Contaminants into the environment in quantities reportable pursuant to
40 C.F.R. 302 by Holdings, the Company or any of the Company's
Subsidiaries;
(vii) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, neither Holdings, nor the Company, nor any
of the Company's Subsidiaries has any liability in connection with any
Release or threatened Release of any Contaminants into the environment
-43-
that is reasonably likely to have a Material Adverse Effect ;
(viii) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, neither Holdings, nor the Company nor any of
the Company's Subsidiaries has sent or directly arranged for the
transport of any waste to any site listed or proposed for listing on
the National Priorities List ("NPL") pursuant to CERCLA, or on the
Comprehensive Environmental Response Compensation Liability
Information System List ("CERCLIS"), or any similar state list;
(ix) to the Company's Knowledge, except as reported to Lender
pursuant to Section 7.07, none of Holdings', the Company's or the
Company's Subsidiaries' present or past Property is listed or proposed
for listing on the NPL pursuant to CERCLA, or on the CERCLIS or any
similar state list of sites requiring Remedial Action, and the Company
and the Company's Subsidiaries are unaware of any conditions on such
Property which would qualify such Property for inclusion on any such
list;
(x) none of Holdings, the Company or any of the Company's
Subsidiaries is subject to any Environmental Property Transfer Act as
a result of the transactions contemplated by the Loan Documents;
(xi) none of the products Holdings, the Company or any of the
Company's Subsidiaries manufactures, distributes or sells, or has ever
manufactured, distributed or sold, contains asbestos-containing
material or suspected asbestos-containing material; and
(xii) none of Holdings, the Company or any of the Company's
Subsidiaries is subject to any Environmental, Health or Safety
Requirements of Law relating to financial responsibility, including,
without limitation, those contained in 40 C.F.R. Parts 264 and 265,
Subparts H, and state and local law equivalents, and those contained
in 40 C.F.R. Part 280, Subpart H, and state and local law equivalents.
(p) ERISA Matters. None of Holdings, the Company or the ERISA
Affiliates maintains or contributes to any Plan other than those listed on
Schedule 6.01-P hereto. With respect to each Plan which is intended to be
qualified under Section 401(a) of the Internal Revenue Code as currently in
effect, Holdings, the Company or an ERISA Affiliate has received or is in
the process of seeking, a favorable determination letter that the Plan is
so qualified and that each trust related to any such Plan is exempt from
federal income tax under Section 501(a) of the Internal Revenue Code as
currently in effect, except as disclosed on Schedule 6.01-P. None of
Holdings, the Company or the ERISA Affiliates has Knowledge of any reason
why such Plans or trusts are not qualified. Except as
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disclosed in Schedule 6.01-P, none of Holdings, the Company or any of the
Company's Subsidiaries maintains or contributes to any employee welfare
benefit plan within the meaning of Section 3(l) of ERISA which provides
benefits to employees after termination of employment other than as
required by Section 601 of ERISA. Holdings, the Company and all of the
ERISA Affiliates are in compliance in all material respects with the
responsibilities, obligations or duties imposed on them by ERISA, the
Internal Revenue Code and regulations promulgated thereunder with respect
to all Plans. No Benefit Plan has incurred any accumulated funding
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the
Internal Revenue Code) whether or not waived. Except as disclosed in
Schedule 6.01-P, neither Holdings, nor the Company, nor any ERISA
Affiliate, nor any fiduciary of any Plan which is not a Multiemployer Plan
(i) has engaged in a nonexempt prohibited transaction described in Section
406 of ERISA or Section 4975 of the Internal Revenue Code or (ii) has taken
or failed to take any action which would constitute or result in a
Termination Event. None of Holdings, the Company or the ERISA Affiliates
has incurred any potential liability under Section 4063, 4064, 4069, 4204
or 4212(c) of ERISA. None of Holdings, the Company or the ERISA Affiliates
has incurred any liability to the PBGC which remains outstanding. There are
no premium payments which have become due to the PBGC which are unpaid.
Schedule B to the most recent annual report filed with the IRS with respect
to each Benefit Plan and furnished to Lender is complete and accurate.
Since the date of each such Schedule B, there has been no material adverse
change in the funding status or financial condition of the Benefit Plan
relating to such Schedule B. Neither Holdings, nor the Company, nor any
ERISA Affiliate has (i) failed to make a required contribution or payment
to a Multiemployer Plan or (ii) made a complete or partial withdrawal under
Section 4203 or 4205 of ERISA from a Multiemployer Plan. Except as
disclosed in Schedule 6.01-P, neither Holdings, nor the Company nor any
ERISA Affiliate has failed to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment. Neither
Holdings, nor the Company, nor any ERISA Affiliate is required to provide
security to a Benefit Plan under Section 401(a)(29) of the Internal Revenue
Code due to a Plan amendment that results in an increase in current
liability for the plan year. Except as disclosed on Schedule 6.01-P,
neither Holdings, nor the Company, nor any of the ERISA Affiliates has, by
reason of the transactions contemplated hereby, any obligation to make any
payment to any employee pursuant to any Plan or existing contract or
arrangement. The Company has made available to Lender copies of all of the
following: each Benefit Plan and related trust agreement (including all
amendments to such Plan and trust) in existence, or for which Holdings, the
Company or any ERISA Affiliate has taken any corporate action to authorize
the adoption thereof, as of the Closing Date and in respect of which
Holdings, the Company or any ERISA Affiliate is currently an "employer" as
defined in section 3(5) of ERISA, and the most recent summary plan
description, actuarial report, determination letter issued by the IRS and
Form 5500
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filed in respect of each such Benefit Plan in existence; a listing of all
of the Multiemployer Plans currently contributed to by Holdings, the
Company or any ERISA Affiliate with the aggregate amount of the most recent
annual contributions required to be made by Holdings, the Company and all
ERISA Affiliates to each such Multiemployer Plan, any information which has
been provided to Holdings, the Company or an ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan and the collective
bargaining agreement pursuant to which such contribution is required to be
made; and each employee welfare benefit plan within the meaning of Section
3(l) of ERISA which provides benefits to employees of Holdings, the Company
or any of the Company's Subsidiaries after termination of employment other
than as required by Section 601 of ERISA, the most recent summary plan
description for such plan and the aggregate amount of the most recent
annual payments made to terminated employees under each such plan.
(q) Foreign Employee Benefit Matters. Each Foreign Employee Benefit
Plan is in compliance in all material respects with all Requirements of Law
applicable thereto and the respective requirements of the governing
documents for such Plan. The aggregate of the liabilities to provide all of
the accrued benefits under any Foreign Pension Plan does not exceed the
current fair market value of the assets held in the trust or other funding
vehicle for such Plan. With respect to any Foreign Employee Benefit Plan
maintained by Holdings, the Company, any of the Company's Subsidiaries or
any ERISA Affiliate (other than a Foreign Pension Plan), reasonable
reserves have been established in accordance with prudent business practice
or where required by ordinary accounting practices in the jurisdiction in
which such Plan is maintained. The aggregate unfunded liabilities, after
giving effect to any reserves for such liabilities, with respect to such
Plans are not material. There are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against Holdings, the
Company, any of the Company's Subsidiaries or any ERISA Affiliate with
respect to any Foreign Employee Benefit Plan.
(r) Labor Matters.
(i) Except as set forth in Schedule 6.01-R, as of the Closing
Date there is no collective bargaining agreement covering any of the
employees of Company or any Subsidiary of Company. To the Company's
Knowledge, except as set forth on Schedule 6.01-R, as of the Closing
Date no attempt to organize the employees of Company or any such
Subsidiary is pending, threatened or planned.
(ii) Set forth in Schedule 6.01-R or Schedule 6.01-P, as the case
may be, is a list, as of the Closing Date, of all material consulting
agreements, executive employment agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or
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retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans, and severance plans of Company and
its Subsidiaries providing for benefits for employees of Company and
its Subsidiaries.
(s) Securities Activities. None of Holdings, the Company or any of the
Company's Subsidiaries is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock.
(t) Solvency. After giving effect to the transactions contemplated in
the Transaction Documents, the disbursement of the proceeds of such Loan
pursuant to the Company's instructions, and the funding of all amounts to
be disbursed on the Closing Date in connection with the Senior Revolving
Obligations, each of Holdings, the Company and each Subsidiary Guarantor is
Solvent.
(u) Patents, Trademarks, Permits, Etc.; Government Approvals.
(i) Holdings, the Company and each of the Company's Subsidiaries
own, are licensed or otherwise have the lawful right to use, or have
all permits and other governmental approvals, patents, trademarks,
trade names, industrial designs, copyrights, technology, know-how and
processes used in or necessary for the conduct of their businesses as
currently conducted except where the failure to do so would not have
or be reasonably likely to have a Material Adverse Effect. Except as
set forth on Schedule 6.01-U, as of the Closing Date no claims are
pending or, to the best of Company's Knowledge following inquiry,
threatened that Holdings, the Company or any of its Subsidiaries is
infringing in any material respect upon the rights of any Person with
respect to such permits and other governmental approvals, patents,
trademarks, trade names, industrial designs, copyrights, technology,
know-how and processes.
(ii) Except for Liens granted to Lender, the Revolving Credit
Agent, or the Senior Revolving Lenders, the transactions contemplated
by the Transaction Documents shall not impair the ownership of or
rights under (or the license or other right to use, as the case may
be) any permits and governmental approvals, patents, trademarks, trade
names, industrial designs, copyrights, technology, know-how or
processes by Holdings, the Company or any of the Company's
Subsidiaries in any manner which shall have or is reasonably likely to
have a Material Adverse Effect.
(v) Assets and Properties. Each of Holdings, the Company and the
Company's Subsidiaries has good and marketable title to all of its material
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assets and Property (tangible and intangible) owned by it or a valid
leasehold interest in all of its material leased assets (except for Liens
permitted under Section 9.03 and minor defects in title which do not
interfere with their ability to conduct their business as presently
conducted insofar as marketability may be limited by any laws or
regulations of any Governmental Authority affecting such assets), and all
such assets and Property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 9.03. As of the
Closing Date Schedule 6.01-V contains a true and complete list of (i) all
of the Real Property owned in fee simple by each of Holdings, the Company
and the Company's Subsidiaries as of the Closing Date, (ii) a true and
complete list of all Leases in effect on the Closing Date the annual rental
payments under which exceed $250,000 and (iii) a true and complete list of
all warehouses in which there is, or is reasonably expected to be, (i) for
a period of 30 days or more during any twelve-month period, Inventory with
a fair market value of $250,000 or more or (ii) at any time, Inventory with
a fair market value of $1,000,000 or more. Substantially all of the assets
and Property owned by or leased to Holdings, the Company and/or each such
Subsidiary are in adequate operating condition and repair, ordinary wear
and tear excepted, and are free and clear of any known defects except such
defects that do not substantially interfere in any material respect with
the continued use thereof in the conduct of normal operations. Except for
Liens granted to Lender, or the Senior Revolving Lenders, neither this
Agreement nor any other Transaction Document, nor any transaction
contemplated herein or therein, shall affect any right, title or interest
of Holdings, the Company or such Subsidiary in and to any of such assets in
a manner that shall have or is reasonably likely to have a Material Adverse
Effect.
