EXHIBIT 10.35
EXECUTION COPY
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
dated as of October 24, 1997
among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
and
SWEETHEART CUP COMPANY INC.
as the Borrower
and
SWEETHEART HOLDINGS INC.
TABLE OF CONTENTS
Section Page
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT.......................................................2
1.1 Definitions.....................................................................................2
1.2 Accounting Terms...............................................................................31
1.3 Interpretive Provisions........................................................................31
ARTICLE 2 LOANS AND LETTERS OF CREDIT...........................................................32
2.1 Total Facility.................................................................................32
2.2 Revolving Loans................................................................................32
2.3 [Reserved].....................................................................................38
2.4 Letters of Credit..............................................................................38
ARTICLE 3 INTEREST AND FEES.....................................................................45
3.1 Interest.......................................................................................45
3.2 Conversion and Continuation Elections..........................................................45
3.3 Maximum Interest Rate..........................................................................47
3.4 Certain Fees...................................................................................47
3.5 Unused Line Fee................................................................................47
3.6 Letter of Credit Fee...........................................................................47
3.7 Collateral Management Fee......................................................................48
ARTICLE 4 PAYMENTS AND PREPAYMENTS..............................................................48
4.1 Revolving Loans................................................................................48
4.2 Termination of Facility........................................................................48
4.3 [Reserved].....................................................................................49
4.4 [Reserved].....................................................................................49
4.5 [Reserved].....................................................................................49
4.6 Payments by the Borrower.......................................................................49
4.7 Payments as Revolving Loans....................................................................50
4.8 Apportionment, Application and Reversal of Payments............................................50
4.9 Indemnity for Returned Payments................................................................51
4.10 Agent's and Lenders' Books and Records; Monthly Statements.....................................51
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY................................................51
5.1 Taxes..........................................................................................51
5.2 Illegality.....................................................................................52
5.3 Increased Costs and Reduction of Return........................................................53
5.4 Funding Losses.................................................................................54
5.5 Inability to Determine Rates...................................................................55
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5.6 Certificates of Lenders........................................................................55
5.7 Survival.......................................................................................55
ARTICLE 6 COLLATERAL............................................................................55
6.1 Grant of Security Interest.....................................................................55
6.2 Perfection and Protection of Security Interest.................................................59
6.3 Location of Collateral.........................................................................60
6.4 Title to, Liens on, and Sale and Use of Collateral.............................................60
6.5 Appraisals.....................................................................................61
6.6 Access and Examination; Confidentiality........................................................61
6.7 Collateral Reporting...........................................................................62
6.8 Accounts.......................................................................................62
6.9 Collection of Accounts; Payments...............................................................64
6.10 Inventory; Perpetual Inventory.................................................................65
6.11 Equipment......................................................................................66
6.12 Assigned Contracts.............................................................................66
6.13 Documents, Instruments, and Chattel Paper......................................................67
6.14 Right to Cure..................................................................................67
6.15 Power of Attorney..............................................................................68
6.16 The Agent's and Lenders' Rights, Duties and Liabilities........................................68
6.17 Intercreditor Agreement........................................................................69
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.....................................69
7.1 Books and Records..............................................................................69
7.2 Financial Information..........................................................................69
7.3 Notices to the Lenders.........................................................................72
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS................................................74
8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........74
8.2 Validity and Priority of Security Interest.....................................................75
8.3 Organization and Qualification.................................................................75
8.4 Corporate Name; Prior Transactions.............................................................75
8.5 Subsidiaries and Affiliates....................................................................75
8.6 Financial Statements and Projections...........................................................76
8.7 Capitalization.................................................................................76
8.8 Solvency.......................................................................................76
8.9 Debt...........................................................................................76
8.10 Distributions..................................................................................77
8.11 Title to Property..............................................................................77
8.12 Real Estate; Leases............................................................................77
8.13 Proprietary Rights.............................................................................77
8.14 Trade Names....................................................................................77
8.15 Litigation.....................................................................................78
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8.16 Restrictive Agreements.........................................................................78
8.17 Labor Disputes.................................................................................78
8.18 Environmental Laws.............................................................................78
8.19 No Violation of Law............................................................................79
8.20 No Default.....................................................................................79
8.21 ERISA Compliance...............................................................................79
8.22 Taxes..........................................................................................80
8.23 Regulated Entities.............................................................................80
8.24 Use of Proceeds; Margin Regulations............................................................80
8.25 Copyrights, Patents, Trademarks and Licenses, etc..............................................81
8.26 No Material Adverse Change.....................................................................81
8.27 Full Disclosure................................................................................81
8.28 Material Agreements............................................................................81
8.29 Bank Accounts..................................................................................81
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS....................................................82
9.1 Taxes and Other Obligations....................................................................82
9.2 Corporate Existence and Good Standing..........................................................82
9.3 Compliance with Law and Agreements; Maintenance of Licenses....................................82
9.4 Maintenance of Property........................................................................83
9.5 Insurance......................................................................................83
9.6 Condemnation...................................................................................84
9.7 Environmental Laws.............................................................................84
9.8 Compliance with ERISA..........................................................................85
9.9 Mergers, Consolidations or Sales...............................................................85
9.10 Distributions; Capital Change; Restricted Investments..........................................87
9.11 Transactions Affecting Collateral or Obligations...............................................89
9.12 Guaranties.....................................................................................89
9.13 Debt...........................................................................................89
9.14 Prepayment.....................................................................................90
9.15 Transactions with Affiliates...................................................................91
