EXHIBIT 10.12
EXECUTION
COPY
CREDIT AGREEMENT
Dated as of July 3, 2003
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
and
BANK OF AMERICA, N.A.
AS THE ADMINISTRATIVE AGENT AND AS COLLATERAL AGENT,
and
XXXXXX XXXXXXX SENIOR FUNDING, INC.
AS DOCUMENTATION AGENT
and
GECC CAPITAL MARKETS GROUP INC.
AS SYNDICATION AGENT
and
AMERICAN COLOR GRAPHICS, INC.
AS THE BORROWER
TABLE OF CONTENTS
i
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES............................. 18
5.1 Books and Records........................................................... 18
5.2 Financial Information....................................................... 18
5.3 Notices to the Lenders...................................................... 21
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS........................................ 23
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents................................................................... 23
6.2 Validity and Priority of Security Interest.................................. 23
6.3 Organization and Qualification.............................................. 24
6.4 Corporate Name; Prior Transactions.......................................... 24
6.5 Subsidiaries and Affiliates................................................. 24
6.6 Financial Statements and Projections........................................ 24
6.7 Capitalization.............................................................. 24
6.8 Solvency.................................................................... 25
6.9 Debt........................................................................ 25
6.10 Distributions............................................................... 25
6.11 Real Estate; Leases......................................................... 25
6.12 Proprietary Rights.......................................................... 25
6.13 Trade Names................................................................. 26
6.14 Litigation.................................................................. 26
6.15 Labor Disputes.............................................................. 26
6.16 Environmental Laws.......................................................... 26
6.17 No Violation of Law......................................................... 27
6.18 No Default.................................................................. 27
6.19 ERISA Compliance............................................................ 27
6.20 Taxes....................................................................... 28
6.21 Regulated Entities.......................................................... 28
6.22 Use of Proceeds; Margin Regulations......................................... 28
6.23 Copyrights, Patents, Trademarks and Licenses, etc........................... 28
6.24 No Material Adverse Change.................................................. 28
6.25 Full Disclosure............................................................. 29
6.26 Material Agreements......................................................... 29
6.27 Bank Accounts............................................................... 29
6.28 Governmental Authorization.................................................. 29
6.29 Tax Shelter Regulations..................................................... 29
6.30 Parent Operations........................................................... 29
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS............................................ 29
7.1 Taxes and Other Obligations................................................. 29
7.2 Legal Existence and Good Standing........................................... 30
7.3 Compliance with Law and Agreements; Maintenance of Licenses................. 30
7.4 Maintenance of Property; Inspection of Property............................. 30
7.5 Insurance................................................................... 31
7.6 Insurance and Condemnation Proceeds......................................... 31
ii
7.7 Environmental Laws.......................................................... 32
7.8 Compliance with ERISA....................................................... 33
7.9 Mergers, Consolidations or Sales............................................ 33
7.10 Distributions and Restricted Investments.................................... 34
7.11 Intentionally omitted....................................................... 34
7.12 Guaranties.................................................................. 34
7.13 Debt........................................................................ 35
7.14 Prepayment.................................................................. 35
7.15 Transactions with Affiliates................................................ 35
7.16 Investment Banking and Finder's Fees........................................ 36
7.17 Business Conducted.......................................................... 36
7.18 Liens....................................................................... 36
7.19 Sale and Leaseback Transactions............................................. 36
7.20 New Subsidiaries............................................................ 36
7.21 Fiscal Year................................................................. 36
7.22 Capital Expenditures........................................................ 36
7.23 Fixed Charge Coverage Ratio................................................. 36
7.24 Use of Proceeds............................................................. 37
7.25 Proceeds from Surplus Cash Deposits......................................... 37
7.26 Further Assurances.......................................................... 37
ARTICLE 8 CONDITIONS OF LENDING......................................................... 37
8.1 Conditions Precedent to Making of Loans on the Closing Date................. 37
8.2 Conditions Precedent to Each Loan........................................... 39
ARTICLE 9 DEFAULT; REMEDIES............................................................. 40
9.1 Events of Default........................................................... 40
9.2 Remedies.................................................................... 42
ARTICLE 10 TERM AND TERMINATION......................................................... 43
10.1 Term and Termination........................................................ 43
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS................. 43
11.1 Amendments and Waivers...................................................... 43
11.2 Assignments; Participations................................................. 45
ARTICLE 12 THE AGENT.................................................................... 47
12.1 Appointment and Authorization............................................... 47
12.2 Delegation of Duties........................................................ 47
12.3 Liability of Agent.......................................................... 47
12.4 Reliance by Agent........................................................... 48
12.5 Notice of Default........................................................... 48
12.6 Credit Decision............................................................. 48
iii
12.7 Indemnification............................................................. 48
12.8 Agent in Individual Capacity................................................ 49
12.9 Successor Agent............................................................. 49
12.10 Withholding Tax............................................................. 49
12.11 Collateral Matters.......................................................... 51
12.12 Restrictions on Actions by Lenders; Sharing of Payments..................... 52
12.13 Agency for Perfection....................................................... 52
12.14 Payments by Agent to Lenders................................................ 52
12.15 Settlement.................................................................. 53
12.16 Letters of Credit; Intra-Lender Issues...................................... 56
12.17 Concerning the Collateral and the Related Loan Documents.................... 58
12.18 Field Audit and Examination Reports; Disclaimer by Lenders.................. 58
12.19 Relation Among Lenders...................................................... 58
12.20 Co-Agents................................................................... 58
ARTICLE 13 MISCELLANEOUS................................................................ 59
13.1 No Waivers; Cumulative Remedies............................................. 59
13.2 Severability................................................................ 59
13.3 Governing Law; Choice of Forum; Service of Process.......................... 59
13.4 WAIVER OF JURY TRIAL........................................................ 60
13.5 Survival of Representations and Warranties.................................. 60
13.6 Other Security and Guaranties 60
13.7 Fees and Expenses........................................................... 60
13.8 Notices..................................................................... 61
13.9 Waiver of Notices........................................................... 62
13.10 Binding Effect.............................................................. 62
13.11 Indemnity of the Agent and the Lenders by the Borrower...................... 62
13.12 Limitation of Liability..................................................... 63
13.13 Final Agreement............................................................. 63
13.14 Counterparts................................................................ 64
13.15 Captions.................................................................... 64
13.16 Right of Setoff............................................................. 64
13.17 Confidentiality............................................................. 64
13.18 Conflicts with Other Loan Documents......................................... 65
13.19 Judgment Currency........................................................... 65
13.20 IMPORTANT: READ BEFORE SIGNING.............................................. 66
iv
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINITIONS
EXHIBITS
EXHIBIT A - FORM OF REVOLVING LOAN NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT G - FORM OF AGREEMENT OF LANDLORD
EXHIBIT H -1 - FORM OF MORTGAGE
EXHIBIT H -2 - FORM OF LEASEHOLD MORTGAGE
EXHIBIT I - FORM OF PLEDGE AGREEMENT
EXHIBIT J - FORM OF SECURITY AGREEMENT
EXHIBIT K - FORM OF BLOCKED ACCOUNT AGREEMENT
EXHIBIT L-1 - FORM OF BORROWER'S U S COUNSEL OPINION
EXHIBIT L-2 - FORM OF BORROWER'S GENERAL COUNSEL OPINION
EXHIBIT L-3 - FORM OF BORROWER'S LOCAL COUNSEL OPINION
SCHEDULES
SCHEDULE 1.1 - COMMITMENTS
SCHEDULE 1.2 - MORTGAGED PROPERTY
SCHEDULE 1.3 - CURRENT INVESTMENTS
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
v
SCHEDULE 6.4 - CREDIT PARTY NAMES
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.9 - DEBT
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR DISPUTES
SCHEDULE 6.16 - ENVIRONMENTAL LAW
SCHEDULE 6.19 - ERISA COMPLIANCE
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.27 - BANK ACCOUNTS
SCHEDULE 7.15 - TRANSACTIONS WITH AFFILIATES
vi
CREDIT AGREEMENT
This
Credit Agreement, dated as of July 3, 2003 (this "Agreement"), is
made by and among the financial institutions from time to time parties hereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), BANK OF AMERICA, N.A., as Administrative Agent
and Collateral Agent for the Lenders (in such capacities, the "Agent"), XXXXXX
XXXXXXX SENIOR FUNDING, INC., as Documentation Agent, GECC CAPITAL MARKETS
GROUP INC., as Syndication Agent, and AMERICAN COLOR GRAPHICS, INC., a
New York
corporation, with offices at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the
"Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
it a revolving line of credit for loans and letters of credit in an amount not
to exceed $70,000,000 and which extensions of credit the Borrowers will use for
the purposes permitted hereunder;
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in ANNEX A which is
attached hereto and incorporated herein; the rules of construction contained
therein shall govern the interpretation of this Agreement and the other Loan
Documents, and all Annexes, Exhibits and Schedules attached hereto are
incorporated herein by reference;
WHEREAS, the Lenders have agreed to make available to the Borrower a
revolving credit facility upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrower hereby agree as follows.
ARTICLE 1
LOANS AND LETTERS OF CREDIT
1.1 TOTAL FACILITY. Subject to all of the terms and conditions of
this Agreement, the Lenders agree to make available a total credit facility of
up to $70,000,000 (the "Total Facility") to the Borrower from time to time
during the term of this Agreement. The Total Facility shall be composed of a
revolving line of credit consisting of Revolving Loans and Letters of Credit.
1.2 REVOLVING LOANS.
(a) (i) AMOUNTS. Subject to the satisfaction of the
conditions precedent set forth in ARTICLE 8, each Lender severally, but not
jointly, agrees, upon the Borrowers' request from time to time on any Business
Day during the period from the Closing Date to the Termination Date, to make
revolving loans (the "Revolving Loans") to the Borrowers in amounts not to
exceed such Lender's Pro Rata Share of Availability, except for Non-Ratable
Loans and Agent Advances. The Lenders, however, in their unanimous discretion,
may elect to make Revolving Loans or issue or arrange to have issued Letters of
Credit in excess of the Borrowing Base on one or more occasions, but if they do
so, neither the Agent nor the Lenders shall be deemed thereby to have changed
the limits of the Borrowing Base or to be obligated to exceed such limits on any
other
occasion. If any Borrowing would exceed Availability, the Lenders may refuse to
make or may otherwise restrict the making of Revolving Loans as the Lenders
determine until such excess has been eliminated, subject to the Agent's
authority, in its sole discretion, to make Agent Advances pursuant to the terms
of SECTION 1.2(i).
(i) Borrower shall execute and deliver to each Lender a
note to evidence the Revolving Loan of that Lender. Each note shall be
in the principal amount of the Lender's Pro Rata Share of the
Revolving Loan Commitments, dated the date hereof and substantially in
the form of EXHIBIT A (each a "REVOLVING LOAN NOTE" and, collectively,
the "REVOLVING LOAN NOTES"). Each Revolving Loan Note shall represent
the obligation of Borrower to pay the amount of Lender's Pro Rata
Share of the Revolving Loan Commitments, or, if less, such Lender's
Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Loans to Borrower together with interest thereon as
prescribed in SECTION 1.2. The entire unpaid balance of the Revolving
Loan and all other non-contingent Obligations shall be immediately due
and payable in full in immediately available funds on the Termination
Date.
(b) Procedure for Borrowing.
(1) Each Borrowing shall be made upon the Borrower's
irrevocable written notice delivered to the Agent in the form of a notice of
borrowing ("Notice of Borrowing"), which must be received by the Agent prior to
(i) 12:00 noon (
New York time) three Business Days prior to the requested
Funding Date, in the case of LIBOR Rate Loans and (ii) 12:00 noon (
New York
time) on the requested Funding Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which in the case of
a LIBOR Rate Loan must equal or exceed $1,000,000 (and
increments of $500,000 in excess of such amount);
(B) the requested Funding Date, which must be a
Business Day;
(C) whether the Revolving Loans requested are to be
Base Rate Loans or LIBOR Revolving Loans (and if not specified,
it shall be deemed a request for a Base Rate Loan); and
(D) the duration of the Interest Period for LIBOR
Revolving Loans (and if not specified, it shall be deemed a
request for an Interest Period of one month);
PROVIDED, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Loans only.
(2) In lieu of delivering a Notice of Borrowing, the
Borrower may give the Agent telephonic notice of such request for advances to
the Designated Account on or before the deadline set forth above. The Agent at
all times shall be entitled to rely on such telephonic notice in making such
Revolving Loans, regardless of whether any written confirmation is received.
2
(3) The Borrower shall have no right to request a LIBOR
Rate Loan while a Default or Event of Default has occurred and is continuing.
(c) RELIANCE UPON AUTHORITY. Prior to the Closing Date,
the Borrower shall deliver to the Agent, a notice setting forth the account of
the Borrower ("Designated Account") to which the Agent is authorized to transfer
the proceeds of the Revolving Loans requested hereunder. The Borrower may
designate a replacement account from time to time by written notice. All such
Designated Accounts must be maintained with a financial institution satisfactory
to the Agent in the Agent's Commercial Judgment. The Agent is entitled to rely
conclusively on any person's request for Revolving Loans on behalf of the
Borrower, so long as the proceeds thereof are to be transferred to the
Designated Account. The Agent has no duty to verify the identity of any
individual representing himself or herself as a person authorized by the
Borrower to make such requests on its behalf.
(d) NO LIABILITY. The Agent shall not incur any liability to the
Borrower as a result of acting upon any notice referred to in SECTIONS 1.2(b)
and (c), which the Agent believes in good faith to have been given by an officer
or other person duly authorized by the Borrower to request Revolving Loans on
its behalf. The Borrower shall provide the Agent with a list of persons
authorized to establish or change the Designated Account and the Agent shall
have a duty of inquiry before accepting a direction from a person not included
on this list of authorized persons, as the same may be amended from time to
time. The crediting of Revolving Loans to the Designated Account conclusively
establishes the obligation of the Borrower to repay such Revolving Loans as
provided herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to SECTION 1.2(b) shall be irrevocable.
The Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof), the Agent shall elect to have
the terms of SECTION 1.2(g) or the terms of SECTION 1.2(h) apply to such
requested Borrowing. If the Bank declines in its sole discretion to make a
Non-Ratable Loan pursuant to SECTION 1.2(h), the terms of SECTION 1.2(g) shall
apply to the requested Borrowing.
(g) MAKING OF REVOLVING LOANS. If Agent elects to have the terms
of this SECTION 1.2(g) apply to a requested Borrowing, then promptly after
receipt of a Notice of Borrowing or telephonic notice in lieu thereof, the Agent
shall notify the Lenders by telecopy, telephone or e-mail of the requested
Borrowing. Each Lender shall transfer its Pro Rata Share of the requested
Borrowing available to the Agent in immediately available funds, to the account
from time to time designated by Agent, not later than 12:00 noon (
New York time)
on the applicable Funding Date. After the Agent's receipt of all proceeds of
such Revolving Loans, the Agent shall make the proceeds of such Revolving Loans
available to the Borrower on the applicable Funding Date by transferring same
day funds to the account designated by the Borrower; PROVIDED, HOWEVER, that the
amount of Revolving Loans so made on any date shall not exceed the Availability
on such date.
(h) MAKING OF NON-RATABLE LOANS.
(A) If Agent elects, with the consent of the Bank, to
have the terms of this SECTION 1.2(h) apply to a requested Borrowing, the Bank
shall make a Revolving Loan
3
in the amount of that Borrowing available to the Borrower on the applicable
Funding Date by transferring same day funds to Borrower's Designated Account.
Each Revolving Loan made solely by the Bank pursuant to this Section is herein
referred to as a "Non-Ratable Loan", and such Revolving Loans are collectively
referred to as the "Non-Ratable Loans." Each Non-Ratable Loan shall be subject
to all the terms and conditions applicable to other Revolving Loans except that
all payments thereon shall be payable to the Bank solely for its own account.
The aggregate amount of Non-Ratable Loans outstanding at any time shall not
exceed $20,000,000. The Agent shall not request the Bank to make any Non-Ratable
Loan if (1) the Agent has received written notice from any Lender that one or
more of the applicable conditions precedent set forth in ARTICLE 8 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (2) the
requested Borrowing would exceed Availability on that Funding Date.
(B) The Non-Ratable Loans shall be secured by the Agent's
Liens in and to the Collateral and shall constitute Base Rate Loans and
Obligations hereunder.
(i) AGENT ADVANCES.
(A) Subject to the limitations set forth below, the Agent
is authorized by the Borrower and the Lenders, from time to time in the Agent's
sole discretion, (A) after the occurrence of a Default or an Event of Default,
or (B) at any time that any of the other conditions precedent set forth in
ARTICLE 8 have not been satisfied, to make Base Rate Loans to the Borrower on
behalf of the Lenders in an aggregate amount outstanding at any time not to
exceed 10% of the Borrowing Base but not in excess of the Maximum Revolver
Amount which the Agent, in its reasonable business judgment, deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion thereof, (2)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (3) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including costs, fees and expenses as
described in SECTION 13.7 (any of such advances are herein referred to as "Agent
Advances"); PROVIDED, that the Required Lenders may at any time revoke the
Agent's authorization to make Agent Advances. Any such revocation must be in
writing and shall become effective prospectively upon the Agent's receipt
thereof.
(B) The Agent Advances shall be secured by the Agent's
Liens in and to the Collateral and shall constitute Base Rate Loans and
Obligations hereunder.
1.3 [Intentionally omitted.]
1.4 LETTERS OF CREDIT.
(a) AGREEMENT TO ISSUE OR CAUSE TO ISSUE. Subject to the terms
and conditions of this Agreement, the Agent agrees (i) to cause the Letter of
Credit Issuer to issue for the account of the Borrower one or more
commercial/documentary and standby letters of credit ("Letter of Credit") and/or
(ii) to provide credit support or other enhancement to a Letter of Credit Issuer
acceptable to Agent, which issues a Letter of Credit for the account of the
Borrower (any such credit support or enhancement being herein referred to as a
"Credit Support") from time to time during the term of this Agreement.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have
any obligation to issue or cause to be issued any Letter of Credit or to provide
Credit Support for any
4
Letter of Credit at any time if: (i) the maximum face amount of the requested
Letter of Credit is greater than the Unused Letter of Credit Subfacility at such
time; (ii) the maximum undrawn amount of the requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with the
opening thereof would exceed Availability at such time; or (iii) such Letter of
Credit has an expiration date later than the Stated Termination Date or more
than 12 months from the date of issuance for standby letters of credit and 180
days for documentary letters of credit. With respect to any Letter of Credit
which contains any "evergreen" or automatic renewal provision, each Lender shall
be deemed to have consented to any such extension or renewal unless any such
Lender shall have provided to the Agent, written notice that it declines to
consent to any such extension or renewal at least thirty (30) days prior to the
date on which the Letter of Credit Issuer is entitled to decline to extend or
renew the Letter of Credit. If all of the requirements of this SECTION 1.4 are
met and no Default or Event of Default has occurred and is continuing, no Lender
shall decline to consent to any such extension or renewal.
(c) OTHER CONDITIONS. In addition to conditions precedent
contained in ARTICLE 8, the obligation of the Agent to issue or to cause to be
issued any Letter of Credit or to provide Credit Support for any Letter of
Credit is subject to the following conditions precedent having been satisfied in
a manner reasonably satisfactory to the Agent:
(1) The Borrower shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as such Letter of Credit Issuer
may prescribe, an application in form and substance satisfactory to such Letter
of Credit Issuer and reasonably satisfactory to the Agent for the issuance of
the Letter of Credit and such other documents as may be required pursuant to the
terms thereof, and the form, terms and purpose of the proposed Letter of Credit
shall be reasonably satisfactory to the Agent and the Letter of Credit Issuer;
and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) ISSUANCE OF LETTERS OF CREDIT.
(1) REQUEST FOR ISSUANCE. Borrower must notify the Agent
of a requested Letter of Credit at least three (3) Business Days prior to the
proposed issuance date. Such notice shall be irrevocable and must specify the
original face amount of the Letter of Credit requested, the Business Day of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the Business Day on which the
requested Letter of Credit is to expire, the purpose for which such Letter of
Credit is to be issued, and the beneficiary of the requested Letter of Credit.
The Borrower shall attach to such notice the proposed form of the Letter of
Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. As of the
Business Day immediately preceding the requested issuance date of the Letter of
Credit, the Agent shall determine the amount of the applicable Unused Letter of
Credit Subfacility and Availability. If (i) the face amount of the requested
Letter of Credit is less than the Unused Letter of Credit Subfacility
5
and (ii) the amount of such requested Letter of Credit and all commissions,
fees, and charges due from the Borrower in connection with the opening thereof
would not exceed Availability, the Agent shall cause the Letter of Credit Issuer
to issue the requested Letter of Credit on the requested issuance date so long
as the other conditions hereof are met.
(3) NO EXTENSIONS OR AMENDMENT. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this SECTION 1.4 are
met as though a new Letter of Credit were being requested and issued.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT. The Borrower
agrees to reimburse immediately the Letter of Credit Issuer for any draw under
any Letter of Credit and the Agent for the account of the Lenders upon any
payment pursuant to any Credit Support, and to pay the Letter of Credit Issuer
the amount of all other charges and fees payable to the Letter of Credit Issuer
in connection with any Letter of Credit immediately when due, irrespective of
any claim, setoff, defense or other right which the Borrower may have at any
time against the Letter of Credit Issuer or any other Person. Each drawing under
any Letter of Credit shall constitute a request by the Borrower to the Agent for
a Borrowing of a Base Rate Loan in the amount of such drawing. The Funding Date
with respect to such borrowing shall be the date of such drawing.
(f) INDEMNIFICATION; EXONERATION; POWER OF ATTORNEY.
(1) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided in this SECTION 1.4, the Borrower agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
(other than a Lender in its capacity as Letter of Credit Issuer) may incur or be
subject to as a consequence, direct or indirect, of the issuance of any Letter
of Credit or the provision of any Credit Support or enhancement in connection
therewith. The Borrower's obligations under this Section shall survive payment
of all other Obligations.
(2) ASSUMPTION OF RISK BY THE BORROWER. As among the
Borrower, the Lenders and the Agent (other than a Lender in its capacity as
Letter of Credit Issuer), the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent (other than a Lender in its capacity as
Letter of Credit Issuer, with respect to which the provisions of paragraph (4)
below shall apply instead of the provisions of this paragraph (2)) shall not be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to any
of the Letters of Credit, even if it should prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of any Letter of
Credit to comply duly with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds
6
thereof; (G) the misapplication by the beneficiary of any Letter of Credit of
the proceeds of any drawing under such Letter of Credit; (H) any consequences
arising from causes beyond the control of the Lenders or the Agent, including
any act or omission, whether rightful or wrongful, of any present or future DE
JURE or DE FACTO Governmental Authority or (I) the Letter of Credit Issuer's
honor of a draw for which the draw or any certificate fails to comply in any
respect with the terms of the Letter of Credit. None of the foregoing shall
affect, impair or prevent the vesting of any rights or powers of the Agent or
any Lender under this SECTION 1.4(f).
(3) EXONERATION. Without limiting the foregoing, no
action or omission whatsoever by Agent or any Lender (excluding any Lender in
its capacity as a Letter of Credit Issuer) shall result in any liability of
Agent or and Lender to the Borrower, or relieve the Borrower of any of its
obligations hereunder to any such Person.
(4) RIGHTS AGAINST LETTER OF CREDIT ISSUER. Nothing
contained in this Agreement is intended to limit the Borrower's rights, if any,
with respect to any Letter of Credit Issuer or modify any duties or standard of
care of any Letter of Credit Issuer which arise under applicable law or as a
result of the letter of credit application and related documents executed by and
between the Borrower and such Letter of Credit Issuer.
(5) ACCOUNT PARTY. The Borrower hereby authorizes and
directs any Letter of Credit Issuer to name the Borrower as the "Account Party"
therein and to deliver to the Agent all instruments, documents and other
writings and property received by the Letter of Credit Issuer pursuant to the
Letter of Credit, and to accept and rely upon the Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(g) SUPPORTING LETTER OF CREDIT; CASH COLLATERAL. If,
notwithstanding the provisions of SECTION 1.4(b) and SECTION 10.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement,
then upon such termination the Borrower shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit or Credit Support then outstanding, a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to the Agent,
issued by an issuer satisfactory to the Agent in an amount equal to the greatest
amount for which such Letter of Credit or such Credit Support may be drawn plus
any fees and expenses associated with such Letter of Credit or such Credit
Support, under which Supporting Letter of Credit the Agent is entitled to draw
amounts necessary to reimburse the Agent and the Lenders for payments to be made
by the Agent and the Lenders under such Letter of Credit or Credit Support and
any fees and expenses associated with such Letter of Credit or Credit Support.
Such Supporting Letter of Credit shall be held by the Agent, for the ratable
benefit of the Agent and the Lenders, as security for, and to provide for the
payment of, the aggregate undrawn amount of such Letters of Credit or such
Credit Support remaining outstanding.
1.5 BANK PRODUCTS. The Borrower may request and the Agent or
Xxxxxx Xxxxxxx Senior Funding, Inc. (each a "Providing Lender") may, in its sole
and absolute discretion, arrange for the Borrower to obtain from a Providing
Lender or a Providing Lender's Affiliates Bank Products although the Borrower is
not required to do so. If Bank Products are provided by an Affiliate of a
Providing Lender, the Borrower agrees to indemnify and hold the Agent, the
Providing Lender and the other Lenders harmless from any and all costs and
obligations now or hereafter incurred by the Agent, the Providing Lender or any
of the other Lenders which arise from any indemnity given by the Providing
Lender to its Affiliates related to such Bank Products; PROVIDED, HOWEVER,
nothing
7
contained herein is intended to limit the Borrower's rights, with respect to the
Providing Lender or its Affiliates, if any, which arise as a result of the
execution of documents by and between the Borrower and the Providing Lender
which relate to Bank Products, including, but not limited to, its right to
negotiate a waiver by any Affiliate of the Providing Lender of its right to seek
an indemnity from the Providing Lender related to Bank Products provided to the
Borrower by such Affiliate. The agreement contained in this Section shall
survive termination of this Agreement. The Borrower acknowledges and agrees that
the obtaining of Bank Products from the Providing Lender or the Providing
Lender's Affiliates (a) is in the sole and absolute discretion of the Providing
Lender or the Providing Lender's Affiliates, and (b) is subject to all rules and
regulations of the Providing Lender or the Providing Lender's Affiliates.