(w) Insurance. The Certificate of Insurance delivered to the Lender
pursuant Section 5.01(a) accurately sets forth as of the Closing Date all
insurance policies currently in effect with respect to the respective
assets and business of the Company and its Subsidiaries, specifying for
each such policy and program, (i) the amount thereof, (ii) the risks
insured against thereby, (iii) the name of the insurer and each insured
party thereunder, (iv) the policy or other identification number thereof,
and (v) the expiration date thereof. Such insurance policies and programs
are in amounts sufficient to cover the replacement value of the respective
assets of the Company and its Subsidiaries.
(x) Pledge of Collateral. The grant and perfection of the security
interests in the Capital Stock of the Company and its Subsidiaries
constituting a portion of the Collateral for the benefit of Lender, as
contemplated by the terms of the Loan Documents, is not made in violation
of the registration provisions of the Securities Act, any applicable
provisions of other federal securities laws, state securities or "Blue Sky"
law, foreign securities law, or applicable general corporation law or in
violation of any other Requirement of Law.
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(y) Transactions with Affiliates. Schedule 6.01-Y lists as of the
Closing Date each and every existing material agreement (other than the
Transaction Documents) as of the Closing Date and arrangement that any of
Holdings, the Company or the Company's Subsidiaries has entered into with
any of their respective Affiliates (other than Holdings, the Company's and
the Company's Subsidiaries).
(z) Transaction Documents. Solely with respect to the Transaction
Documents (other than the Loan Documents), as of the Closing Date the
following are true and correct and complete:
(i) All conditions precedent to, and all material consents and
Permits necessary to permit, the consummation of the transactions
contemplated by such Transaction Documents which will be entered into
as of the or prior to the Closing Date have been satisfied or
delivered, or waived (to the extent required under Section 9.16) with
the prior written consent of Lender, and no action has been taken, or
to the best of Holdings and the Company's Knowledge, shall be taken by
any Governmental Authority which restrains, prevents or imposes
material adverse conditions upon, or seeks to restrain, prevent or
impose material adverse conditions upon, the consummation of the
transactions contemplated in such Transaction Documents.
(ii) Each of Holdings, the Company and the Company's Subsidiaries
has the requisite corporate power and authority to execute, deliver
and perform each of such Transaction Documents to which it is a party.
(iii) The execution, delivery and performance, as the case may
be, of each of such Transaction Documents which have been executed and
to which any of Holdings, the Company or any of the Company's
Subsidiaries is a party and the consummation of the transactions
contemplated thereby, have been duly approved by each of the boards of
directors and (to the extent required by law) the shareholders of
Holdings, the Company and such Subsidiary, respectively, and such
approvals have not been rescinded, revoked or modified in any material
respect. No other corporate action or proceedings on the part of
Holdings, the Company or any of the Company's Subsidiaries is
necessary to consummate such transactions.
(iv) Each of such Transaction Documents to which Holdings, the
Company or any of the Company's Subsidiaries is a party has been duly
executed, or delivered on behalf of Holdings, the Company or such
Subsidiary, as the case may be, and constitutes its legal, valid and
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binding obligation, enforceable against such Person in accordance with
its terms (except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and
other laws affecting the enforcement of creditors' rights generally
and to the effect of general equitable principles (whether considered
in a proceeding in equity or at law)), is in full force and effect
and, except as permitted pursuant to Section 9.16, no term or
condition thereof has been amended, modified or waived from the terms
and conditions contained in such Transaction Documents delivered to
Lender pursuant to Section 5.01(a) without the prior written consent
of Lender. Each of Holdings, the Company and the Company's
Subsidiaries that is a party to such Transaction Documents and, to the
Knowledge of the Company, all other parties thereto, have performed
and complied in all material respects with all material terms,
provisions, agreements and conditions set forth therein and required
to be performed or complied with by such parties on or before the
Closing Date, and as of such date, no material default, event of
default or breach of any covenant by any such party exists thereunder.
ARTICLE VII
REPORTING COVENANTS
Each of Holdings and the Borrowers covenants and agrees that so long as any
amount is outstanding and thereafter until Payment In Full of all of the
Obligations, unless Lender shall otherwise give prior written consent thereto:
7.01. Financial Statements. The Company and Holdings shall maintain, and
shall cause each of the Company's Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the financial statements
described below shall be prepared from such system and records. The Company or
Holdings, as the case may be, shall deliver or cause to be delivered to Lender:
(a) Monthly Reports. Within thirty (30) days after the end of each
fiscal month in each Fiscal Year, the consolidated and consolidating
balance sheets of Holdings and its Subsidiaries as at the end of such
period and the related consolidated and consolidating statements of income
and cash flow of Holdings and its Subsidiaries for such fiscal month and
for the period from the beginning of the then current Fiscal Year to the
end of such fiscal month, and for the corresponding period during the
previous Fiscal Year, and a comparison of the statement of the year to date
earnings and cash flow to the corresponding statement for the corresponding
period from the previous Fiscal Year, and the most recently prepared
forecasted consolidated balance sheet and consolidated statement of
earnings and cash flow of Holdings and its Subsidiaries for and as of the
end of
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such Fiscal Year, and a comparison of the statement of year to date
earnings and cash flow to the annual operating plan, certified by a
Financial Officer of the Company as fairly presenting the consolidated and
consolidating financial position of Holdings and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP, subject to normal year end
adjustments.
(b) Annual Reports. Within ninety (90) days after the end of each
Fiscal Year, (i) audited financial statements of Holdings and its
Subsidiaries and (ii) annual consolidating financial statements of Holdings
and its Subsidiaries reported on by independent certified public
accountants of recognized national standing acceptable to Lender, which
report shall be unqualified (or, if qualified, only as to non-material
matters) and shall state that such financial statements fairly present the
consolidated and consolidating financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except for changes with which such
independent certified public accountants shall concur and which shall have
been disclosed in the notes to the financial statements) and that the
examination by such accountants in connection with such consolidating
financial statements has been made in accordance with generally accepted
auditing standards.
(c) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraph (a) and (b) of this Section 7.01,
an Officer's Certificate of the Company, signed by a Financial Officer of
the Company which demonstrate compliance, when applicable, with the
provisions of Article X (the "Compliance Certificate").
(d) Business Plans; Financial Projections. Not later than fifteen (15)
days prior to the end of each Fiscal Year, and containing substantially the
same types of financial information contained in the Initial Projections,
(i) the annual business plan of the Company for the next succeeding Fiscal
Year and (ii) forecasts prepared by management of the Company for each
fiscal quarter in the next Fiscal Year and for each succeeding Fiscal Year,
up to and including the Fiscal Year immediately following the Fiscal Year
during which it is anticipated that the Obligations shall be Paid In Full,
containing a consolidated balance sheet, an income statement and a
consolidated statement of cash flow.
(e) Accountant's Statement and Reliance Letter. Together with each
delivery of the financial statements referred to in Section 7.01(b), a
written statement of the firm of independent certified public accountants
of recognized national standing acceptable to Lender giving the report
stating:
(i) that their audit examination has included a review of
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the terms hereof as it relates to accounting matters and
(ii) whether, in connection with their audit examination, any
condition or event which constitutes an Event of Default or Default
has come to their attention, and if such condition or event has come
to their attention, specifying the nature and period of existence
thereof. The statement referred to above shall be accompanied by (x) a
copy of the management letter or any similar report delivered to the
Company or Holdings or to any officer or employee thereof by such
accountants in connection with such financial statements and (y) a
reliance letter in form and substance reasonably satisfactory to
Lender from such accountants to the Company or Holdings. Lender may
communicate directly with such accountants.
(f) Opening Balance Sheet. Within ninety (90) days after the Closing
Date, the Closing Date Balance Sheet (as defined in the Acquisition
Agreement).
7.02. Events of Default. Promptly upon (and, in any event, within five (5)
Business Days of) any Borrower or Holdings, as the case may be, obtaining
Knowledge (i) of any condition or event which constitutes an Event of Default or
Default, or becoming aware that Lender has given any written notice with respect
to a claimed Event of Default or Default, (ii) that any Person has given any
written notice to Holdings, the Company or any Subsidiary of the Company or
taken any other action with respect to a claimed default or event or condition
of the type referred to in Section 11.01(e), (iii) of any condition or event
which has or is reasonably likely to materially and adversely affect the value
of, or Lender's interest in, the Collateral, or (iv) of any condition or event
which has or is reasonably likely to have a Material Adverse Effect, the Company
or Holdings, as the case may be, shall deliver to Lender an Officer's
Certificate specifying (A) the nature and period of existence of any such
claimed default, Event of Default, Default, condition or event, (B) the notice
given or action taken by such Person in connection therewith, and (C) the
remedial action the Company or Holdings, as the case may be, has taken, is
taking and proposes to take with respect thereto.
7.03. Lawsuits. Promptly upon (and, in any event, within ten (10) Business
Days of) the Company or Holdings, as the case may be, obtaining Knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation, any allegation of defective pricing, or any arbitration against
or affecting Holdings, the Company or any of the Company's Subsidiaries or any
Property of Holdings, the Company or any of the Company's Subsidiaries not
previously disclosed pursuant to Section 6.01(i), which action, suit,
proceeding, governmental investigation or arbitration exposes, or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in Holdings' or the Company's reasonable judgment, Holdings, the Company
or any of the
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Company's Subsidiaries to liability in an amount aggregating $1,000,000 or more,
or which could otherwise reasonably be expected to result in a Material Adverse
Effect, Holdings or the Company, as the case may be, shall give written notice
thereof to Lender and provide such other information as may be reasonably
available to enable Lender and its counsel to evaluate such matters.
7.04. Insurance. As soon as practicable and in any event within ninety (90)
days after the Closing Date and ninety (90) days after the end of each Fiscal
Year ending after the Closing Date, the Company shall deliver to Lender (i) a
report in form and substance satisfactory to Lender outlining all material
insurance coverage (including any self-insurance provided by Holdings and/or the
Company but excluding health, medical, dental and life insurance (other than key
man life insurance)) maintained as of the date of such report by Holdings, the
Company and the Company's Subsidiaries and the duration of such coverage and
(ii) to the extent such insurance coverage is not provided by Holdings and/or
the Company, an insurance broker's statement that all premiums then due and
payable with respect to such coverage have been paid (except as otherwise agreed
to by Lender). The foregoing shall not relieve the obligation of Holdings and
each Borrower to provide Lender with evidence of the renewal of any policy of
insurance prior to its expiration as such renewals take place from time to time.
7.05. Borrowing Base Certificate. Concurrently with the delivery to the
Revolving Credit Agent or the Senior Revolving Lenders, (a) the Company shall
provide Lender with a Borrowing Base Certificate, together with such supporting
documents as Lender requests (including weekly updated information concerning
Receivables of the Borrowers) and (b) monthly Inventory reports of the Borrowers
as of the last day of the preceding month, all certified as being true, accurate
and complete by a Financial Officer of the Company.