9.16 Investment Banking and Finder's Fees...........................................................91
9.17 Amendments of Senior Secured Notes and Senior Subordinated Notes...............................92
9.18 Business Conducted.............................................................................92
9.19 Liens..........................................................................................92
9.20 Sale and Leaseback Transactions................................................................92
9.21 New Subsidiaries...............................................................................92
9.22 Fiscal Year....................................................................................92
9.23 Capital Expenditures...........................................................................92
9.24 [Reserved].....................................................................................93
9.25 Minimum Availability...........................................................................93
9.26 Fixed Charge Coverage Ratio....................................................................93
9.27 Use of Proceeds................................................................................93
9.28 Senior Indebtedness and Secured Note Collateral................................................94
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9.29 Further Assurances.............................................................................94
ARTICLE 10 CONDITIONS OF LENDING.................................................................94
10.1 Conditions Precedent to Making of Loans on the Closing Date....................................94
10.2 Conditions Precedent to Each Loan..............................................................96
ARTICLE 11 DEFAULT; REMEDIES.....................................................................97
11.1 Events of Default..............................................................................97
11.2 Remedies......................................................................................100
ARTICLE 12 TERM AND TERMINATION.................................................................102
12.1 Term and Termination..........................................................................102
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..........................102
13.1 No Waivers; Cumulative Remedies...............................................................102
13.2 Amendments and Waivers........................................................................102
13.3 Assignments; Participations...................................................................103
ARTICLE 14 THE AGENT............................................................................105
14.1 Appointment and Authorization.................................................................105
14.2 Delegation of Duties..........................................................................106
14.3 Liability of Agent............................................................................106
14.4 Reliance by Agent.............................................................................106
14.5 Notice of Default.............................................................................107
14.6 Credit Decision...............................................................................107
14.7 Indemnification...............................................................................108
14.8 Agent in Individual Capacity..................................................................108
14.9 Successor Agent...............................................................................108
14.10 Withholding Tax...............................................................................109
14.11 [Reserved]....................................................................................110
14.12 Collateral Matters............................................................................110
14.13 Restrictions on Actions by Lenders; Sharing of Payments.......................................111
14.14 Agency for Perfection.........................................................................112
14.15 Payments by Agent to Lenders..................................................................112
14.16 Concerning the Collateral and the Related Loan Documents......................................112
14.17 Field Audit and Examination Reports; Disclaimer by Lenders....................................112
14.18 Relation Among Lenders........................................................................113
ARTICLE 15 MISCELLANEOUS........................................................................113
15.1 Cumulative Remedies; No Prior Recourse to Collateral..........................................113
15.2 Severability..................................................................................114
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.........................114
15.4 WAIVER OF JURY TRIAL..........................................................................115
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15.5 Survival of Representations and Warranties....................................................115
15.6 Other Security and Guaranties.................................................................115
15.7 Fees and Expenses.............................................................................116
15.8 Notices.......................................................................................116
15.9 Waiver of Notices.............................................................................118
15.10 Binding Effect................................................................................118
15.11 Indemnity of the Agent and the Lenders by the Borrower........................................118
15.12 Limitation of Liability.......................................................................119
15.13 Final Agreement...............................................................................119
15.14 Counterparts..................................................................................119
15.15 Captions......................................................................................119
15.16 Right of Setoff...............................................................................119
15.17 Credit Agreement and Conflicts................................................................120
15.18 Intercreditor Agreement.......................................................................120
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EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A - [RESERVED]
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - [RESERVED]
EXHIBIT E - FORM OF NOTICE OF BORROWING
EXHIBIT F - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - FORM OF ASSIGNMENT AND ACCEPTANCE
AGREEMENT
EXHIBIT H FORM OF STOCKHOLDER SUBORDINATED NOTE
EXHIBIT I FORM OF LILY INTERCOMPANY NOTE
SCHEDULES
---------
SCHEDULE 1.1A ASSIGNED CONTRACTS
SCHEDULE 6.3 LOCATION OF COLLATERAL
SCHEDULE 8.3 ORGANIZATION AND QUALIFICATION
SCHEDULE 8.5 SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.12 REAL ESTATE; LEASES
SCHEDULE 8.13 PROPRIETARY RIGHTS
SCHEDULE 8.14 TRADE NAMES
SCHEDULE 8.15 LITIGATION
SCHEDULE 8.17 LABOR DISPUTES
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SCHEDULE 8.18 ENVIRONMENTAL LAWS
SCHEDULE 8.21 ERISA
SCHEDULE 8.28 MATERIAL AGREEMENTS
SCHEDULE 8.29 BANK ACCOUNTS
SCHEDULE 9.13 EXISTING DEBT
SCHEDULE 9.19 EXISTING LIENS
vii
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Amended and Restated Loan and Security Agreement, dated as of October
24, 1997, among the financial institutions listed on the signature pages hereof
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), BankAmerica Business Credit, Inc., a Delaware
corporation ("BABC") with an office at Forty Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as agent for the Lenders (in its capacity as agent, together with
any successor agent, the "Agent"), Sweetheart Cup Company Inc., a Delaware
corporation, with offices at 00000 Xxxxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxx
00000 (the "Borrower"), and Sweetheart Holdings Inc., a Delaware corporation,
with offices at 00000 Xxxxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000
("Parent").
W I T N E S S E T H
-------------------
WHEREAS, the Borrower has requested the Lenders to make available to
the Borrower a revolving line of credit for loans and letters of credit in an
amount not to exceed $135,000,000 and which extensions of credit the Borrower
will use for its working capital needs and general business purposes;
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;
WHEREAS, the Borrower and Parent are parties to a certain Credit
Agreement, dated as of August 30, 1993, by and among the Borrower, Parent, the
banks and other financial institutions party thereto and Bankers Trust Company,
as agent, as amended by a First Amendment, dated as of July 22, 1994, a Second
Amendment To Credit Agreement, dated as of September 6, 1996, a Third Amendment
To Credit Agreement, dated as of June 17, 1997, and a Fourth Amendment and
Consent To Credit Agreement, dated as of September 29, 1997 (as so amended, the
"Existing Credit Agreement");
WHEREAS, in connection with the aforesaid revolving credit facility
requested by the Borrower from the Lenders, BABC, as the sole Lender on the date
hereof, has purchased from the banks and other financial institutions party to
the Existing Credit Agreement all of such banks' and other financial
institutions' right, title and interest in and to the Existing Credit Agreement
and the documents and instruments executed and delivered in connection therewith
(with certain exceptions), all pursuant to a certain Assignment and Assumption
Agreement (the "Bank Assignment Agreement"), dated as of the date hereof, among
BABC, the banks and other financial institutions party to the Existing Credit
Agreement, the agent and collateral agent under the Existing Credit Agreement,
the Borrower and Parent;
WHEREAS, the Borrower, Parent and the Lenders desire to amend and
restate the Existing Credit Agreement in its entirety in the manner hereinafter
set forth to provide for the aforesaid revolving credit facility requested by
the Borrower from the Lenders.
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, the
Borrower and Parent hereby agree that the Existing Credit Agreement shall be,
and hereby is, amended and restated in its entirety as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
--------------------------------
1.1 Definitions. As used herein:
"Accounts" means all of the Borrower's now owned or hereafter
acquired or arising accounts, and any other rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned by
performance.