ARTICLE 2
INTEREST AND FEES
2.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall
bear interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from and including the
date made until but excluding the date paid in full in cash at a rate determined
by reference to the Base Rate or the LIBOR Rate PLUS the Applicable Margins as
set forth below, but not to exceed the Maximum Rate. If at any time Loans are
outstanding with respect to which the Borrower has not delivered to the Agent a
notice specifying the basis for determining the interest rate applicable thereto
in accordance herewith, those Loans shall bear interest at a rate determined by
reference to the Base Rate until notice to the contrary has been given to the
Agent in accordance with this Agreement and such notice has become effective.
Except as otherwise provided herein, the outstanding Obligations shall bear
interest as follows:
(i) For all Base Rate Loans and other Obligations (other
than LIBOR Rate Loans) at a fluctuating per annum rate equal to the
Base Rate plus the Applicable Margin; and
(ii) For all LIBOR Revolving Loans at a per annum rate
equal to the LIBOR Rate PLUS the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year).
For the purposes of the INTEREST ACT (Canada), the yearly rate of interest to
which any rate calculated on the basis of a period of time different from the
actual number of days in the year (360 days, for example) is equivalent is the
stated rate multiplied by the actual number of days in the year (365 or 366, as
applicable) and divided by the number of days in the shorter period (360 days,
in the example).
(b) PAYMENT OF INTEREST. The Borrower shall pay to the
Agent, for the ratable benefit of Lenders, interest accrued on all Base Rate
Loans in arrears on the first day of each month hereafter and on the Termination
Date. The Borrower shall pay to the Agent, for the ratable
8
benefit of Lenders, interest on all LIBOR Rate Loans in arrears on each LIBOR
Interest Payment Date.
(c) DEFAULT RATE. If any Default or Event of Default
occurs and is continuing and the Agent or the Required Lenders in their
discretion so elect, then, while any such Default or Event of Default is
continuing, all of the Obligations shall bear interest at the Default Rate
applicable thereto.
2.2 CONTINUATION AND CONVERSION ELECTIONS.
(a) The Borrower may:
(i) elect, as of any Business Day, in the case of Base
Rate Loans to convert any Base Rate Loans (or any part thereof in an
amount not less than $1,000,000, or that is in an integral multiple of
$500,000 in excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $500,000 in excess
thereof);
PROVIDED, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans; PROVIDED FURTHER that if the notice
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month.
(b) The Borrower shall deliver a notice of
continuation/conversion ("Notice of Continuation/Conversion") to the Agent not
later than 12:00 noon (
New York time) at least three (3) Business Days in
advance of the Continuation/Conversion Date, if the Loans are to be converted
into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period,
PROVIDED, HOWEVER, the Borrower may not select an Interest Period that
ends after the Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrower has failed to select timely a new Interest Period
to be applicable to LIBOR Rate Loans or if any Default or Event of Default then
exists, the Borrower shall be deemed to have elected to convert such LIBOR Rate
Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.
9
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(e) There may not be more than six (6) different LIBOR Rate
Loans in effect hereunder at any time.
2.3 MAXIMUM INTEREST RATE. In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable by any Lender
under applicable law for such Lender with respect to loans of the type provided
for hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent
such limitation, would have exceeded the Maximum Rate, then the interest rate
for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations, the total amount of interest paid or accrued under
the terms of this Agreement is less than the total amount of interest which
would, but for this SECTION 2.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. If a court of competent jurisdiction determines that the
Agent and/or any Lender has received interest and other charges hereunder in
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Agent and/or such Lender shall refund to the Borrower such
excess.
2.4 CLOSING FEE. The Borrower agrees to pay the Agent on the Closing
Date the fees (the "Closing Fee") as set forth in the fee letter dated June 11,
2003, between the Agent and the Borrower (the "Fee Letter").
2.5 UNUSED LINE FEE. On the first day of each month and on the
Termination Date the Borrower agrees to pay to the Agent, for the account of the
Lenders, in accordance with their respective Pro Rata Shares, an unused line fee
(the "Unused Line Fee") equal to three-eighths of one percent (.375%) per annum
times the amount by which the Maximum Revolver Amount exceeded the sum of the
average daily outstanding amount of Revolving Loans and the average daily
undrawn face amount of outstanding Letters of Credit, during the immediately
preceding month or shorter period if calculated for the first month hereafter or
on the Termination Date. The Unused Line Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. All principal payments
received by the Agent shall be deemed to be credited to the Borrower's Loan
Account immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this SECTION 2.5.
2.6 LETTER OF CREDIT FEE. The Borrower agrees to pay to the Agent,
for the account of the Lenders, in accordance with their respective Pro Rata
Shares, for each Letter of Credit, a fee (the "Letter of Credit Fee") equal to
the Applicable Margin for LIBOR Loans and to Agent for
10
the benefit of the Letter of Credit Issuer a fronting fee of one-eighth of one
percent (.125%) per annum of the undrawn face amount of each Letter of Credit,
and to the Letter of Credit Issuer, all reasonable out-of-pocket costs, fees and
expenses incurred by the Letter of Credit Issuer in connection with the
application for, processing of, issuance of, or amendment to any Letter of
Credit. The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit is
outstanding and on the Termination Date. The Letter of Credit Fee shall be
computed on the basis of a 360-day year for the actual number of days elapsed.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 REVOLVING LOANS. The Borrower shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. The Borrower may prepay Revolving Loans at any
time, and reborrow subject to the terms of this Agreement. All amounts received
by the Agent pursuant to Section 11(c) of the Security Agreement shall be
applied as prepayments of the Revolving Loans in the manner and at the times
specified in said Section 11(c). In addition, and without limiting the
generality of the foregoing, upon demand the Borrower shall pay to the Agent,
for account of the Lenders, the amount, without duplication, by which the
Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or the
Maximum Revolver Amount.
3.2 TERMINATION OF FACILITY.
(a) The Borrower may terminate this Agreement upon at least ten
(10) Business Days' notice to the Agent and the Lenders, upon (a) the payment in
full of all outstanding Revolving Loans, together with accrued interest thereon,
and the cancellation and return of all outstanding Letters of Credit, (b) the
payment of the early termination fee set forth below, (c) the payment in full in
cash of all reimbursable expenses and other Obligations, and (d) with respect to
any LIBOR Rate Loans prepaid, payment of the amounts due under SECTION 4.4, if
any. If this Agreement is terminated at any time prior to the first anniversary
of the Closing Date, whether pursuant to this Section or pursuant to SECTION
9.2, the Borrower shall pay to the Agent, for the account of the Lenders, an
early termination fee in an amount equal to one-quarter of one percent (.250%)
of the Commitments.
(b) In addition to the ability of the Borrower to terminate this
Agreement pursuant to SECTION 3.2(a) above, the Borrower may, upon notice to the
Agent, from time to time permanently reduce Total Facility and the aggregate
Commitments to an amount not less than $40,000,000; PROVIDED that (i) any such
notice shall be received by the Agent not later than 11:00 a.m. five Business
Days prior to the date of the proposed reduction, (ii) any such partial
reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of
$1,000,000 in excess thereof; and (iii) the Borrower shall not reduce the Total
Facility or the aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the outstanding amount of all Revolving Loans
and outstanding Letters of Credit would exceed the aggregate Commitments. The
Agent will promptly notify the Lenders of any such notice of reduction of the
Total Facility and the aggregate Commitments. Any reduction of the aggregate
Commitments shall be applied to the Commitment of each Lender according to its
Pro Rata Share. Any Unused Line Fees accrued until the effective date of any
reduction of the Total Facility and the aggregate Commitments shall be paid on
the effective date of such reduction.
11
3.3 [INTENTIONALLY OMITTED]
3.4 [INTENTIONALLY OMITTED]
3.5 REPAYMENTS OF THE LOANS FROM ASSET DISPOSITIONS.
(a) Immediately upon receipt by Borrower or its Subsidiaries of
cash proceeds of any asset disposition (excluding proceeds of asset dispositions
permitted by SECTION 7.9(a)), Borrower shall repay the Loans in an amount equal
to all such proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrower in connection therewith, (B) transfer taxes, (C) amounts
payable to holders of senior Liens (to the extent such Liens constitute
Permitted Liens hereunder), if any, (D) any commercially reasonable escrow
deposit or other reserve required under the terms of the purchase and sale
agreement for surviving liabilities thereunder, (E) amounts paid or payable for
restoration of any property following an asset disposition by condemnation to
substantially the same functional condition as existed prior to such
condemnation, and (F) an appropriate reserve for income taxes in accordance with
GAAP in connection therewith ("Net Proceeds").
(b) Repayments from proceeds of any asset disposition shall be
applied as follows: FIRST, to accrued interest with respect to the Revolving
Loans, SECOND, to pay the principal of the Revolving Loans, THIRD to the extent
that the Borrowing Base, after giving effect to such asset disposition, is less
than the outstanding face amount of outstanding Letters of Credit, to cash
collateralize such Letters of Credit, but only to the extent of such shortfall,
FOURTH, to repay any other outstanding Obligations and FIFTH, to the Borrower or
to any other Person entitled thereto as their interests may appear or as a court
of competent jurisdiction may otherwise direct.
(c) No provision contained in this SECTION 3.5 shall constitute
a consent to an asset disposition that is otherwise not permitted by the terms
of this Agreement
3.6 PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrower shall be made to the Agent for the
account of the Lenders, at the account designated by the Agent and shall be made
in Dollars and in immediately available funds, no later than 12:00 noon (
New
York City time) on the date specified herein. Any payment received by the Agent
after such time shall be deemed (for purposes of calculating interest only) to
have been received on the following Business Day and any applicable interest
shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period", whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.
(c) If any LIBOR Rate Loans are repaid prior to the expiration
date of the Interest Period applicable thereto, the Borrower shall pay to the
Lenders the amounts described in SECTION 4.4.
12
(d) The parties hereto agree that so long as no Event of Default
exists or the Obligations have not been declared due and payable in full (a) any
payments or repayments of the Obligations by the Borrower shall be deemed to
apply first to the portion of the Obligations that are not secured by any of the
Mortgages, such that the portion of the Obligations last remaining unpaid shall
be deemed to be the portion secured by the Mortgages and (b) the portion of
payments or repayments of Obligations by the Borrower which are deemed to apply
to the portion of the Obligations secured by the Mortgages shall be deemed to
apply last to the portions thereof secured by the Mortgages covering property
located in the States of Alabama, Maryland or Minnesota.
3.7 PAYMENTS AS REVOLVING LOANS. At the election of Agent, all
payments of principal, interest, reimbursement obligations in connection with
Letters of Credit and Credit Support for Letters of Credit, fees, premiums,
reimbursable expenses and other sums payable hereunder, may be paid from the
proceeds of Revolving Loans made hereunder. The Borrower hereby irrevocably
authorizes the Agent to (i) charge the Loan Account for the purpose of paying
all amounts from time to time due hereunder and agrees that all such amounts
charged shall constitute Revolving Loans (including Non-Ratable Loans and Agent
Advances), and (ii) withdraw funds from the Canadian bank accounts of Borrower
pursuant to the terms of this Agreement and the applicable Blocked Account
Agreement and apply such funds to the Loan Account of Borrower as provided
herein.
3.8 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS. Principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Loans to which such payments relate held
by each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to Agent and the
Letter of Credit Issuer and except as provided in SECTION 11.1(b). All payments
shall be remitted to the Agent and all such payments not relating to principal
or interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Accounts or other Collateral received by the Agent, shall be
applied, ratably, subject to the provisions of this Agreement, FIRST, to pay any
fees, indemnities or expense reimbursements, as well as all amounts relating to
Bank Products other than Hedge Agreements, then due to the Agent from the
Borrower; SECOND, to pay any fees or expense reimbursements then due to the
Lenders from the Borrower; THIRD, to pay interest due in respect of all Loans,
including Non-Ratable Loans and Agent Advances; FOURTH, to pay or prepay
principal of the Non-Ratable Loans and Agent Advances; FIFTH, to pay or prepay
principal of the Revolving Loans (other than Non-Ratable Loans and Agent
Advances) and unpaid reimbursement obligations in respect of Letters of Credit;
SIXTH, to pay an amount to Agent equal to all outstanding Letter of Credit
Obligations to be held as cash collateral for such Obligations; and SEVENTH, to
the payment of any other Obligation, including Obligations arising under Hedge
Agreements that are Bank Products, due to the Agent or any Lender by the
Borrower. Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrower, or unless an Event of Default has occurred
and is continuing, neither the Agent nor any Lender shall apply any payments
which it receives to any LIBOR Rate Loan, except (a) on the expiration date of
the Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event,
and only to the extent, that there are no outstanding Base Rate Loans and, in
any event, the Borrower shall pay LIBOR breakage losses in accordance with
SECTION 4.4. The Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Obligations.
3.9 INDEMNITY FOR RETURNED PAYMENTS. If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, the
Agent, any Lender, the Bank or any Affiliate of the Bank (each an "Affected
Payee") is for any reason compelled to surrender such payment or proceeds to any
Person because such payment or application of proceeds is invalidated,
13
declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Affected Payee and
the Borrower shall be liable to pay to the Affected Payee and the Lenders, and
hereby does indemnify the Affected Payee and hold the Agent and the Lenders
harmless for the amount of such payment or proceeds surrendered. The provisions
of this SECTION 3.9 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Affected Payee in reliance upon such
payment or application of proceeds, and any such contrary action so taken shall
be without prejudice to the Affected Payee's rights under this Agreement and
shall be deemed to have been conditioned upon such payment or application of
proceeds having become final and irrevocable. The provisions of this SECTION 3.9
shall survive the termination of this Agreement.
3.10 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS. The
Agent shall record the principal amount of the Loans owing to each Lender, the
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of unpaid reimbursement obligations outstanding with respect to the
Letters of Credit from time to time on its books. In addition, each Lender may
note the date and amount of each payment or prepayment of principal of such
Lender's Loans in its books and records. Failure by Agent or any Lender to make
such notation shall not affect the obligations of the Borrower with respect to
the Loans or the Letters of Credit. The Borrower agrees that the Agent's and
each Lender's books and records showing the Obligations and the transactions
pursuant to this Agreement and the other Loan Documents shall be admissible in
any action or proceeding arising therefrom, and shall constitute rebuttably
presumptive proof thereof, irrespective of whether any Obligation is also
evidenced by a promissory note or other instrument. The Agent will provide to
the Borrower a monthly statement of Loans, payments, and other transactions
pursuant to this Agreement. Such statement shall be deemed correct, accurate,
and binding on the Borrower and an account stated (except for reversals and
reapplications of payments made as provided in SECTION 3.8 and corrections of
errors discovered by the Agent), unless the Borrower notifies the Agent in
writing to the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is given by the
Borrower, only the items to which exception is expressly made will be considered
to be disputed by the Borrower.
3.11 CANADIAN BRANCH PAYMENTS. The Agent in the Agent's Commercial
Judgment, shall be satisfied with any material change to the accounting and tax
treatment of any payments made to Borrower, including any payments in respect of
withholding taxes or which withholding taxes may apply, out of the Canadian
Branch, whether for application to the Loans or otherwise or whether made out of
the Canadian Branch pursuant to Blocked Account Agreements or otherwise.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 TAXES.
(a) Subject to SECTION 4.1(d), any and all payments by the
Borrower to each Lender or the Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for any Taxes. In addition, the Borrower shall pay all Other Taxes.
14
(b) Subject to SECTION 4.1(d), the Borrower agrees to indemnify
and hold harmless each Lender and the Agent for the full amount of Taxes or
Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by, or, in Canada, following a
determination by the Canadian taxing authorities, assessed against, any Lender
or the Agent (including any amounts required to be remitted by them on account
of withholding taxes) and any tax liability (including penalties, interest,
additions to tax and expenses, including any failure by Agent or any Lender to
make any remittance, except to the extent such amounts arise as a result of the
gross negligence of the Lenders or the Agent), arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days after
the date such Lender or the Agent makes written demand therefor, including a
schedule setting forth in reasonable detail the amount of such Taxes or Other
Taxes and the amount of the required payment.
(c) Subject to Section 4.1(d), if the Borrower shall be
required by law to deduct or withhold, or the Agent or any Lender shall be
liable to remit, any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions, remittances and
withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Lender or the Agent,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions, remittances or withholdings been
made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is paid,
all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) No amounts shall be payable to a Lender pursuant to
this SECTION 4.1 as a result of the failure of a Lender to comply with the
requirements of SECTION 12.10(a), unless the failure to comply with that Section
is due solely to a change in law arising after the date of this Agreement or, if
later, the date on which a Lender becomes a Lender under this Agreement.
(e) At the Agent's request, within 45 days after the date
of any payment by the Borrower of Taxes or Other Taxes, the Borrower shall
furnish the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the Agent.
(f) If the Borrower is required to pay additional amounts
to any Lender or the Agent pursuant to SUBSECTION (b) or (c) of this Section,
then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending office so as
to eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
15
(g) If the Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes or a credit resulting
from the payment of any Taxes or Other Taxes as to which it has been indemnified
by the Borrower or with respect to which the Borrower has paid additional
amounts pursuant to this SECTION 4.1, it shall pay to the Borrower an amount
equal to such refund or credit (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section with
respect to the Taxes or Other Taxes or credit giving rise to such refund), net
of all out-of-pocket expenses of the Agent or such Lender, as the case may be,
and without interest (other than any interest paid by the relevant Government
Authority with respect to such refund), PROVIDED that the Borrower, upon the
request of the Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties in the nature of interest, interest or other
charges (but not other penalties) imposed by the relevant Governmental
Authority) to the Agent or such Lender in the event the Agent or such Lender is
required to repay such refund or credit to such Governmental Authority. This
paragraph shall not be construed to require the Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to the Borrower or any other Person.
4.2 ILLEGALITY.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by that Lender to the Borrower through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be
suspended until that Lender notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Rate Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under SECTION 4.4, either on the last day of the
Interest Period thereof, if that Lender may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if that Lender may not lawfully
continue to maintain such LIBOR Rate Loans. If the Borrower is required to so
prepay any LIBOR Rate Loans, then concurrently with such prepayment, the
Borrower shall borrow from the affected Lender, in the amount of such repayment,
a Base Rate Loan.
4.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or regulation,
other than a change relating to taxes, as to which SECTION 4.1 shall be the
exclusive remedy, or (ii) the compliance by that Lender with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining any LIBOR Rate Loans, then
the Borrower shall be liable for, and shall from time to time, upon demand (with
a copy of such demand to be sent to the Agent), pay to the Agent for the account
of such Lender, additional amounts as are sufficient to compensate such Lender
for such increased costs.
16
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by such Lender or any corporation or other entity controlling such
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by such Lender or any
corporation or other entity controlling such Lender and (taking into
consideration such Lender's or such corporation's or other entity's policies
with respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrower through the Agent, the Borrower shall pay
to such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender for such increase.
4.4 FUNDING LOSSES. The Borrower shall reimburse each Lender and
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loans on a day that is not the last day
of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. Borrower shall also pay any reasonable and customary
administrative fees charged by any Lender in connection with the foregoing.
4.5 INABILITY TO DETERMINE RATES. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the LIBOR
Rate for any requested Interest Period with respect to a proposed LIBOR Rate
Loan, or that the LIBOR Rate for any requested Interest Period with respect to a
proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to the
Lenders of funding such Loan, the Agent will promptly so notify the Borrower and
each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR
Rate Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrower may revoke any Notice of
Borrowing or Notice of Continuation/Conversion then submitted by it. If the
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
4.6 CERTIFICATES OF AGENT. If any Lender claims reimbursement or
compensation under this ARTICLE 4, Agent shall determine the amount thereof and
shall deliver to the Borrower (with a copy to the affected Lender) a certificate
setting forth in reasonable detail the amount payable to the
17
affected Lender, and such certificate shall be conclusive and binding on the
Borrower in the absence of manifest error.
4.7 REPLACEMENT LENDER.
(a) If any Lender shall make a claim for compensation from the Borrower
pursuant to SECTION 4.1 or SECTION 4.3 in an amount materially greater than
claims of other Lenders, or if any Lender shall become a Defaulting Lender and
remain as such for a period in excess of five (5) Business Days, the Borrower
may, provided no Default or Event of Default exists and upon notice to such
Lender and the Agent, replace such Lender by causing such Lender to assign its
Commitment (without payment of any assignment fee, except in the case of a
Defaulting Lender) pursuant to SECTION 11.2 to one or more other Lenders or
Eligible Assignees identified by the Borrower. The Borrower shall (x) pay in
full all principal, interest, fees and other amounts owing to such Lender
through the date of replacement (including any amounts payable pursuant to
SECTION 4.4), (y) provide appropriate assurances and indemnities (which may
include letters of credit) to a Letter of Credit Issuer as the Letter of Credit
Issuer may reasonably require with respect to any continuing obligation to
purchase participation interests in any Obligations arising under Letters of
Credit then outstanding, and (z) release such Lender from its obligations under
the Loan Documents. Any Lender being replaced shall execute and deliver an
Assignment and Acceptance with respect to such Lender's Commitment and
outstanding Obligations.
(b) This section shall supersede any provision in SECTION 11.1 or 11.2 to
the contrary.
4.8 SURVIVAL. The agreements and obligations of the Borrower in this
ARTICLE 4 shall survive the payment of all other Obligations.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 BOOKS AND RECORDS. The Borrower shall, and shall cause the
Parent and its Subsidiaries to, maintain, at all times, correct and complete
books, records and accounts in which complete, correct and timely entries are
made of its transactions in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to SECTION
5.2(a). The Borrower shall, and shall cause the Parent and its Subsidiaries to,
by means of appropriate entries, reflect in such accounts and in all Financial
Statements proper liabilities and reserves for all taxes and proper provision
for depreciation and amortization of property and bad debts, all in accordance
with GAAP. The Borrower shall, and shall cause the Parent and its Subsidiaries
to, maintain at all times books and records pertaining to the Collateral in such
detail, form and scope as the Agent or any Lender shall reasonably require,
including, but not limited to, records of (a) all payments received and all
credits and extensions granted with respect to the Accounts; (b) the return,
rejection, repossession, stoppage in transit, loss, damage, or destruction of
any Inventory; and (c) all other dealings affecting the Collateral.
5.2 FINANCIAL INFORMATION. The Borrower shall, and shall cause the
Parent and its Subsidiaries to, promptly furnish to each Lender, all such
financial information as the Agent shall reasonably request. Without limiting
the foregoing, the Borrower will furnish to the Agent, in sufficient copies for
distribution by the Agent to each Lender, in such detail as the Agent or the
Lenders shall request, the following:
18
(a) As soon as available, but in any event not later than ninety
(90) days after the close of each Fiscal Year (or such shorter period as may be
required by the SEC), consolidated audited and consolidating unaudited balance
sheets, and income statements, consolidated audited cash flow statements and
changes in stockholders' equity for the Parent and its Subsidiaries for such
Fiscal Year, and the accompanying notes thereto, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable detail,
fairly presenting the financial position and the results of operations of the
Parent and its consolidated Subsidiaries as at the date thereof and for the
Fiscal Year then ended, and prepared in accordance with GAAP. Such statements
shall be examined in accordance with generally accepted auditing standards by
and accompanied by an unqualified report thereon of independent certified public
accountants selected by the Borrower and reasonably satisfactory to the Agent.
The Borrower will provide the Agent with access to its certified public
accountants and hereby authorizes (or will cause the Parent to authorize) the
Agent to communicate directly with the Borrower's certified public accountants
regarding the business, operations, assets and financial condition of the Parent
and its Subsidiaries; PROVIDED, HOWEVER, that (i) the Agent shall, not less than
five Business Days prior to any such discussion, notify the Borrower in writing
of the Agent's intention to discuss with such certified public accountants the
finances and affairs of the Parent and its Subsidiaries and (ii) nothing herein
shall restrict the right of the Borrower to be present during any such
discussion between its certified public accountants and the Agent.
(b) As soon as available, but in any event not later than thirty
(30) days after the end of each month (or forty-five (45) days in the case of a
month that is also the end of a fiscal quarter, or such shorter period as may be
required by the SEC), consolidated and consolidating unaudited balance sheets of
the Parent and its consolidated Subsidiaries as at the end of such month, and
consolidated and consolidating unaudited income statements and consolidated
unaudited cash flow statements for the Parent and its consolidated Subsidiaries
for such month and for the period from the beginning of the Fiscal Year to the
end of such month, all in reasonable detail, fairly presenting the financial
position and results of operations of the Parent and its consolidated
Subsidiaries as at the date thereof and for such periods and, in each case, in
comparable form, figures for the corresponding period in the prior Fiscal Year
(other than balance sheet information) and in the Borrower's budget, and
prepared in accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to SECTION 5.2(a). The Parent shall
certify by a certificate signed by its chief financial officer that all such
statements have been prepared in accordance with GAAP and present fairly the
Parent's consolidated financial position as at the dates thereof and its results
of operations for the periods then ended, subject to normal year-end
adjustments.
(c) With each of the audited Financial Statements delivered
pursuant to SECTION 5.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that they have reviewed
and are familiar with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to a SECTION 7.23, except
for those, if any, described in reasonable detail in such certificate.
(d) With each of the annual audited Financial Statements
delivered pursuant to SECTION 5.2(a), and within forty-five (45) days after the
end of each fiscal quarter (except the last fiscal quarter of any Fiscal Year),
a certificate of the chief financial officer of the Parent setting forth in
reasonable detail the calculations required to establish that the Parent was in
compliance with the covenants set forth in SECTIONS 7.22 OR 7.23 during the
period covered in such
19
Financial Statements and as at the end thereof. Within thirty (30) days after
the end of each month (or forty-five (45) days in the case of a month that is
also the end of the first three fiscal quarters and ninety (90) days in the case
of a month that is also the end of a Fiscal Year), a certificate of the chief
financial officer of the Parent stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and warranties of the
Borrower contained in this Agreement and the other Loan Documents are correct
and complete in all material respects as at the date of such certificate as if
made at such time, except for those that speak as of a particular date, (B) the
Borrower is, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Loan Documents, and (C) no Default or Event of Default then exists
or existed during the period covered by the Financial Statements for such month.