7.06. ERISA Notices. The Company shall deliver or cause to be delivered to
Lender, at the Company's expense, the following information and notices as soon
as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Company or any ERISA
Affiliate Knows or reasonably should Know that a Termination Event has
occurred, a written statement of a Financial Officer of the Company
describing such Termination Event and the action, if any, which the Company
or any ERISA Affiliate has taken, is taking or proposes to take with
respect thereto, and when Known, any action taken or threatened by the IRS,
DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company or any ERISA
Affiliate Knows or reasonably should Know that a prohibited transaction
(defined in Sections 406 of ERISA and 4975 of the Internal Revenue Code)
has occurred that would have a material adverse effect (financial or
otherwise) on the
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Company or any ERISA Affiliate for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from
the DOL, a statement of a Financial Officer of the Company describing such
transaction and the action which the Company or any ERISA Affiliate has
taken, is taking or proposes to take with respect thereto;
(iii) within ten (10) Business Days after receipt by the Company of
written request therefor from Lender, copies of each annual report (form
5500 series), including Schedule B thereto, filed with respect to each
Benefit Plan;
(iv) within ten (10) Business Days after receipt by the Company of a
written request therefor from Lender, copies of each actuarial report for
any Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan;
(v) within ten (10) Business Days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and, if requested by Lender, all communications received by
the Company or any ERISA Affiliate with respect to such request;
(vi) within ten (10) Business Days upon the occurrence thereof,
notification of any material increase in the benefits of any existing
Benefit Plan or the establishment of any new Benefit Plan or the
commencement of contributions to any Benefit Plan to which the Company or
any ERISA Affiliate was not previously contributing;
(vii) within ten (10) Business Days after receipt by the Company or
any ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(viii) within ten (10) Business Days after receipt by the Company or
any ERISA Affiliate of any unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Internal
Revenue Code, copies of each such letter; provided, that the Company or any
ERISA Affiliate has reason to believe that the IRS erroneously sent such
letter, then a copy of such letter need not be delivered to Lender if the
IRS shall confirm in writing within such ten (10) day period that such
letter is withdrawn, invalid or otherwise should be disregarded;
(ix) within ten (10) Business Days after receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability, copies of each such notice;
(x) within ten (10) Business Days after the Company or any
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ERISA Affiliate fails to make a required installment or any other required
payment that would give rise to a Lien under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment, a
notification of such failure;
(xi) within ten (10) Business Days after the Company or any ERISA
Affiliate Knows or reasonably should Know (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted
or will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan; and
(xii) within ten (10) Business Days after receipt by the Company of a
written notice from Lender, copies of any Foreign Employee Benefit Plan and
related documents, reports and correspondence as requested by Lender in
such notice.
For purposes of this Section 7.06, the Company and any ERISA Affiliate
shall be deemed to Know all facts Known by the administrator of any Plan of
which the Company or any ERISA Affiliate is the plan sponsor.
7.07. Environmental Notices.
(a) The Company shall notify Lender in writing, promptly and in any
event within 10 Business Days upon the Company's learning thereof, of any:
(i) notice or claim by a Governmental Authority or any third
party to the effect that Holdings, the Company or any of the Company's
Subsidiaries is or may be liable to any Person, or is subject to an
investigation by a Governmental Authority, relating to a material
Release or threatened Release of any Contaminant into the environment,
or any materially unsafe or unhealthy condition at any Property of
Holdings, the Company or any of the Company's Subsidiaries;
(ii) notice that any Property of Holdings, the Company or any of
the Company's Subsidiaries is subject to an Environmental Lien;
(iii) commencement or threat of any judicial or administrative
proceeding alleging a material violation by Holdings, the Company or
any of the Company's Subsidiaries of any Environmental, Health or
Safety Requirement of Law;
(iv) new and material changes to any existing Environmental,
Health or Safety Requirement of Law that would or could
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reasonably be expected to have a Material Adverse Effect; or
(v) any intent to execute an agreement, letter of intent or
commitment to acquire stock, assets or real estate, or to lease
property, or to take any other action by Holdings, the Company or any
of the Company's Subsidiaries that would subject Holdings, the Company
or any of the Company's Subsidiaries to environmental, health or
safety Liabilities and Costs that would or could reasonably be
expected to have a Material Adverse Effect.
(b) The Company shall notify Lender in writing, promptly and in any
event within ten (10) Business Days upon any filing or report made by
Holdings, the Company or any of the Company's Subsidiaries with any
Governmental Authority with respect to (i) the violation of any
Environmental, Health or Safety Requirement of Law, (ii) any unpermitted
Release or threatened Release of a Contaminant that is reportable under 40
C.F.R. 302 or (iii) any unsafe or unhealthful condition at any Property of
Holdings, the Company or any of the Company's Subsidiaries that would or
could reasonably be expected to have a Material Adverse Effect.
7.08. Labor Matters. The Company shall notify Lender in writing, promptly
after the Company has Knowledge thereof, of (i) any material labor dispute to
which Holdings, the Company or any of the Company's Subsidiaries is or may
become a party, including, without limitation, any strikes, lockouts or other
disputes relating to such Persons' plants and other facilities and (ii) any
material liability (arising pursuant to the Worker Adjustment and Retraining
Notification Act or otherwise) incurred with respect to the closing of any plant
or other facility of such Persons.
7.09. Public Filings and Reports. Promptly upon the filing thereof with the
Securities and Exchange Commission, the Company shall deliver to Lender copies
of all filings or reports made in connection with outstanding Indebtedness and
Capital Stock of Holdings or the Company.
7.10. Notices Under Acquisition Agreement. Upon receipt thereof, Holdings
shall cause a copy of every written notice or communication received by Holdings
pursuant to the Acquisition Agreement to be promptly delivered to Lender.
7.11 Other Information. Promptly upon receipt of a request therefor from
Lender, the Company shall prepare and deliver to Lender such other information
with respect to Holdings, the Company, any of the Company's Subsidiaries or the
Collateral including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof and copies of each existing written
agreement or arrangement set forth on Schedule 6.01-Y, as from time to time may
be reasonably requested by Lender.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Each of Holdings and the Borrowers covenants and agrees that so long as any
amount is outstanding and thereafter until Payment In Full of all of the
Obligations, unless Lender shall otherwise give prior written consent:
8.01. Corporate Existence, Etc. Each of Holdings and the Company shall, and
shall cause each of the Company's Subsidiaries to, at all times maintain its
respective corporate existence and preserve and keep, or cause to be preserved
and kept, in full force and effect their respective rights and franchises
material to their respective businesses except where the failure to so maintain
or preserve would not have or be reasonably likely to have a Material Adverse
Effect.
8.02. Corporate Powers; Conduct of Business, Etc. Each of Holdings and the
Company shall, and shall cause each of the Company's Subsidiaries to, qualify
and remain qualified to do business in each jurisdiction in which the nature of
its business requires it to be so qualified, except where the failure to be so
qualified would not have or be reasonably likely to have a Material Adverse
Effect.
8.03. Compliance with Laws, Etc. Each of Holdings and the Company shall,
and shall cause each of the Company's Subsidiaries to, (a) comply with all
Requirements of Law and all restrictive covenants affecting such Person or the
business, Property or operations of such Person, and (b) obtain as needed all
Permits necessary for such Person's operations and maintain such Permits in good
standing, except, in each case, where the failure to do so would not have or be
reasonably likely to have a Material Adverse Effect.
8.04. Payment of Taxes and Claims; Tax Consolidation. Each of Holdings and
the Company shall, and shall cause each of the Company's Subsidiaries to, pay
(a) all taxes, assessments and other governmental charges imposed upon it or on
any of its Property or in respect of any of its franchises, business, income or
Property before any penalty or interest for late payment (except as such penalty
or interest relates to underpayment of estimated tax payments) accrues thereon,
and (b) all material claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien (other than a Lien permitted by Section
9.03) upon any of Holdings', the Company's or such Subsidiary's Property (other
than Property with a fair market value of less than $100,000), prior to the time
when any penalty or fine shall be incurred with respect thereto. Notwithstanding
the preceding sentence, any Borrower shall have the right to contest in good
faith the validity or amount of any such taxes or claims by proper proceedings
timely instituted, and may permit the taxes or claims to be contested to remain
unpaid during the period of such contest if (i) it diligently prosecutes such
contest, (ii) it makes adequate provision in conformity with GAAP with respect
to the contested items, and (iii) during the
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period of such contest, the enforcement and ability of any taxing authority to
force payment of any contested item or to impose a Lien with respect thereto is
effectively stayed. The Borrower shall promptly pay or cause to be paid any
valid judgment enforcing any such taxes and cause the same to be satisfied of
record.
8.05. Insurance. The Company shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain, in full force
and effect the insurance policies and programs listed in the most recent report
delivered to Lender pursuant to Section 7.04 or substantially similar policies
and programs or other policies and programs as are reasonably acceptable to
Lender. Each certificate and policy relating to Collateral damage and/or
business interruption coverage shall contain an endorsement, in form and
substance acceptable to Lender, showing loss payable to Lender, and naming
Lender as an additional insured under such policy (provided, however, that with
respect to the Junior Collateral, such designation as loss payee and additional
insured in favor of Lender shall be subject to the rights of the Senior
Revolving Lenders in such Junior Collateral), and providing that no act, whether
willful or negligent, or default of the Company, any of the Company's
Subsidiaries or any other Person shall affect the right of Lender to recover
under such policy or policies of insurance in case of loss or damage. Each
certificate and policy relating to general liability, umbrella and excess
insurance coverages other than the foregoing shall contain an endorsement naming
Lender as an additional insured under such policy (provided, however, that with
respect to the Junior Collateral, such designation as loss payee and additional
insured in favor of Lender shall be subject to the rights of the Senior
Revolving Lenders in such Junior Collateral). Such endorsement or an independent
instrument furnished to Lender shall provide that the insurance companies shall
give Lender at least thirty (30) days' written notice before any such policy or
policies of insurance shall be cancelled or altered materially adversely to the
interests of Lender. In the event that the Company or any of its Subsidiaries,
at any time or times hereafter, shall fail to obtain or maintain any of the
policies or insurance required herein or to pay any premium in whole or in part
relating thereto, then Lender, without waiving or releasing any obligations or
resulting Event of Default hereunder, may at any time or times after the
occurrence of an Event of Default (but shall be under no obligation to do so)
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto which Lender deems advisable (subject, as
to the Junior Collateral, to the right of the Revolving Credit Agent and the
Senior Revolving Lenders to maintain such policies of insurance, pay such
premiums, and take such other actions as the Revolving Credit Agent or the
Senior Revolving Lenders deem advisable). Lender agrees to give the Company
reasonable notice of any such payments made by it, but Lender's failure to do so
shall not limit its rights under this section. All sums so disbursed by Lender
shall constitute Protective Advances and be part of the Obligations, payable as
provided herein. Lender's rights with respect to the proceeds of any insurance
affecting the Junior Collateral shall be subject to the rights of the Senior
Revolving Lenders, all as set forth in the Intercreditor Agreement.