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"Adjusted Net Earnings from Operations" means, with respect to
any period of time, the Borrower's net income after provision for income taxes
for such period of time, as determined in accordance with GAAP and reported on
the Financial Statements for such period, excluding any and all of the following
included in such net income: (a) gain or loss arising from the sale of any
capital assets; (b) gain or loss arising from any write-up or non-cash charge
from the write-down, respectively, in the book value of any asset; (c) earnings
of any corporation, substantially all the assets of which have been acquired by
the Borrower in any manner, to the extent realized by such other corporation
prior to the date of acquisition; (d) earnings of any business entity in which
the Borrower has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by the Borrower in the form of cash
distributions; (e) earnings of any Person to which assets of the Borrower shall
have been sold, transferred or disposed of, or into which the Borrower shall
have been merged, or which has been a party with the Borrower to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) non-cash gain or non-cash loss arising from the acquisition of
debt or equity securities of the Borrower or from cancellation or forgiveness of
Debt of the Borrower; and (g) non-cash gain or non-cash loss arising from
extraordinary items, as determined in accordance with GAAP, or from any other
non-recurring transaction. For purposes of the Fixed Charge Coverage Ratio test
set forth in Section 9.26, (i) Adjusted Net Earnings From Operations shall not
include the one-time costs and expenses arising from (x) the transactions
contemplated hereby on the Closing Date or in connection with the Divestiture or
the sales permitted by Sections 9.9(iv) and (v)(C) or (y) the transfer and
2
management of the Double Sided Poly (DSP) Cold Cup conversion program and (ii)
any charge of the Borrower with respect to plant closings, consolidations and
the transfer and management of the Double Sided Poly (DSP) Cold Cup conversion
program after the Closing Date and related employee severance shall constitute
an expense of the Borrower when such charge is actually paid in cash by the
Borrower and not when such charge is accrued on the books and records of the
Borrower.
"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, five percent
(5%) or more of the outstanding equity interest of such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise. For purposes of this Agreement and
the other Loan Documents, neither BABC nor Bank of America shall be considered
an Affiliate of Parent or any of its Subsidiaries by virtue of Bank America's
passive investment in one or more funds managed by American Industrial Partners,
L.P. or any of its Affiliates.
"Agent" means BankAmerica Business Credit, Inc., solely in its
capacity as agent for the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Liens" means the Liens granted to the Agent, for the
ratable benefit of the Lenders, BABC, and Agent pursuant to this Agreement and
the other Loan Documents.
"Agent-Related Persons" means the Agent and any successor
agent appointed pursuant to Section 14.9, together with their respective
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Agreement" means this Amended and Restated Loan and Security
Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means:
(i) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Revolving Loans), 1.00%; and
(ii) with respect to LIBOR Revolving Loans, 2.25%;
provided that from and after the first day following the Divestiture (in whole
or in part) and the receipt by the Borrower of gross cash proceeds therefrom
3
aggregating not less than $150,000,000, the Applicable Margin with respect to
LIBOR Revolving Loans will be 2.00%. The term "gross cash proceeds" when used in
this definition shall be deemed to include for this purpose (x) net cash
proceeds received by the Borrower from the sale or collection of any and all
receivables, inventory and any other current assets retained by the Borrower
(net of cash payments made by the Borrower with respect to current liabilities
retained or incurred by the Borrower) in connection with product lines
theretofore sold in their entirety as part of the Divestiture (but only if the
Borrower delivers to the Agent a certificate certifying as to the amount of the
net cash proceeds so received and cash payments so made and that such net cash
proceeds were received from the sale or collection of current assets retained by
the Borrower in connection with product lines theretofore sold in their entirety
as part of the Divestiture), (y) the cash proceeds of any consideration received
by the Borrower as and when received by the Borrower in connection with the
transaction constituting such Divestiture and shall be reduced by (z) without
duplication, the amount of liabilities retained by the Borrower with respect to
assets sold as a part of the Divestiture, but only to the extent, if any, that
such liabilities are shown on the face of a balance sheet of the Borrower .
"Asset Transfer Documents" means, collectively, (i) the Asset
Sale Agreement and Asset Distribution Agreement each dated as of October 6, 1993
(collectively, the "Asset Transfer Agreements") between Parent and the Borrower;
(ii) any deed or conveyance for Real Estate required pursuant to the Asset
Transfer Agreements; (iii) any xxxx of sale for equipment and machines or other
assignment and assumption agreements delivered pursuant to the Asset Transfer
Agreements; (iv) the wrap-around note dated as at October 6, 1993 given as part
of the consideration by Parent to the Borrower in connection with the foregoing;
(v) the Manufacturing Agreement dated as of October 6, 1993 between Parent and
the Borrower; (vi) the Patent/Know-How License Agreement dated as of October 6,
1993 between Parent and the Borrower granting to Parent certain intellectual
property rights for manufacturing process required pursuant to the Asset
Transfer Agreements; and (vii) the Acknowledgment of Distribution Assignment and
Assumption Agreement dated as of October 6, 1993 between Parent and the
Borrower.
"Assigned Contracts" means, collectively, all of the
Borrower's rights and remedies under, and all moneys and claims for money due or
to become due to the Borrower under those contracts set forth on Schedule 1.1A,
and any other material contracts, and any and all amendments, supplements,
extensions, and renewals thereof including, without limitation, all rights and
claims of the Borrower now or hereafter existing: (i) under any insurance,
indemnities, warranties, and guarantees provided for or arising out of or in
connection with any of the foregoing agreements; (ii) for any damages arising
out of or for breach or default under or in connection with any of the foregoing
contracts ; (iii) to all other amounts from time to time paid or payable under
or in connection with any of the foregoing agreements; or (iv) to exercise or
enforce any and all covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in Section 13.3(a).
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"Assignment and Acceptance" has the meaning specified in
Section 13.3(a).
"Attorney Costs" means and includes all reasonable fees,
expenses and disbursements of any law firm or other external counsel engaged by
the Agent, the reasonable allocated cost of internal legal services of the Agent
and all reasonable expenses and disbursements of internal counsel of the Agent.