If such certificate discloses that a representation or warranty is not correct
or complete in any material respect, or that a covenant has not been complied
with in any material respect, or that a Default or Event of Default existed or
exists, such certificate shall set forth what action the Borrower has taken or
proposes to take with respect thereto.
(e) No sooner than sixty (60) days prior to and not more than
forty-five (45) days after the beginning of each Fiscal Year, annual forecasts
(to include forecasted consolidated and consolidating balance sheets and income
statements and consolidated cash flow statements) for the Parent and its
Subsidiaries as at the end of and for each month of such Fiscal Year.
(f) Promptly after request of the Agent, a copy of each annual
report or other filing filed with the PBGC and/or the IRS with respect to each
Plan of the Borrower.
(g) Promptly upon the filing thereof, copies of all reports, if
any, to or other documents filed by the Borrower or any of its Subsidiaries with
the SEC under the Exchange Act, and all notices sent or received by the Borrower
or any of its Subsidiaries to or from the trustee under the Senior Note
Indenture.
(h) As soon as available, but in any event not later than 15
days after the Borrower's receipt thereof, a copy of all management reports and
management letters prepared for the Borrower by any independent certified public
accountants of the Borrower.
(i) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Borrower makes
generally available to its shareholders.
(j) If requested by the Agent, promptly after filing with the
IRS, a copy of each U.S. federal income tax return filed by the Borrower or by
any of its Subsidiaries.
(k) As soon as available, but in any event within twenty (20)
days after the end of each month (for such month) a Borrowing Base Certificate
with supporting information in accordance with Section 9 of the Security
Agreement, together with copies of the most recent available statements of all
its Canadian bank accounts.
(l) Promptly after the Borrower has notified the Agent of any
intention by the Borrower to treat the Loans and/or Letters of Credit and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or
any successor form.
20
(m) As soon as available, but in any event not later than 10
Business Days after the Borrower's receipt thereof, a copy of the Borrower's T-2
Income Tax Return in respect of the Canadian Branch.
(n) Such additional information as the Agent on its own behalf
or on behalf of any Lender (requesting solely through the Agent) may from time
to time reasonably and in good faith request regarding the financial and
business affairs of the Borrower or any Subsidiary.
5.3 NOTICES TO THE LENDERS. The Borrower shall notify the Agent and
the Lenders in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Event of Default or
any Default that could reasonably be expected to become an Event of Default;
(b) Immediately after becoming aware of the assertion by the
holder of any Debt of the Parent, the Borrower or any Subsidiary in an
outstanding amount in excess of $3,000,000 that a default exists with respect
thereto; provided no notice shall be required if the Borrower reasonably
believes that no such default exists.
(c) Immediately after becoming aware of any event or
circumstance which could reasonably be expected to have a Material Adverse
Effect;
(d) Immediately after becoming aware of any pending or
threatened action, suit, or proceeding, by any Person, or any pending or
threatened investigation by a Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect;
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting the Parent, the Borrower or any of its Subsidiaries in a
manner which could reasonably be expected to have a Material Adverse Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority affecting the
Parent, the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect;
(g) Immediately after receipt of any notice of any violation by
the Parent, the Borrower or any of its Subsidiaries of any Environmental Law
which could reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that the Parent, the Borrower or
any Subsidiary is not in compliance with any Environmental Law or is
investigating the Parent's, the Borrower's or such Subsidiary's compliance
therewith which, in each case, could reasonably be expected to have a Material
Adverse Effect;
(h) Immediately after receipt of any written notice that the
Parent, the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the Release or threatened Release of any Contaminant or
that the Parent, the Borrower or any Subsidiary is subject to investigation by
any Governmental Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Contaminant which, in either
case, is reasonably likely to give rise to liability in excess of $1,000,000 at
any one location or $3,000,000 in the aggregate at any combination of locations;
21
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of the Parent, the
Borrower or any of its Subsidiaries;
(j) Within thirty (30) days prior to any change in (i) any
Credit Party's name as it appears in the state of its incorporation or other
organization, (ii) any Credit Party's state of incorporation or organization,
type of entity, organizational identification number, or trade names under which
any Credit Party will sell Inventory or create Accounts or to which instruments
in payment of Accounts may be made payable or (iii) the locations of Collateral;
(k) Within fifteen (15) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL,
or the PBGC or any other Governmental Authority with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within ten (10)
Business Days after the filing thereof with the PBGC, the DOL, or the IRS or the
Pension Commission of Ontario or any other applicable Governmental Authority, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS or the
Pension Commission of Ontario or any other applicable Governmental Authority
with respect to each Plan and in the case of any Plan governed by the PBA, each
report, valuation, request for amendment, whole or partial withdrawal or
termination or other variation, (ii) a copy of each funding waiver request filed
with the PBGC, the DOL, the IRS or the Pension Commission of Ontario or any
other applicable Governmental Authority with respect to any Plan and all
communications received by the Borrower or any ERISA Affiliate from the PBGC,
the DOL, the IRS or the Pension Commission of Ontario or any other applicable
Governmental Authority with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL, the IRS or the Pension
Commission of Ontario or any other applicable Governmental Authority, with
respect to each Plan by either the Borrower or any ERISA Affiliate;
(m) Upon request, copies of each actuarial report for any Plan
or Multiemployer Plan and annual report for any Multiemployer Plan (with respect
to a Multiemployer Plan, only to the extent available to the Borrower); and
within fifteen (15) Business Days after receipt thereof by the Borrower or any
ERISA Affiliate, copies of the following: (i) any notices of the PBGC, the
Pension Commission of Ontario or other applicable Governmental Authority's
intention to terminate a Plan or to have a trustee appointed to administer such
Plan; (ii) any unfavorable determination letter from the IRS, the Pension
Commission of Ontario or other applicable Governmental Authority regarding the
qualification of a Plan under Section 401(a) of the Code, the PBA or other
applicable laws; or (iii) any notice from a Multiemployer Plan regarding the
imposition of withdrawal liability;
(n) Within fifteen (15) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which increase the
Borrower's annual costs with respect thereto by an amount in excess of
$3,000,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Borrower or any ERISA Affiliate was not
previously contributing; or (ii) any failure by the Borrower or any ERISA
Affiliate to make a required installment or any other required payment under
Section 412 of the Code, the Pension
22
Commission of Ontario or other applicable Governmental Authority on or before
the due date for such installment or payment; or
(o) Within fifteen (15) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multiemployer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan; (iii) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan; or (iv)
Reportable Event or Termination Event in respect of any Plan.
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Borrower,
its Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent and the Required
Lenders in writing:
6.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT
AND THE LOAN DOCUMENTS. Each Credit Party has the power and authority to
execute, deliver and perform each of the Loan Documents to which it is a party,
to incur the Obligations or the obligations under the Facility Guaranty, as
applicable, and to grant to the Agent Liens upon and security interests in the
Collateral. Each Credit Party has taken all necessary action (including
obtaining approval of its stockholders if necessary) to authorize its execution,
delivery, and performance of the Loan Documents to which it is a party. The Loan
Documents to which it is a party have been duly executed and delivered by each
Credit Party, and constitute the legal, valid and binding obligations of each
Credit Party, enforceable against it in accordance with their respective terms.
Each Credit Party's execution, delivery, and performance of the Loan Documents
to which it is a party do not and will not conflict with, or constitute a
violation or breach of, or result in the imposition of any Lien upon the
property of each Credit Party or any of its Subsidiaries, by reason of the terms
of (a) any contract, mortgage, lease, agreement, indenture, or instrument to
which the Borrower is a party or which is binding upon it, (b) any Requirement
of Law applicable to any Credit Party or any of its Subsidiaries, or (c) the
certificate or articles of incorporation or by-laws or the limited liability
company or limited partnership agreement of any Credit Party or any of its
Subsidiaries.
6.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions of
this Agreement, and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the Agent, for the ratable benefit of the Agent and
the Lenders, and upon recording and/or filing of Mortgages, financing statements
and other documents required to be filed in order to perfect such Liens in the
proper public records and payment of all taxes, fees and other charges payable
in respect thereof, such Liens shall constitute perfected and continuing Liens
on all the Collateral, securing all the Obligations and having priority over all
other Liens on the Collateral, except for those Liens identified in CLAUSES (c),
(d) and (e) of the definition of Permitted Liens or otherwise permissible in
accordance with the terms of each such Loan Document, and enforceable against
each Credit Party and all third parties. All of the Obligations constitute
"First Priority Lien Obligations" under and as defined in the Senior Note
Indenture.
23
6.3 ORGANIZATION AND QUALIFICATION. Each Credit Party and each of
its Subsidiaries (a) is duly organized or incorporated and validly existing in
good standing under the laws of the state of its organization or incorporation,
(b) is qualified to do business and is in good standing in the jurisdictions set
forth on SCHEDULE 6.3 which are the only jurisdictions in which qualification is
necessary in order for it to own or lease its property and conduct its business
and (c) has all requisite power and authority to conduct its business and to own
its property.
6.4 CORPORATE NAME; PRIOR TRANSACTIONS. Except as set forth on
SCHEDULE 6.4, no Credit Party has, during the past five (5) years, been known by
or used any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
6.5 SUBSIDIARIES AND AFFILIATES. SCHEDULE 6.5 is a correct and
complete list of the name and relationship to the Borrower of each and all of
the Borrower's Subsidiaries and other Affiliates. The Parent has no Subsidiaries
other than the Borrower. Each Subsidiary of the Borrower is an Immaterial
Subsidiary. Each Subsidiary is (a) duly incorporated or organized and validly
existing in good standing under the laws of its state of incorporation or
organization set forth on SCHEDULE 6.5, and (b) qualified to do business and in
good standing in each jurisdiction in which the failure to so qualify or be in
good standing could reasonably be expected to have a material adverse effect on
any such Subsidiary's business, operations, prospects, property, or condition
(financial or otherwise) and (c) has all requisite power and authority to
conduct its business and own its property.
6.6 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The Borrower has delivered to the Agent and the Lenders a
copy of its Annual Report on Form 10-K as filed with the SEC that contains the
audited balance sheet and related statements of income, retained earnings, cash
flows, and changes in stockholders equity for the Parent and its consolidated
Subsidiaries as of March 31, 2003, and for the Fiscal Year then ended,
accompanied by the report thereon of the Parent's independent certified public
accountants, Ernst & Young LLP. Such financial statements are attached hereto as
EXHIBIT C. All such financial statements have been prepared in accordance with
GAAP and present accurately and fairly in all material respects the financial
position of the Parent and its consolidated Subsidiaries as at the dates thereof
and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represented the Borrower's best estimate at the time submitted
to the Lenders of the future financial performance of the Parent and its
consolidated Subsidiaries for the periods set forth therein. The Latest
Projections have been prepared on the basis of the assumptions set forth
therein, which the Borrower believes were fair and reasonable in light of the
then current and reasonably foreseeable business conditions at the time
submitted to the Lenders.
6.7 CAPITALIZATION. As of the Closing Date:
(a) The Parent's authorized capital stock consists of (i)
5,852,223 shares of common stock, par value $0.01 per share, of which 163,929
shares are validly issued and outstanding, fully paid and non-assessable and
(ii) 15,823 shares of preferred stock, of which 3,617 shares of Series AA
convertible preferred stock and 1,606 shares of Series BB convertible preferred
stock are validly issued and outstanding, fully paid and non-assessable.
24
(b) The Borrower's authorized capital stock consists of (i)
10,000,000 shares of Class A Non-Voting Common Stock, par value $0.01 per share,
of which 135,276.9 shares are validly issued and outstanding, fully paid and
non-assessable and are owned beneficially and of record by the Parent and (ii)
100 shares of Class B Voting Common Stock, par value $0.01 per share, of which 3
shares are validly issued and outstanding, fully paid and non-assessable and are
owned beneficially and of record by the Parent.
6.8 SOLVENCY. Each of (i) the Borrower and its Subsidiaries, on a
consolidated basis, and (ii) the Parent and its Subsidiaries, on a consolidated
basis, is Solvent prior to and after giving effect to the Borrowings to be made
on the Closing Date and the issuance of the Letters of Credit to be issued on
the Closing Date, and reasonably expects to remain Solvent during the term of
this Agreement.
6.9 DEBT. As of the Closing Date and after giving effect to the
making of the Revolving Loans to be made on the Closing Date, the Parent and its
Subsidiaries have no Debt, except (a) the Obligations, and (b) Debt described on
SCHEDULE 6.9.
6.10 DISTRIBUTIONS. As of the Closing Date, since March 31, 2003, no
Distribution has been declared, paid, or made upon or in respect of any capital
stock or other securities of the Borrower, the Parent or any of its Subsidiaries
other than as part of the 2003 Recapitalization.
6.11 REAL ESTATE; LEASES. SCHEDULE 6.11 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by the Borrower and
the Parent and all Real Estate owned by any of its Subsidiaries, all leases and
subleases of real property and all capitalized leases of personal property held
by the Borrower or the Parent as lessee or sublessee, each operating lease of
personal property as to which the Borrower is lessee or sublessee for which the
rent payable in any year exceeds $200,000, and all leases and subleases of real
or personal property held by the Borrower or the Parent as lessor, or sublessor.
As of the Closing Date (a) each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, (b) no
default by the Parent or the Borrower exists under any such lease or sublease
and (c) with respect to the leases relating to the Pittsburg, California
Facility and the Sylacauga, Alabama Facility, to the Borrower's knowledge no
default by any other party to such leases exists. The Borrower has good and
marketable title in fee simple to the Real Estate identified on SCHEDULE 6.11 as
owned by the Borrower or the Parent, or valid leasehold interests in all Real
Estate designated therein as "leased" by the Borrower or the Parent. The
Borrower and the Parent each has good, indefeasible, and merchantable title to
all of its other property reflected on the Financial Statements referenced in
SECTION 6.6(a) or most recently delivered to the Agent and the Lenders pursuant
to SECTION 5.2(a), except as disposed of in the ordinary course of business
since the date thereof, free of all Liens except Permitted Liens.
6.12 PROPRIETARY RIGHTS. SCHEDULE 6.12 sets forth a correct and
complete list of all of the Credit Parties' Proprietary Rights as of the Closing
Date. None of the Proprietary Rights is subject to any licensing agreement or
similar arrangement except as set forth on SCHEDULE 6.12, or, after the Closing
Date, as would not reasonably be expected to have a Material Adverse Effect. To
the best of the Borrower's knowledge, none of the Proprietary Rights infringes
on or conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights, in each case except as
would not reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, the Proprietary Rights described on SCHEDULE 6.12 constitute
25
all of the property of such type necessary to the current and anticipated future
conduct of the Credit Parties' business.
6.13 TRADE NAMES. All trade names or styles under which the Borrower,
or the Parent or any of its Subsidiaries will sell Inventory or create Accounts,
or to which instruments in payment of Accounts may be made payable, are listed
on SCHEDULE 6.13.
6.14 LITIGATION. Except as set forth on SCHEDULE 6.14, there is no
pending, or to the best of the Borrower's knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or to the best of the Borrower's
knowledge, investigation by any Governmental Authority, or any basis for any of
the foregoing, which could reasonably be expected to have a Material Adverse
Effect.
6.15 LABOR DISPUTES. Except as set forth on SCHEDULE 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of the Borrower, the Parent or any of its
Subsidiaries, (b) no such collective bargaining agreement or other labor
contract is scheduled to expire during the term of this Agreement, (c) to the
best of Borrower's knowledge no union or other labor organization is seeking to
organize, or to be recognized as, a collective bargaining unit of employees of
the Borrower, or Parent or any of its Subsidiaries or for any similar purpose,
and (d) there is no pending or (to the best of the Borrower's knowledge)
threatened, strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting the Borrower, the Parent or
its Subsidiaries or their employees.
6.16 ENVIRONMENTAL LAWS. Except as otherwise disclosed on
SCHEDULE 6.16 or in the summaries of environmental matters provided to the Agent
and except for other matters that would not reasonably be expected to have a
Material Adverse Effect:
(a) The Borrower, the Parent and its Subsidiaries have complied
in all material respects with all Environmental Laws and neither the Borrower,
the Parent nor any Subsidiary nor any of its presently owned real property or
presently conducted operations for which the Borrower, the Parent or any its
Subsidiaries are liable or any property now or previously in its charge,
management or control, nor its previously owned real property or prior
operations, is subject to any enforcement order from or liability agreement with
any Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial action
arising from the Release or threatened Release of a Contaminant.
(b) The Borrower, the Parent and its Subsidiaries have obtained
all permits necessary for their current operations under Environmental Laws, and
all such permits are in good standing and the Borrower, the Parent and its
Subsidiaries are in compliance with all material terms and conditions of such
permits.
(c) Neither the Borrower, the Parent nor any of its
Subsidiaries, nor, to the best of the Borrower's knowledge, any of its
predecessors in interest, has stored, treated or disposed of any hazardous
substance in violation of any Environmental Laws.
(d) Neither the Borrower, the Parent nor any of its Subsidiaries
has received any summons, complaint, order or similar written notice indicating
that it is currently not in compliance with, or that any Governmental Authority
is investigating its compliance with, any
26
Environmental Laws or that it is or may be liable to any other Person as a
result of a Release or threatened Release of a Contaminant.
(e) To the best of the Borrower's knowledge, none of the present
or past operations or any property now or previously in the charge, management
or control of the Borrower, the Parent and its Subsidiaries is the subject of
any investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a Contaminant.
(f) Neither the Borrower, the Parent nor any of its Subsidiaries
has filed any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted Release or discharge of a Contaminant into
the environment.
(g) Neither the Borrower, the Parent nor any of its Subsidiaries
has entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property and any Governmental Authority)
imposing material obligations or liabilities on the Borrower, the Parent or any
of its Subsidiaries with respect to any remedial action in response to the
Release of a Contaminant or environmentally related claim.
(h) None of the products manufactured, distributed or sold by
the Borrower, the Parent or any of its Subsidiaries contain asbestos containing
material.
(i) No Environmental Lien has attached to the Real Estate.
6.17 NO VIOLATION OF LAW. Neither the Borrower, the Parent nor any of
its Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect.
6.18 NO DEFAULT. Neither the Borrower, the Parent nor any of its
Subsidiaries is in default with respect to any note, indenture, loan agreement,
mortgage, lease, deed, or other agreement to which the Borrower, the Parent or
such Subsidiary is a party or by which it is bound, which default could
reasonably be expected to have a Material Adverse Effect.
6.19 ERISA COMPLIANCE. Except as specifically disclosed in
SCHEDULE 6.19:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, the PBA and other federal, provincial
or state law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the best
knowledge of the Borrower, nothing has occurred which would cause the loss of
such qualification. The Borrower and each ERISA Affiliate has made all required
contributions to any Plan when due, and no application for a funding waiver or
an extension of any amortization period has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
27
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability in excess of
$40,000,000; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA) that could reasonably be expected to have a Material Adverse
Effect; (iv) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any material liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; (v) neither the Borrower nor any ERISA Affiliate has engaged
in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; and
(vi) no Lien has arisen, xxxxxx of inchoate, in respect of the Borrower or its
property in connection with any Plan (save for Contribution amounts not yet
due).
6.20 TAXES. The Borrower, the Parent and its Subsidiaries have filed
all federal and other material tax returns and material reports required to be
filed, and have paid all federal and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable unless such unpaid taxes and
assessments would constitute a Permitted Lien or unless such items need not be
paid by reason of the PROVISO to SECTION 7.1.
6.21 REGULATED ENTITIES. None of the Borrower, any Person controlling
the Borrower, or any Subsidiary, is an "Investment Company" within the meaning
of the Investment Company Act of 1940. The Borrower is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
6.22 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans
are to be used for general corporate purposes in the United States and not in
connection with the Canadian Branch, unless such use is permitted by SECTION
7.24. Neither the Borrower, the Parent nor any Subsidiary is engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.23 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. Each of the
Borrower, the Parent and its subsidiaries owns or is licensed or otherwise has
the right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, licenses, rights of way, authorizations and
other rights that are reasonably necessary for the operation of its businesses,
without conflict with the rights of any other Person. To the best knowledge of
the Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower, the Parent or any Subsidiary infringes upon any
rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Borrower, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
6.24 NO MATERIAL ADVERSE CHANGE. No Material Adverse Effect has
occurred since the latest date of the Financial Statements delivered to the
Lenders.
28
6.25 FULL DISCLOSURE. None of the representations or warranties made
by the Borrower, the Parent or any Subsidiary in the Loan Documents as of the
date such representations and warranties are made or deemed made, and none of
the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Borrower, the Parent or any Subsidiary in
connection with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of the Borrower to the Lenders prior to the
Closing Date), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.
6.26 MATERIAL AGREEMENTS. SCHEDULE 6.26 hereto sets forth as of the
Closing Date all agreements (the "Material Agreements") that are material to the
operation of the business of the Borrower and to which the Borrower, the Parent
or any of its Subsidiaries is a party or is bound as of the date hereof.
6.27 BANK ACCOUNTS. SCHEDULE 6.27 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by the Borrower, the
Parent and its Subsidiaries with any bank or other financial institution.
6.28 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the
Borrower, the Parent or any of its Subsidiaries of any Loan Document to which it
is a party.
6.29 TAX SHELTER REGULATIONS. The Borrower does not intend to treat
the Loans and/or Letters of Credit and related transactions as being a
"reportable transaction" (within the meaning of Treasury Regulation Section
1.6011-4). In the event the Borrower determines to take any action inconsistent
with such intention, it will promptly notify the Agent thereof. If the Borrower
so notifies the Agent, the Borrower acknowledges that one or more of the Lenders
may treat its Loans and/or its interest in Non-Ratable Loans and/or Agent
Advances and/or Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such Treasury
Regulation.
6.30 PARENT OPERATIONS. The only lines of business in which the
Parent is engaged are acting as a holding company for the capital stock of the
Borrower and other corporate governance and shareholder-related activities.
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender that, unless
written consent is obtained from the Required Lenders or, if required under
SECTION 11.1, all of the Lenders, so long as any of the Obligations remain
outstanding or this Agreement is in effect:
7.1 TAXES AND OTHER OBLIGATIONS. The Borrower shall, and shall cause
the Parent and each of its Subsidiaries to, (a) file when due all federal and
other material tax returns and other
29
material reports which it is required to file and (b) pay, or provide for the
payment of, when due, all federal and other material taxes, fees, assessments
and other governmental charges against it or upon its property, income and
franchises, make, in all material respects, all required withholding and other
tax deposits, and establish adequate reserves for the payment of all such items,
and provide to the Agent and the Lenders, upon request, satisfactory evidence of
its timely compliance with the foregoing; PROVIDED, HOWEVER, none of the
Borrower, the Parent nor any of its Subsidiaries need pay any tax, fee,
assessment, or governmental charge (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) as to which the Borrower, the
Parent or its Subsidiary, as the case may be, has established proper reserves as
required under GAAP, (iii) the nonpayment of which does not result in the
imposition of a Lien (other than a Permitted Lien) and (iv) as to which, if the
amount thereof is in excess of $1,000,000, the Borrower shall have notified the
Agent in writing of such tax, fee, assessment, or governmental charge.
7.2 LEGAL EXISTENCE AND GOOD STANDING. The Borrower shall, and shall
cause the Parent and each of its Subsidiaries to, maintain its legal existence
and its qualification and good standing in all jurisdictions in which the
failure to maintain such existence and qualification or good standing could
reasonably be expected to have a Material Adverse Effect.
7.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES. The
Borrower shall comply, and shall cause the Parent and each Subsidiary to comply,
in all material respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws). The Borrower shall, and
shall cause the Parent and each of its Subsidiaries (other than Immaterial
Subsidiaries) to, obtain and maintain all material licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date. The Borrower shall not,
nor shall it permit the Parent or any Subsidiary to, modify, amend or alter its
certificate or articles of incorporation, or its limited liability company
operating agreement or limited partnership agreement, as applicable, other than
in a manner which does not materially adversely affect the rights of the Lenders
or the Agent.
7.4 MAINTENANCE OF PROPERTY; INSPECTION OF PROPERTY.
(a) The Borrower shall, and shall cause the Parent and
each of its Subsidiaries to, maintain all of its property that is material to
the conduct of its business, in good operating condition and repair, ordinary
wear and tear excepted.
(b) The Borrower shall, and shall cause the Parent to,
permit representatives and independent contractors of the Agent (at the expense
of the Borrower not to exceed three (3) times per year unless an Event of
Default has occurred and is continuing) to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom and to discuss its affairs, finances and
accounts with its directors, officers and independent public accountants, at
such reasonable times during normal business hours and as soon as may be
reasonably desired, upon reasonable advance notice to the Borrower (which notice
the Agent shall use its best efforts to give 30 days in advance); PROVIDED,
HOWEVER, when an Event of Default exists, the Agent or any Lender may do any of
the foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.
30
7.5 INSURANCE.
(a) The Borrower shall maintain, and shall cause the
Parent and each of its Subsidiaries (other than Immaterial Subsidiaries) to
maintain, with financially sound and reputable insurers having a rating of (i)
at least A or better by Best Rating Guide with respect to property insurance and
(ii) at least A- or better by Best Rating Guide with respect to all other
insurance, insurance against loss or damage by fire with extended coverage;
theft, burglary, pilferage and loss in transit; public liability and third party
property damage; larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage; and such other
hazards or of such other types as is customary for Persons engaged in the same
or similar business, as the Agent, in the Agent's Commercial Judgment, shall
specify, in amounts, and under policies acceptable to the Agent in the Agent's
Commercial Judgment. Without limiting the foregoing, in the event that any
Mortgaged Property is determined to be located within an area that has been
identified by the Director of the Federal Emergency Management Agency as a
Special Flood Hazard Area ("SFHA"), the Borrower shall purchase and maintain
flood insurance on the Mortgaged Property and any Equipment and Inventory
located on such Mortgaged Property. The amount of said flood insurance will be
reasonably determined by the Agent, and shall, at a minimum, comply with
applicable federal regulations as required by the Flood Disaster Protection Act
of 1973, as amended. The Borrower shall also maintain and shall cause the Parent
and its Subsidiaries to maintain flood insurance for its Inventory and Equipment
which is, at any time, located in a SFHA.