8.06. Inspection of Property; Books and Records; Discussions.
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(a) Holdings and the Company shall permit, and shall cause each of the
Company's Subsidiaries to permit, any authorized representative(s)
designated by Lender to visit and inspect any of the Properties of such
Person or such Subsidiary, to examine, audit, check and make copies of
their respective financial and accounting records, books, journals, orders,
receipts and any correspondence and other data relating to their respective
businesses or the transactions contemplated hereby and by the Transaction
Documents (including, in connection with environmental compliance, hazard
or liability), and to discuss their affairs, finances and accounts with
their officers and independent certified public accountants, in each case
upon reasonable notice and at such times during normal business hours, as
often as may be reasonably requested. All costs and expenses reasonably
incurred by Lender as a result of such inspection, audit or examination
conducted pursuant to this Section 8.06 shall be paid by the Company. It is
presently anticipated that four (4) such inspections and audits will take
place in each Fiscal Year, provided that this sentence shall in no way
limit the right of Lender to conduct greater or fewer inspections during
such time period.
(b) Holdings and the Company shall keep and maintain, and shall cause
its respective Subsidiaries to keep and maintain, in all material respects
proper books of record and account in which entries consistent with past
practices or otherwise in conformity with GAAP shall be made of all
dealings and transactions in relation to their respective businesses and
activities, including, without limitation, transactions and other dealings
with respect to the Collateral. If an Event of Default has occurred and is
continuing, the Company, upon Lender's request, shall promptly turn over
true, correct and complete copies of all such records to Lender or any of
its representatives.
8.07. [Intentionally omitted]
8.08. ERISA Compliance. Holdings and the Company shall, and shall cause
each of the Company's Subsidiaries and each of the ERISA Affiliates to,
establish, maintain and operate all Plans to comply in all material respects
with the provisions of ERISA, the Internal Revenue Code, all other applicable
laws, and the regulations and interpretations thereunder and the respective
requirements of the governing documents for such Plans. Unless otherwise
consented to by Lender, the Company shall exercise its discretion under Section
11.3 of the ESOP to require that the payment for company stock purchased upon
the exercise of a put option be made with a Common Equity Note commencing within
the 30-day period immediately following the date of exercise of the put option.
8.09. Foreign Employee Benefit Plan Compliance. Holdings and the Company
shall, and shall cause each of the Company's Subsidiaries and each of the ERISA
Affiliates to establish, maintain and operate all Foreign Employee Benefit Plans
to comply
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in all material respects with all laws, regulations and rules applicable thereto
and the respective requirements of the governing documents for such Plans.
8.10. Maintenance of Property. The Company shall, and shall cause each of
its Subsidiaries to, cause all material Property used or useful in the conduct
of its business to be maintained and kept in good condition, repair and working
order, ordinary wear and tear excepted, and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any such Property if (i) such Property is permitted
to be disposed of under Section 9.02 or (ii) such discontinuance is, in the
judgment of the Company, necessary or appropriate in the conduct of its business
or the business of any of its Subsidiaries and not disadvantageous to Lender.
8.11. Further Assurances; Additional Collateral. Each of Holdings and the
Borrowers shall execute and deliver, and cause its Subsidiaries to execute and
deliver, within the time periods set forth with respect to such items on the
Closing List, all agreements, documents and instruments designated as
"post-closing items" on the Closing List. At any time and from time to time,
promptly following Lender's written request and at the expense of the applicable
Person, each of Holdings and the Borrowers agrees to duly execute and deliver,
and agrees to cause its Subsidiaries to duly execute and deliver, any and all
such further instruments and documents and take such further action as Lender
may reasonably deem desirable in order to perfect and protect any Lien granted
or purported to be granted pursuant to the Loan Documents or to enable Lender,
in accordance with the terms of the applicable Loan Documents, to exercise and
enforce its rights and remedies under the Loan Documents with respect to such
Collateral. In addition, each Borrower agrees to grant, and cause any of its
Subsidiaries to grant, to Lender, a security interest in any additional property
which, as of the Closing Date, does not constitute Collateral, provided, that
the granting of such security interest would not be prohibited by other
Contractual Obligations to which such Borrower or such Subsidiary is a party, or
would not be prohibited by applicable law, and provided further, that such
Subsidiary has granted to the Senior Revolving Lenders a security interest in
such additional Property, it being understood and agreed that Lender shall not
be entitled to obtain the foregoing security interest in, (a) any Property as to
which the Senior Revolving Lenders are not granted a security interest
(exclusive of the Houston Facility), (b) the stock of any Subsidiary which is
organized outside the laws of the United States or any political subdivision
thereof, or any Property owned by any such Subsidiary, wherever located, (c) any
Property located outside the United States, or (d) any accounts payable to
parties resident outside the United States.
8.12. Landlord and Bailee Waivers. On or prior to the date which is 90 days
following the Closing Date, the Company shall obtain and deliver to Lender
Collateral Access Agreements (a) relating to the Lease which is located at the
Company's headquarters in Norwalk, Connecticut (provided, however, that Lender
shall only be
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entitled to such Collateral Access Agreement if a Collateral Access Agreement is
obtained in favor of the Revolving Credit Agent or the Senior Revolving Lenders
with respect to such facility), and (b) relating to each warehouse location
listed on Schedule 6.01-V (with such exceptions thereto as agreed to by Lender).
The Company shall use its best efforts to obtain and deliver to Lender
Collateral Access Agreements (x) with respect to any Lease entered into after
the Closing Date which relates to a location in which there is, or is reasonably
expected to be, Inventory with a fair market value of $250,000 or more and (y)
with respect to any warehouse location listed on Schedule 6.01-V that was not
obtained on or prior to the Closing Date and any other warehouse location
obtained after the Closing Date in which there is, or is reasonably expected to
be, (i) for a period of 30 days or more during any twelve-month period,
Inventory with a fair market value of $250,000 or more or (ii) at any time,
Inventory with a fair market value of $1,000,000 or more.
8.13. Environmental Compliance.
(a) Holdings, the Company and the Company's Subsidiaries shall comply
with all Environmental, Health or Safety Requirements of Law, noncompliance
with which reasonably could be expected to have a Material Adverse Effect.
(b) Holdings, the Company and each of the Company's Subsidiaries shall
obtain as needed all Permits necessary for their operations, and shall
maintain such Permits in good standing, where the failure to obtain and
maintain such Permits is reasonable likely to have a Material Adverse
Effect.
ARTICLE IX
NEGATIVE COVENANTS
Each of Holdings and the Borrowers covenants and agrees that it shall
comply with the following covenants so long as any amount is outstanding and
thereafter until Payment In Full of all of the Obligations, unless (except as
otherwise provided below) the Lender shall otherwise give prior written consent
thereto:
9.01. Indebtedness. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
except:
(a) the Obligations;
(b) the Senior Revolving Obligations;
(c) Permitted Existing Indebtedness and any extensions, renewals,
refundings or replacements of such Indebtedness, provided that any such
extension, renewal, refunding or replacement is in an aggregate principal
amount
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not greater than the principal amount of, and, taken as a whole is on terms
no less favorable to such Borrower or such Subsidiary than the terms of,
such Indebtedness so extended, renewed, refunded or replaced;
(d) Indebtedness in respect of taxes, assessments, governmental
charges and claims for labor, materials or supplies, to the extent that
payment thereof is not required pursuant to Section 8.04;
(e) Indebtedness constituting Accommodation Obligations permitted by
Section 9.05;
(f) Indebtedness under appeal bonds in connection with judgments which
do not result in an Event of Default or Default or any other breach
hereunder;
(g) to the extent permitted by Article X and in any event in an
aggregate amount not to exceed $3,000,000 at any time, Capital Leases and
purchase money Indebtedness incurred by the Borrowers to finance the
acquisition of fixed assets, and Indebtedness incurred by the Borrowers to
refinance such Capital Leases and purchase money Indebtedness;
(h) Indebtedness incurred pursuant to the Permitted Receivables
Transaction Documents;
(i) Permitted Subordinated Indebtedness;
(j) Indebtedness arising from intercompany loans (A) from any Borrower
to any other Borrower; provided that such loans shall be evidenced by
promissory notes substantially in the form of Exhibit V and shall be
pledged to Lender as additional Collateral, (B) from any Subsidiary of the
Company (other than Borrowers) to a Borrower, (C) from Holdings to any
Borrower, (D) from any Borrower to any Subsidiary of the Company (other
than Borrowers) in a principal amount, together with any Investments made
after the Closing Date in such Subsidiaries and Finsub and other
Subsidiaries permitted to be created or capitalized after the Closing Date
under Section 9.07(b), in any Fiscal Year not to exceed the Subsidiary
Investment Basket for such Fiscal Year and (E) in addition to any loans
made to such Person under clause (D) above, from Pegasus to Pegasus
Polymers Asia Ltd. ("PPAL") in an amount at any time outstanding not to
exceed the sum of (1) $2,000,000 plus the amount of dividends received by
Pegasus from PPAL after the Closing Date; provided, that no loans permitted
by clauses (D) or (E) shall be made if an Event of Default or Default has
occurred and is continuing;
(k) Indebtedness arising pursuant to Interest Rate Contracts
reasonably acceptable to Lender having aggregate Interest Rate Contract
Exposure
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for all Borrowers in an amount not to exceed an amount equal to (x)
$5,000,000 minus (y) the aggregate Currency Agreement Exposure for all
Borrowers at such time;
(l) Indebtedness arising pursuant to Currency Agreements entered into
in the ordinary course of business or otherwise reasonably acceptable to
Lender having aggregate Currency Agreement Exposure for all Borrowers in an
amount not to exceed an amount equal to (x) $5,000,000 minus (y) the
aggregate Interest Rate Contract Exposure for all Borrowers at such time;
and
(m) Indebtedness of Holdings in respect of the Common Equity Notes.
9.02. Sales of Assets. None of Holdings, the Company or any of the
Company's Subsidiaries shall sell, assign, transfer, lease, convey or otherwise
dispose of any Property, whether now owned or hereafter acquired, or any income
or profits therefrom, or enter into any agreement to do so, to the extent such
Property constitutes Senior Collateral, without Lender's prior written consent.
With respect to any Property other than Property constituting Senior Collateral,
none of Holdings, the Company or any of the Company's Subsidiaries shall sell,
assign, transfer, lease, convey or otherwise dispose of any such Property,
whether now owned or hereafter acquired, or any income or profits therefrom, or
enter into any agreement to do so, except:
(a) the sale of Property (other than General Intangibles) in the
ordinary course of business (including sales of such Property between the
Borrowers and their Subsidiaries);
(b) the sale of Receivables pursuant to the Permitted Receivables
Transaction Documents;
(c) sales of assets outside of the ordinary course of business not in
excess of $1,000,000 in any Fiscal Year; provided, however, (A) sales of
Collateral permitted pursuant to this clause shall be for cash or on
customary payment terms and (B) sales of other assets permitted pursuant to
this clause may be for cash, on customary payment terms or for promissory
notes, provided, that all cash shall be applied to the obligations of the
Borrower whose Collateral is being sold, and all promissory notes shall be
pledged to the Revolving Credit Agent as additional collateral;
(d) sales of Receivables in the ordinary course of business made (A)
between Borrowers or (B) from Subsidiaries of the Company to a Borrower,
provided, that all actions under the Uniform Commercial Code and other
applicable Requirements of Law required to perfect the purchaser's interest
in such Receivables shall have been taken;
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(e) assignments and licenses of intellectual property of the Company
in the ordinary course of business;
(f) subleases of leases or leases of owned Real Property (other than
the Houston Facility), to the extent such leases and subleases have
anticipated annual rentals of less than $1,000,000 each;
(g) sales of Receivables backed by foreign letters of credit of not
more than $3,500,000 in any Fiscal Year (or such larger amount as Lender
may approve in its sole discretion);
(h) sales of Capital Stock of Subsidiaries of the Company permitted by
Section 9.13; and
(i) additional dispositions which may be approved by the Revolving
Credit Agent in its sole discretion and which result in Net Cash Proceeds
of not more than $2,500,000 in the aggregate and which are applied to pay
the Senior Revolving Obligations.