"Availability" means, at any time: (a) the least of (i) the
Maximum Revolver Amount, (ii) the sum of (A) eighty-five percent (85%) of the
Net Amount of Eligible Accounts plus (B) the sum of (1) sixty percent (60%) of
the value of that portion of Eligible Inventory constituting raw materials and
work in process (other than any such Inventory which is in-transit between the
Borrower's facilities), (2) sixty-five percent (65%) of the value of that
portion of Eligible Inventory constituting finished goods (other than any such
Inventory which is in-transit between the Borrower's facilities) and (3) forty
percent (40%) of the value of Eligible Inventory which is in-transit between the
Borrower's facilities; provided, that at no time shall the sum of outstanding
Revolving Loans based upon the value of Eligible Inventory exceed $100,000,000,
or (iii) the maximum amount which the Borrower is entitled to borrow pursuant to
the indentures governing each of the Borrower's Senior Secured Notes and Senior
Subordinated Notes (which as of the Closing Date is 80% of Borrower's accounts
not more than 60 days past due plus 50% of Borrower's inventory, each calculated
in accordance with GAAP); minus (b) the sum of (i) the unpaid balance of
Revolving Loans at such time, (ii) the aggregate amount of Pending Revolving
Loans at such time, (iii) the aggregate undrawn amount of all outstanding
Letters of Credit, (iv) the aggregate amount of any unpaid reimbursement
obligations (unless included in clause (b)(iii) of this definition) in respect
of the Letters of Credit, (v) reserves for accrued interest on the Obligations,
(vi) the Environmental Compliance Reserve and (vii) all other reserves which the
Agent in good xxxxx xxxxx necessary in the exercise of its reasonable credit
judgment to maintain with respect to the Borrower's account and which are
customary in scope and application, in the assessment of the Agent, in the
lending practices of the Agent in effect from time to time, including, without
limitation, reserves for "special programs", inventory valuation reserves and
reserves for any amounts which the Agent or any Lender may be obligated to pay
in the future for the account of the Borrower.
"BABC" means BankAmerica Business Credit, Inc.
"BABC Fees" has the meaning specified in Section 3.4.
"BABC Loan" and "BABC Loans" have the meanings specified in
Section 2.2(h).
"Bank Assignment Agreement" has the meaning specified in the
recitals to this Agreement.
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, or any successor entity
thereto.
5
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. ss. 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 Bank of America in San
Francisco, California, as its "reference rate" (the "reference rate" being a
rate set by Bank of America based upon various factors including Bank of
America'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 reference
rate announced by Bank of America 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 Revolving Loan" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
"Borrower" has the meaning specified in the introductory
paragraph hereof.
"Borrower Security Agreement" means the Amended and Restated
Security Agreement dated as of the Closing Date between the Borrower and the
Agent.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the Borrower (or by BABC
in the case of a Borrowing funded by BABC Loans) or by the Agent in the case of
a Borrowing consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate by a
Responsible Officer of the Borrower, substantially in the form of Exhibit B (or
another form reasonably acceptable to the Agent) setting forth the calculation
of the Availability, including a calculation of each component thereof, as of
the close of business no more than five (5) Business Days prior to the date of
such certificate (or with respect to the calculation of the Inventory component,
a calculation thereof as of the close of business on the date which is no
earlier than the earliest of (x) five (5) Business Days prior to the date of
such certificate and (y) the last day of the calendar month just ended), all in
such detail as shall be satisfactory to the Agent. All calculation of
Availability in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrower and certified to the Agent;
provided, that the Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such calculation (1) to reflect
its reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
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"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in San Francisco, California or Baltimore,
Maryland are required or permitted to be closed, and (b) with respect to all
notices, determinations, fundings and payments in connection with the LIBOR Rate
or LIBOR Revolving Loans, any day that is a Business Day pursuant to clause (a)
above and that is also a day on which trading is carried on by and between banks
in the London interbank market.
"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 having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments (whether or not
paid) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or offset items or in connection with a Capital Lease, in each
case, to the extent classified by GAAP as a capital expenditure.
"Capital Lease" means any lease of property by Parent or any
of its Subsidiaries which, in accordance with GAAP, is or should be reflected as
a capital lease on the balance sheet of such Person.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, contingent share issuances,
participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt
securities convertible into or exchangeable for such equity.
"Cash Equivalents" means those investments described in
clauses (d), (e), (f), (g) and (h) of the defined term "Restricted Investment"
in this Section 1.1.
"Change of Control" means the occurrence of any of the
following events:
(i) American Industrial Partners Capital Fund, L.P., a
Delaware limited partnership ("AIP"), ceases to be the record and
Beneficial Owner (as defined below) of a majority in the aggregate of
the total voting power of the Voting Stock (as defined below) of
Parent, whether as a result of an issuance of securities of Parent, any
merger, consolidation, liquidation or dissolution of Parent, any direct
or indirect transfer of securities or otherwise; or
(ii) AIP ceases to have the right or ability, by voting power,
contract or otherwise, to elect or designate for election a majority of
the Board of Directors (as defined below) of Parent; or
(iii) Parent shall fail at any time to be the record and
Beneficial Owner of 100% of the outstanding equity interests of the
Borrower; or
7
(iv) American Industrial Partners, L.P., a Delaware limited
partnership, ceases to be the sole general partner of AIP; or
(v) there shall occur a "Change of Control" (as such term is
defined in either the indenture governing the Senior Secured Notes or
the indenture governing the Senior Subordinated Notes).
For purposes of this definition of "Change of Control", and
the definitions used within this definition (and only for such
purposes), the following terms have the following meanings:
"Beneficial Owner", and terms having similar
import, means any direct or indirect "beneficial
owner", as such term is defined in Rules 13d-3 and
13d-5 under the Exchange Act.
"Board of Directors" means, with respect to
any Person, such Person's Board of Directors or any
committee thereof duly authorized to act on behalf of
such Board of Directors.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
"Voting Stock" of a corporation means all
classes of Capital Stock of such corporation then
outstanding and normally entitled to vote in the
election of directors.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and regulations promulgated
thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Collateral Agent" has the meaning set forth in the
Intercreditor Agreement.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.3, as such Commitment
8
may be adjusted from time to time in accordance with the provisions of Section
13.3, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Commodities Agreement" means any forward contract, futures
contract, option contract or similar agreement or arrangement, in each case
intended to protect the Persons entering into same from fluctuations in the
price of, or shortage of supply of, pulp, paper or paper products or any other
materials used in connection with any of the businesses of the Borrower or any
of its Subsidiaries permitted to be conducted under Section 9.18.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any hazardous constituent of any such substance or waste.