(b) The Borrower shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party or mortgagee
and sole loss payee or additional insured on each insurance policy covering loss
of or damage to, or liability for damages caused by or on the premises of, any
property included in the Collateral, in a manner acceptable to the Agent in the
Agent's Commercial Judgment. Each such policy of insurance shall contain a
clause or endorsement requiring the insurer to give not less than thirty (30)
days' prior written notice to the Agent in the event of cancellation of the
policy for any reason whatsoever and a clause or endorsement stating that the
interest of the Agent shall not be impaired or invalidated by any act or neglect
of the Borrower or any of its Subsidiaries or the owner of any Real Estate for
purposes more hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the Borrower when due, and certificates of insurance
and, if requested by the Agent or any Lender, photocopies of the policies, shall
be delivered to the Agent, in each case in sufficient quantity for distribution
by the Agent to each of the Lenders. If the Borrower fails to procure such
insurance or to pay the premiums therefor when due, the Agent may, and at the
direction of the Required Lenders shall, do so from the proceeds of Revolving
Loans.
7.6 INSURANCE AND CONDEMNATION PROCEEDS. The Borrower shall promptly
notify the Agent and the Lenders of any loss, damage, or destruction to the
Collateral in an amount excess of $1,000,000, whether or not covered by
insurance. The Agent is hereby authorized to collect all cash insurance and
condemnation Net Proceeds in respect of Collateral directly and to apply or
remit them as follows:
(i) With respect to insurance proceeds and condemnation
Net Proceeds relating to Collateral other than Fixed Assets, after
deducting from such Net Proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent
shall apply such Net Proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 3.8.
31
(ii) With respect to insurance proceeds and condemnation
Net Proceeds relating to Collateral consisting of Fixed Assets, the
Agent shall permit or require the Borrower to use such Net Proceeds,
or any part thereof, to replace, repair, restore or rebuild the
relevant Fixed Assets in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed
before the loss, damage or destruction so long as (1) no Default or
Event of Default has occurred and is continuing, (2) the aggregate
proceeds do not exceed $10,000,000 and (3) the Borrower first (i)
provides the Agent and the Required Lenders with plans and
specifications for any such repair or restoration which shall be
reasonably satisfactory to the Agent and the Required Lenders and (ii)
demonstrates to the reasonable satisfaction of the Agent and the
Required Lenders that the funds available to it will be sufficient to
complete such project in the manner provided therein. In all other
circumstances, the Agent shall apply such insurance and condemnation
Net Proceeds, ratably, to the reduction of outstanding Revolving Loans
in accordance with SECTION 3.5(b) as if such proceeds resulted from an
asset disposition.
7.7 ENVIRONMENTAL LAWS.
(a) The Borrower shall, and shall cause the Parent and each of
its Subsidiaries to, conduct its business in compliance in all material respects
with all Environmental Laws applicable to it, including those relating to the
generation, handling, use, storage, and disposal of any Contaminant. The
Borrower shall, and shall cause the Parent and each of its Subsidiaries to, take
prompt and appropriate action to respond to any material non-compliance with
Environmental Laws and shall regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the
Borrower shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, an update of
the status of each material environmental compliance or liability issue. The
Agent or any Lender may request copies of technical reports prepared by the
Borrower, the Parent or any Subsidiary and its communications with any
Governmental Authority to determine whether the Borrower, the Parent or any
Subsidiary or any of its Subsidiaries is proceeding reasonably to correct, cure
or contest in good faith any such alleged non-compliance or environmental
liability. The Borrower shall, at the Agent's or the Required Lenders'
reasonable request and at the Borrower's expense, (i) retain an independent
environmental engineer acceptable to the Agent to evaluate the site, including
tests if appropriate, where the non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the Agent, in
sufficient quantity for distribution by the Agent to the Lenders, a report
setting forth the results of such evaluation, a proposed plan for responding to
any environmental problems described therein, and an estimate of the costs
thereof, and (ii) provide to the Agent and the Lenders a supplemental report of
such engineer whenever the estimated costs, or response thereto, shall increase
in any material respect.
(c) The Agent and its representatives will have the right
at any reasonable time upon reasonable advance notice to enter and visit the
Real Estate and any other place where any property of the Borrower is located
for the purposes of observing the Real Estate, taking and removing soil or
groundwater samples, and conducting tests on any part of the Real Estate. The
Agent is under no duty, however, to visit or observe the Real Estate or to
conduct tests, and any such acts by the Agent will be solely for the purposes of
protecting the Agent's Liens and preserving the Agent and the Lenders' rights
under the Loan Documents. No site visit, observation or testing by the
32
Agent and the Lenders will result in a waiver of any default of the Borrower or
impose any liability on the Agent or the Lenders. In no event will any site
visit, observation or testing by the Agent be a representation that hazardous
substances are or are not present in, on or under the Real Estate, or that there
has been or will be compliance with any Environmental Law. None of the Borrower,
any other Credit Party nor any other party is entitled to rely on any site
visit, observation or testing by the Agent. The Agent and the Lenders owe no
duty of care to protect the Borrower, any other Credit Party or any other party
against, or to inform the Borrower, any other Credit Party or any other party
of, any hazardous substances or any other adverse condition affecting the Real
Estate. The Agent may in its discretion disclose to the Borrower or to any other
party if so required by law any report or findings made as a result of, or in
connection with, any site visit, observation or testing by the Agent. The
Borrower understands and agrees that the Agent makes no warranty or
representation to the Borrower or any other party regarding the truth, accuracy
or completeness of any such report or findings that may be disclosed. The
Borrower also understands that depending on the results of any site visit,
observation or testing by the Agent and disclosed to the Borrower, the Borrower,
the Parent or its Subsidiaries may have a legal obligation to notify one or more
environmental agencies of the results, that such reporting requirements are
site-specific, and are to be evaluated by the Borrower without advice or
assistance from the Agent. In each instance, the Agent will give the Borrower
reasonable notice before entering the Real Estate or any other place the Agent
is permitted to enter under this SECTION 7.7(c). The Agent will make reasonable
efforts to avoid interfering with the Borrower's use of the Real Estate or any
other property in exercising any rights provided hereunder.
7.8 COMPLIANCE WITH ERISA. The Borrower shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code, the PBA and other
federal, provincial or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which could result in a material liability for the Borrower;
(e) not engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA; and (f) not permit any Lien, xxxxxx of inchoate, to arise or exist in
connection with any Plan (save for contribution amounts not yet due).
7.9 MERGERS, CONSOLIDATIONS OR SALES. Neither the Borrower nor any
of its Subsidiaries, other than Immaterial Subsidiaries, shall enter into any
transaction of merger, reorganization, or consolidation, or transfer, sell,
assign, lease, or otherwise dispose of all or any part of its property, or wind
up, liquidate or dissolve, or agree to do any of the foregoing, except (a) for
sales of Inventory in the ordinary course of its business, (b) for sales or
other dispositions of Equipment in the ordinary course of business that are
obsolete or no longer useable by Borrower in its business, (c) sales of
investments excluded from the definition of Restricted Investments under clauses
(d), (e), (f), (g), and (i) thereof, (d) granting easements, rights of way and
other rights to use land which shall not have any material adverse effect on the
value of the land nor on the operation of the Borrower's business thereat, (e)
surrender by the Borrower of leases no longer used or usable by the Borrower for
its business, (f) entry by the Borrower into leases in the ordinary course of
business as lessor or sublessor for a term not to exceed five (5) years provided
no provision of such leases shall have any material adverse effect on the
Agent's Liens or the Agent's ability to enforce such Liens on any Collateral,
and (g) permitting the U.S. Postal Service to occupy part of its property in a
manner consistent with past practices. Within 120 days following each such
Equipment sale or disposition described in clause (b), the Borrower shall either
(i) reinvest the Net Proceeds of that sale or disposition in other Equipment of
equal or greater utility and value or (ii) apply such Net Proceeds
33
in accordance with SECTION 3.5(b). All Equipment purchased with such Net
Proceeds shall be free and clear of all Liens, except any Liens permitted under
SECTION 7.18.
7.10 DISTRIBUTIONS AND RESTRICTED INVESTMENTS. None of the Parent,
the Borrower or any of its Subsidiaries shall directly or indirectly declare or
make, or incur any liability to make, any Distribution or Restricted Investment,
except (a) Distributions to the Borrower by its Subsidiaries; (b) Distributions
or Restricted Investments from the Borrower to the Parent to enable the Parent
to make Distributions otherwise permitted to be made by it hereunder and to
enable the Parent to pay its general operating expenses; (c) Permitted
Distributions; (d) the Digiscope Loans; (e) loans and advances to employees,
officers and directors in an aggregate principal amount not to exceed $2,500,000
at any time outstanding; (f) contributions of capital to Immaterial Subsidiaries
provided such Subsidiaries use such contributions to simultaneously pay off
accumulated intercompany debt of such Immaterial Subsidiaries to the Borrower or
the Parent existing on the Closing Date in an amount not in excess of
$7,000,000; (g) payments made pursuant to the Tax Sharing Agreement; (h)
Distributions and Restricted Investments made in connection with the 2003
Recapitalization; (i) loans made giving rise to Debt permitted under SECTION
7.13(d); (j) purchases of Equipment (not included in the Borrowing Base) owned
by Borrower but subject to a purchase option in favor of the customer for whose
account such Equipment was purchased, with such option being exercisable at the
end of a specified contractual term, entered into in accordance with past
practice and in the ordinary course of business; (k) purchases of spare parts
inventory booked as a long-term rather than current asset in accordance with
past practice and in the ordinary course of business; (l) payments described in
clause (i) of the definition of the term "Permitted Affiliate Transactions"; (m)
payments in amounts necessary to permit Parent to (x) make payments in respect
of its indemnification obligations owing to directors, officers or other Persons
under Parent's charter or by-laws or pursuant to written agreements with any
such Person, or obligations in respect of director and officer insurance
(including premiums therefor) or (y) satisfy its obligations, or through the
Company satisfy its obligations, under any registration rights agreement or (z)
make payments in respect of indemnification obligations of Parent in connection
with any issuance by Parent of capital stock of Parent; (n) Distributions by the
Parent in an aggregate amount of up to $2,000,000 made to permit repurchases of
common stock of the Parent or to purchase options to purchase common stock of
the Parent granted to directors, officers and certain key employees of the
Parent or the Borrower pursuant to stock option plans adopted by the board of
directors of the Parent or the Borrower; (o) Restricted Investments by the
Parent in an aggregate amount of up to $2,000,000 made to permit repurchases of
common stock of the Parent or to purchase options to purchase common stock of
the Parent granted to directors, officers and certain key employees of the
Parent or the Borrower pursuant to stock option plans adopted by the board of
directors of the Parent or the Borrower; and (p) other Dividends and Restricted
Investments in an aggregate amount outstanding of up to $2,000,000; PROVIDED,
HOWEVER, none of the Parent, the Borrower or any Subsidiary shall make any
Distribution or Restricted Investment permitted under clauses (n), (o) or (p)
above if a Default or Event of Default exists immediately prior to or would
exist immediately after giving effect to such Distribution or Permitted
Investment.
7.11 INTENTIONALLY OMITTED.
7.12 GUARANTIES. None of the Borrower, the Parent nor any of its
Subsidiaries shall make, issue, or become liable on any Guaranty, except
Guaranties of the Obligations in favor of the Agent and the Guaranties permitted
under SECTION 7.13.
34
7.13 DEBT. None of the Borrower, the Parent or any of its
Subsidiaries shall incur or maintain any Debt, other than: (a) the Obligations;
(b) Debt described on SCHEDULE 6.9; (c) the Senior Notes; (d) Debt of any Credit
Party to any other Credit Party; (e) Debt resulting from Restricted Investments
permitted under SECTION 7.10(b), (g), (m) or (n); (f) Guaranties, including
those evidenced by performance or surety bonds, issued in the ordinary course of
business in an aggregate amount at any one time outstanding not to exceed
$2,000,000 (excluding the amount thereof, if any, secured by Letters of Credit);
(g) other Debt in an aggregate amount at any one time outstanding not to exceed
$3,000,000; (h) Capital Leases and purchase money secured Debt incurred to
purchase or acquire additions to property, plant or Equipment PROVIDED that (i)
Liens securing the same attach only to the property, plant and Equipment
acquired by the incurrence of such Debt, and (ii) the aggregate amount of such
Debt (including Capital Leases) outstanding does not exceed $30,000,000 at any
time; (i) Hedge Agreements; and (j) Debt evidencing a refunding, renewal or
extension of the Debt described in the foregoing clauses (b) through (h);
PROVIDED that (i) the principal amount thereof is not increased, (ii) the Liens,
if any, securing such refunded, renewed or extended Debt do not attach to any
assets in addition to those assets, if any, securing the Debt to be refunded,
renewed or extended, (iii) no Person that is not an obligor or guarantor of such
Debt as of the Closing Date or, if later, the date such Debt was incurred, shall
become an obligor or guarantor thereof, and (iv) the terms of such refunding,
renewal or extension are in all material respects, no less favorable to the
Borrower, the Agent or the Lenders than the original Debt; provided no such
terms shall alter any provisions relating to the subordination, intercreditor
arrangements or rights in Collateral in any manner adverse to the Agent or the
Lenders.
7.14 PREPAYMENT. None of the Borrower, the Parent nor any of its
Subsidiaries shall voluntarily prepay any Debt, except (a) in a Permitted
Prepayment; (b) prepayments of the Obligations; (c) prepayments in connection
with a refunding permitted under SECTION 7.13(j), (d) Debt owed to the Parent or
the Borrower in connection with the Sylacauga IRB described on SCHEDULE 6.9; and
(e) Debt permitted under SECTION 7.13(d); or (f) intercompany Debt required to
be prepaid pursuant to Section 7.10(f).
7.15 TRANSACTIONS WITH AFFILIATES. Parent will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
transactions involving payments or property with a value in excess of $100,000,
whether or not in the ordinary course of business with any Affiliate other than
(i) Permitted Affiliate Transactions, (ii) fees and expenses set forth in
SCHEDULE 7.15, (iii) amounts payable under the contractual agreements listed in
SCHEDULE 7.15, as in effect as of the date of this Agreement, copies of which
have been delivered to the Agent, as amended, modified or replaced from time to
time, PROVIDED that the amended, modified or replaced agreement or arrangement
is not less favorable in any material respect to the Parent, the Borrower and
its Subsidiaries than that in effect on the Closing Date; or (iv) employment
agreements entered into in the ordinary course of business, and (v) the payment
of fees to any Person for financial, consulting or investment banking services
(including, without limitation any underwriting discounts and commissions and
placement agent fees, but excluding management fees) performed in the ordinary
course of such Person's business; PROVIDED that the amount of any such fees for
any such service provided shall not exceed the usual and customary fees of such
Person for similar services rendered to third parties. Except as expressly
described on SCHEDULE 7.15, (x) no management or similar fees shall be payable
by Parent, the Borrower or the respective Subsidiaries to any Person (other than
to the Borrower) and (y) in no event shall the Borrower and its Subsidiaries
make payments in respect of taxes computed on a consolidated, combined or
unitary basis payable by the Parent's combined or affiliated group (within the
meaning of Section 1504 of the Code or comparable provision of state or local
law) in excess of those required to be paid pursuant to the Tax Sharing
Agreement.
35
7.16 INVESTMENT BANKING AND FINDER'S FEES. Neither the Borrower, the
Parent nor any of its Subsidiaries shall pay or agree to pay, or reimburse any
other party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with the credit facilities provided by the Lenders under this Agreement other
than as set forth in the Fee Letter. The Borrower shall defend and indemnify the
Agent and the Lenders against and hold them harmless from all claims of any
Person that the Borrower is obligated to pay for any such fees, and all costs
and expenses (including attorneys' fees) incurred by the Agent and/or any Lender
in connection therewith.
7.17 BUSINESS CONDUCTED. The Borrower shall not and shall not permit
the Parent or any of its Subsidiaries to, engage directly or indirectly, in any
line of business other than the businesses in which any thereof are engaged on
the Closing Date and any business reasonably related thereto.
7.18 LIENS. None of the Borrower, the Parent nor any of its
Subsidiaries shall create, incur, assume, or permit to exist any Lien on any
property now owned or hereafter acquired by any of them, except Permitted Liens,
and Liens, if any, in effect as of the Closing Date described in SCHEDULE 6.9
securing Debt described in SCHEDULE 6.9 and Liens securing Capital Leases and
purchase money Debt permitted in SECTION 7.13.
7.19 SALE AND LEASEBACK TRANSACTIONS. None of the Borrower, the
Parent nor any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for the Borrower, the Parent or such
Subsidiary to lease or rent property that the Borrower, the Parent or such
Subsidiary has sold or will sell or otherwise transfer to such Person.
7.20 NEW SUBSIDIARIES. Neither the Parent nor the Borrower shall,
directly or indirectly, organize, create, acquire or permit to exist any
Subsidiary other than those listed on SCHEDULE 6.5.
7.21 FISCAL YEAR. Neither the Parent nor the Borrower shall change
its Fiscal Year.
7.22 CAPITAL EXPENDITURES. The Parent shall not make any Capital
Expenditures. Neither the Borrower nor any of its Subsidiaries shall make or
incur any Capital Expenditure if, after giving effect thereto, the aggregate
amount of all Capital Expenditures by the Borrower and its Subsidiaries on a
consolidated basis, in excess of insurance proceeds or condemnation awards,
would exceed $18,500,000 during the Fiscal Year ending March 31, 2004 or
$20,500,000 during any Fiscal Year thereafter. To the extent that the aggregate
amount of Capital Expenditures of the Borrower and the Subsidiaries during a
Fiscal Year is less than the amount that is permitted by the preceding sentence
(the result of such permitted amount minus the actual amount of Capital
Expenditures during a Fiscal Year being the "UNUSED AMOUNT"), the aggregate
amount of Capital Expenditures that may be made by the Borrower and the
Subsidiaries during the next succeeding Fiscal Year will be the sum of the
amount otherwise permitted by the preceding sentence plus the Unused Amount from
the previous Fiscal Year.
7.23 FIXED CHARGE COVERAGE RATIO. The Borrower will have a Fixed
Charge Coverage Ratio of not less than 1.00 to 1.00 (a) for the one-fiscal
quarter period ended December 31, 2003, (b) for the two-fiscal quarter period
ended March 31, 2004 (taken together as one accounting period), (c) for the
three-fiscal quarter period ended June 30, 2004 (taken together as one
accounting
36
period) and (d) thereafter for each Four Quarter Period ended on the last day of
each fiscal quarter, in each case measured at the end of the applicable period.
7.24 USE OF PROCEEDS. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, borrow under this Agreement or otherwise use any
portion of Loan proceeds, directly or indirectly, (i) to purchase or carry
Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Borrower
or others incurred to purchase or carry Margin Stock (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) without the
prior written consent of the Required Lenders, for any purpose or in any manner
that would cause or result in any portion of the interest, or any other amount
hereunder in excess of the Dollar Equivalent of $2,000,000 in the aggregate from
the Closing Date to the date of determination, to be or being deducted or
deductible in computing the Borrower's income earned in Canada for any taxation
year, for Canadian federal or provincial income tax purposes.
7.25 PROCEEDS FROM SURPLUS CASH DEPOSITS. Borrower, to the extent
that, at the close of business on any Business Day, it has on deposit in any
Canadian bank accounts unapplied cash exceeding the Dollar Equivalent of
$1,000,000 in the aggregate (calculated in accordance with GAAP), shall within
one (1) Business Day transfer such unapplied cash to an account in the United
States subject to a Blocked Account Agreement in favor of Agent.
7.26 FURTHER ASSURANCES. The Borrower shall execute and deliver, or
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time in the exercise of the Agent's
Commercial Judgment, request to carry out the terms and conditions of this
Agreement and the other Loan Documents.
ARTICLE 8
CONDITIONS OF LENDING
8.1 CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit on the Closing Date, are subject to the following
conditions precedent:
(a) This Agreement and the other Loan Documents shall have been
executed and delivered by each party thereto and the Borrower shall have
performed and complied with all covenants, agreements and conditions contained
herein and the other Loan Documents which are required to be performed or
complied with by the Borrower before or on such Closing Date.
(b) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct in all material respects as if
made on such date.
(c) No Default or Event of Default shall have occurred and be
continuing after giving effect to the Loans to be made and the Letters of Credit
to be issued on the Closing Date.
(d) The Agent and the Lenders shall have received opinions of
counsel for the Borrower and its Subsidiaries in substantially the forms of
EXHIBITS L-1 through L-3 hereto.
37
(e) The Borrower shall have consummated the issuance of the
Senior Notes and shall have delivered to the Agent a certified copy of the
Senior Note Indenture and all material security documents related thereto, all
in form and substance acceptable to the Agent in the Agent's Commercial
Judgment.
(f) The Agent shall have received (i) a payoff letter with
respect to the Existing Credit Facility together with all termination documents
required under (g) (ii) below, and (ii) evidence of repayment or defeasance of
the Existing Notes, all in form and substance satisfactory to the Agent in the
Agent's Commercial Judgment.
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing statements,
duly filed on or before the Closing Date under the UCC or PPSA of all
jurisdictions that the Agent may deem necessary or desirable in order
to perfect the Agent's Liens; and
(ii) duly executed UCC-3 and PPSA Termination Statements
and such other instruments, in form and substance satisfactory to the
Agent, as shall be necessary to terminate and satisfy all Liens on the
Property of the Borrower and its Subsidiaries except Permitted Liens.
(h) The Borrower shall have paid the following items in
connection with the transactions contemplated by this Agreement and the Loan
Documents: (i) all reasonable out-of-pocket costs and expenses of the Agent or
the Documentation Agent (the "Co-Arrangers") (including legal fees of one
counsel for the Co-Arrangers), including without limitation costs and expenses
of (A) Co-Arrangers' due diligence, including field examinations, appraisals and
environmental audits, and (B) preparing, administering, syndicating and
enforcing all documents executed in connection with this Agreement, plus (ii) a
$850 per day per field examiner charge, in addition to all out-of-pocket
expenses for field examinations.
(i) The Agent shall have received, in form, scope, and
substance, reasonably satisfactory to the Agent, evidence of all insurance
coverage as required by this Agreement together with an executed lender's loss
payable endorsement.
(j) All proceedings taken in connection with the execution of
this Agreement, the 2003 Recapitalization, all other Loan Documents and all
documents and papers relating thereto shall be satisfactory in form, scope, and
substance to the Agent.
(k) After giving effect to all Revolving Loans (including such
Revolving Loans made to finance the Closing Fee or otherwise as reimbursement
for fees, costs and expenses then payable under this Agreement) made on the
Closing Date and with all its obligations current, the Borrower shall have
Availability of at least $20,000,000. No minimum or excess Availability levels
will be required after the Closing Date.
(l) Without limiting the generality of the items described
above, the Borrower and each Person guarantying or securing payment of the
Obligations shall have delivered or caused to be delivered to the Agent (in form
and substance reasonably satisfactory to the Agent in the Agent's Commercial
Judgment), the financial statements, instruments, resolutions, documents,
38
agreements, certificates, opinions and other items set forth on the "Closing
Checklist" delivered by the Agent to the Borrower prior to the Closing Date.
The acceptance by the Borrower of any Loans made or Letters of Credit
issued on the Closing Date shall be deemed to be a representation and warranty
made by the Borrower to the effect that all of the conditions precedent to the
making of such Loans or the issuance of such Letters of Credit have been
satisfied, with the same effect as delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of the Borrower, dated the Closing
Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this SECTION 8.1 have been fulfilled to the satisfaction
of such Lender, (ii) the decision of such Lender to execute and deliver to the
Agent an executed counterpart of this Agreement was made by such Lender
independently and without reliance on the Agent or any other Lender as to the
satisfaction of any condition precedent set forth in this SECTION 8.1, and (iii)
all documents sent to such Lender for approval consent, or satisfaction were
acceptable to such Lender.
8.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the Lenders
to make each Loan, including the initial Revolving Loans on the Closing Date,
and the obligation of the Agent to cause the Letter of Credit Issuer to issue
any Letter of Credit shall be subject to the further conditions precedent that
on and as of the date of any such extension of credit:
(a) The following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in CLAUSES (i), (ii) and (iii) with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though
made on and as of such date, other than any such representation or
warranty which relates to a specified prior date and except to the
extent the Agent and the Lenders have been notified in writing by the
Borrower that any representation or warranty is not correct and the
Required Lenders have explicitly waived in writing compliance with
such representation or warranty; and
(ii) No event has occurred and is continuing, or would
result from such extension of credit, which constitutes a Default or
an Event of Default; and
(iii) No event has occurred and is continuing, or would
result from such extension of credit, which has had or would
reasonably be expected to have a Material Adverse Effect.
(b) No such Borrowing shall exceed Availability, PROVIDED,
HOWEVER, that the foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing the Bank or the Agent for such Lenders'
Pro Rata Share of any Non-Ratable Loan or Agent Advance made in accordance with
the provisions of SECTIONS 1.2(h) and (i).