9.03. Liens. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any of their respective Property or assets
except:
(a) Liens created by the Loan Documents and the Senior Revolving Loan
Documents;
(b) Permitted Existing Liens;
(c) Customary Permitted Liens;
(d) purchase money Liens granted by a Borrower (including the interest
of a lessor under a Capital Lease) and Liens to which any Property is
subject at the time of the Company's acquisition thereof) securing
Indebtedness permitted under Sections 9.01(g) and limited in each case to
the property purchased or subject to such lease;
(e) any attachment or judgment Lien the existence of which does not
constitute an Event of Default under Section 11.01(h);
(f) Liens filed to perfect the transfers of Receivables pursuant to
the Permitted Receivables Transaction Documents or otherwise to evidence
the transactions contemplated thereunder;
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(g) to the extent Indebtedness secured thereby is permitted to be
extended, renewed, replaced or refinanced pursuant to Section 9.01 (b), a
future Lien upon any Property which is subject to a Lien described in
clauses (b) or (d) above, if such future Lien attaches only to the same
Property, secures only such permitted extensions, renewals, replacements or
refinancings and is of like quality, character and extent; and
(h) certain statutory and contractual rights of retention on the
Inventory of the Company or any of its Subsidiaries located outside of the
United States and Canada.
9.04. Investments. None of Holdings, the Company or any of the Company's
Subsidiaries shall directly or indirectly make or own any Investment except:
(a) Investments in cash and Cash Equivalents;
(b) Permitted Existing Investments in an amount not greater than the
amount thereof on the Closing Date;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(d) Investments by Holdings and the Borrowers on the Closing Date in
the Capital Stock of their Subsidiaries and additional Investments made
after the Closing Date in such Subsidiaries and Finsub and other
Subsidiaries permitted to be created or acquired after the Closing Date
under Section 9.07;
(e) Investments in loans to employees made in the ordinary course of
business (but excluding any such loans the proceeds of which are intended
to be used to purchase Capital Stock); and
(f) Investments constituting Indebtedness permitted by Section 9.01,
Accommodation Obligations permitted by Section 9.05, or Capital
Expenditures permitted by Section 10.03.
9.05. Accommodation Obligations. None of Holdings, the Company or any of
the Company's Subsidiaries shall directly or indirectly create or become or be
liable with respect to any Accommodation Obligation, except:
(a) Permitted Existing Accommodation Obligations;
(b) Accommodation Obligations arising under the Loan
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Documents;
(c) obligations, warranties and indemnities which have been or are
undertaken or made in the ordinary course of business, in connection with
the Transaction Documents or in connection with any sale of assets
permitted under Section 9.02;
(d) (A) Accommodation Obligations of any Subsidiary of Holdings in
respect of obligations of a Borrower or a Subsidiary Guarantor and (B)
Accommodation Obligations of any Subsidiary of Holdings in respect of
obligations of any other Subsidiary of Holdings (other than the Borrowers
or the Subsidiary Guarantors) but only if the aggregate amount of such
Accommodation Obligations does not exceed $17,500,000 at any time
outstanding; and
(e) Accommodation Obligations of the Company and Finsub pursuant to
the Permitted Receivables Transaction Documents; and
(f) Accommodation Obligations in respect of Indebtedness permitted
under Section 9.01 or constituting a Lien permitted under Section 9.03 or
an Investment permitted under Section 9.04.
9.06. Restricted Junior Payments. None of Holdings, the Company or any of
the Company's Subsidiaries shall declare or make any Restricted Junior Payment,
except:
(a) regularly scheduled cash dividends by Holdings on the Preferred
Stock in an aggregate amount not to exceed $1,200,000 in any Fiscal Year;
provided that in the event such dividends actually paid in any Fiscal Year
are less than the maximum permitted to be paid during such Fiscal Year, the
unpaid amount for such Fiscal Year may be carried over to the next
succeeding Fiscal Year;
(b) regularly scheduled payments of principal and interest by Holdings
on the Indebtedness evidenced by the Common Equity Notes issued to the
holders of Common Stock either (i) pursuant to the Shareholders' Agreement
or (ii) pursuant to the ESOP;
(c) cash dividends on the Capital Stock of the Company to Holdings
paid and declared on or prior to the Closing Date to fund the transactions
contemplated by the Acquisition Documents;
(d) cash dividends on the Capital Stock of the Company to Holdings
paid and declared in any Fiscal Year (A) to fund the payment of taxes and
ordinary operating expenses of Holdings, (B) to fund the payment of
Transaction
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Costs of Holdings not in excess of $6,000,000 in the aggregate and (C) to
fund payments permitted to be made by Holdings pursuant to clauses (a), (b)
and (g) of this Section 9.06;
(e) cash dividends paid solely to a Borrower by any of such Borrower's
Subsidiaries;
(f) regularly scheduled payments of interest and principal on the
Permitted Subordinated Indebtedness but only to the extent permitted to be
paid pursuant to the terms of such Permitted Subordinated Indebtedness; and
(g) after the first anniversary of the Closing Date, payments made by
Holdings in respect of (A) redemptions of the Preferred Stock, (B)
repurchases of the Nonvoting Common Stock (but only to the extent such
Nonvoting Common Stock is subject to a put or call pursuant to the
Nonvoting Common Stock Purchase Agreement), (C) repurchases of other
Capital Stock of Holdings put to (or, in the case of Capital Stock subject
to the Shareholders' Agreement and held by former employees of Holdings,
the Borrowers or any Subsidiary Guarantor, called by) Holdings pursuant to
the terms of the Shareholders' Agreement or the ESOP and principal
prepayments of any Common Equity Notes; provided, however, that the
Restricted Junior Payments described in clauses (a), (b)(i), (d) and (g)
above shall not be permitted if either (A) a Default or an Event of Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom or (B) such Restricted Junior Payment is
prohibited under the terms of any Indebtedness or Capital Stock of
Holdings, the Company or any of the Company's Subsidiaries; and provided,
further, that cash redemptions permitted under clause (g) above shall be
limited to the excess, if any, of the average aggregate Revolving Credit
Availability under all Credit Facilities (plus, after the inception of the
Permitted Receivables Financing Program, the average liquidity available to
the Borrowers under the Permitted Receivables Financing Program) during the
thirty days immediately preceding the date set for such payment over
$15,000,000.
9.07. Conduct of Business; Subsidiaries; Acquisitions.
(a) Neither the Company nor any of its Subsidiaries shall engage in
any business other than the businesses engaged in by the Company on the
date hereof and any business or activities which are substantially similar,
related or incidental thereto. Holdings shall engage in no business or
activity other than acting as the parent of the Company and owning all of
the issued and outstanding shares of the common stock of the Company and
activities reasonably related thereto or as otherwise permitted by the Loan
Documents. The Subsidiaries of the Company (other than Borrowers)
conducting business in Europe shall not engage in any business or activity
other than acting as the agent for Pegasus pursuant to the
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terms of an agency agreement between Pegasus and such Subsidiary, in form
and substance reasonably satisfactory to the Senior Revolving Lenders.
(b) Neither Holdings nor the Company shall create, capitalize or
acquire any Subsidiary after the date hereof; provided, however, the
Company may capitalize Finsub in accordance with the Permitted Receivables
Transaction Documents and may capitalize the Subsidiaries proposed to be
created on Schedule 6.01-C for the purposes set forth on such schedule in
an aggregate amount during any Fiscal Year, together with the initial
principal amount of all intercompany loans permitted to be made in such
Fiscal Year pursuant to Section 9.01(j), not to exceed the amounts
permitted by Sections 9.01(j)(D) and 9.01(j)(E) for such Fiscal Year.
(c) No Borrower shall enter into any transaction or series of
transactions (other than the transactions contemplated in the Acquisition
Documents) in which it acquires all or any significant portion of the
Capital Stock or assets of another Person; provided, however, with the
consent of Lender and so long as no Event of Default has occurred and is
continuing, the Borrowers may acquire the assets or Capital Stock of
Persons having a fair market value (as determined by the Company's board of
directors), net of any liabilities assumed by such Borrower in such
acquisition (determined in accordance with GAAP) in the aggregate for all
such acquisitions after the Closing Date of not greater than $2,000,000.
9.08. Transactions with Shareholders and Affiliates. Except for the
consummation of the transactions contemplated in the Transaction Documents, none
of Holdings, the Company or any of the Company's Subsidiaries shall directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of Holdings or the Company which is
not its Subsidiary, on terms that are less favorable to Holdings, the Company or
any such Subsidiary, as applicable, than those that could be obtained in an
arm's length transaction at the time from Persons who are not such a holder or
Affiliate other than transactions with such Affiliates who are officers,
directors, or members of the leadership committee of Holdings, the Company or a
Subsidiary of the Company which (a) are approved by the board of directors of
Holdings, the Company or such Subsidiary, as applicable, or (b) are in the
ordinary course of business of Holdings, the Company or such Subsidiary, as
applicable.
9.09. Restriction on Fundamental Changes. None of Holdings, the Company or
any of the Company's Subsidiaries shall (a) enter into any merger or
consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), except for a merger of a Borrower into another Borrower, provided
that the documents governing such merger are satisfactory to Lender and a merger
of a Wholly Owned Subsidiary (other than a Borrower) into the Company (with the
Company as the surviving
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corporation) or another Wholly Owned Subsidiary or the dissolution of a
Subsidiary of the Company that is not a party to any Loan Document and the
Capital Stock of which is not pledged in full or in part to Lender, or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of Holdings, the Company's or any such
Subsidiary's business or Property, whether now or hereafter acquired, except
transactions permitted under Section 9.02 or (b) enter into any partnership or
joint venture (other than (x) profit sharing arrangements with suppliers that
are not conducted through a corporation or partnership established for such
purpose and (y) partnerships or joint ventures which are at least 51% owned by a
Borrower and which do not constitute consolidated Subsidiaries of Holdings).
9.10. Sales and Leasebacks; Operating Leases.
(a) None of Holdings, the Company or any of the Company's Subsidiaries
shall enter into any Sale and Leaseback Transaction except to the extent
otherwise permitted by Article X and in an aggregate amount not to exceed
the amount specified in Section 9.01(g).
(b) None of Holdings, the Company or any of the Company's Subsidiaries
shall become liable in any way, whether directly or by assignment or by
Accommodation Obligation, for the obligations of a lessee under any
Operating Lease unless, immediately after giving effect to the incurrence
of liability with respect to such Operating Lease, the aggregate amount of
all rents paid or accrued under all Operating Leases of Holdings, the
Company and the Company's Subsidiaries (determined in conformity with GAAP)
shall not exceed $4,000,000 in any Fiscal Year.