"Credit Agreement Collateral" has the meaning set forth in the
Intercreditor Agreement.
"Credit Support" has the meaning specified in Section 2.4(a).
"Debt" means, without duplication, all indebtedness of Parent
or any of its Subsidiaries to any Person for borrowed money or as evidenced by
notes, bonds, debentures or similar instruments or documents or for the deferred
and unpaid purchase price of any property or business or any services (other
than trade payables and accrued expenses incurred in the ordinary course of
business), all obligations of Parent or any of its Subsidiaries under or with
respect to any letters of credit or guarantees or credit support therefor, all
obligations under any Interest Rate Protection or Other Hedging Agreement or
under any similar type of agreement and all obligations of Parent or any of its
Subsidiaries under Capital Leases, in each instance, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, and
including in any event and without in any way limiting the generality of the
foregoing: (i) all Obligations; (ii) all obligations and liabilities of any
Person secured by any Lien on the property of Parent or any of its Subsidiaries,
even though Parent or any such Subsidiary shall not have assumed or become
liable for the payment thereof; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
the face of a balance sheet of Parent or such Subsidiary, as the case may be,
prepared in accordance with GAAP; (iii) all obligations or liabilities created
or arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by Parent or any of its
Subsidiaries, even if the rights and remedies of the lessor, seller or lender
thereunder are limited to repossession of such property; provided, however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
9
property as would be shown on the face of a balance sheet of Parent or such
Subsidiary, as the case may be, prepared in accordance with GAAP; (iv) all
obligations and liabilities under Guaranties; and (v) all Disqualified Stock of
Parent or any of its Subsidiaries.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%). Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. In addition, with respect to Letters
of Credit, the Default Rate shall mean an increase in the Letter of Credit Fee
by two percentage points .
"Defaulting Lender" has the meaning specified in Section
2.2(g)(ii).
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) which is not Disqualified Stock; or (b) the redemption
or other acquisition of any capital stock (or any options or warrants for such
stock) of such corporation, except in exchange for capital stock (or warrants or
options for such capital stock) which is not Disqualified Stock.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable (other than redeemable only for
Capital Stock of such Person which is not itself Disqualified Stock) pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Debt (including, without limitation, Disqualified Stock) or (iii) is redeemable
at the option of the holder thereof, in whole or in part, in each case on or
prior to the first anniversary of the Stated Termination Date.
"Divestiture" means the proposed sale (in one or more
transactions) by the Borrower of its packaging division (which manufactures
paper and plastic containers for the refrigerated and frozen dessert industry)
that satisfies the following requirements:
(1) at the time of the consummation of each such sale
transaction, the Borrower shall receive gross cash proceeds with respect to the
Accounts and Inventory included as part of such transaction in an amount not
less than the then book value of all such Accounts and Inventory as shown on the
face of a balance sheet of the Borrower prepared in accordance with GAAP;
10
(2) neither Parent nor any of its Subsidiaries shall,
with respect to all such sale transactions, retain or assume aggregate
liabilities for all such sale transactions (including, without limitation,
payables and indemnity obligations) relating to the assets or business sold
pursuant to such transactions in excess of $15,000,000 (it being agreed that any
such liabilities shown on the face of a balance sheet of the Parent or any of
its Subsidiaries, as appropriate, or for which the amount thereof can be
determined shall be valued at the amount thereof as shown on the face of such
balance sheet or as so determined and the amount of any other liabilities shall
be determined by a good faith estimate of senior management of the Borrower);
provided, however, any and all such liabilities which are only to be paid by the
Borrower out of a cash escrow set up by the Borrower shall not be considered a
liability for purposes of this clause (b), but only to the extent of the amount
of the cash escrow therefor and only so long as the amount of such escrow is not
counted as gross cash proceeds of a sale transaction constituting part of the
Divestiture unless and until such cash which is the subject of such escrow is
released to the Borrower and the liability for which such cash has been escrowed
is discharged;
(3) with respect to each such sale transaction and
prior to the consummation thereof, the Agent shall receive a pro forma Borrowing
Base Certificate immediately after giving effect to such transaction (including,
without limitation, as to the calculation of the Inventory component of such
certificate immediately after giving effect to such transaction) which indicates
an Availability level sufficient to comply with Section 9.25 as of such date of
determination; and
(4) with respect to each such sale transaction and
prior to the consummation thereof, the Agent shall receive a certificate from
the chief financial officer or treasurer of the Borrower (i) as to the gross
cash proceeds that the Borrower expects it can receive (as determined in the
good faith estimate of senior management of the Borrower) from the sale of the
assets and business of the Borrower's packaging division which the Borrower
retains immediately after giving effect to such sale transaction, (ii) that the
aggregate gross cash proceeds of such transaction and all prior such
transactions, together with the amount of the gross cash proceeds estimated to
be receivable by the Borrower from the sale of the remaining assets and business
of the Borrower's packaging division as described in clause (i) above, shall be
no less than $100,000,000, (iii) stating that, to the best knowledge of the
Borrower, the representations and warranties made by the Borrower in the sale
documentation with respect to such sale transaction are and will be true and
correct when made under such documentation, provided, however, that
notwithstanding that this representation and warranty shall be made to the best
knowledge of the Borrower, this representation and warranty shall be deemed
breached for purposes of this Agreement in the event that the Borrower pays the
buyer or buyers with respect to such sales in respect of indemnity obligations
for the breach of any such representations and warranties an aggregate amount
which, when aggregated with all liabilities retained or assumed by Parent or its
Subsidiaries which are included in the $15,000,000 basket included in clause (b)
11
above, exceeds $15,000,000 and (iv) calculating the aggregate liabilities
described in clause (b) above retained or assumed by Parent and its Subsidiaries
for such sale transaction and all other such sale transactions (including,
without limitation, any assumptions made in estimating liabilities).
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" mean dollars in the lawful currency of the
United States.
"Domestic Subsidiary" means any Subsidiary which is organized
under the laws of any state of the United States or the District of Columbia.
"EBITDA" means, with respect to any period of time, the total
of the following for the Borrower as determined in accordance with GAAP, each
calculated for such period of time: Adjusted Net Earnings from Operations plus,
to the extent included in the calculation of Adjusted Net Earnings from
Operations, the sum of (a) income tax expense; (b) interest expense paid or
payable in cash, net of cash interest income; (c) amortization and depreciation
expense; (d) other non-cash charges; and (e) operating lease expense in excess
of $20,000,000 (for any period of time which is less than a four consecutive
fiscal quarter period, such amount shall be prorated for such shorter period).