39
ARTICLE 9
DEFAULT; REMEDIES
9.1 EVENTS OF DEFAULT. It shall constitute an event of default
("EVENT OF DEFAULT") if any one or more of the following shall occur for any
reason:
(a) any failure by the Borrower to pay the principal of or
interest or premium on any of the Obligations or any fee or other amount owing
hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Borrower in this Agreement or by the Borrower or any of its Subsidiaries in any
of the other Loan Documents, any Financial Statement, or any certificate
furnished by the Borrower or any of its Subsidiaries at any time to the Agent or
any Lender shall prove to be untrue in any material respect as of the date on
which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance
of any of the covenants and agreements contained in SECTIONS 5.2(k), 7.2, 7.9
THROUGH 7.24 (OTHER THAN CLAUSE (iv) THEREOF), or Section 11 of the Security
Agreement, (ii) any default shall occur in the observance or performance of any
of the covenants and agreements contained in SECTIONS 5.2 (OTHER THAN 5.2(k)),
5.3, 7.5 OR 7.25 and such default shall continue for three (3) Business Days or
more; or (iii) any default shall occur in the observance or performance of any
of the other covenants or agreements contained in any other Section of this
Agreement or any other Loan Document, and such default shall continue for thirty
(30) days or more after written notice thereof shall have been given to the
Borrower by the Agent;
(d) any default shall occur with respect to any Debt (other than
the Obligations) of the Borrower or any of its Subsidiaries in an outstanding
principal amount which exceeds $5,000,000, or under any agreement or instrument
under or pursuant to which any such Debt may have been issued, created, assumed,
or guaranteed by the Borrower or any of its Subsidiaries, and such default shall
continue for more than the period of grace, if any, therein specified, if the
effect thereof (with or without the giving of notice or further lapse of time or
both) is to accelerate, or to permit the holders of any such Debt to accelerate,
the maturity of any such Debt; or any such Debt shall be declared due and
payable or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;
(e) the Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
file any proposal or notice of intent to file a proposal or otherwise commence
any action or proceeding seeking reorganization, arrangement, consolidation or
readjustment of its debts or for any other relief under the federal Bankruptcy
Code, as amended, or under any other bankruptcy, insolvency, liquidation,
winding up, corporate or similar act or law, state, provincial or federal, now
or hereafter existing including, without limitation, the Companies' Creditors
Arrangement Act (Canada) or the Bankruptcy and Insolvency Act (Canada) (the
"BIA"), or consent to, approve of, or acquiesce in, any such petition, proposal,
action or proceeding; (ii) apply for or acquiesce in the appointment of a
receiver, assignee, liquidator, sequestrator, custodian, monitor, administrator,
trustee or similar officer for it or for all or any part of its property; (iii)
make an assignment for the benefit of creditors; or (iv) be unable generally to
pay its debts as they become due;
40
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of the Borrower or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy, insolvency, liquidation, winding up,
corporate or similar act or law, state, provincial or federal, now or hereafter
existing including, without limitation, the Companies' Creditors Arrangement Act
(Canada) or the BIA and such petition, proposal or proceeding shall not be
dismissed within ninety (90) days after the filing or commencement thereof or an
order of relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for the Borrower or any of its Subsidiaries
or for all or any part of its property shall be appointed or a warrant of
attachment, execution, writ of seizure or seizure and sale or similar process
shall be issued against any part of the property of the Borrower or any of its
Subsidiaries or any distress or analogous process is levied upon all or any part
of the Borrower or its Subsidiaries;
(h) all or a material part of the properties of the Borrower or
any of its Subsidiaries (other than an Immaterial Subsidiary) shall be
nationalized, expropriated or condemned, seized or otherwise appropriated, or
custody or control of such property or of the Borrower or such Subsidiary shall
be assumed by any Governmental Authority or any court of competent jurisdiction
at the instance of any Governmental Authority or any other Person, except where
contested in good faith by proper proceedings diligently pursued where a stay of
enforcement is in effect;
(i) any Loan Document shall be terminated, revoked or declared
void or invalid or unenforceable or challenged by the Borrower or any other
obligor;
(j) one or more judgments, orders, decrees or arbitration awards
is entered against the Borrower involving liability (to the extent not covered
by independent third-party insurance as to which the insurer does not dispute
coverage) of $3,000,000 or more as to any single or related series of
transactions, incidents or conditions, or $6,000,000 or more in the aggregate,
and the same shall remain unsatisfied, unvacated and unstayed pending appeal for
a period of thirty (30) days after the entry thereof;
(k) any loss, theft, damage or destruction of any item or items
of Collateral or other property of the Borrower or any Subsidiary occurs which
could reasonably be expected to cause a Material Adverse Effect and is not
adequately covered by insurance;
(l) there is filed against the Borrower or any of its
Subsidiaries any action, suit or proceeding under any federal or state
racketeering statute (including the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (i) is not dismissed
within one hundred twenty (120) days, and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(m) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens, pursuant
to the Loan Documents, any Loan Document ceases to be in full force and effect
or any Lien with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens) or is terminated, revoked or declared
void;
41
(n) an ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under applicable laws in an aggregate amount in
excess of $3,000,000; (ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds an amount that has, or would
reasonably be expected to have, a Material Adverse Effect; (iii) the Borrower or
any ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of $3,000,000; or (iv) any Lien (save for contribution amounts
not yet due) arises in connection with any Plan; or
(o) there occurs a Change of Control.
9.2 REMEDIES.
(a) If a Default or an Event of Default exists, the Agent may,
in its discretion, and shall, at the direction of the Required Lenders, do one
or more of the following at any time or times and in any order, without notice
to or demand on the Borrower: (i) reduce the Maximum Revolver Amount, or the
advance rates against Eligible Accounts and/or Eligible Inventory used in
computing the Borrowing Base, or reduce one or more of the other elements used
in computing the Borrowing Base; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of Credit or
Credit Support. If an Event of Default exists, the Agent shall, at the direction
of the Required Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times and in any
order, without notice to or demand on the Borrower: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; PROVIDED, HOWEVER, that upon the occurrence of any
Event of Default described in SECTIONS 9.1(e), 9.1(f), or 9.1(g), the
Commitments shall automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or demand of any
kind; (C) require the Borrower to cash collateralize all outstanding Letter of
Credit Obligations; and (D) pursue its other rights and remedies under the Loan
Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the Loan Documents and the UCC, PPSA and the Mortgages Act of Ontario;
(ii) the Agent may, at any time, take possession of the Collateral and keep it
on the Borrower's premises, at no cost to the Agent or any Lender, or remove any
part of it to such other place or places as the Agent may desire, or the
Borrower shall, upon the Agent's demand, at the Borrower's cost, assemble the
Collateral and make it available to the Agent at a place reasonably convenient
to the Agent; and (iii) the Agent may sell and deliver any Collateral at public
or private sales, for cash, upon credit or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion, and may, if the
Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way requiring notice to
be given in the following manner, the Borrower agrees that any notice by the
Agent of sale, disposition or other intended action hereunder or in connection
herewith, whether required by the UCC, PPSA and the Mortgages Act of Ontario or
otherwise, shall constitute reasonable notice to the Borrower if such notice is
mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least five (5) Business
Days prior to such action to the Borrower's address specified in or pursuant to
SECTION 13.8. If any Collateral is sold on terms other
42
than payment in full at the time of sale, no credit shall be given against the
Obligations until the Agent or the Lenders receive payment, and if the buyer
defaults in payment, the Agent may resell the Collateral without further notice
to the Borrower. In the event the Agent seeks to take possession of all or any
portion of the Collateral by judicial process, the Borrower irrevocably waives:
(A) the posting of any bond, surety or security with respect thereto which might
otherwise be required; (B) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (C) any requirement that
the Agent retain possession and not dispose of any Collateral until after trial
or final judgment. The Borrower agrees that the Agent has no obligation to
preserve rights to the Collateral or marshal any Collateral for the benefit of
any Person. The Agent is hereby granted a license or other right to use, without
charge, the Borrower's labels, patents, copyrights, name, trade secrets, trade
names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and the
Borrower's rights under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including attorneys' fees, and then to the
Obligations. The Agent will return any excess to the Borrower and the Borrower
shall remain liable for any deficiency.
(c) If an Event of Default occurs, the Borrower hereby waives,
to the extent permitted by applicable law, all rights to notice and hearing
prior to the exercise by the Agent of the Agent's rights to repossess the
Collateral without judicial process or to reply, attach or levy upon the
Collateral without notice or hearing.
ARTICLE 10
TERM AND TERMINATION
10.1 TERM AND TERMINATION. The term of this Agreement shall end on
the Stated Termination Date unless sooner terminated in accordance with the
terms hereof. The Agent upon direction from the Required Lenders may terminate
this Agreement without notice upon the occurrence of an Event of Default. Upon
the effective date of termination of this Agreement for any reason whatsoever,
all Obligations (including all unpaid principal, accrued and unpaid interest and
any early termination or prepayment fees or penalties) shall become immediately
due and payable and the Borrower shall immediately arrange for the cancellation
and return of Letters of Credit then outstanding. Notwithstanding the
termination of this Agreement, until all Obligations are indefeasibly paid and
performed in full in cash, the Borrower shall remain bound by the terms of this
Agreement and shall not be relieved of any of its Obligations hereunder or under
any other Loan Document, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including the Agent's Liens in and all rights and
remedies with respect to all then existing and after-arising Collateral).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 AMENDMENTS AND WAIVERS.
(a) No amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by the
Borrower therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by the Agent at the written request of the
Required Lenders) and the Borrower and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given;
43
PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders and the Borrower and acknowledged by the
Agent, do any of the following:
(i) increase or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees
or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document;
(iii) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for
the Lenders or any of them to take any action hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base;
(vi) amend this Section or any provision of this Agreement
providing for consent or other action by all Lenders;
(vii) release any Guaranties of the Obligations or release
Collateral other than as permitted by SECTION 12.11;
(viii) change the definition of "Required Lenders"; or
(ix) increase the Maximum Revolver Amount or Letter of
Credit Subfacility;
PROVIDED, HOWEVER, the Agent may, in its sole discretion and notwithstanding the
limitations contained in CLAUSES (v) and (ix) above and any other terms of this
Agreement, make Agent Advances in accordance with SECTION 1.2(i) and, PROVIDED
FURTHER, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and PROVIDED FURTHER, that SCHEDULE 1.1
hereto (Commitments) may be amended from time to time by Agent alone to reflect
assignments of Commitments in accordance herewith.
(b) If any fees are paid to the Lenders as consideration for
amendments, waivers or consents with respect to this Agreement, at Agent's
election, such fees may be paid only to those Lenders that agree to such
amendments, waivers or consents within the time specified for submission
thereof.
(c) If, in connection with any proposed amendment, waiver or
consent (a "Proposed Change"):
(i) requiring the consent of all Lenders, the consent of
Required Lenders is obtained, but the consent of other Lenders is not
obtained (any such
44
Lender whose consent is not obtained as described in this clause (i)
and in clause (ii) below being referred to as a "Non-Consenting
Lender"), or
(ii) requiring the consent of Required Lenders, the
consent of Required Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrower's
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the principal
balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to Assignment and Acceptance Agreement(s), without
premium or discount.
11.2 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more Eligible
Assignees (each an "ASSIGNEE") all, or any ratable part of all, of the Loans,
the Commitments and the other rights and obligations of such Lender hereunder,
in a minimum amount of $1,000,000 (provided that, unless an assignor Lender has
assigned and delegated all of its Loans and Commitments, no such assignment
and/or delegation shall be permitted unless, after giving effect thereto, such
assignor Lender retains a Commitment in a minimum amount of $5,000,000);
PROVIDED, HOWEVER, that the Borrower and the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrower
and the Agent an Assignment and Acceptance in the form of EXHIBIT F ("ASSIGNMENT
AND ACCEPTANCE") together with any note or notes subject to such assignment and
(iii) the assignor Lender or Assignee has paid to the Agent a processing fee in
the amount of $3,500 (unless such assignment is made in connection with the
Initial Syndication). The Borrower agrees to promptly execute and deliver new
promissory notes and replacement promissory notes as reasonably requested by the
Agent to evidence assignments of the Loans and Commitments in accordance
herewith.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
45
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto or the attachment, perfection, or
priority of any Lien granted by the Borrower to the Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers,
including the discretionary rights and incidental power, as are reasonably
incidental thereto; and (vi) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of SECTION
11.2(a), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the Borrower
(a "PARTICIPANT") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan Document
except the matters set forth in SECTION 11.1(a)(i), (ii) and (iii), and all
amounts payable by the Borrower hereunder shall be determined as if such Lender
had not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent and subject to the same limitation as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
46
ARTICLE 12
THE AGENT
12.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby designates and
appoints Bank as its Agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this ARTICLE 12. The provisions of this
ARTICLE 12 are solely for the benefit of the Agent and the Lenders and the
Borrower shall have no rights as a third party beneficiary of any of the
provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
SECTION 1.2(i), and (c) the exercise of remedies pursuant to SECTION 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
12.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
12.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the Borrower or any
Subsidiary or Affiliate of the Borrower, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of the Borrower's Subsidiaries or Affiliates.
47
12.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders (or all Lenders if so required by
SECTION 11.1) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
12.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with SECTION 9; PROVIDED, HOWEVER, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
12.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Affiliates, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of any of the Agent-Related Persons.
12.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower
48
to do so), in accordance with their Pro Rata Shares, from and against any and
all Indemnified Liabilities as such term is defined in SECTION 13.11; PROVIDED,
HOWEVER, that no Lender shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata
Share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
12.8 AGENT IN INDIVIDUAL CAPACITY. The Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. The Bank or its Affiliates may
receive information regarding the Borrower, its Affiliates and Account Debtors
(including information that may be subject to confidentiality obligations in
favor of the Borrower or such Subsidiary) and acknowledge that the Agent and the
Bank shall be under no obligation to provide such information to them. With
respect to its Loans, the Bank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" include the Bank in its
individual capacity.
12.9 SUCCESSOR AGENT. The Agent may resign as Agent upon at least 30
days' prior notice to the Lenders and the Borrower, such resignation to be
effective upon the acceptance of a successor agent to its appointment as Agent.
In the event the Bank sells all of its Commitment and Revolving Loans as part of
a sale, transfer or other disposition by the Bank of substantially all of its
loan portfolio, the Bank shall resign as Agent and such purchaser or transferee
shall become the successor Agent hereunder. Subject to the foregoing, if the
Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Lenders and the Borrower, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this ARTICLE 12 shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
12.10 WITHHOLDING TAX.
(a) If any Lender is not a U.S. Person within the meaning of the
Code, such Lender agrees with and in favor of the Agent, to deliver to the
Agent, with a copy to the Borrower:
(i) if such Lender claims a complete exemption from
withholding tax under a United States of America tax treaty, two
properly completed and executed
49
copies of IRS Form W-8BEN (or successor form) before the payment of
any interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year (or such other time as
a previously delivered form becomes obsolete) during which interest
may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States of America withholding tax
because it is effectively connected with a United States of America
trade or business of such Lender, two properly completed and executed
copies of IRS Form W-8ECI (or successor form) before the payment of
any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender (or such other time as a
previously delivered form becomes obsolete) during which interest may
be paid under this Agreement, and IRS Form W-9 (or any successor
form); or
(iii) such other form or forms as may be required under the
Code or other laws of the United States of America as a condition to a
complete exemption from United States of America withholding tax.
Such Lender agrees to promptly notify the Agent and the Borrower of any change
in circumstances which would modify or render invalid any claimed exemption.
(b) If any Lender claims exemption from withholding tax under a
United States of America tax treaty by providing IRS Form W-8BEN and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations owing to such Lender, such Lender agrees to notify the Agent and
the Borrower of the percentage amount in which it is no longer the beneficial
owner of Obligations of the Borrower to such Lender. To the extent of such
percentage amount, the Agent and the Borrower will treat such Lender's IRS Form
W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States of
America withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) Each Lender agrees with and in favor of the Agent to deliver
to the Agent, with a copy to the Borrower, two properly completed and executed
copies of IRS Form W-9 (or successor form) before any payment of interest in the
first calendar year during which interest must be paid under this Agreement.
(e) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent or the
Borrower did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent and the Borrower of
a change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent or the Borrower fully for all amounts paid, directly or
indirectly, by the Agent or the Borrower as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent or the Borrower under this Section, together
with all costs and
50
expenses (including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
12.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Liens upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Loans and reimbursement obligations in
respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such obligations are due)
and all other Obligations; (ii) constituting property being sold or disposed of
if the Borrower certifies to the Agent that the sale or disposition is made in
compliance with SECTION 7.9 (and the Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which the
Borrower owned no interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to the Borrower under a lease
which has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of the
Agent's Liens without the prior written authorization of the Lenders; PROVIDED
that the Agent may, in its discretion, release the Agent's Liens on Collateral
valued in the aggregate not in excess of $500,000 during each Fiscal Year
without the prior written authorization of the Lenders and the Agent may release
the Agent's Liens on Collateral valued in the aggregate not in excess of
$1,000,000 during each Fiscal Year with the prior written authorization of
Required Lenders. Upon request by the Agent or the Borrower at any time, the
Lenders will confirm in writing the Agent's authority to release any Agent's
Liens upon particular types or items of Collateral pursuant to this SECTION
12.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to SECTION 12.11(a) from the Lenders of the Agent's authority to
release Agent's Liens upon particular types or items of Collateral, and upon at
least five (5) Business Days prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent's Liens upon
such Collateral; PROVIDED, HOWEVER, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Borrower in respect of) all interests retained by the Borrower, including
the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower or is
cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
51
12.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of all Lenders, set off against the
Obligations, any amounts owing by such Lender to the Borrower or any accounts of
the Borrower now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by the
Agent, take or cause to be taken any action to enforce its rights under this
Agreement or against the Borrower, including the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of the Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from the Agent pursuant to
the terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; PROVIDED, HOWEVER, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
12.13 AGENCY FOR PERFECTION. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC or the applicable
provisions of the PPSA can be perfected only by possession. Should any Lender
(other than the Agent) obtain possession of any such Collateral, such Lender
shall notify the Agent thereof, and, promptly upon the Agent's request therefor
shall deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
12.14 PAYMENTS BY AGENT TO LENDERS. All payments to be made by the
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans or otherwise.
Unless the Agent receives notice from the Borrower prior to the date on which
any payment is due to the Lenders that the Borrower will not make such payment
in full as and when required, the Agent may assume that the Borrower has made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made such
payment in full to the
52
Agent, each Lender shall repay to the Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Lender until the date
repaid.
12.15 SETTLEMENT.
(a) (i) Each Lender's funded portion of the Revolving Loans
is intended by the Lenders to be equal at all times to such Lender's
Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, the Bank, and the other Lenders agree
(which agreement shall not be for the benefit of or enforceable by the
Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to
the Revolving Loans, the Non-Ratable Loans and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:
(ii) The Agent shall request settlement ("Settlement")
with the Lenders on at least a weekly basis, or on a more frequent
basis at Agent's election, (A) on behalf of the Bank, with respect to
each outstanding Non-Ratable Loan, (B) for itself, with respect to
each Agent Advance, and (C) with respect to collections received, in
each case, by notifying the Lenders of such requested Settlement by
telecopy, telephone or other similar form of transmission, of such
requested Settlement, no later than 12:00 noon (
New York City time) on
the date of such requested Settlement (the "Settlement Date"). Each
Lender (other than the Bank, in the case of Non-Ratable Loans and the
Agent in the case of Agent Advances) shall transfer the amount of such
Lender's Pro Rata Share of the outstanding principal amount of the
Non-Ratable Loans and Agent Advances with respect to each Settlement
to the Agent, to Agent's account, not later than 2:00 p.m. (
New York
City time), on the Settlement Date applicable thereto. Settlements may
occur during the continuation of a Default or an Event of Default and
whether or not the applicable conditions precedent set forth in
Article 8 have then been satisfied. Such amounts made available to the
Agent shall be applied against the amounts of the applicable
Non-Ratable Loan or Agent Advance and, together with the portion of
such Non-Ratable Loan or Agent Advance representing the Bank's Pro
Rata Share thereof, shall constitute Revolving Loans of such Lenders.
If any such amount is not transferred to the Agent by any Lender on
the Settlement Date applicable thereto, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest
thereon at the Federal Funds Rate for the first three (3) days from
and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans (A) on behalf of the Bank, with
respect to each outstanding Non-Ratable Loan, and (B) for itself, with
respect to each Agent Advance.
(iii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or
after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with
respect to a Non-Ratable Loan or Agent Advance), each other Lender (A)
shall irrevocably and unconditionally purchase and receive from the
Bank or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan or Agent
Advance equal to such Lender's Pro Rata Share of such Non-Ratable Loan
or Agent Advance
53
and (B) if Settlement has not previously occurred with respect to such
Non-Ratable Loans or Agent Advances, upon demand by Bank or Agent, as
applicable, shall pay to Bank or Agent, as applicable, as the purchase
price of such participation an amount equal to one-hundred percent
(100%) of such Lender's Pro Rata Share of such Non-Ratable Loans or
Agent Advances. If such amount is not in fact made available to the
Agent by any Lender, the Agent shall be entitled to recover such
amount on demand from such Lender together with interest thereon at
the Federal Funds Rate for the first three (3) days from and after
such demand and thereafter at the Interest Rate then applicable to
Base Rate Loans.
(iv) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable
Loan or Agent Advance pursuant to CLAUSE (iii) above, the Agent shall
promptly distribute to such Lender, such Lender's Pro Rata Share of
all payments of principal and interest and all proceeds of Collateral
received by the Agent in respect of such Non-Ratable Loan or Agent
Advance.
(v) Between Settlement Dates, the Agent, to the extent no
Agent Advances are outstanding, may pay over to the Bank any payments
received by the Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the Revolving Loans,
for application to the Bank's Revolving Loans including Non-Ratable
Loans. If, as of any Settlement Date, collections received since the
then immediately preceding Settlement Date have been applied to the
Bank's Revolving Loans (other than to Non-Ratable Loans or Agent
Advances in which such Lender has not yet funded its purchase of a
participation pursuant to clause (iii) above), as provided for in the
previous sentence, the Bank shall pay to the Agent for the accounts of
the Lenders, to be applied to the outstanding Revolving Loans of such
Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the
Revolving Loans. During the period between Settlement Dates, the Bank
with respect to Non-Ratable Loans, the Agent with respect to Agent
Advances, and each Lender with respect to the Revolving Loans other
than Non-Ratable Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement
on the actual average daily amount of funds employed by the Bank, the
Agent and the other Lenders.
(vi) Unless the Agent has received written notice from a
Lender to the contrary, the Agent may assume that the applicable
conditions precedent set forth in ARTICLE 8 have been satisfied and
the requested Borrowing will not exceed Availability on any Funding
Date for a Revolving Loan or Non-Ratable Loan.
(b) LENDERS' FAILURE TO PERFORM. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from
54
its obligation to make any Revolving Loans hereunder, and (iii) the obligations
of each Lender hereunder shall be several, not joint and several.
(c) DEFAULTING LENDERS. Unless the Agent receives notice from a
Lender on or prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Agent that Lender's Pro Rata Share of a Borrowing, the Agent may assume that
each Lender has made such amount available to the Agent in immediately available
funds on the Funding Date. Furthermore, the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If any Lender has not transferred its full Pro Rata Share to the Agent in
immediately available funds and the Agent has transferred corresponding amount
to the Borrower on the Business Day following such Funding Date that Lender
shall make such amount available to the Agent, together with interest at the
Federal Funds Rate for that day. A notice by the Agent submitted to any Lender
with respect to amounts owing shall be conclusive, absent manifest error. If
each Lender's full Pro Rata Share is transferred to the Agent as required, the
amount transferred to the Agent shall constitute that Lender's Revolving Loan
for all purposes of this Agreement. If that amount is not transferred to the
Agent on the Business Day following the Funding Date, the Agent will notify the
Borrower of such failure to fund and, upon demand by the Agent, the Borrower
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the Interest Rate applicable at the time to the
Revolving Loans comprising that particular Borrowing. The failure of any Lender
to make any Revolving Loan on any Funding Date (any such Lender, prior to the
cure of such failure, being hereinafter referred to as a "Defaulting Lender")
shall not relieve any other Lender of its obligation hereunder to make a
Revolving Loan on that Funding Date. No Lender shall be responsible for any
other Lender's failure to advance such other Lenders' Pro Rata Share of any
Borrowing.
(d) RETENTION OF DEFAULTING LENDER'S PAYMENTS. The Agent shall
not be obligated to transfer to a Defaulting Lender any payments made by
Borrower to the Agent for the Defaulting Lender's benefit; nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts
payable to a Defaulting Lender shall instead be paid to or retained by the
Agent. In its discretion, the Agent may loan Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
Any amounts so loaned to the Borrower shall bear interest at the rate applicable
to Base Rate Loans and for all other purposes of this Agreement shall be treated
as if they were Revolving Loans, PROVIDED, HOWEVER, that for purposes of voting
or consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender". Until
a Defaulting Lender cures its failure to fund its Pro Rata Share of any
Borrowing (A) such Defaulting Lender shall not be entitled to any portion of the
Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the Lenders
which have funded their respective Pro Rata Shares of such requested Borrowing
and shall be allocated among such performing Lenders ratably based upon their
relative Commitments. This Section shall remain effective with respect to such
Lender until such time as the Defaulting Lender shall no longer be in default of
any of its obligations under this Agreement. The terms of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by the Borrower of its duties and obligations
hereunder.
55
12.16 LETTERS OF CREDIT; INTRA-LENDER ISSUES.
(a) NOTICE OF LETTER OF CREDIT BALANCE. On each Settlement Date
the Agent shall notify each Lender of the issuance of all Letters of Credit
since the prior Settlement Date.
(b) PARTICIPATIONS IN LETTERS OF CREDIT.
(i) PURCHASE OF PARTICIPATIONS. Immediately upon issuance
of any Letter of Credit in accordance with SECTION 1.4(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and
participation equal to such Lender's Pro Rata Share of the face amount
of such Letter of Credit or the Credit Support provided through the
Agent to the Letter of Credit Issuer, if not the Bank, in connection
with the issuance of such Letter of Credit (including all obligations
of the Borrower with respect thereto, and any security therefor or
guaranty pertaining thereto).
(ii) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS.
Whenever the Agent receives a payment from the Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit
Support as to which the Agent has previously received for the account
of the Letter of Credit Issuer thereof payment from a Lender, the
Agent shall promptly pay to such Lender such Lender's Pro Rata Share
of such payment from the Borrower. Each such payment shall be made by
the Agent on the next Settlement Date.
(iii) DOCUMENTATION. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit,
Credit Support for any Letter of Credit, reimbursement agreements
executed in connection therewith, applications for any Letter of
Credit, and such other documentation as may reasonably be requested by
such Lender.
(iv) OBLIGATIONS IRREVOCABLE. The obligations of each
Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to their participation therein or with respect
to any Credit Support for any Letter of Credit or with respect to the
Revolving Loans made as a result of a drawing under a Letter of Credit
and the obligations of the Borrower for whose account the Letter of
Credit or Credit Support was issued to make payments to the Agent, for
the account of the Lenders, shall be irrevocable and shall not be
subject to any qualification or exception whatsoever, including any of
the following circumstances:
(1) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(2) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any
Letter of Credit (or any Person for whom any such transferee may
be acting), any Lender, the Agent, the issuer of such Letter of
Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transactions
56
between the Borrower or any other Person and the beneficiary
named in any Letter of Credit);
(3) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(4) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the
Loan Documents;
(5) the occurrence of any Default or Event of
Default; or
(6) the failure of the Borrower to satisfy the
applicable conditions precedent set forth in ARTICLE 8.