9.11. Margin Regulations; Securities Laws. None of Holdings, the Company or
any of the Company's Subsidiaries, shall use all or any portion of the proceeds
of any credit extended hereunder to purchase or carry Margin Stock.
9.12. ERISA and Certain Employment Matters. The Company shall not:
(a) engage, or permit any ERISA Affiliate to engage, in any prohibited
transaction described in Sections 406 of ERISA or 4975 of the Internal
Revenue Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the DOL or with
respect to which the aggregate liability of the Company and its ERISA
Affiliates arising from such transaction is greater than $1,000,000;
(b) permit to exist any accumulated funding deficiency (as defined in
sections 302 of ERISA and 412 of the Internal Revenue Code), with respect
to any Benefit Plan, whether or not waived;
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(c) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any Benefit
Plan which would result in a material liability of Company or any ERISA
Affiliate under Title IV of ERISA;
(e) fail to make any contribution or payment to any Multiemployer Plan
which Company or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(f) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required that would give rise to a Lien
under Section 412 of the Internal Revenue Code on or before the due date
for such installment or other payment;
(g) amend, or permit any ERISA Affiliate to amend, a Plan resulting in
an increase in current liability for the plan year such that the Company or
any ERISA Affiliate is required to provide security to such Plan under
Section 401(a)(29) of the Internal Revenue Code;
(h) permit any unfunded liabilities with respect to any Foreign
Pension Plan other than as permitted under local law; or
(i) fail, or permit any Subsidiary or ERISA Affiliate to fail, to pay
any required contributions or payments to a Foreign Pension Plan on or
before the due date for such required installment or payment.
9.13. Issuance or Sale of Capital Stock. Other than pursuant to the
Registration Statement, the Retirement Plan, the ESOP, the Shareholders'
Agreement and the Nonvoting Common Stock Purchase Agreement, none of the Company
or any of the Company's Subsidiaries shall (i) issue any Capital Stock, except,
in the case of the Company, the Capital Stock of the Company issued to Holdings
on or prior to the Closing Date and, in the case of Company's Subsidiaries, the
Capital Stock of any such Subsidiary to the extent the creation thereof is
permitted pursuant to Sections 9.04 and 9.07, (ii) grant any rights (either
preemptive or other) to subscribe for or to purchase, or any option for the
purchase of, its Capital Stock or (iii) create calls, commitments, or claims of
any character relating to any of its Capital Stock. The Company shall not sell
or otherwise dispose of, or permit the sale or disposition of, any shares of
Capital Stock of any of its Subsidiaries, except (x) as required by applicable
law for the qualification of directors or to satisfy minimum shareholder
requirements and (y) for the Capital Stock of Subsidiaries of the Company that
are not party to any Loan Document and the Capital Stock of which is not
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pledged in full or in part to Lender.
9.14. Constituent Documents. None of Holdings, the Company or any of the
Company's Subsidiaries shall materially amend, modify or otherwise change any of
the terms or provisions in any of their respective Constituent Documents as in
effect on the Closing Date, except that Holdings, the Company or any such
Subsidiary may change its name, provided that any change of name of Holdings,
the Company or any Subsidiary party to the Subsidiary Junior Security Agreements
shall be made in accordance with the Holdings Security Agreement, the Borrower
Junior Security Agreements and the Subsidiary Junior Security Agreements,
respectively.
9.15. Fiscal Year. None of Holdings, the Company or any of the Company's
Subsidiaries shall change its Fiscal Year for accounting or tax purposes from a
period consisting of the 12-month period ending on December 31 of each calendar
year.
9.16. Cancellation of Debt; Prepayment; Certain Amendments. Neither
Holdings, nor the Company, nor any of the Company's Subsidiaries shall (i)
cancel any material claim or debt or amend or modify the terms thereof, except
in the ordinary course of its business or pursuant to the exercise of reasonable
business judgment or (ii) except for regularly scheduled payments as expressly
permitted pursuant to the terms of the Loan Documents, prepay, redeem, purchase,
repurchase, defease or retire any long-term Indebtedness (other than the Senior
Revolving Obligations); or (iii) terminate, amend, supplement or otherwise
modify the terms of (A) the Acquisition Documents (other than the Common Equity
Notes) in any respect that is materially adverse to the Lender or (B) the Senior
Revolving Loan Documents, the Common Equity Notes, the Permitted Receivables
Transaction Documents or any documents evidencing the Permitted Subordinated
Indebtedness in any respect that is adverse to the Lender.
9.17. Environmental Matters. Neither Holdings, nor the Company, nor any of
Company's Subsidiaries shall become subject to any Liabilities and Costs which
would have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Contaminant into the
environment, or any Remedial Action in response thereto, or (b) any violation of
any Environmental, Health and Safety Requirements of Law. The Company shall not
approve the "Phase II Report" (as defined in the Acquisition Agreement) with
respect to the issue of "Potentially Remediable On-Site Conditions" (as defined
in the Acquisition Agreement), pursuant to the approval right provided to the
Company in the Second Amendment to Stock Purchase Agreement, without Lender's
prior written consent, which consent shall not unreasonably be withheld.
9.18. [Intentionally omitted.]
9.19. [Intentionally omitted.]
9.20. No New Restrictions on Subsidiary Dividends. Except to the extent
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that any such agreement may be contained in the Loan Documents or the Permitted
Receivables Transaction Documents, neither Holdings nor the Company will agree,
or permit any of the Company's Subsidiaries to agree, to create or otherwise
permit to exist any consensual encumbrance or restriction of any kind on the
ability of any of the Company's Subsidiaries to pay dividends or make any other
distribution or transfer of funds or assets or make loans or advances to or
other Investments in, or pay any Indebtedness owing to, the Company.
ARTICLE X
FINANCIAL COVENANTS
Each of Holdings and the Borrowers covenants and agrees that so long as any
amount is outstanding and thereafter until Payment In Full of all of the
Obligations, unless Lender shall otherwise give prior written consent thereto:
10.01. Minimum Consolidated Tangible Net Worth. Holdings and its
Subsidiaries shall maintain a Consolidated Tangible Net Worth at all times (i)
with respect to the first fiscal quarter of 1996, from the Closing Date until
the day preceding the last day of such fiscal quarter and (ii) with respect to
each fiscal quarter in each Fiscal Year set forth below thereafter, in each case
from the last day of the fiscal quarter preceding such fiscal quarter to the day
preceding the last day of such fiscal quarter of not be less than the minimum
amount set forth opposite such fiscal quarter:
Period Minimum Amount
------ --------------
First fiscal quarter of 1996 $18,000,000
Second fiscal quarter of 1996 19,000,000
Third fiscal quarter of 1996 20,500,000
Fourth fiscal quarter of 1996 22,000,000
First fiscal quarter of 1997 23,125,000
Second fiscal quarter of 1997 24,250,000
Third fiscal quarter of 1997 25,375,000
Fourth fiscal quarter of 1997 26,500,000
First fiscal quarter of 1998 27,750,000
Second fiscal quarter of 1998 29,000,000
Third fiscal quarter of 1998 30,250,000
Fourth fiscal quarter of 1998 31,500,000
First fiscal quarter of 1999 33,125,000
Second fiscal quarter of 1999 34,750,000
Third fiscal quarter of 1999 36,375,000
Fourth fiscal quarter of 1999 38,000,000
10.02. Minimum Fixed Charge Coverage Ratio. Holdings and its Subsidiaries
shall maintain a Fixed Charge Coverage Ratio on a consolidated basis, as
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determined as of the last day of each fiscal quarter set forth below for the
four fiscal quarter period ending on such date (or if the period from the
Closing Date to such last day is less than four full fiscal quarters, such
shorter period), shall not be less than the minimum ratio set forth opposite
such fiscal quarter:
Fiscal Quarter Minimum Ratio
-------------- -------------
Second fiscal quarter of 1996 1.00 to 1
Third fiscal quarter of 1996 1.00 to 1
Fourth fiscal quarter of 1996 1.00 to 1
First fiscal quarter of 1997 1.05 to 1
Second fiscal quarter of 1997 1.10 to 1
Third fiscal quarter of 1997 1.10 to 1
Fourth fiscal quarter of 1997 1.20 to 1
First fiscal quarter of 1998 1.20 to 1
Second fiscal quarter of 1998 1.25 to 1
Third fiscal quarter of 1998 1.25 to 1
Fourth fiscal quarter of 1998 and
each fiscal quarter thereafter 1.30 to 1
10.03. Maximum Capital Expenditures. Capital Expenditures made or incurred
by the Company and its Subsidiaries on a consolidated basis during any Fiscal
Year shall not exceed $1,750,000; provided, that in the event Capital
Expenditures in any Fiscal Year are less than the maximum specified above for
such Fiscal Year, the unspent amount for such Fiscal Year may be carried over to
the next succeeding Fiscal Year (such carry-over amount being available only for
use in such succeeding Fiscal Year and being treated as the last amount spent in
such succeeding Fiscal Year, in each case for purposes of applying this proviso
to such Fiscal Year).
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default hereunder:
(a) Failure to Make Payments When Due. Any Borrower shall fail to pay
(i) when due any principal or interest on the Loan or any other fees
payable hereunder or (ii) any other Obligation, and if such non-payment
relates to Obligations other than interest, principal or fees, such
non-payment continues for a period of five (5) Business Days after the due
date thereof.
(b) Breach of Certain Covenants. Holdings or any Borrower shall fail
to perform or observe duly and punctually any agreement, covenant or
obligation binding on such Person under (i) Section 7.02, 7.03, 8.01, 8.02
or 8.05
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(solely with respect to the failure to pay insurance premiums which has the
effect of terminating any insurance policy required to be maintained
pursuant to such section), or (ii) Article IX or Article X.
(c) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by Holdings, the Company or any of the
Company's Subsidiaries to Lender herein or in any other Loan Document or in
any certificate at any time given by any such Person pursuant to any Loan
Document shall be false or misleading in any material respect on the date
made (or deemed made).
(d) Other Defaults. Holdings or any Borrower shall default in the
performance of or compliance with any term contained herein (other than as
covered by paragraphs (a), (b) or (c) of this Section 11.01), or Holdings,
the Company or any of the Company's Subsidiaries shall default in the
performance of or compliance with any term contained in any other Loan
Document, and such default shall continue for (i) five (5) Business Days
after the occurrence thereof with any respect to any term contained in
Section 8.06; (ii) ten (10) Business Days after the occurrence thereof with
respect to any term contained in Section 7.01; and (iii) thirty (30) days
after the occurrence thereof with respect to any other term.