"Eligible Accounts" means all Accounts of the Borrower which
the Agent, in good faith in the exercise of its reasonable commercial discretion
and based upon criteria which, in the assessment of the Agent, are customary in
the lending practices of the Agent in effect from time to time, determines to be
Eligible Accounts. Without limiting the discretion of the Agent to establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account:
(1) with respect to which more than ninety days have
elapsed since the date of the original invoice therefor or it is more than sixty
days past due;
(2) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section 6.8 are not or have
ceased to be complete and correct or have been breached;
(3) with respect to which, in whole or in part, a
check, promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned
uncollected for any reason;
(4) 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
12
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;
(5) as to which any one or more of the following
events has occurred with respect to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an individual;
the filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(6) if fifty percent (50%) or more of the aggregate
Dollar amount of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible under the criteria set forth in clauses (a)
and/or (u);
(7) owed by an Account Debtor which: (i) does not
maintain its chief executive office in the United States; or (ii) is not
organized under the laws of the United States or any state thereof; or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof; except
to the extent that such Account is secured or payable by a letter of credit
reasonably satisfactory to the Agent;
(8) owed by an Account Debtor which is an Affiliate
or employee of the Borrower;
(9) except as provided in (k) below, as to which
either the perfection, enforceability, or validity of the Agent's Lien in such
Account, or the Agent's right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC;
(10) which is owed by an Account Debtor to which the
Borrower is indebted in any way, or which is subject to any right of setoff or
recoupment by the Account Debtor, unless the Account Debtor has entered into an
13
agreement reasonably acceptable to the Agent to waive setoff rights; or if the
Account Debtor thereon has disputed liability or made any claim with respect to
any other Account due from such Account Debtor; but in each such case only to
the extent of such indebtedness, setoff, recoupment, dispute, or claim;
(11) which is owed by the government of the United
States of America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss. 3727 et seq.), and any other steps necessary to perfect
the Agent's Lien therein, have been complied with to the Agent's satisfaction
with respect to such Account;
(12) which is owed by any state, municipality, or
other political subdivision of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof and as to which the
Agent determines that its Lien therein is not or cannot be perfected;
(13) which represents a sale on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis (other than for damage);
(14) which is evidenced by a promissory note or other
instrument or by chattel paper;
(15) if the Agent believes, in good faith in the
exercise of its reasonable judgment (based upon such factors that, in the
assessment of the Agent, are customary in the lending practices of the Agent in
effect from time to time), that the prospect of collection of such Account is
impaired or that the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(16) 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 or such failure
to file and inability to seek judicial enforcement is capable of being remedied
without any material delay or material cost;
(17) which arises out of a sale not made in the
ordinary course of the Borrower's business;
(18) as to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by the Account
Debtor or the services giving rise to such Account have not been performed by
the Borrower, and, if applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;
14
(19) which is owed by an Account Debtor (other than
Perseco or an Account Debtor that is rated 5a1 or better by Dun & Bradstreet)
that is obligated to the Borrower respecting Accounts the aggregate unpaid
balance of which exceeds the lesser of (i) $10,000,000 and (ii) ten percent
(10%) of the aggregate unpaid balance of all Accounts owed to the Borrower at
such time by all of the Borrower's Account Debtors, but only to the extent of
such excess;
(20) which arises out of a contract or order which,
by its terms, forbids, restricts or makes void or unenforceable the granting of
a Lien by the Borrower to the Agent with respect to such Account;
(21) which is a "short pay" account (but only with
respect to that portion of the Account which is "short pay"); or
(22) which is not subject to a first priority and
perfected security interest in favor of the Agent for the benefit of the
Lenders.
If any Account at any time ceases to be an Eligible Account by
reason of any of the foregoing exclusions or any failure to meet any other
eligibility criteria established by the Agent in good faith in the exercise of
its reasonable commercial discretion (based upon such factors that, in the
assessment of the Agent, are customary in the lending practices of the Agent in
effect from time to time) then such Account shall promptly be excluded from the
calculation of Eligible Accounts.
"Eligible Inventory" means Inventory, valued at the lower of
cost or market, that constitutes raw materials consisting of jumbo paper rolls,
virgin resin, regrinds or resin material reconverted to pellet form, work in
process and finished goods and that, unless the Agent in its sole discretion
elects, (a) is not, in the Agent's reasonable good faith opinion (based upon
such factors that, in the assessment of the Agent, are customary in the lending
practices of the Agent in effect from time to time), obsolete, slow moving,
defective or unmerchantable; (b) is located at premises owned by the Borrower or
on premises otherwise reasonably acceptable to the Agent or is in-transit
between the Borrower's facilities, provided, however, that, with respect to
Inventory located on any premises leased to the Borrower, unless the Borrower
shall have delivered to the Agent a written waiver, duly executed on behalf of
the appropriate landlord and in form and substance reasonably acceptable to the
Agent, of all Liens which the landlord for such premises may be entitled to
assert against such Inventory the Agent may, in its sole discretion, establish a
reserve against Availability therefor in an amount up to the aggregate of three
months rent payable with respect to such leased premises plus any rent payable
with respect to such leased premises which is then due and payable; (c) upon
which the Agent for the benefit of the Lenders has a first priority perfected
security interest; (d) is not spare parts, packaging and shipping materials,
supplies, xxxx-and-hold Inventory or defective Inventory, or Inventory delivered
to the Borrower on consignment; and (e) the Agent, in good faith in the exercise
of its reasonable commercial discretion, deems eligible as the basis for
Revolving Loans based on such collateral and credit criteria as the Agent may
15
from time to time establish and which are customary in scope and application, in
the assessment of the Agent, in the lending practices of the Agent in effect
from time to time. If any Inventory at any time ceases to be Eligible Inventory,
such Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
"Environmental Compliance Reserve" means any reserves which
the Agent, after the Closing Date, establishes from time to time for amounts
that are reasonably likely to be expended by the Borrower in order for the
Borrower and its operations and property (a) to comply with any notice from a
Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent and the Lenders pursuant to Section 9.7, in each instance
under clause (a) or (b), for which non-compliance (or the remediation thereof)
may impose or result in an Environmental Lien in any Accounts, Inventory or
other Credit Agreement Collateral which will have priority over the Agent's
Liens therein; provided that no such reserves shall be established by the Agent
to the extent that (i) the Agent shall have determined, in its reasonable
commercial judgment, that the Borrower has the financial ability to pay for any
such compliance or remediation and has sufficient Availability therefor as well
as for its other working capital needs and to satisfy Section 9.25, in each
instance, on a prospective basis through the estimated time of completion of
such compliance or remediation and (ii) the Borrower shall have delivered a
certificate to the Agent certifying as to the Borrower having such financial
ability and Availability with appropriate projections in detail reasonably
satisfactory to the Agent supporting such certification by the Borrower (such
certificate and projections to be updated and delivered to the Agent quarterly
until the completion of such compliance or remediation).