(c) RECOVERY OR AVOIDANCE OF PAYMENTS; REFUND OF PAYMENTS IN
ERROR. In the event any payment by or on behalf of the Borrower received by the
Agent with respect to any Letter of Credit or Credit Support provided for any
Letter of Credit and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it. Unless the Agent receives notice from the
Borrower prior to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full as and when required, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(d) INDEMNIFICATION BY LENDERS. To the extent not reimbursed by
the Borrower and without limiting the obligations of the Borrower hereunder, the
Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance
with their respective Pro Rata Shares, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Letter of Credit
Issuer in any way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the Letter
of Credit Issuer under any Letter of Credit or any Loan Document in connection
therewith; PROVIDED that no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro
Rata Share of any costs or expenses payable by the Borrower to the Letter of
Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Borrower. The agreement contained
in this Section shall survive payment in full of all other Obligations.
57
12.17 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS. Each
Lender authorizes and directs the Agent to enter into the other Loan Documents,
for the ratable benefit and obligation of the Agent and the Lenders. Each Lender
agrees that any action taken by the Agent or the Required Lenders in accordance
with the terms of this Agreement or the other Loan Documents, and the exercise
by the Agent or the Required Lenders of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders. The Lenders
acknowledge that the Revolving Loans Agent Advances, Non-Ratable Loans, Hedge
Agreements, Bank Products and all interest, fees and expenses hereunder
constitute one Debt, secured pari passu by all of the Collateral.
12.18 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by or
on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor
the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other party
performing any audit or examination will inspect only specific information
regarding the Borrower and will rely significantly upon the Borrower's books and
records, as well as on representations of the Borrower's personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of the Borrower; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including Attorney Costs) incurred by the Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
12.19 RELATION AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
12.20 CO-AGENTS. None of the Lenders identified on the facing page or
signature pages of this Agreement as a "co-agent" or a "documentation agent" or
a "syndication agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than
58
those applicable to all Lenders as such. Without limiting the foregoing, none of
the Lenders so identified as a "co-agent" or a "documentation agent" or a
"syndication agent" shall have or be deemed to have any fiduciary relationship
with any Lender. Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
ARTICLE 13
MISCELLANEOUS
13.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
the Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent's and each
Lender's rights under this Agreement will be cumulative and not exclusive of any
other right or remedy which the Agent or any Lender may have.
13.2 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument
or agreement required hereunder.
13.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
NEW YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX
XX XXX XXXX IN THE BOROUGH OF MANHATTAN OR OF THE UNITED STATES OF AMERICA
LOCATED IN THE SOUTHERN DISTRICT OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT AND THE LENDERS CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE
AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE
AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE
59
ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE
PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT
OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
13.4 WAIVER OF JURY TRIAL. THE BORROWER, THE LENDERS AND THE AGENT
EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
13.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
Borrower's representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
13.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without notice or
demand and without affecting the Borrower's obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
13.7 FEES AND EXPENSES. The Borrower agrees to pay to the Agent, for
its benefit, on demand, all reasonable costs and expenses that Agent pays or
incurs in connection with the
60
negotiation, preparation, syndication, consummation, administration,
enforcement, and termination of this Agreement or any of the other Loan
Documents, including: (a) Attorney Costs; (b) costs and expenses (including
attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees and other charges
for recording the Mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of Agreement); (e) sums paid or incurred to pay any amount or take
any action required of the Borrower under the Loan Documents that the Borrower
fails to pay or take; (f) costs of appraisals, inspections, and verifications of
the Collateral, including travel, lodging, and meals for inspections of the
Collateral and the Borrower's operations by the Agent plus the Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $850 per day (or portion thereof) for
each Person retained or employed by the Agent with respect to each field
examination or audit); and (g) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes, and costs and expenses of preserving and
protecting the Collateral. Notwithstanding the foregoing, Borrower shall not be
responsible for the costs and expenses of any third party retained by any
Co-Arranger after the date of the Fee Letter and prior to the Closing Date
unless the Borrower shall have previously approved the engagement (including the
material terms thereof) of such third party. The Co-Arrangers hereby confirm
that they have disclosed to the Borrower all third parties retained by them in
connection with this Agreement as of the date hereof. In addition, if an Event
of Default exists or if the Loans have been accelerated, the Borrower agrees to
pay all costs and expenses incurred by the Agent (including reasonable
Attorneys' Costs) to the Agent, for its benefit, on demand, and to the other
Lenders for their benefit, on demand, and all reasonable fees, expenses and
disbursements incurred by such other Lenders for one law firm retained by such
other Lenders, in each case, paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising out
of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other directly contrary provisions of the Loan Documents regarding
costs and expenses to be paid by the Borrower. All of the foregoing costs and
expenses shall be charged to the Borrower's Loan Account as Revolving Loans as
described in SECTION 3.7.
13.8 NOTICES. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:
61
If to the Agent or to the Bank:
Bank of America, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Business Credit-
Account Executive
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
If to the Borrower:
c/o ACG Holdings, Inc.
000 Xxxxxx'x Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000)000-0000
Telecopy: (000)000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
13.9 WAIVER OF NOTICES. Unless otherwise expressly provided herein,
the Borrower waives presentment, and notice of demand or dishonor and protest as
to any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on the Borrower which the
Agent or any Lender may elect to give shall entitle the Borrower to any or
further notice or demand in the same, similar or other circumstances.
13.10 BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; PROVIDED, HOWEVER, that no
interest herein may be assigned by the Borrower without prior written consent of
the Agent and each Lender. The rights and benefits of the Agent and the Lenders
hereunder shall, if such Persons so agree, inure to any party acquiring any
interest in the Obligations or any part thereof.
13.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWER.
(a) The Borrower agrees to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, representatives, agents and attorneys-in-fact
(each, an "INDEMNIFIED PERSON") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever
62
which may at any time (including at any time following repayment of the Loans
and the termination, resignation or replacement of the Agent or replacement of
any Lender) be imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement, any other Loan Document, or the Loans or
the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto, but excluding however Taxes and Other Taxes as to which the terms
of Section 4.1 shall provide the exclusive remedy available to the Lenders (all
the foregoing, collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities that are determined by a court of competent
jurisdiction in a final nonappealable judgment to have resulted primarily from
the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
(b) The Borrower agrees to indemnify, defend and hold harmless
the Agent and the Lenders from any loss or liability directly or indirectly
arising out of (i) the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence of a hazardous
substance relating to the Borrower's operations, business or property or (ii)
any non-compliance with the Environmental Laws relating to Borrower's
operations, business or property. This indemnity will apply whether the
hazardous substance is on, under or about the Borrower's property or operations
or property leased to the Borrower. The indemnity includes but is not limited to
Attorneys Costs. The indemnity extends to the Agent and the Lenders, their
parents, affiliates, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns. "Hazardous substances"
means any substance, material, waste, pollutant or contaminant that is or
becomes designated, regulated or actionable under any Environmental Laws,
including petroleum, petroleum products, natural gas, mold or fungi. This
indemnity will survive repayment of all other Obligations.
13.12 LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY THE BORROWER,
ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND THE BORROWER AND EACH LENDER HEREBY
WAIVE, RELEASE AND AGREE NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR
NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
13.13 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by the Borrower, the Agent and the Lenders to be the final, complete,
and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof except for the Fee Letter. No modification, rescission, waiver,
release, or amendment of any provision of this Agreement or any other Loan
63
Document shall be made, except by a written agreement signed by the Borrower and
a duly authorized officer of each of the Agent and the requisite Lenders.
13.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and the Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
13.15 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
13.16 RIGHT OF SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of the Borrower
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Lender; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity of
such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF THE BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT
THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
13.17 CONFIDENTIALITY.
(a) The Borrower hereby consents that the Agent and each Lender
may issue and disseminate to the public general information describing the
credit accommodation entered into pursuant to this Agreement, including the name
and address of the Borrower and a general description of the Borrower's business
and may use the Borrower's name in advertising and other promotional material;
PROVIDED that no such information, advertising or promotional materials shall
contain the name of or make any other reference to any shareholder of the
Borrower or any Affiliate of such shareholder (other than the Documentation
Agent in its capacity as such and as a Lender).
(b) Each Lender severally agrees to take precautions and
exercise due care in accordance with customary practice in the banking industry
to maintain the confidentiality of all information identified as "confidential"
or "secret" by the Borrower and provided to the Agent or such Lender by or on
behalf of the Borrower, under this Agreement or any other Loan Document, except
to the extent that such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Agent or such Lender, or
(ii) was or becomes available on a nonconfidential basis from a source other
than the Borrower, PROVIDED that such source is not bound by a confidentiality
agreement with the Borrower known to the Agent or such Lender; PROVIDED,
HOWEVER, that the Agent and any Lender may disclose such information (1) at the
request or pursuant
64
to any requirement of any Governmental Authority to which the Agent or such
Lender is subject or in connection with an examination of the Agent or such
Lender by any such Governmental Authority; (2) pursuant to subpoena or other
court process; (3) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (6)
to the Agent's or such Lender's independent auditors, accountants, attorneys and
other professional advisors; (7) to any prospective Participant or Assignee
under any Assignment and Acceptance, actual or potential, PROVIDED that such
prospective Participant or Assignee agrees to keep such information confidential
to the same extent required of the Agent and the Lenders hereunder; (8) as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower is party or is deemed party with the Agent
or such Lender, and (9) to its Affiliates. Notwithstanding anything herein to
the contrary, the information subject to this Section 13.17(b) shall not
include, and the Agent and each Lender may disclose without limitation of any
kind, any information with respect to the "tax treatment" and "tax structure"
(in each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Agent or such Lender
relating to such tax treatment and tax structure; PROVIDED that with respect to
any document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transactions as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the Loans,
Letters of Credit and transactions contemplated hereby.
13.18 CONFLICTS WITH OTHER LOAN DOCUMENTS. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
13.19 JUDGMENT CURRENCY. If for the purpose of obtaining judgment in
any court it is necessary to convert an amount due hereunder in the currency in
which it is due (the "Original Currency") into another currency (the "Second
Currency"), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Agent could purchase in the New York foreign
exchange market, the Original Currency with the Second Currency on the date two
(2) Business Days preceding that on which judgment is given. The Borrower agrees
that its obligation in respect of any Original Currency due from it hereunder
shall, notwithstanding any judgment or payment in such other currency, be
discharged only to the extent that, on the Business Day following the date the
Agent receives payment of any sum so adjudged to be due hereunder in the Second
Currency, the Agent may, in accordance with normal banking procedures, purchase,
in the New York foreign exchange market, the Original Currency with the amount
of the Second Currency so paid; and if the amount of the Original Currency so
purchased or that could have been so purchased is less than the amount
originally due in the Original Currency, the Borrower agrees as a separate
obligation and notwithstanding any such payment or judgment to indemnify the
Agent against such loss. The term "rate of exchange" in this Section 13.19 means
the spot rate at which the Agent, in accordance with normal practices, is able
on the relevant date to purchase the Original Currency with the Second Currency,
and includes any premium and costs of exchange payable in connection with such
purchase.
65
13.20 IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER
WRITTEN AGREEMENT.
66
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
BORROWER:
AMERICAN COLOR GRAPHICS, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ADMINISTRATIVE AGENT AND
COLLATERAL AGENT:
BANK OF AMERICA, N.A., as the Agent
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
DOCUMENTATION AGENT:
XXXXXX XXXXXXX SENIOR FUNDING, INC.,
as Documentation Agent
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
GECC CAPITAL MARKETS GROUP INC., as
Syndication Agent
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
LENDERS:
BANK OF AMERICA, N.A., as a Lender
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
XXXXXX XXXXXXX SENIOR FUNDING, INC.,
as a Lender
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"ACCOUNTS" means all of the Credit Parties now owned or hereafter
acquired or arising accounts, as defined in the UCC, including any rights to
payment for the sale or lease of goods or rendition of services, whether or not
they have been earned by performance.
"ACCOUNT DEBTOR" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangibles (including a
payment intangible).
"ACH TRANSACTIONS" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of the Borrower pursuant to agreement or overdrafts.
"ADJUSTED NET EARNINGS FROM OPERATIONS" means, with respect to any
fiscal period of the Parent, the Parent's consolidated net income after
provision for income taxes for such fiscal period, as determined in accordance
with GAAP and reported on the Financial Statements for such period, excluding,
on an after-tax basis for the purpose of calculating Permitted Distributions
only, any and all of the following included in such net income: (a) gain or loss
arising from the sale of any capital assets; (b) gain arising from any write-up
in the book value of any asset; (c) earnings of any Person, substantially all
the assets of which have been acquired by the Parent or its Subsidiaries in any
manner, to the extent realized by such other Person prior to the date of
acquisition; (d) earnings of any unconsolidated entity in which the Parent or
any of its Subsidiaries has an ownership interest unless (and only to the
extent) such earnings shall actually have been received by the Parent or any
Subsidiary in the form of cash distributions; (e) earnings of any Person to
which assets of the Parent or any Subsidiary shall have been sold, transferred
or disposed of, or into which the Parent or any Subsidiary shall have been
merged, or which has been a party with the Parent or any Subsidiary to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain or loss arising from the acquisition of debt or equity
securities of the Parent or any Subsidiary or from cancellation or forgiveness
of Debt; (g) gain or loss arising (y) from extraordinary items, as determined in
accordance with GAAP, or (z) from any other unusual or non-recurring
transaction, (h) the 2003 Recapitalization, including, without limitation, all
fees, expenses and other costs incurred in connection therewith and the
write-off of unamortized deferred financing costs.
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
A-1
"AGENT" means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.
"AGENT ADVANCES" has the meaning specified in SECTION 1.2(i).
"AGENT'S COMMERCIAL JUDGMENT" means the commercially reasonable
judgment of the Agent as to credit or, where applicable, other matters, in each
case exercised in good faith.
"AGENT'S LIENS" means the Liens in the Collateral granted to the
Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this
Agreement and the other Loan Documents.
"AGENT-RELATED PERSONS" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Agent and such Affiliates.
"AGGREGATE REVOLVER OUTSTANDINGS" means, at any date of determination:
the sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount
of Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding Letters of Credit, and (d) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit.
"AGREEMENT" means the
Credit Agreement to which this ANNEX A is
attached, as from time to time amended, modified or restated.
"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"APPLICABLE MARGIN" means
(i) with respect to Base Rate Loans and all other Obligations
(other than LIBOR Rate Loans), 1.50%; and
(ii) with respect to LIBOR Revolving Loans, 2.50%.
The Applicable Margins shall be adjusted (up or down) prospectively on
a quarterly basis as determined by the Borrower's Fixed Charge Coverage Ratio
for the Four Quarter Period most recently ended, commencing with the first day
of the first calendar month that occurs more than 5 days after delivery of the
Borrower's quarterly Financial Statements to Lenders for the fiscal quarter
ending December 31, 2003 (the "Initial Adjustment Date"). Adjustments in
Applicable Margins shall be determined by reference to the following grids:
IF FIXED CHARGE LEVEL OF
COVERAGE RATIO IS: APPLICABLE MARGINS:
------------------------------ -------------------
Greater than or Level I
equal to 1.50 to 1.00
Greater than or equal to 1.25 Level II
to 1.00 but less than 1.50 to
1.00
Less than 1.25 to 1.00 Level III
A-2
LOW TO HIGH
APPLICABLE MARGINS
------------------
LEVEL I LEVEL II LEVEL III
------- -------- ---------
Base Rate Loans 1.00% 1.25% 1.50%
LIBOR Loans 2.00% 2.25% 2.50%
All adjustments in the Applicable Margins after the Initial Adjustment
Date shall be implemented for a three calendar month period on a prospective
basis, for each three calendar month period commencing at least 5 days after the
date of delivery to the Lenders of quarterly unaudited or annual audited (as
applicable) Financial Statements evidencing the need for an adjustment.
Concurrently with the delivery of those Financial Statements, the Borrower shall
deliver to the Agent and the Lenders a certificate, signed by its chief
financial officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margins. Failure to timely
deliver such Financial Statements shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the Applicable Margins
to the highest level set forth in the foregoing grid, until the first day of the
first calendar month following the delivery of those Financial Statements
demonstrating that such an increase is not required. If a Default or Event of
Default has occurred and is continuing at the time any reduction in the
Applicable Margins is to be implemented, no reduction may occur until the first
day of the first calendar month following the date on which such Default or
Event of Default is waived or cured.
"APPLICABLE VALUE" means, as to any Inventory at any time, the lower
of (a) cost of such Inventory at such time (calculated in accordance with GAAP
on a first-in, first-out basis) or (b) market value of such Inventory at such
time.
"APPRAISAL DATE" means each of (a) the Closing Date, (b) any date upon
which the Agent receives results of an appraisal conducted by an Eligible
Appraiser at the Agent's request which, so long as no Event of Default exists,
shall not be requested more frequently than once during each twelve month period
following the date that is one year after the Closing Date and (c) any other
date on which results are received by the Agent of an appraisal conducted by an
Eligible Appraiser at the Borrower's request or, if an Event of Default exists,
the Agent's request.
"APPRAISAL VALUE" means (a) with respect to Equipment, the orderly
liquidation value, net of expenses, of any asset established on the most
recently occurring Appraisal Date by an appraisal conducted by an Eligible
Appraiser and (b) with respect to Real Estate, market value established on the
most recently occurring Appraisal Date by an appraisal conducted by an Eligible
Appraiser in accordance with the Agent's then current credit policy, which shall
not be materially different from then current policies in the asset based
lending industry in general. It is the Agent's intent to utilize the appraisers
previously used and to obtain "desktop" appraisals where appropriate; PROVIDED
that the Agent retains discretion to change appraisers and require full
appraisals in the exercise of the Agent's Commercial Judgment and otherwise when
an Event of Default has occurred and is continuing. It is understood by the
parties that Appraisal Value is used solely for the purpose of determining the
amount that may be advanced against the relevant assets, and that such values
may not necessarily reflect the true fair values or fair salable values of such
assets.
"ASSIGNEE" has the meaning specified in SECTION 11.2(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION
11.2(a).
A-3
"ATTORNEY COSTS" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent, and, if an
Event of Default exists, the reasonably allocated costs and expenses of internal
legal services of the Agent.
"AVAILABILITY" means, at any time (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the Borrowing Base, MINUS (b) Reserves other than
Reserves deducted in the calculation of the Borrowing Base, MINUS (c) in each
case, the Aggregate Revolver Outstandings.
"BANK" means Bank of America, N.A., a national banking association, or
any successor entity thereto.
"BANK PRODUCTS" means any one or more of the following types of
services or facilities extended to the Borrower by a Providing Lender or any
affiliate of the Providing Lender in reliance (unless waived by such Affiliate)
on the Providing Lender's agreement to indemnify such Affiliate: (i) credit
cards; (ii) ACH Transactions; (iii) cash management, including controlled
disbursement services; and (iv) Hedge Agreements.
"BANK PRODUCT RESERVES" means all reserves which the Agent from time
to time establishes in the Agent's Commercial Judgment for the Bank Products
then provided or outstanding.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
Section 101 ET SEQ.).
"BASE RATE" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"BASE RATE LOANS" means a Revolving Loan during any period in which it
bears interest based on the Base Rate.
"BLOCKED ACCOUNT AGREEMENT" means agreements among the Borrower, the
Agent and a Clearing Bank, substantially in form attached hereto as EXHIBIT K,
concerning the collection of payments which represent the proceeds of Accounts
or of any other Collateral and include, without limitation, blocked account
agreements requiring activation by the Agent.
"BORROWING" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrower or by Bank in the case of a
Borrowing funded by Non-Ratable Loans or by the Agent in the case of a Borrowing
consisting of an Agent Advance, or the issuance of Letters of Credit hereunder.
"BORROWING BASE" means, at any time, an amount equal to
(a) the sum of
A-4
(i) eighty-five percent (85%) of the Net Amount of
Eligible Accounts; PLUS
(ii) eighty percent (80%) of the Net Amount of Eligible
Unbilled Accounts; PLUS
(iii) sixty-five percent (65%) of the Applicable Value of
Eligible Inventory; PLUS
(iv) the lesser of
(A) the Fixed Asset Maximum and
(B) the sum of (1) eighty percent (80%) of the
Appraisal Value of Eligible Equipment plus (2) fifty percent
(50%) of the Appraisal Value of Mortgaged Property minus
(b) Reserves from time to time established by the Agent in the
Agent's Commercial Judgment;
PROVIDED, HOWEVER, at no time shall the amount of the Borrowing Base derived
from Eligible Equipment and Mortgaged Property under clause (iv) above exceed
50% of the total amount of the Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate by a Responsible
Officer of the Borrower, substantially in the form of EXHIBIT B (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof. All calculations of the
Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrower and certified to the Agent;
PROVIDED, that the Agent shall have the right to review and adjust, in the
exercise of the Agent's Commercial Judgment, any such calculation to the extent
that such calculation is not in accordance with this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in New York, New York or Charlotte, North Carolina are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or LIBOR
Rate Loans, any day that is a Business Day pursuant to CLAUSE (a) above and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
"CANADIAN BRANCH" means all operations, business or otherwise, carried
on in Canada, including, without limitation, the operations and business carried
on at the plant located 0000 Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx.
"CANADIAN SECURITY AGREEMENT" means that certain General Security
Agreement dated as of the Closing Date by and between the Borrower and the Agent
covering certain personal property located in Canada, as hereafter modified,
amended or supplemented from time to time.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not
A-5
having the force of law, in each case, regarding capital adequacy of any bank or
of any corporation controlling a bank.
"CAPITAL EXPENDITURES" means all payments due (whether or not paid
during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year and a cost in excess of $2,500 if made in the
Borrower's American Color operations and $5,000 if made in the Borrower's Retail
and Newspaper operations, including, without limitation, those costs arising in
connection with the direct or indirect acquisition of such asset by way of
increased product or service charges or in connection with a Capital Lease.
"CAPITAL LEASE" means any lease of property by the Borrower which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of the Borrower.
"CHANGE OF CONTROL" means an event or series of events by which:
(a) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) other than the Permitted Holders and
treating all Permitted Holders as if they were not members of any such
"person" or "group", becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have "beneficial ownership" of all
securities that such person or group has the right to acquire (such right,
an "OPTION RIGHT"), whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 40% or more of the
equity securities of the Parent entitled to vote for members of the board
of directors or equivalent governing body of the Parent on a fully-diluted
basis (and taking into account all such securities that such person or
group has the right to acquire pursuant to any option right); or
(b) during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of the
Parent cease to be composed of individuals (i) who were members of that
board or equivalent governing body on the first day of such period, (ii)
whose election or nomination to that board or equivalent governing body was
approved by individuals referred to in clause (i) above constituting at the
time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that
board or other equivalent governing body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause
(iii), any individual whose initial nomination for, or assumption of office
as, a member of that board or equivalent governing body occurs as a result
of an actual or threatened solicitation of proxies or consents for the
election or removal of one or more directors by any person or group other
than a solicitation for the election of one or more directors by or on
behalf of the board of directors); or
(c) The Permitted Holders shall cease to be the direct or indirect
beneficial owner of more than 40% of the equity securities of the Parent
entitled to vote for members of the board of directors or equivalent
governing body of the Parent; or
A-6
(d) the Parent shall cease to be the direct beneficial owner of all
of the equity securities of the Borrower.
"CHATTEL PAPER" means all of the Credit Parties' now owned or
hereafter acquired chattel paper, as defined in the UCC, including electronic
chattel paper.
"CLEARING BANK" means the Bank or any other U.S. or Canadian banking
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"CLOSING DATE" means the date of this Agreement.
"CLOSING FEE" has the meaning specified in SECTION 2.4.
"CO-ARRANGERS" has the meaning given to such term in SECTION 8.1(h).
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"COLLATERAL" means all of the Credit Parties' real and personal
property and all other assets of any Person from time to time subject to Agent's
Liens securing payment or performance of the Obligations.
"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on SCHEDULE 1.1 attached to the Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of SECTION
11.2, and "COMMITMENTS" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"CONTINUATION/CONVERSION DATE" means the date on which a Loan is
converted into or continued as a LIBOR Rate Loan.
"CREDIT PARTY" means the Borrower, the Parent and any other Guarantor.
"CREDIT SUPPORT" has the meaning specified in SECTION 1.4(a).
"DEBT" means, without duplication, all liabilities, obligations and
indebtedness of the Parent, the Borrower or any Subsidiary to any Person, of any
kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, in each case with respect to
indebtedness for borrowed money or the deferred purchase price of property,
excluding trade payables, but including (a) all Obligations; (b) all obligations
and liabilities of any Person secured by any Lien on the Borrower's property,
even though the Borrower shall not have assumed or become liable for the payment
thereof; PROVIDED, HOWEVER, that all such obligations and liabilities which are
limited in
A-7
recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of the Borrower
prepared in accordance with GAAP; (c) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by the Borrower, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; PROVIDED, HOWEVER, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the Borrower prepared in accordance with GAAP; (d) all
obligations and liabilities under Guaranties and (e) the present value
(discounted at the Base Rate then in effect) of lease payments due under
synthetic leases.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"DEFAULT RATE" means a fluctuating per annum interest rate at all
times equal to the sum of (a) the otherwise applicable Interest Rate PLUS (b)
two percent (2%) per annum. Each Default Rate shall be adjusted simultaneously
with any change in the applicable Interest Rate. In addition, the Default Rate
shall result in an increase in the Letter of Credit Fee by two percent (2%) per
annum.
"DEFAULTING LENDER" has the meaning specified in SECTION 12.15(c).
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is
defined in the UCC, now or hereafter held in the name of any Credit Party.
"DESIGNATED ACCOUNT" has the meaning specified in SECTION 1.2(c).
"DIGISCOPE LOAN' means any revolving loan made and outstanding from
time to time under the commitment of the Borrower to lend to Digiscope LLC on a
revolving basis no more than $150,000 outstanding at any one time during the
period from the date hereof until June 5, 2004, and no more than outstanding at
any one time $100,000 thereafter until June 5, 2005.
"DISTRIBUTION" means, in respect of any corporation: (a) the payment
or making of any dividend or other distribution of property in respect of
capital stock (or any options or warrants for, or other rights with respect to,
such stock) of such corporation, other than distributions in capital stock (or
any options or warrants for such stock) of the same class; or (b) the redemption
or other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"DOCUMENTS" means all documents as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by any Credit Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under the Agreements shall be
made in Dollars.