(e) Acceleration as to Other Indebtedness; Operating Leases. Any
Indebtedness of Holdings, the Company or any of the Company's Subsidiaries
in excess of $1,000,000 shall be declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by Holdings, the Company or any of the Company's Subsidiaries
(other than by a regularly scheduled required prepayment, mandatory
redemption or required repurchase) prior to the stated maturity thereof; or
any breach, default or event of default remaining uncured for a period of
sixty (60) days on the part of Holdings, the Company or any of the
Company's Subsidiaries shall occur under any Operating Lease to which the
Company or any of its Subsidiaries is a party involving Property located at
the Houston Facility pursuant to which rental payments thereunder equal or
exceed $1,000,000 per annum; or any event shall have occurred and be
continuing which constitutes an "Event of Termination" under and as defined
in the Permitted Receivables Transaction Documents, or which could
otherwise cause the early termination of the Permitted Receivables
Financing Program.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case, proceeding or other action shall be
commenced against Holdings, the Company or any of its Subsidiaries (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have any order for relief entered with respect
to it, or seeking to
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adjudicate it as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, receiver-manager,
liquidator, sequestrator, administrator, custodian or similar official
for it or for all or any substantial part of its assets which case,
proceeding or other action results in entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for period of sixty (60) days; or a court
having jurisdiction in the premises shall enter a decree or order for
relief in respect of Holdings, the Company or any of the Company's
Subsidiaries in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any
other similar relief shall be granted under any applicable federal,
state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, receiver-manager,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Holdings, the Company or any of the Company's
Subsidiaries or over all or a substantial part of the Property of
Holdings, the Company or any of the Company's Subsidiaries shall be
entered; or an interim receiver, trustee or other custodian of
Holdings, the Company or any of the Company's Subsidiaries or of all
or a substantial part of the property of Holdings, the Company or any
of the Company's Subsidiaries shall be appointed or a warrant of
attachment, execution or similar process against any substantial part
of the Property of Holdings, the Company or any of the Company's
Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Holdings, the
Company or any of the Company's Subsidiaries shall (i) commence any
voluntary case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have any order
for relief entered with respect to it, or seeking to adjudicate it as
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
wind-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
receiver-manager, liquidator, sequestrator, administrator, custodian or
similar official for it or for all or any substantial part of its assets or
(ii) shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case,
under any such law, or (iii) shall consent to the appointment of or taking
possession by a receiver, receiver-manager, liquidator, sequestrator,
trustee or other custodian or other officer for all or a substantial part
of its property; (iv) or Holdings, the Company or any of
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the Company's Subsidiaries shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make any general assignment for the benefit of
creditors or (v) the Borrower shall take any other action to authorize any
of the actions set forth in this paragraph (g).
(h) Judgments. Holdings, the Company or any of the Company's
Subsidiaries shall permit any judgments or orders against any of them or
any of their respective assets for the payment of money in excess of
$1,000,000 in the aggregate at any one time in excess of any available
insurance proceeds to remain undischarged during a period of forty-five
(45) consecutive days unless during such period such judgments or orders
shall be effectively stayed, vacated or discharged on appeal or otherwise.
(i) Dissolution. Any order, judgment or decree shall be entered
against Holdings, the Company or any of the Company's Subsidiaries,
decreeing its involuntary dissolution or other similar proceeding, and such
order shall remain undischarged and unstayed for a period in excess of
sixty (60) days; or Holdings, the Company or any of the Company's
Subsidiaries shall otherwise dissolve or cease to exist except as
specifically permitted hereby.
(j) Loan Documents; Failure of Security. At any time, for any reason,
(i) any Loan Document ceases to be in full force and effect (except in
accordance with its terms) or Holdings, the Company or any of the Company's
Subsidiaries party thereto seeks to repudiate its obligations thereunder
and the Liens intended to be created thereby are, or Holdings, the Company
or any such Subsidiary seeks to render such Liens, invalid or unperfected,
or (ii) Liens in favor of Lender contemplated by the Loan Documents shall,
at any time, for any reason, be invalidated or otherwise cease to be in
full force and effect (except to the extent that Lender has agreed that its
Lien on the Junior Collateral shall remain unperfected until the occurrence
of a Triggering Event), or such Liens shall be subordinated or shall not
have the priority contemplated hereby or by the other Loan Documents.
(k) Termination Event. Any Termination Event occurs which Lender
reasonably believes could subject either the Company or any ERISA Affiliate
to a liability in excess of $1,000,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
any Plan applies under Section 412(d) of the Internal Revenue Code for a
waiver of the minimum funding standards of Section 412(a) of the Internal
Revenue Code and Lender believes the substantial business hardship upon
which the application for the waiver is based could subject either
Holdings, the Company or any ERISA Affiliate to a material liability.
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(m) Material Adverse Change. An event shall exist or occur which has a
Material Adverse Effect.
(n) Intercreditor Agreement. Any of the parties to the Intercreditor
Agreement (other than Lender) shall fail to perform any material covenant
or material obligation binding on such party or the Intercreditor Agreement
shall cease to be in full force and effect.
(o) Change of Control. A Change of Control shall have occurred.
An Event of Default shall be deemed "continuing" until cured or waived in
accordance with Section 13.07.
11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Sections 11.01(f) or 11.01(g), the unpaid principal
amount of, and any and all accrued interest on, the Obligations and all
accrued fees shall automatically become immediately due and payable,
without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration),
all of which are hereby expressly waived by the Borrowers; and upon the
occurrence and during the continuance of any other Event of Default, and
subject to the provisions of the Intercreditor Agreement, Lender may, by
written notice to the Company, declare the unpaid principal amount of and
any and all accrued and unpaid interest on the Obligations to be, and the
same shall thereupon be, immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of
intent to demand or accelerate and of acceleration), all of which are
hereby expressly waived by the Borrowers.
(b) Rescission. If at any time after acceleration of the maturity of
the Loan, the Borrowers shall pay all arrears of interest and all payments
on account of principal of the Loan which shall have become due otherwise
than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified herein) and
all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Loan due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 13.07, then
upon written consent of Lender and written notice to the Company, the
consequences of such acceleration may be rescinded and annulled; but such
action shall not affect any subsequent Event of Default or Default or
impair any right or remedy consequent thereon.
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(d) Enforcement. The Borrowers acknowledge that in the event Holdings,
the Company or any of the Company's Subsidiaries fails to perform, observe
or discharge any of its respective obligations or liabilities hereunder or
under any other Loan Document, any remedy of law may prove to be inadequate
relief to Lender; therefore, each Borrower agrees that Lender shall be
entitled after the occurrence and during the continuance of an Event of
Default to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(e) Protective Advances. Lender may from time to time, after the
occurrence and during the continuance of an Event of Default, make such
disbursements and advances to or for the account of any Borrower pursuant
to the Loan Documents which Lender, in its sole discretion, deems necessary
or desirable to preserve or protect the Collateral or any portion thereof
(provided, that other than with respect to the payment of insurance
premiums and taxes affecting the Senior Collateral, such payments shall not
exceed $50,000 in the aggregate) or, to the extent such advance is
consented to by such Borrower, to enhance the likelihood or maximize the
amount of repayment of the Loan and other Obligations ("Protective
Advances"). Lender shall notify the Company in writing of each such
Protective Advance, which notice shall include a description of the purpose
of such Protective Advance. The Borrowers jointly and severally agree to
pay Lender, upon demand, the principal amount of all outstanding Protective
Advances, together with interest thereon at the Default Rate from the date
of such Protective Advance until the outstanding principal balance thereof
is paid in full. All outstanding principal of, and interest on, Protective
Advances shall constitute Obligations secured by the Collateral until paid
in full by the applicable Borrower(s).
ARTICLE XII
[RESERVED]
ARTICLE XIII
MISCELLANEOUS
13.01. (a) Assignment. No assignment of Lender's rights or obligations
hereunder shall be made without the prior consent of the Revolving Credit Agent
and the Company, which consent shall not unreasonably be withheld. Any such
assignment shall be on terms reasonably acceptable to Lender, the Revolving
Credit Agent, and the Company.
(b) Participations. Lender may sell participations to one or more
other financial institutions in or to all or a portion of its rights and
obligations under and in respect of the Loan hereunder; provided, however,
that (i) Lender's obligations hereunder shall remain unchanged, (ii) Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii)
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Holdings and the Borrowers shall continue to deal solely and directly with
Lender in connection with Lender's rights and obligations hereunder and
(iv) such participant's rights to agree or to restrict such Lender's
ability to agree to the modification, waiver or release of any of the terms
of the Loan Documents or to the release of any Collateral covered by the
Loan Documents, to consent to any action or failure to act by any party to
any of the Loan Documents or any of their respective Subsidiaries or
Affiliates, or to exercise or refrain from exercising any powers or rights
which any Lender may have under or in respect of the Loan Documents or any
Collateral, shall be limited to the right to consent to (A) reduction of
the principal of, or rate or amount of interest on the Loan subject to such
participation (other than by the payment or prepayment thereof), (B)
postponement of any scheduled date for any payment of principal of, or
interest on, the Loan subject to such participation (except with respect to
any modifications of the applicable provisions relating to the prepayments
of Loan and other Obligations) and (C) release of any guarantor of the
Obligations or all or any substantial portion of the Collateral. No holder
of a participation in all or any part of the Loan shall be a "Lender" or a
"Holder" for any purposes hereunder by reason of such participation;
provided, however, that each holder of a participation shall have the
rights and obligations of a Lender (including any right to receive payment)
under Sections 13.02 and 13.05; provided, however, that all requests for
any payments pursuant to such Sections shall be made by a participant
through the Lender granting such participation. The right of each holder of
a participation to receive payment under Sections 13.02 and 13.05 shall be
limited to the lesser of (i) the amounts actually incurred by such holder
for which payment is provided under said Sections and (ii) the amounts that
would have been payable under said Sections by the Borrowers to the Lender
granting the participation in respect of the participated interest to such
holder had such participation not been granted.
(i) Payment to Participants. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts
payable by the Borrowers under the Loan Documents shall be
calculated and made in the manner and to the parties required hereby
as if no such participation had been sold.
13.02. Expenses.
(a) Generally. The Borrowers jointly and severally agree upon demand
to pay, or reimburse Lender for, all of Lender's reasonable internal and
external audit, legal, appraisal, valuation, filing, document duplication
and reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including,
without limitation, the reasonable fees, expenses and disbursements of
Lender's counsel, Xxxxxxx & Xxxxxxx, local legal counsel, auditors,
accountants, appraisers, printers, insurance and environmental advisers,
and other consultants and Lenders), incurred by Lender in connection with
(A) Lender's audit and investigation of the Company and
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the Company's Subsidiaries in connection with the preparation, negotiation,
and execution of the Loan Documents and Lender's periodic audits of the
Company or the Company's Subsidiaries; (B) the preparation, negotiation,
execution and interpretation hereof (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions set forth
in Article V), the other Loan Documents and any proposal letter or
commitment letter issued in connection therewith and the making of the Loan
hereunder; (C) the creation, perfection or protection of the Liens under
the Loan Documents (including, without limitation, any reasonable fees and
expenses for local counsel in various jurisdictions); (D) the ongoing
administration hereof and of the Loan, including consultation with
attorneys in connection therewith and with respect to Lender's rights and
responsibilities hereunder and under the other Loan Documents; (E) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (F) the commencement, defense or
intervention in any court proceeding relating in any way to the
Obligations, the Property, Holdings, the Company, any of the Company's
Subsidiaries, this Agreement or any of the other Loan Documents; (G) the
response to, and preparation for, any subpoena or request for document
production with which Lender is served or deposition or other proceeding in
which Lender is called to testify, in each case, relating in any way to the
Obligations, the Property, Holdings, the Company, any of the Company's
Subsidiaries, this Agreement or any of the other Loan Documents; and (H)
any amendments, consents, waivers, assignments, restatements, or
supplements to any of the Loan Documents and the preparation, negotiation,
and execution of the same.