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health or safety matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"Equipment" means all of the Borrower's now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including motor vehicles
with respect to which a certificate of title has been issued, aircraft, dies,
tools, jigs, and office equipment, as well as all of such types of property
leased by the Borrower and all of the Borrower's rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
16
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower or Parent within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower, Parent or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower, Parent
or any ERISA Affiliate from a Multi-employer Plan or notification that a
Multi-employer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multi-employer Plan; (e) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan; or (f) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower, Parent or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934,
and regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning specified in the
recitals to this Agreement.
"Existing Debt" has the meaning specified in Section 9.13.
"Existing Liens" has the meaning specified in clause (i) of
the defined term "Permitted Liens" in this Section 1.1.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal functions.
17
"Fee Letter" means the Fee Letter, dated the Closing Date,
between the Borrower and BABC with respect to the fees referred to therein.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Financial Statements" means, according to the context in
which it is used, the financial statements referred to in Section 8.6 or any
other financial statements required to be given to the Lenders pursuant to this
Agreement.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
September 30, 1997.
"Fixed Assets" means Equipment and Real Estate of the Borrower
or Parent.
"Fixed Charge Component" means, with respect to any period of
time, the following for the Borrower as determined in accordance with GAAP, each
calculated for such period of time: the sum of (i) cash interest expense, net of
cash interest income, (ii) cash income tax expense, (iii) the aggregate amount
of Capital Expenditures made by the Borrower during such period (other than
Capital Expenditures financed by the Borrower and Capital Expenditures paid for
by the Borrower with cash proceeds from the sale of assets (other than Credit
Agreement Collateral) of the Borrower) and (iv) the aggregate amount of all cash
payments of principal on Debt made by the Borrower during such period (other
than under any of the Loan Documents, the Existing Credit Agreement and other
Credit Documents (as defined in the Existing Credit Agreement)).
"Fixed Charge Coverage Ratio" means, at any date of
determination, the ratio of (i) EBITDA for the Test Period most recently ended
(taken as one accounting period) and ending on such date to (ii) the Fixed
Charge Component for such Test Period (taken as one accounting period).
"Funding Date" means the date on which a Borrowing occurs.
18
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date and subject to Section 1.2.
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications,
trademarks, service marks, trade names, trade secrets, goodwill, copyrights,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, any funds which may become due to the Borrower in connection with
the termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to the Borrower from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which the Borrower is
beneficiary, and any letter of credit, guarantee, claim, security interest or
other security held by or granted to the Borrower.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by the Borrower with,
any Affiliate.
19
"Intercreditor Agreement" means the Intercreditor Agreement
dated as of August 30, 1993 by and among United States Trust Company of New
York, as Trustee, the Credit Agent and the Collateral Agent (as each such term
is defined therein), and acknowledged by the Borrower and the Parent.
"Interest Period" means, as to any LIBOR Revolving Loan, the
period commencing on the Funding Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or continued as
a LIBOR Revolving Loan, and ending on the date one, two, three or six months
thereafter as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
(1) 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;
(2) any Interest Period pertaining to a LIBOR
Revolving 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
(3) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
"Interest Rate Protection or Other Hedging Agreement" means
one or more (i) interest rate protection agreements (including, without
limitation, swaps, caps, floors, collars and similar agreements), (ii) foreign
exchange contracts, currency swap agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values
and/or (iii) other types of hedging agreements from time to time entered into by
Parent or any of its Subsidiaries with Bank America, any Lender or a syndicate
of financial institutions organized by Bank America or any such Lender or an
affiliate of Bank America or such Lender.
"Inventory" means all of the Borrower's now owned and
hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned
goods, raw materials, other materials and supplies of any kind, nature or
description which are or might be consumed in the Borrower's business or used in
connection with the packing, shipping, advertising, selling or finishing of such
goods, merchandise and such other personal property, and all documents of title
or other documents representing them.
20
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to Section 7.2(f),
the projections of the Borrower's financial condition, results of operations,
and cash flow, for the period commencing on October 1, 1998 and ending on
September 30, 2002 and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
Section 7.2(f).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and BABC to the extent of any BABC Loan outstanding;
provided that no such Agent Advance or BABC Loan shall be taken into account in
determining any Lender's Pro Rata Share.
"Letter of Credit" means a letter of credit issued or caused
to be issued for the account of the Borrower pursuant to Section 2.4.
"Letter of Credit Fee" has the meaning specified in Section
3.6.
"LIBOR Interest Payment Date" means, with respect to a LIBOR
Revolving Loan having an Interest Period of one, two or three months, the last
day of the Interest Period applicable to such loan and, with respect to a LIBOR
Revolving Loan having an Interest Period of six months, the date which occurs
three months after the initial date of such Interest Period, each of the dates
which occur one and two months after the end of such third month and the last
day of such Interest Period.
"LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Revolving Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/1000th of 1.0%) determined by
the Agent as follows:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
where:
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as
a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day (whether or not applicable to any Lender)
under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency
liabilities"); and
21
"LIBOR" means the rate of interest per annum (rounded upward
to the next 1/16th of 1%) notified to the Agent by Bank of
America as the rate of interest at which dollar deposits in
the approximate amount of the Loan to be made or continued
as, or converted into, a LIBOR Rate Loan and having a
maturity comparable to such Interest Period would be offered
by Bank of America's applicable lending office to major
banks in the London eurodollar market at approximately 11:00
a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
"LIBOR Revolving Loan" 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 without limitation, a security interest, charge, claim,
or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes; and (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
real property.