A-8
"DOLLAR EQUIVALENT" means, at any time, with respect to any amount
denominated in any currency other than Dollars: (a) solely for purposes of
determining compliance with the requirements of Section 7.24 or Section 7.25 at
any time, the equivalent amount thereof determined by the Borrower on the basis
of the exchange rate set forth under "Exchange Rates" in the most-recently
published edition of the WALL STREET JOURNAL and (b) for any other purpose under
this Agreement (including if an exchange rate cannot be determined as provided
in the foregoing clause (a)), the equivalent amount thereof in Dollars as
determined by the Agent at such time on the basis of the Spot Rate for the
purchase of Dollars with such other Currency. "SPOT RATE" for a currency means
the rate quoted by the Agent as the spot rate for the purchase by the Agent of
such currency with another currency through its principal foreign exchange
trading office at approximately 11:00 a.m., New York time, on the date two
Business Days prior to the date as of which the foreign exchange computation is
made.
"EBITDA" means, with respect to any fiscal period of the Parent,
Adjusted Net Earnings from Operations, PLUS, to the extent deducted in the
determination of Adjusted Net Earnings from Operations for that fiscal period,
Interest Expense, Federal, state, local, foreign and deferred income tax
expense, depreciation and amortization, PLUS restructuring charges, severance
expenses and other non-recurring charges accrued during such period and MINUS
restructuring charges, severance expenses and other non-recurring charges paid
during such period whether or not such charges and expenses were accrued during
such period; PROVIDED, HOWEVER, there shall be excluded from the immediately
foregoing deduction up to $2,000,000 of such restructuring charges, severance
expenses and other non-recurring charges accrued during the Fiscal Year ended
March 31, 2002, and the Fiscal Year ended March 31, 2003 of the Borrower and
unpaid as of the Closing Date.
"ELIGIBLE ACCOUNTS" means the Accounts arising from the rendition of
services or sale of goods by a Credit Party which in the Agent's Commercial
Judgment it determines to be Eligible Accounts. Without limiting the ability of
the Agent to establish other criteria of ineligibility, Eligible Accounts shall
not, unless the Agent in the Agent's Commercial Judgment elects, include any
Account:
(a) with respect to which more than 90 days have elapsed since the
date of the original invoice therefor or which is more than 60 days past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Security Agreement are incorrect or
have been breached;
(c) with respect to which Account (or any other Account due from
such Account Debtor), in whole or in part, a check, promissory note, draft,
trade acceptance or other instrument for the payment of money has been received,
presented for payment and returned uncollected because of insufficient funds in,
or closure of, the account on which the item was drawn;
(d) which represents a progress billing (as hereinafter defined) or
as to which the Borrower has extended the time for payment without the consent
of the Agent; for the purposes hereof, "progress billing" means any invoice for
goods sold or leased or services rendered under a contract or agreement pursuant
to which the Account Debtor's obligation to pay such invoice is conditioned upon
the Borrower's completion of any further performance under the contract or
agreement; the foregoing provisions with respect to progress xxxxxxxx shall not
render ineligible any otherwise Eligible Account arising under a contract
covered by the Fixed Fee Contract Reserve;
A-9
(e) with respect to which any one or more of the following events
has occurred to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, consolidation, adjustment of debts,
adjudication as a bankrupt, winding-up, or other relief under the bankruptcy,
insolvency, winding up, liquidation or similar corporate statutes or similar
laws of Canada, any province thereof or the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in effect; the
making of any general assignment by the Account Debtor for the benefit of
creditors; the appointment of a receiver or trustee for the Account Debtor or
for any of the assets of the Account Debtor, including, without limitation, the
appointment of or taking possession by a "custodian," as defined in the Federal
Bankruptcy Code; the institution by or against the Account Debtor of any other
type of insolvency proceeding (under the bankruptcy laws of the United States,
Canada or otherwise) or of any formal or informal proceeding for the dissolution
or liquidation of, settlement of claims against, or winding up of affairs of,
the Account Debtor; the sale, assignment, or transfer of all or any material
part of the assets of the Account Debtor; the nonpayment generally by the
Account Debtor of its debts as they become due; or the cessation of the business
of the Account Debtor as a going concern;
(f) owed by an Account Debtor with respect to which fifty percent
(50%) or more of the aggregate Dollar amount of outstanding Accounts owed at
such time by such Account Debtor is classified as ineligible under CLAUSE (a)
above;
(g) owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States of America or Canada; or (ii) is not
organized under the laws of the United States of America or Canada or any state
or province thereof; or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof; except to the extent that such Account is secured or
payable by a letter of credit satisfactory to the Agent in the Agent's
Commercial Judgment;
(h) owed by an Account Debtor which is an Affiliate or employee of
the Borrower;
(i) owed by an Account Debtor which has been classified as being on
"Credit Hold" by the Borrower;
(i) except as provided in CLAUSE (k) below, with respect to which
either the perfection, enforceability, or validity of the Agent's Liens in such
Account, or the Agent's right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, provincial
or local statutory requirements other than those of the UCC (for U.S. Accounts)
and the PPSA (for Canadian Accounts);
(j) owed by an Account Debtor to which the Borrower or any of its
Subsidiaries, is indebted in any way, or which is subject to any right of setoff
or recoupment by the Account Debtor, unless the Account Debtor has entered into
an agreement acceptable to the Agent to waive setoff rights; or if the Account
Debtor thereon has disputed liability or made any claim with respect to any
other Account due from such Account Debtor; but in each such case only to the
extent of such indebtedness, setoff, recoupment, dispute, or claim;
A-10
(k) owed by the government of the United States of America, Canada
or any department, agency, public corporation, or other instrumentality thereof,
unless in the case of the United States of America the Federal Assignment of
Claims Act of 1940, as amended (31 U.S.C. Section 3727 ET SEQ.), and any other
steps necessary to perfect the Agent's Liens therein, have been complied with to
the Agent's satisfaction with respect to such Account;
(l) owed by any state, province, municipality, or other political
subdivision of the United States of America or Canada, or any department,
agency, public corporation, or other instrumentality thereof and as to which the
Agent determines in the Agent's Commercial Judgment that its Lien therein is not
or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis;
(n) which is evidenced by a promissory note or other instrument or
by chattel paper;
(o) if the Agent believes, in the Agent's Commercial Judgment, that
the prospect of collection of such Account is impaired or that the Account may
not be paid by reason of the Account Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in any state
requiring the filing of a notice of business activities report or similar report
in order to permit the Borrower to seek judicial enforcement in such State of
payment of such Account, unless such Borrower has qualified to do business in
such state or has filed a notice of business activities report or equivalent
report for the then current year;
(q) which arises out of a sale not made in the ordinary course of
the Borrower's business;
(r) with respect to which the goods giving rise to such Account have
not been shipped and have not been rejected by the Account Debtor or the
services giving rise to such Account have not been performed by the Borrower,
and, if applicable, accepted by the Account Debtor, or the Account Debtor
revokes its acceptance of such goods or services; the foregoing provisions
requiring shipment and non-rejection of goods or performance and acceptance of
services shall not in and of itself render ineligible any otherwise Eligible
Account arising under a contract covered by the Fixed Fee Contract Reserve;
(s) owed by an Account Debtor which is obligated to the Borrower
respecting Accounts the aggregate unpaid balance of which exceeds twenty percent
(20%) of the aggregate unpaid balance of all Accounts owed to the Borrower at
such time by all of the Borrower's Account Debtors, but only to the extent of
such excess; or
(t) which is not subject to a first priority and perfected security
interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from Eligible Accounts.
A-11
"ELIGIBLE APPRAISER" means (a) with respect to Equipment, (i) AccuVal
Associates, Inc. and (ii) any other independent appraiser acceptable to the
Agent in the Agent's Commercial Judgment and, so long as no Event of Default is
continuing, the Borrower, and (b) with respect to Real Estate, any independent
real estate appraiser acceptable to the Agent in the Agent's Commercial Judgment
and selected using the Agent's customary business practices.
"ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a Lender;
(c) any financial institution becoming a Lender in connection with the Initial
Syndication and (d) any other commercial financial institution having total
assets in excess of $1,000,000,000 approved by (i) the Agent and (ii) unless a
Default or Event of Default has occurred and is continuing, the Borrower (each
such approval not to be unreasonably withheld or delayed).
"ELIGIBLE EQUIPMENT" means all Equipment which the Agent, in the
Agent's Commercial Judgment, determines to be Eligible Equipment. Without
limiting the ability of the Agent to establish other criteria of ineligibility,
Eligible Equipment shall not, unless the Agent in the Agent's Commercial
Judgment elects, include any Equipment:
(a) that is not owned by the Borrower;
(b) that is not subject to the Agent's Liens, which are first
priority and perfected as to such Equipment or that is subject to any other Lien
whatsoever;
(c) as to which all of the representations, warranties and covenants
contained in the Security Agreement are not true, correct and satisfied.
(d) that is not in good repair and normal operating condition or
which has not been maintained in accordance with the Borrower's historic
maintenance program, including annual and preventative maintenance and rebuilds;
(e) that is obsolete; or
(f) that is not located on Mortgaged Property or at a Leased
Facility subject to an acceptable Landlord Waiver.
If any Equipment at any time ceases to be Eligible Equipment, such
Equipment shall promptly be excluded from Eligible Equipment.
"ELIGIBLE INVENTORY" means Inventory which the Agent, in the Agent's
Commercial Judgment, determines to be Eligible Inventory. Without limiting the
ability of the Agent to establish other criteria of ineligibility, Eligible
Inventory shall not, unless the Agent in the Agent's Commercial Judgment elects,
include any Inventory:
(a) that is not owned by the Borrower;
(b) that is not subject to the Agent's Liens, which are perfected as
to such Inventory, or that are subject to any other Lien whatsoever (other than
the Liens described in CLAUSE (d) of the definition of Permitted Liens provided
that such Permitted Liens (i) are junior in priority to the Agent's Liens or
subject to Reserves and (ii) do not impair directly or indirectly the ability of
the Agent to realize on or obtain the full benefit of the Collateral);
A-12
(c) that does not consist of finished goods or raw materials;
(d) that consists of work-in-process, chemicals, samples,
prototypes, supplies, or packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority, having regulatory
authority over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of the Borrower's business, or
that is slow moving or stale;
(g) that is obsolete or returned or repossessed or used goods taken
in trade;
(h) that is located outside the United States of America or Canada
(or that is in-transit from vendors or suppliers);
(i) that is located in a public warehouse or in possession of a
bailee or in a facility leased by the Borrower, if the warehouseman, or the
bailee, or the lessor has not delivered to the Agent, if requested by the Agent,
a subordination agreement in form and substance satisfactory to the Agent or if
a Reserve for rents or storage charges has not been established for Inventory at
that location;
(j) that contains or bears any Proprietary Rights licensed to a
Borrower by any Person, if the Agent is not satisfied that it may sell or
otherwise dispose of such Inventory in accordance with the terms of the Security
Agreement and SECTION 9.2 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and without
payment of any royalties other than any royalties due with respect to the sale
or disposition of such Inventory pursuant to the existing license agreement),
and, as to which the Borrower has not delivered to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Agent if requested;
(k) that is not reflected in the details of a current perpetual
inventory report unless it is Inventory from the Borrower's Shakopee, Minnesota
plant, in which case it need not be reflected in such report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from Eligible Inventory.
"ELIGIBLE UNBILLED ACCOUNTS" means Accounts, other than pre-media
Accounts (a) that have not been invoiced but have been treated as Accounts for
less than thirty (30) days, (b) that represent completed portions of customer
orders that have been printed and shipped or are ready to be shipped within a
three day period and (c) that will be Eligible Accounts upon delivery of an
invoice to the prospective Account Debtors.
"ENVIRONMENTAL COMPLIANCE RESERVE" means any reserve which the Agent
establishes in the Agent's Commercial Judgment after prior written notice to the
Borrower from time to time for amounts that are reasonably likely to be expended
by the Borrower in order for the Borrower and its
A-13
operations and property (a) to comply with any notice from a Governmental
Authority relating to alleged violation of any Environmental Law that would
reasonably be expected to cause a Material Adverse Effect, or (b) to correct any
such material non-compliance identified in a report delivered to the Agent and
the Lenders pursuant to SECTION 7.7.
"ENVIRONMENTAL LAWS" means all federal, provincial, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority or any other Person for (a) any liability under Environmental Laws, or
(b) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
"EQUIPMENT" means all of the Credit Parties' now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including embedded software,
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by the Borrower or such Guarantor and all of the
Borrower's and such Guarantor's rights and interests with respect thereto under
such leases (including, without limitation, options to purchase); together with
all present and future additions and accessions thereto, replacements therefor,
component and auxiliary parts and supplies used or to be used in connection
therewith, and all substitutes for any of the foregoing, and all manuals,
drawings, instructions, warranties and rights with respect thereto; wherever any
of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event or Termination Event with
respect to a Pension Plan, (b) a withdrawal by the Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or employer under the PBA
or a cessation of operations which is treated as such a withdrawal, (c) a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or plan regulated or governed by the PBA or notification that
a Multiemployer Plan or plan regulated or governed by the PBA is in
reorganization, (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination, or the commencement of proceedings by the
PBGC or other applicable Governmental Authority to terminate a Pension Plan or
Multiemployer Plan, (e) the occurrence of an event or condition which might
reasonably be expected to constitute grounds for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan,
(f) the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA or PBA or other
applicable law of any jurisdiction, upon the Borrower or any ERISA Affiliate; or
(g) any failure to make or remit any Contribution when due in respect of any
Plan.
A-14
"EVENT OF DEFAULT" has the meaning specified in SECTION 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXISTING CREDIT FACILITY" means the credit facilities evidenced by
that certain
Credit Agreement dated as of August 15, 1995 and Amended and
Restated as of May 8, 1998 by and among the Parent, the Borrower, GE Capital
Corporation, as Documentation Agent, Xxxxxx Xxxxxxx Senior Funding, Inc., as
Syndication Agent, Bankers Trust Company, as Administrative Agent, and the
financial institutions party thereto, as amended.
"EXISTING NOTES" means the Borrower's 12 3/4% Senior Subordinated
Notes Due 2005 issued pursuant to that certain Indenture, dated as of August 15,
1995, by and between the Borrower and NationsBank of Georgia, National
Association, as trustee.
"FACILITY GUARANTY" means each Guaranty Agreement between the
Guarantor and the Agent for the benefit of the Agent and the Lenders, delivered
as of the Closing Date, as the same may be amended, modified or supplemented.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; PROVIDED that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"FEE LETTER" has the meaning given to such term in SECTION 2.4.
"FINANCIAL STATEMENTS" means, according to the context in which it is
used, the financial statements referred to in SECTIONS 5.2 AND 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"FISCAL YEAR" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on March
31, 2004.
"FIXED ASSET MAXIMUM" means $35,000,000.
"FIXED ASSETS" means the Equipment and Real Estate of each Credit
Party.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any fiscal period
of the Parent, the ratio of (a) EBITDA minus Capital Expenditures paid in cash
during such period to (b) Fixed Charges.
A-15
"FIXED CHARGES" means, with respect to any fiscal period of the Parent
and its Subsidiaries on a consolidated basis, without duplication, Interest
Expense (excluding amortization of deferred financing costs). all scheduled
principal payments of Debt (but not Permitted Prepayments), and Federal, state,
local and foreign income taxes paid in cash.
"FIXED FEE CONTRACT RESERVE" means a Reserve to be applied against
Accounts arising under contracts for the provision of printing services under
which the customer pays a fixed monthly fee and shall be subject to upward or
downward adjustment in the Agent's Commercial Judgment.
"FOUR QUARTER PERIOD" a period of four full consecutive fiscal
quarters of the Parent and its Subsidiaries, taken together as one accounting
period.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices
set forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date.
"GENERAL INTANGIBLES" means all of each Credit Party's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of each Credit Party of every kind
and nature (other than Accounts), including, without limitation, all contract
rights, payment intangibles, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to such Credit
Party in connection with the termination of any Plan or other employee benefit
plan or any rights thereto and any other amounts payable to such Credit Party
from any Plan or other employee benefit plan, rights and claims against carriers
and shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key employees on
which such Credit Party is beneficiary, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged equity interests or Investment Property and any letter of credit,
guarantee, claim, security interest or other security held by or granted to such
Credit Party.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
province, municipality, region or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of the
foregoing and any department, agency, board, commission, tribunal, committee or
instrumentality of any of the foregoing.
"GUARANTOR" means the Parent and each Subsidiary (other than the
Borrower) providing a Facility Guaranty hereunder (which Guaranty shall be
accompanied by all Security Instruments requested by the Agent in the Agent's
Commercial Judgment).
A-16
"GUARANTY" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services; PROVIDED, that the term "Guaranty" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.
"HEDGE AGREEMENT" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Borrower's exposure to fluctuations in interest
or exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
"IMMATERIAL SUBSIDIARY" means a Subsidiary of the Borrower that has
assets that total, when added to the assets of all other Immaterial
Subsidiaries, not more than $300,000.
"INITIAL SYNDICATION" means the assignments by Bank of America and
Xxxxxx Xxxxxxx Senior Funding, Inc. of portions of their Commitments hereunder
that enable them to achieve their targeted Commitment levels set forth in the
Fee Letter.
"INSTRUMENTS" means all instruments as such term is defined in the
UCC, now owned or hereafter acquired by the Credit Parties.
"INTEREST EXPENSE" means, for any fiscal period, the aggregate amount
of interest required to be paid or payable in cash by the Parent and its
Subsidiaries during such period on all Debt of the Parent and its Subsidiaries
during such period (including amortization of deferred financing costs), whether
such interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capital
Leases or synthetic leases, and including unused commitment fees, facility fees
and similar fees or expenses in connection with the borrowing of money
(including all fees and net expenses in connection with Hedge Agreements).
"INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three, six or, with the approval of all the
Lenders, twelve months thereafter as selected by the Borrower in its Notice of
Borrowing, in the form attached hereto as EXHIBIT D, or Notice of
Continuation/Conversion, in the form attached hereto as EXHIBIT E, provided
that:
(a) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following Business
Day unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the preceding Business Day;
A-17
(b) any Interest Period pertaining to a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and
(c) no Interest Period shall extend beyond the Stated Termination
Date.
"INTEREST RATE" means each or any of the interest rates, including the
Default Rate, set forth in SECTION 2.1.
"INVENTORY" means all of the Credit Parties' now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in the Credit Parties' business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.
"INVESTMENT PROPERTY" means all of the Credit Parties' right title and
interest in and to any and all: (a) securities whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LANDLORD WAIVERS" means the Agreement of Landlord required by the
Agent to be delivered by the landlord of each Leased Facility of the Borrower
and any Subsidiary, substantially in the form of EXHIBIT G hereto, as amended,
supplemented and restated from time to time.
"LATEST PROJECTIONS" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to SECTION 5.2(e), the
projections of the Parent's consolidated financial condition, results of
operations, and cash flows, for the period commencing on April 1, 2003 and
ending on March 31, 2006 and delivered to the Agent prior to the Closing Date;
and (b) thereafter, the projections most recently received by the Agent pursuant
to SECTION 5.2(e).
"LEASED FACILITY" means the Pittsburg, California plant, the
Sylacauga, Alabama plant and each other facility operated by the Borrower
subject to a ground lease agreement identified by the Agent in the Agent's
Commercial Judgment as material to the operations of the Borrower.
"LEASE RELATED DOCUMENTS" means with respect to any Leased Facility
(a) environmental assessments and flood hazard certifications prepared by
recognized experts in their respective fields selected by the Borrowers and
acceptable to the Agent in the Agent's Commercial Judgment and containing
results satisfactory to the Agent in the Agent's Commercial Judgment as of the
Closing Date, (b) Landlord Waivers, (c) such opinions of local counsel with
respect to any Leasehold Mortgage as the Agent may require as of the Closing
Date, and (d) such other documentation as the Agent may require, in each case as
shall be in form and substance acceptable to the Agent in the Agent's Commercial
Judgment.
A-18
"LEASEHOLD MORTGAGE" means, collectively, each leasehold mortgage or
leasehold deed of trust with respect to a Leased Facility entered into on or
after the Closing Date substantially in the form of EXHIBIT H-2 hereto, as
amended, supplemented or restated from time to time, or similar mortgage
instrument of the Borrower or any Guarantor now or hereafter entered into in
connection with this Agreement to secure (a) all Obligations now existing or
hereafter arising and (b) if applicable, its obligations as a Guarantor under
the Facility Guaranty, as from time to time modified, amended, supplemented or
amended and restated.
"LENDER" and "LENDERS" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding;
PROVIDED that no such Agent Advance or Non-Ratable Loan shall be taken into
account in determining any Lender's Pro Rata Share.
"LETTER OF CREDIT" has the meaning specified in SECTION 1.4(a).
"LETTER OF CREDIT FEE" has the meaning specified in SECTION 2.6.
"LETTER OF CREDIT ISSUER" means the Bank, any affiliate of the Bank or
any other financial institution that issues any Letter of Credit pursuant to
this Agreement.
"LETTER OF CREDIT SUBFACILITY" means $40,000,000.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR Rate
Loan, the Termination Date and the last day of each Interest Period applicable
to such Loan or, with respect to each Interest Period of greater than three
months in duration, the last day of the third month of such Interest Period and
the last day of such Interest Period.
"LIBOR RATE" means, for any Interest Period, with respect to LIBOR
Rate Loans, the rate of interest per annum determined pursuant to the following
formula:
Offshore Base Rate
LIBOR Rate = -----------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"OFFSHORE BASE RATE" means the rate per annum appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not available, the
Offshore Base Rate shall be, for any Interest Period, the rate per annum
appearing on Reuters Screen LIBO Page as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; PROVIDED, HOWEVER, if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates. If for any reason none of the
foregoing rates is available, the Offshore Base Rate shall be, for any
Interest Period, the rate per annum determined by Agent as the rate of
interest at which dollar deposits in the approximate amount of the LIBOR
Rate Loan comprising part of such Borrowing would be offered by the
A-19
Bank's London Branch to major banks in the offshore dollar market at their
request at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day applicable to member banks
under regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency liabilities").
The Offshore Rate for each outstanding LIBOR Rate Loan shall be adjusted
automatically as of the effective date of any change in the Eurodollar
Reserve Percentage.
"LIBOR RATE LOANS" means a Revolving Loan during any period in which
it bears interest based on the LIBOR Rate.
"LIEN" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, hypothec, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; (b) to the extent not
included under CLAUSE (a), (i) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property and, (ii) any other lien, charge,
privilege, secured claim, title retention, garnishment right, deemed trust,
encumbrance or other right affecting property, xxxxxx or inchoate, arising by
any statute, act of law of any jurisdiction at common law or in equity or by
agreement; and (c) any contingent or other agreement to provide any of the
foregoing.
"LOAN ACCOUNT" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranty, the Blocked Account Agreements, the Senior
Note Intercreditor Agreement, and any other agreements, instruments, and
documents heretofore, now or hereafter executed in connection therewith and
evidencing, securing, guaranteeing or otherwise relating to the Obligations.
"LOANS" means, collectively, all loans and advances provided for in
ARTICLE 1.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect upon the
business, assets, liabilities (actual or contingent), condition (financial or
otherwise), prospects or results of operations of the (i) Borrower or (ii) the
Parent and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of any Credit Party to perform its obligations under any Loan Document
to which it is a party; or (c) a material adverse effect upon the legality
validity, binding effect or enforceability against any Credit Party of any Loan
Document to which it is a party.
A-20
"MATERIAL AGREEMENTS" has the meaning given to such term in SECTION
6.26.
"MAXIMUM REVOLVER AMOUNT" means $70,000,000.
"MORTGAGE" means, collectively (or individually as the context may
indicate), each mortgage or deed of trust of a Credit Party substantially in the
form of EXHIBIT H-1 delivered on the Closing Date or hereafter entered into in
connection with this Agreement to secure (a) all Obligations now existing or
hereafter arising and (b) if applicable, its obligations as a Guarantor under
the Facility Guaranty, as from time to time modified, amended, supplemented or
amended and restated.
"MORTGAGED PROPERTY" means, collectively, (i) the real property
improvements, fixtures and other items of real property related thereto,
including the proceeds and products thereof, of the Borrowers and as more fully
identified on SCHEDULE 1.2, and (ii) any of such property owned or acquired by
any Borrower or any Subsidiary of the Borrower or the Parent.
"MORTGAGE SUPPORT DOCUMENTS" means for each Mortgaged Property (i) the
Title Policy pertaining thereto, (ii) as-built surveys, Phase I environmental
assessments, flood hazard certifications and appraisals prepared by recognized
experts in their respective fields selected by the Borrowers (or, in the case of
the appraisals, the Agent) and reasonably acceptable to the Agent (or, in the
case of the appraisals, the Borrower) and containing results satisfactory to the
Agent in the Agent's Commercial Judgment, (iii) as to Mortgaged Property located
in a flood hazard area, such flood hazard insurance as the Agent may require,
(iv) with respect to facilities leased or subleased to third parties, such
lessees' estoppel, waiver and consent certificates and subordination,
nondisturbance and attornment agreements as the Agent may reasonably require,
(v) such owner's or lessee's affidavits as the Agent may require in the Agent's
Commercial Judgment, (vi) such opinions of local counsel with respect to the
Mortgages as the Agent may require, and (viii) such other documentation as the
Agent may reasonably require, in each case as shall be in form and substance
reasonably acceptable to the Agent.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by the Borrower or any
ERISA Affiliate.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the gross amount
of Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits allowances, accrued rebates, offsets, deductions,
counterclaims, disputes and other defenses of any nature at any time issued,
owing, granted, outstanding, available or claimed.
"NET PROCEEDS" has the meaning specified in SECTION 3.5(a).
"NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the meanings specified
in SECTION 1.2(h).
"NOTES" means Revolving Loan Notes.
"NOTICE OF BORROWING" has the meaning specified in SECTION 1.2(b).
"NOTICE OF CONTINUATION/CONVERSION" has the meaning specified in
SECTION 2.2(b).
A-21
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to the Borrower hereunder or under any of the other Loan
Documents. "Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter arising from or in connection with
the Letters of Credit and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products unless the agreement
governing such Bank Products provides that such debts, liabilities and
obligations shall not be treated as Obligations hereunder.
"OTHER TAXES" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"PARENT" means ACG Holdings, Inc., a Delaware corporation.