(b) After Default. The Borrowers further jointly and severally agree
to pay or reimburse Lender, within five (5) Business Days after such
Person's informing such Borrower(s) thereof in writing accompanied by a
copy of a related invoice or similar statement in reasonable detail and
reasonably detailed supporting information with respect thereto, for all
reasonable out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred by Lender (i) in enforcing any Loan
Document or Obligation or any security therefor or exercising or enforcing
any other right or remedy available by reason of any Event of Default; (ii)
in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer,
motion or other pleadings in any legal proceeding relating to the
Obligations, the Property, Holdings, the Company or any of the Company's
Subsidiaries and related to or arising out of the transactions contemplated
hereby or by any of the other Loan Documents; and (iv) in taking any other
action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clauses (i) through (iii) above.
13.03. Indemnity. The Borrowers further jointly and severally agree to
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defend, protect, indemnify, and hold harmless Lender and its Affiliates, and
Lender's and its Affiliate's respective officers, directors, employees,
attorneys and Lenders (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V) (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of or
in connection with (a) this Agreement, the other Loan Documents, any of the
other Transaction Documents or any act, event or transaction related or
attendant thereto, whether or not such Indemnitee is a party thereto and whether
or not such transactions are consummated, the making of the Loan hereunder, the
management of the Loan, the use or intended use of the proceeds of the Loan, or
(b) any Liabilities and Costs under Environmental, Health or Safety Requirements
of Law arising from or in connection with the past, present or future operations
of Holdings, the Company, the Company's Subsidiaries or any of their respective
predecessors in interest, or, the past, present or future environmental, health
or safety condition of any respective Property of Holdings, the Company or the
Company's Subsidiaries, the presence of asbestos-containing materials or
suspected asbestos-containing materials at any respective Property of Holdings,
the Company or such Subsidiaries or the Release or threatened Release of any
Contaminant into the environment (collectively, the "Indemnified Matters");
provided, however, the Company shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Matters resulting from the willful
misconduct or gross negligence of such Indemnitee, as determined in a judgment
by a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, each Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
13.04. Change in Accounting Principles. If any change in the accounting
principles used in the preparation of the most recent financial statements
referred to in the definition of "GAAP" contained in Section 1.01 is hereafter
required or permitted by the rules, regulations, pronouncements and opinions of
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and are adopted by the Company with the agreement of its independent certified
public accountants and such change results in a change in the method of
calculation of any of the covenants, standards or terms found in Article IX and
Article X, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such change with the desired result
that the criteria for evaluating compliance with such covenants, standards and
terms by the Company shall be the same after such change as if such change had
not been made; provided, however, no change in
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GAAP that would affect the method of calculation of any of the covenants,
standards or terms shall be given effect in such calculations until such
provisions are amended, in a manner satisfactory to Lender and the Company, so
to reflect such change in accounting principles.
13.05. Setoff. In addition to any Liens granted under the Loan Documents
and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, Lender is hereby
authorized by each Borrower at any time or from time to time, without notice to
any Person (any such notice being hereby expressly waived) to combine accounts
or to set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured (but not including trust accounts)) and
any other Indebtedness at any time held or owing by Lender, to or for the credit
or the account of such Borrower against and on account of the Obligations of any
Borrowers to Lender, including, but not limited to, all Loans and all claims of
any nature or description arising out of or in connection herewith, irrespective
of whether or not (i) Lender shall have made any demand hereunder or (ii) Lender
shall have declared the principal of and interest on the Loan and other amounts
due hereunder to be due and payable as permitted by Article XI and even though
such Obligations may be contingent or unmatured. Lender shall give the Company
notice of any action taken pursuant to this Section 13.05 promptly upon the
occurrence thereof provided that any failure to do so shall not limit any right
of Lender to take such action.
13.06 [Intentionally omitted.]
13.07 Amendments and Waivers. Unless otherwise provided herein, no
amendment or modification of any provision hereof shall be effective without the
written agreement of Lender and the Company, and no termination or waiver of any
provision hereof, or consent to any departure by the Borrowers therefrom, shall
be effective without the written concurrence of Lender, which Lender shall have
the right to grant or withhold in its sole discretion. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. No notice to or demand on any Borrower in any case shall
entitle such Borrower to any other or further notice or demand in similar or
other circumstances.
13.08. Notices.
(a) Unless otherwise specifically provided herein, any notice, consent
or other communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied, or sent by courier
service or the United States mails and shall be deemed to have been given
(i) ten (10) days following deposit in the United States mails, with proper
postage prepaid, (ii) upon delivery thereof to a reputable overnight
courier service, with delivery charges prepaid, (iii) when delivered in
person or (iv) upon confirmation of receipt of a
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telecopy. Notices to Lender pursuant to Article II, III or IV shall not be
effective until received by Lender. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as
provided in this Section 13.08) shall be as set forth below each party's
name on the signature pages hereof or, as to each party, at such other
address as may be designated by such party in a written notice to all of
the other parties hereto.
(b) The Borrowers jointly and severally agree to indemnify and hold
harmless each Indemnitee from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits,
costs, disbursements and expenses of any kind or nature (including, without
limitation, reasonable fees and disbursements of counsel to any such
Indemnitee) which may be imposed on, incurred by or asserted against any
such Indemnitee in any manner relating to or arising out of any action
taken or omitted by such Indemnitee in good faith in reliance on any notice
or other written communication in the form of a telecopy or facsimile
purporting to be from a Borrower or Holdings; provided that no Borrower
shall have any obligation under this Section 13.08(b) to an Indemnitee with
respect to any indemnified matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a
court of competent jurisdiction.
13.09. Survival of Warranties and Agreements. All representations and
warranties made herein and all obligations of the Borrowers and Holdings in
respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery hereof and of the other Loan Documents, the making and
repayment of the Loan, and shall not be limited in any way by the passage of
time or occurrence of any event and shall expressly cover time periods when
Lender may have come into possession or control of any of Holdings', the
Company's or the Company's Subsidiaries' Property.
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of Lender in the exercise of any power, right or privilege
under any of the Loan Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
13.11. Marshalling; Payments Set Aside. Lender shall not be under any
obligation to xxxxxxxx any assets in favor of the Borrowers or any other party
or against or in payment of any or all of the Obligations. To the extent that a
Borrower makes a payment or payments to Lender, or if Lender receives payment
from the proceeds of the Collateral or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to
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be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party, then to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, right and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
13.12. Severability. In case any provision in or obligation hereunder or
under the other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
13.13. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof or be given
any substantive effect.
13.14. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK.
13.15. [Intentionally Omitted]
13.16. Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon the parties hereto and their respective successors and
permitted assigns and shall inure to the benefit of the parties hereto and the
successors and permitted assigns of the Lender. The rights hereunder and the
interest herein of the Borrowers may not be assigned without the written consent
of Lender. Any attempted assignment without such written consent shall be void.
13.17. Certain Consents and Waivers.
(a) Personal Jurisdiction.
(i) EACH OF LENDER, HOLDINGS AND THE BORROWERS IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER
APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN
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CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
EACH OF HOLDINGS AND THE BORROWERS IRREVOCABLY DESIGNATES AND APPOINTS
CT CORPORATION SYSTEM AT 0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000, AS
ITS PROCESS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
EACH OF LENDER, HOLDINGS AND THE BORROWERS AGREES THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF HOLDINGS AND
THE BORROWERS WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO
THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH OF HOLDINGS AND THE BORROWERS AGREES THAT LENDER SHALL
HAVE THE RIGHT TO PROCEED AGAINST SUCH PERSON OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE LENDER TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF LENDER. EACH OF HOLDINGS AND THE
BORROWERS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS
SECTION.
(b) Service of Process. EACH OF HOLDINGS AND THE BORROWERS IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE
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PREPAID, TO THE PROCESS AGENT OR THE RELEVANT BORROWER'S AND/OR HOLDINGS'
NOTICE ADDRESS SPECIFIED PURSUANT TO SECTION 13.08, SUCH SERVICE TO BECOME
EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH OF HOLDINGS AND THE
BORROWERS IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST HOLDINGS AND/OR ANY
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF LENDER, HOLDINGS AND THE BORROWERS
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, AMONG ANY OF LENDER, HOLDINGS OR THE
BORROWERS ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY
AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY SUCH PERSON MAY FILE AN ORIGINAL
COUNTERPART OR 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.
13.18. Counterparts; Effectiveness; Inconsistencies. This Agreement and any
amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective against Holdings, the
Borrowers, and Lender on the date hereof. This Agreement and each of the other
Loan Documents shall be construed to the extent reasonable to be consistent one
with the other, but to the extent that the terms and conditions hereof are
actually inconsistent with the terms and conditions of any other Loan Document,
this Agreement shall govern.
13.19. Limitation on Agreements. All agreements between the Borrowers and
Lender, in the Loan Documents are hereby expressly limited so that in no event
shall any of the Loan or other amounts payable by the Borrower under any of the
Loan Documents be directly or indirectly secured (within the meaning of
Regulation U) by Margin Stock.
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13.20. Confidentiality. Lender shall hold all nonpublic information
obtained pursuant to the requirements hereof and identified as such by the
Company in accordance with safe and sound banking practices and in any event may
make disclosure reasonably required by a bona fide offeree or assignee (or
participant) in connection with the contemplated transfer (or participation), or
as required or requested by any Governmental Authority or representative
thereof, or pursuant to legal process, or to its accountants, lawyers and other
advisors who shall be informed of the confidential nature of such information,
and shall require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to comply with
this Section 13.20. In no event shall Lender be obligated or required to return
any materials furnished by the Company; provided, however, each offeree shall be
required to agree that if it does not become an assignee (or participant) it
shall return all materials furnished to it by the Company in connection
herewith. In the event Lender is requested or required by law to disclose any of
such information, Lender agrees to will provide the Company with prompt notice
thereof; provided, however, Lender may, without restriction hereunder, including
the providing of such notice, provide any and all of such information to any of
the agencies or other governmental entities which regularly regulate its ability
to engage in any of its businesses under state or federal law.
13.21 [Intentionally omitted.]
13.22. Entire Agreement. This Agreement, taken together with all of the
other Loan Documents embodies the entire agreement and understanding among the
parties hereto and supersedes all prior agreements and understandings, written
and oral, relating to the subject matter hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
X. XXXXXXXXXX & CO., INC.
By:
Name:
Title:
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
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PEGASUS POLYMERS
INTERNATIONAL INC.
By:
Name: ____________________________
Title: ____________________________
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
XXXXXXXXXX INTERNATIONAL,
LTD.
By:
Name: ____________________________
Title: ____________________________
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
HMC ACQUISITION CORPORATION
(to be renamed XXXXXXXXXX
HOLDING CORPORATION)
By:
Name: ____________________________
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Title: ____________________________
Notice Address:
________________________________________
________________________________________________________________________________
________________________________________________________________________________
FINOVA CAPITAL CORPORATION, as
Lender
By:
Name: ____________________________
Title: ____________________________
Notice Address:
FINOVA Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Vice President - Law
Telecopier No.: 000-000-0000
with a copy to:
FINOVA Capital Corporation
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Portfolio Manager
Telecopier No.: 000-000-0000
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