"PARTICIPANT" means any Person who shall have been granted the right
by any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"PAYMENT ACCOUNT" means each bank account established pursuant to the
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or the
Borrower, as the Agent may determine, with a financial institution acceptable to
the Agent and subject to a Blocked Account Agreement.
"PBA" means the Pensions Benefit Act of Ontario and all regulations
thereunder as amended from time to time and any successor legislation.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA or the applicable laws of any other jurisdiction including the PBA)
subject to Title IV of ERISA or the applicable laws of any other jurisdiction
including the PBA which the Borrower sponsors, maintains, or to which it makes,
is making, or is obligated to make contributions, or has made contributions at
any time during the immediately preceding five (5) plan years.
"PERMITTED AFFILIATE TRANSACTIONS" shall mean (i) reasonable and
customary fees, compensation, indemnity payments and benefits paid to officers,
directors, employees or consultants of the Borrower or any of its Subsidiaries
or their respective Affiliates for services rendered to the
A-22
Borrower or any such Subsidiary in the ordinary course of business consistent
with past practices; (ii) transfers of goods and services by or among the
Borrower and its Subsidiaries in the ordinary course of business on fair and
reasonable terms; (iii) transactions permitted under SECTION 7.10; (iv)
transactions pursuant to the Tax Sharing Agreement; (v) the 2003
Recapitalization; (vi) the grant or sale of shares, or options to purchase
shares, of common stock of the Parent to directors, officers, and certain other
key employees of the Parent and its Subsidiaries; and (vii) any other
transaction or series of transactions the terms and conditions of which are
substantially as favorable (or more favorable) to Parent or such Subsidiary as
would be obtainable by Parent or such Subsidiary at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
"PERMITTED DISTRIBUTION" means a Distribution made by the Borrower or
the Parent on or after the date on which the financial statements required by
SECTION 5.2 for the fiscal quarter ended December 31, 2003 have been delivered
to the Agent; provided that (a) no Default or Event of Default shall exist
immediately prior to or immediately after giving effect to such Distribution,
(b) the Fixed Charge Coverage Ratio shall be no less than 1.00 to 1.00 (i) for
the two-fiscal quarter period ended December 31, 2003 (taken together as one
accounting period) for any Distribution made during the period between delivery
of financial statements for the fiscal quarter ended December 31, 2003, and the
delivery of financial statements for the fiscal quarter ended Xxxxx 00, 0000,
(xx) for the three-fiscal quarter period ended March 31, 2004 (taken together as
one accounting period) for any Distribution made during the period between
delivery of financial statements for the fiscal quarter ended March 31, 2004,
and the delivery of financial statements for the fiscal quarter ended June 30,
2004, and (iii) for the Four Quarter Period ended most recently prior to such
Distribution for which the financial statements have been delivered to the Agent
pursuant to SECTION 5.2 at any time after delivery of financial statements for
the fiscal quarter ended September 30, 2004, (c) Availability immediately prior
to and immediately after giving effect to such Distribution shall be greater
than $15,000,000 and (d) the aggregate amount of all such Distributions shall
not exceed 50% of the aggregate amount of the Adjusted Net Earnings from
Operations (or, if the Adjusted Net Earnings from Operations is a loss, minus
100% of the amount of such loss) accrued on a cumulative basis during the period
(taken as one accounting period) beginning on the first day of the fiscal
quarter in which the Closing Date occurs and ending on the last day of the last
fiscal quarter preceding the date of such Distribution for which financial
statements have been filed with the SEC or provided to the Agent and Lenders
pursuant to SECTION 5.2(a) or (b).
"PERMITTED HOLDERS" means, collectively, The Xxxxxx Xxxxxxx Leveraged
Equity Fund II, L.P., a Delaware limited partnership, Xxxxxx Xxxxxxx Capital
Partners III, L.P., a Delaware limited partnership, Xxxxxx Xxxxxxx Capital
Investors, L.P., a Delaware limited partnership, and MSCP III 892 Investors,
L.P., a Delaware limited partnership, and the other investors, including the
officers and directors of the Borrower or the Parent, who beneficially own
voting stock of the Parent on the Closing Date after giving effect to the 2003
Recapitalization or, upon the death of any such individual investor, such
individual investor's executors, administrators, testamentary trustees, heirs,
legatees or beneficiaries.
"PERMITTED LIENS" means:
(a) Liens for taxes not delinquent or statutory Liens for taxes in an
amount not to exceed $500,000 provided that the payment of such taxes which are
due and payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established on Borrower's books and records and a stay of enforcement
A-23
of any such Lien is in effect or, if not in effect, the time period for
obtaining a stay has not elapsed and the Borrower is diligently pursuing such a
stay;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than liens arising under
ERISA, the PBA or Environmental Liens) or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, PROVIDED that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims or demands do not exceed $500,000 in the aggregate and are being
contested in good faith and by appropriate proceedings diligently pursued;
(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, covenants running with the
land, and other similar title exceptions or encumbrances affecting any Real
Estate; PROVIDED that any such Liens which did not exist on the Closing Date do
not in the aggregate materially detract from the value of the Real Estate or
materially interfere with its use in the ordinary conduct of the Borrower's
business; and
(f) Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside and no material Property is subject to a material risk of loss or
forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect.
(g) Liens of lessors arising from operating leases and precautionary
UCC financing statement filings made in respect thereof.
"PERMITTED PREPAYMENT" means a prepayment of Debt made by the Borrower
on or after the date on which the financial statements required by SECTION 5.2
for the fiscal quarter ended December 31, 2003 have been delivered to the Agent;
provided that (a) no Default or Event of Default shall exist immediately prior
to or immediately after giving effect to such prepayment, (b) the Fixed Charge
Coverage Ratio shall be no less than 1.00 to 1.00 (i) for the two-fiscal quarter
period ended December 31, 2003 (taken together as one accounting period) for any
prepayment made during the period between delivery of financial statements for
the fiscal quarter ended December 31, 2003, and the delivery of financial
statements for the fiscal quarter ended Xxxxx 00, 0000, (xx) for the
three-fiscal quarter period ended March 31, 2004 (taken together as one
accounting period) for any prepayment made during the period between delivery of
financial statements for the fiscal quarter ended March 31, 2004, and the
delivery of financial statements for the fiscal quarter ended June 30, 2004, and
(iii) for the Four Quarter Period ended most recently prior to such prepayment
for which the financial statements have been delivered to the Agent pursuant to
SECTION 5.2 at any time after
A-24
delivery of financial statements for the fiscal quarter ended September 30,
2004, and (c) Availability prior to and after giving effect to such prepayment
shall be (i) for any prepayment made prior to March 31, 2004, greater than
$20,000,000 and (ii) for any prepayment made thereafter, greater than
$18,000,000.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA or the applicable laws of any other jurisdiction) which the Borrower
sponsors or maintains or to which the Borrower makes, is making, or is obligated
to make contributions and includes any Pension Plan.
"PLEDGE AGREEMENTS" means the Pledge Agreement dated as of the date
hereof by the Borrower and the Parent to the Agent in Form of EXHIBIT I hereto
and each other pledge or similar agreement delivered pursuant to the terms of
the Loan Documents, each as hereafter modified, amended or supplemented from
time to time.
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation (including, without limitation, the
Civil Code of Quebec) of any other jurisdiction the laws of which are required
by such legislation to be applied in connection with the issue, perfection,
enforcement, validity or effect of security interests.
"PRIORITY PAYABLE RESERVES" means any reserve that the Agent may from
time to time establish (in its sole discretion) with respect to the Borrower to
cover any amount payable by the Borrower which is secured by a Lien in favor of
a Governmental Authority in Canada which would rank or would be capable of
ranking prior or pari passu with the Agent's Liens on any Accounts of such
Borrower, including amounts owing for wages, vacation pay, severance pay,
employee deductions, sales tax, excise tax, tax payable pursuant to Part IX of
the Excise Tax Act (Canada) (net of GST input credits) or similar applicable
provincial legislation, income tax, workers compensation, government royalties,
pension fund obligations, overdue rents, and other statutory or other claims
that would have or might have priority over any existing or hereafter arising
Agent's Liens.
"PROPRIETARY RIGHTS" means all of each Credit Party's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including those patents, trademarks, service marks, trade names and
copyrights set forth on SCHEDULE 6.12 hereto, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case giving effect to a
Lender's participation in Non-Ratable Loans and Agent Advances.
A-25
"PROVIDING LENDER" has the meaning given to such term in SECTION 1.5.
"REAL ESTATE" means all of any Credit Party's now or hereafter owned
or leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of such Credit Party's now or
hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.
"RELEASE" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"REQUIRED LENDERS" means at any time Lenders whose Pro Rata Shares
aggregate more than 50% of the aggregate of all Lenders' Pro Rata Shares.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule, order, regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is subject.
"RESERVES" means Bank Product Reserves, the Fixed Fee Contract
Reserve, Environmental Compliance Reserves and other reserves that limit the
availability of credit hereunder, consisting of reserves against Availability,
Net Amount of Eligible Accounts or Eligible Inventory, established by Agent from
time to time in Agent's Commercial Judgment. Without limiting the generality of
the foregoing, establishing reserves for any of the following shall be deemed to
be a reasonable exercise of Agent's Commercial Judgment: (a) accrued, unpaid
interest on the Obligations, (b) rent at leased locations subject to statutory
or contractual landlord liens, (c) Inventory shrinkage, (d) customs charges, (e)
dilution, (f) warehousemen's or bailees' charges and (g) Eligible Unbilled
Accounts, and (h) Priority Payable Reserves.
"RESPONSIBLE OFFICER" means the chief executive officer or the
president of the Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate, the chief
financial officer or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"RESTRICTED INVESTMENT" means, as to the Borrower, any acquisition of
property by the Borrower in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except the following: (a) acquisitions of
Equipment to be used in the business of the Borrower so long as the acquisition
costs thereof constitute Capital Expenditures permitted hereunder; (b)
acquisitions of Inventory in the ordinary course of business of the Borrower;
(c) acquisitions of current assets acquired in the ordinary course of business
of the Borrower; (d) direct obligations of the United States of America, or any
agency thereof, or obligations guaranteed by the United States of America,
PROVIDED that such obligations mature within
A-26
one year from the date of acquisition thereof; (e) acquisitions of certificates
of deposit maturing within one year from the date of acquisition, bankers'
acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case
issued by, created by, or with a bank or trust company organized under the laws
of the United States of America or Canada or any state or province thereof
having capital and surplus aggregating at least $100,000,000; (f) acquisitions
of commercial paper given a rating of "A2" or better by Standard & Poor's
Corporation or "P2" or better by Xxxxx'x Investors Service, Inc. and maturing
not more than 90 days from the date of creation thereof; (g) repurchase
agreements with parties described in clause (e) above or other parties
reasonably acceptable to the Agent, in each case with a term of not more than 30
days; (h) Hedge Agreements; (i) shares of money market mutual or similar funds
which invest substantially all their assets in assets satisfying the
requirements of clauses (d) through (g) above; and (j) investments held as of
the date hereof listed on SCHEDULE 1.3.
"REVOLVING LOANS" has the meaning specified in SECTION 1.2 and
includes each Agent Advance and Non-Ratable Loan.
"REVOLVING LOAN NOTE" and "REVOLVING LOAN NOTES" have the meanings
specified in SECTION 1.2(a)(ii).
"SEC" means the Securities and Exchange Commission, or any other
Governmental Authority succeeding to any of its principal functions.
"SECURITIES ACCOUNT CONTROL AGREEMENT" means that certain Securities
Account Control Agreement dated as of the date hereof by and among the Borrower,
the Agent and Bank of America, as account holder, as amended, restated or
supplemented from time to time.
"SECURITY AGREEMENT" means the Security Agreement dated as of the date
hereof by the Borrower and the Parent to the Agent in Form of EXHIBIT J hereto,
and each other security agreement delivered pursuant to the terms of the Loan
Documents, each as hereafter modified, amended or supplemented from time to
time.
"SECURITY INSTRUMENTS" means, collectively, the Security Agreement,
the Pledge Agreement, the Canadian Security Agreement, the Blocked Account
Agreements, the Securities Account Control Agreement, the Mortgages, the
Leasehold Mortgages, the Lease Related Documents, the Mortgage Support
Documents, and all other agreements (including control agreements), instruments
and other documents, whether now existing or hereafter in effect, pursuant to
which the Borrower or the Guarantor or other Person shall grant or convey to the
Agent or the Lenders a Lien in, or any other Person shall acknowledge any such
Lien in, property as security for all or any portion of the Obligations or any
other obligation under any Loan Document, as any of them may be amended,
modified or supplemented from time to time.
"SENIOR NOTE INDENTURE" means that certain Indenture dated July 3,
2003 by and among the Borrower, the Parent and The Bank of New York, as trustee,
providing for the issuance of the Senior Notes, as amended, supplemented or
amended and restated from time to time.
"SENIOR NOTE INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement dated as of the Closing Date by and among the Agent, The Bank of New
York, as trustee under the Senior Note Indenture, and the Borrower.
A-27
"SENIOR NOTES" means the 10% Senior Second Secured Notes due 2010
issued by the Borrower pursuant to the Senior Note Indenture in an aggregate
original principal amount of $280,000,000.
"SETTLEMENT" and "SETTLEMENT DATE" have the meanings specified in
SECTION 12.15(a)(ii).
"SOLVENT" means, when used with respect to any Person, that at the
time of determination:
(a) the present fair saleable value of its assets (which may be
determined on a different basis from the Appraisal Value) is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(b) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(c) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"STATED TERMINATION DATE" means July 3, 2008.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Parent.
"SYLACAUGA IRB" means that certain Industrial Revenue Bond financing
with the Industrial Development Board of the City of Sylacauga, Alabama (the
"Board") pursuant to that certain Mortgage and Indenture of Trust dated
September 1, 1985 between the Board and Amsouth Bank, National Association, as
trustee, pursuant to which the Borrower has purchased certain bonds issued by
the Authority, of which approximately $29,000,000 is outstanding as of the
Closing Date). The proceeds of the Bonds were used by the Board to make certain
improvements to real property at the Borrower's Sylacauga plant and purchase
certain equipment used at the Sylacauga plant, all of which are leased from the
Board by the Borrower pursuant to that certain Lease Agreement dated September
1, 1985 between the Authority and Southeastern Commercial Printing Corporation,
a predecessor corporation of the Borrower.
"TAX SHARING AGREEMENT" means that certain Amended and Restated Tax
Allocation Agreement dated as of August 15, 1995, by and between the Parent and
the Borrower.
"TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender
A-28
and the Agent, such taxes (including income taxes, branch taxes and/or franchise
taxes) as are imposed on or measured by the Agent's or each Lender's net income
in any the jurisdiction (whether federal, state or local and including any
political subdivision thereof) under the laws of which such Lender or the Agent,
as the case may be, is organized, maintains a lending office or is doing
business other than by reason of this Agreement or any other Loan Document, and
excluding any penalties, interest, additions to tax and expenses resulting from
the gross negligence of any of the Lenders or the Agent.
"TERMINATION DATE" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to SECTION 3.2 or by the Required Lenders pursuant to SECTION
9.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"TERMINATION EVENT" means (a) the whole or partial withdrawal of the
Borrower or any Subsidiary from a Plan during a plan year; or (b) the filing of
a notice of interest to terminate in whole or in part a Plan or the treatment of
a Plan amendment as a termination of partial termination; or (c) the institution
of proceedings by any Governmental Authority to terminate in whole or in part or
have a trustee appointed to administer a Plan; or (d) any other event or
condition which might constitute grounds for the termination of, winding up or
partial termination or winding up or the appointment of any trustee to
administer, any Plan.
"TITLE POLICY" means each ALTA title insurance policy issued with
respect to each Mortgaged Property in form and substance acceptable to the Agent
and the Lenders and containing such endorsements as the Agent and the Lenders
may require.
"TOTAL FACILITY" has the meaning specified in SECTION 1.1.
"2003 RECAPITALIZATION" has the meaning assigned thereto in the
Offering Memorandum dated June 19, 2003, for the Senior Notes.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests; PROVIDED, that to the extent that the UCC is
used to define any term herein or in any other documents and such term is
defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities, over the current value of that Plan's assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to
Section 412 of the Code or the PBA or other applicable laws of any jurisdiction
for the applicable plan year and includes in the case of any Plan regulated or
governed by the PBA or applicable laws of any jurisdiction, any unfunded
liability or solvency deficiency as determined under the PBA or other applicable
laws.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to
$40,000,000 MINUS the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit PLUS, without duplication, (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"UNUSED LINE FEE" has the meaning specified in SECTION 2.5.
A-29
ACCOUNTING TERMS. Any accounting term used in the Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations in the Agreement
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP as consistently applied and using the same method for inventory
valuation as used in the preparation of the Financial Statements.
INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including,"
the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) For purposes of SECTION 9.1, a breach of a financial covenant
contained in SECTIONS 7.22 OR 7.23 shall be deemed to have occurred as of any
date of determination thereof by the Agent or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.
(h) The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
A-30
EXHIBIT A
FORM OF REVOLVING LOAN NOTE
EXHIBIT B
FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C
FINANCIAL STATEMENTS
EXHIBIT D
NOTICE OF BORROWING
Date: ______________, 200_
To: Bank of America, N.A. as Agent for the Lenders who are parties to the
Credit Agreement dated as of ___________, 2003 (as extended, renewed,
amended or restated from time to time, the "
CREDIT AGREEMENT") among
American Color Graphics, Inc., certain Lenders which are signatories
thereto and Bank of America, N.A., as Agent
Ladies and Gentlemen:
The undersigned, American Color Graphics, Inc. (the "BORROWER"),
refers to the
Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably of the Borrowing
specified below:
1. The Business Day of the proposed Borrowing is _______________,
200__.
2. The aggregate amount of the proposed Borrowing is
$_______________.
3. The Borrowing is to be comprised of $_______________ of Base
Rate and $_______________ of LIBOR Rate Loans.
4. The duration of the Interest Period for the LIBOR Rate Loans, if
any, included in the Borrowing shall be _____ months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties of the Borrower contained in
the
Credit Agreement are true and correct as though made on and as of such date;
(b) No Default or Event of Default has occurred and is continuing,
or would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans PLUS the aggregate amount available
for drawing under all outstanding Letters of Credit, to exceed the Borrowing
Base or the combined Commitments of the Lenders.
AMERICAN COLOR GRAPHICS, INC.
By:
--------------------------
Title:
--------------------------
EXHIBIT E
NOTICE OF CONTINUATION/CONVERSION
Date: _______________, 200__
To: Bank of America, N.A. as Agent for the Lenders to the Credit Agreement
dated as of _______________, 2003 (as extended, renewed, amended or
restated from time to time, the "CREDIT AGREEMENT") among American Color
Graphics, Inc., certain Lenders which are signatories thereto and Bank of
America, N.A., as Agent
Ladies and Gentlemen:
The undersigned, American Color Graphics, Inc. (the "BORROWER"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably of the [conversion]
[continuation] of the Loans specified herein, that:
1. The Continuation/Conversion Date is _______________, 200__.
2. The aggregate amount of the Loans to be [converted] [continued]
is $_______________.
3. The Loans are to be [converted into] [continued as] [LIBOR Rate]
[Base Rate] Loans.
4. The duration of the Interest Period for the LIBOR Rate Loans
included in the [conversion] [continuation] shall be _____
months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the proposed
Continuation/Conversion Date, before and after giving effect thereto and to the
application of the proceeds therefrom:
(a) The representations and warranties of the Borrower contained in
the Credit Agreement are true and correct as though made on and as of such date;
(b) No Default or Event of Default has occurred and is continuing,
or would result from such proposed [conversion] [continuation]; and
(c) The proposed conversion-continuation will not cause the
aggregate principal amount of all outstanding Revolving Loans PLUS the aggregate
amount available for drawing under all outstanding Letters of Credit to exceed
the Borrowing Base or the combined Commitments of the Lenders.
AMERICAN COLOR GRAPHICS, INC.
By:
--------------------------
Title:
--------------------------
EXHIBIT F
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "ASSIGNMENT AND
ACCEPTANCE") dated as of ____________________, 200_ is made between
______________________________ (the "ASSIGNOR") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement dated
as of _____________, 2003 (as amended, amended and restated, modified,
supplemented or renewed, the "CREDIT AGREEMENT") among American Color Graphics,
Inc., a[n] ______________ corporation (the "BORROWER"), the several financial
institutions from time to time party thereto (including the Assignor, the
"LENDERS"), and Bank of America, N. A., as agent for the Lenders (the "AGENT").
Any terms defined in the Credit Agreement and not defined in this Assignment and
Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Loans (the "COMMITTED LOANS") to the Borrower in an
aggregate amount not to exceed $__________ (the "COMMITMENT");
WHEREAS, the Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Borrower
WHEREAS, [the Assignor has acquired a participation in its pro rata
share of the Lenders' liabilities under Letters of Credit in an aggregate
principal amount of $____________ (the "L/C OBLIGATIONS")] [no Letters of Credit
are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, together with a corresponding portion of each of its
outstanding Committed Loans and L/C Obligations, in an amount equal to
$__________ (the "ASSIGNED AMOUNT") on the terms and subject to the conditions
set forth herein and the Assignee wishes to accept assignment of such rights and
to assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "ASSIGNEE'S PERCENTAGE
SHARE") of (A) the Commitment, the Committed Loans and the L/C Obligations of
the Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of the Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; PROVIDED, HOWEVER, the Assignor shall not relinquish its rights under
Sections __ and __ of the Credit Agreement to the extent such rights relate to
the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment will be $__________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's Commitment will be $__________.
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all
Committed Loans.
(b) The Assignee further agrees to pay to the Agent a processing fee
in the amount specified in Section 11.2(a) of the Credit Agreement.
3. REALLOCATION OF PAYMENTS.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, and Committed Loans and L/C Obligations shall be
for the account of the Assignor. Any interest, fees and other payments accrued
on and after the Effective Date with respect to the Assigned Amount shall be for
the account of the Assignee. Each of the Assignor and the Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. INDEPENDENT CREDIT DECISION.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with copies of
the most recent financial statements of the Borrower, and such other documents
and information as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Assignment and Acceptance; and (b)
agrees that it will, independently and without reliance upon the Assignor, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement.
5. EFFECTIVE DATE; NOTICES.
(a) As between the Assignor and the Assignee, the effective date for
this Assignment and Acceptance shall be __________, 200_ (the "EFFECTIVE DATE");
PROVIDED that the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
[(ii) the consent of the Agent required for an effective
assignment of the Assigned Amount by the Assignor to the Assignee shall
have been duly obtained and shall be in full force and effect as of the
Effective Date;]
(iii) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Assignment and Acceptance;
[(iv) the Assignee shall have complied with Section 11.2 of the
Credit Agreement (if applicable);]
(v) the processing fee referred to in Section 2(b) hereof and
in Section 11.2(a) of the Credit Agreement shall have been paid to the
Agent;
(vi) the Borrower shall have consented to such assignment in
accordance with the definition of the term "Eligible Assignee;" and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrower and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached hereto
as SCHEDULE 1.
6. [AGENT. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Lenders pursuant to the terms of
the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.]
7. WITHHOLDING TAX.
The Assignee (a) represents and warrants to the Lender, the Agent and
the Borrower that under applicable law and treaties no tax will be required to
be withheld by the Agent or the Borrower with respect to any payments to be made
to the Assignee hereunder, (b) agrees to furnish (if it is organized under the
laws of any jurisdiction other than the United States or any State thereof) to
the Agent and the Borrower prior to the time that the Agent or Borrower is
required to make any payment of principal, interest or fees hereunder, duplicate
executed originals of either U.S. Internal Revenue Service Form W-8ECI or U.S.
Internal Revenue Service Form W-8BEN (wherein the Assignee claims entitlement to
the benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms W-8ECI or W-8BEN upon the expiration of any previously delivered form
or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Borrower, or the performance or observance by the Borrower, of any of its
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; [and (iv) it is an
Eligible Assignee.]
9. FURTHER ASSURANCES.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the
transactions contemplated by this Assignment and Acceptance, including the
delivery of any notices or other documents or instruments to the Borrower or the
Agent, which may be required in connection with the assignment and assumption
contemplated hereby.
10. MISCELLANEOUS.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in the Borough of Manhattan, City of New York,
over any suit, action or proceeding arising out of or relating to this
Assignment and Acceptance and irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such New York State or
Federal court. Each party to this Assignment and Acceptance hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
[ASSIGNEE]
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
Consented to this __ day of _______,
20__:
American Color Graphics, Inc.
By:
---------------------------
Name:
------------------------
Title:
-----------------------
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 200_
Bank of America, N.A
________________________
________________________
Attn: __________________
Re: [Name and Address of Borrower]
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of _________, 2003 (as
amended, amended and restated, modified, supplemented or renewed from time to
time the "CREDIT AGREEMENT") among American Color Graphics, Inc. (the
"BORROWER"), the Lenders referred to therein and Bank of America, N. A., as
agent for the Lenders (the "AGENT"). Terms defined in the Credit Agreement are
used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "ASSIGNOR") to _______________ (the
"ASSIGNEE") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including the right, title and interest of the Assignor in
and to the Commitments of the Assignor, all outstanding Loans made by the
Assignor and the Assignor's participation in the Letters of Credit pursuant to
the Assignment and Acceptance Agreement attached hereto (the "ASSIGNMENT AND
ACCEPTANCE"). We understand and agree that the Assignor's Commitment, as of
_______________, 200__, is $___________, the aggregate amount of its outstanding
Loans is $_____________, and its participation in L/C Obligations is
$_____________.
2. The Assignee agrees that, upon receiving the consent of the
Agent and, if applicable, the Borrower to such assignment, the Assignee will be
bound by the terms of the Credit Agreement as fully and to the same extent as if
the Assignee were the Lender originally holding such interest in the Credit
Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: ____________________________
Address: ______________________________
______________________________
______________________________
Attention: ______________________________
Telephone: (___)___________________________
Telecopier: (___)___________________________
Telex (Answerback):_________________________
(B) Payment Instructions:
Account No.:________________________________
At:_________________________________
_________________________________
_________________________________
Reference: _________________________________
Attention: _________________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
---------------------------
Title:
---------------------------
[NAME OF ASSIGNEE]
By:
---------------------------
Title:
---------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
Bank of America, N. A.
as Agent
By:
------------------------------
Title:
------------------------------