"Lily Credit Facility" means the Term and Revolving Credit
Facilities Agreement, dated as of December 20, 1989, among Lily Cup, the
financial institutions party thereto and The Bank of Nova Scotia, as facility
agent, as amended, modified or supplemented from time to time pursuant to the
terms thereof, and any other document or instrument entered into by Lily Cup in
connection therewith.
"Lily Cup" means Lily Cups, Inc., a Canadian corporation and a
Subsidiary of the Borrower.
"Loan Account" means the loan account of the Borrower, which
account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Fee Letter, the
Borrower Security Agreement, the Trademark, Patent and Copyright Agreements, the
Mortgages, the Parent Guaranty, the Parent Security Agreement, the Pledge
Agreement, the Parent Pledge Agreement, the Intercreditor Agreement, the Bank
Assignment Agreement, all other Credit Documents (as defined in the Existing
Credit Agreement) to the extent assigned to BABC or the Agent pursuant to or as
22
contemplated by the Bank Assignment Agreement and any other agreements,
instruments and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise executed and/or delivered in connection with the
Obligations, the Collateral or any other aspect of the financing transactions by
or with the Lenders and/or the Agent contemplated by this Agreement.
"Loans" means, collectively, all loans and advances provided
for in Article 2.
"Majority Lenders" means at any time Lenders whose Pro Rata
shares aggregate more than 50% of the Commitments or, if no Commitments shall
then be in effect, Lenders who hold more than 50% of the aggregate principal
amount of the Loans then outstanding.
"Management Services Agreement" means the Management Services
Agreement, dated August 30, 1993, between American Industrial Partners
Management Company, Inc., the Borrower and Parent.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties or
financial condition of Parent and the Borrower taken as a whole or a material
portion of the Collateral; (b) an impairment of the ability of the Borrower or
Parent to perform any material obligation under any Loan Document; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower or Parent of any Loan Document.
"Maximum Revolver Amount" means $135,000,000.
"Mortgages" means: (a) each Mortgage, Security Agreement, and
Assignment of Leases and Rents (or similar agreement) to be entered into by the
Borrower or Parent in favor of the Agent and delivered to the Agent; and (b) all
other real property mortgages, leasehold mortgages, assignments of leases,
mortgage deeds, deeds of trust, deeds to secure debt, security agreements, and
other similar instruments entered into or to be entered into which provide the
Agent a lien, for the benefit of the Agent and the Lenders, on or other interest
in any portion of any Premises, any Real Estate or any other real property in
which Parent or any of its Subsidiaries has an interest or which relate to any
such Lien or interest (including, without limitation, any of the foregoing
executed in connection with the Existing Credit Agreement and assigned by
Bankers Trust Company, as collateral agent, to the Agent as contemplated by the
Bank Assignment Agreement).
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
23
year or the immediately preceding six (6) years contributed to by the Borrower,
Parent or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"Notice of Borrowing" has the meaning specified in Section
2.2(b), the form of which is attached as Exhibit E.
"Notice of Conversion/Continuation" has the meaning specified
in Section 3.2(b), the form of which is attached as Exhibit F.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including, without
limitation, all principal, interest, charges, expenses, fees, attorneys' fees,
filing fees and any other sums chargeable to the Borrower hereunder or under any
of the other Loan Documents. "Obligations" includes, without limitation, all
debts, liabilities, and obligations now or hereafter owing from the Borrower to
the Agent and/or any Lender under or in connection with the Letters of Credit
and all loans made under the Existing Credit Agreement and assigned to BABC
under the Bank Assignment Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Parent" means Sweetheart Holdings Inc., a Delaware
corporation and the owner of 100% of the outstanding capital stock of the
Borrower.
"Parent Guaranty" means the Guaranty dated as of the Closing
Date made by Parent in favor of the Agent.
"Parent Pledge Agreement" means the Pledge Agreement dated as
of August 30, 1993 made by Parent in favor of the Collateral Agent.
"Parent Security Agreement" means the Amended and Restated
Security Agreement dated as of the Closing Date between Parent and the Agent.
24
"Participating Lender" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under the terms and conditions of this Agreement, and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"Payment Account" means each blocked bank account established
pursuant to Section 6.9, to which the funds of the Borrower (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or the Borrower, as
the Agent may determine, on terms reasonably acceptable to the Agent.
"Payment and Termination Date" means the first date on which
all of the following are satisfied: the Commitments of all Lenders have been
terminated, all outstanding monetary Obligations have been paid in full and all
Letters of Credit have been terminated or canceled or have expired (or
Supporting Letters of Credit have been delivered to the Agent therefor in
accordance with Section 2.4(j)).
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice(s) of Borrowing
received by the Agent which have not yet been advanced and for which the Lenders
will advance unless the Agent has notified the Borrower that such Revolving
Loan(s) will not be funded.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Borrower or Parent
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"Permitted Commodities Agreement" means any Commodities
Agreement which is entered into in the ordinary course of business by Parent
and/or any of its Subsidiaries consistent with past practices.
"Permitted Liens" means:
(1) Liens for taxes, assessments or governmental
charges or levies not delinquent or statutory Liens for taxes, assessments or
governmental charges or levies in an aggregate amount not to exceed $1,000,000
(with the Agent having the right in its reasonable commercial discretion to
establish reserves against Availability for any amount in excess of $100,000 in
the aggregate) provided that the payment of such taxes, assessments or
25
governmental charges or levies which are due and payable is being contested in
good faith and by appropriate proceedings diligently pursued and as to which
adequate financial reserves have been established on the books and records of
the Borrower, Parent or its other Subsidiaries, as the case may be, and no
enforcement action has been taken;
(2) the Agent's Liens;
(3) deposits under worker's compensation,
unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations (other than liens arising
under ERISA or Environmental Liens) or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;
(4) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, provided that if any such Lien arises from the nonpayment of such
claims or demands when due, such claims or demands do not exceed $1,000,000 in
the aggregate (with the Agent having the right in its reasonable commercial
discretion to establish reserves against Availability for any amount in excess
of $100,000 in the aggregate);
(5) Reservations, exceptions, encroachments,
easements, rights of way, covenants running with the land, and other similar
title exceptions or encumbrances affecting any Real Estate; provided that they
do not in the aggregate materially detract from the value of the Real Estate or
materially interfere with its use in the ordinary conduct of the Borrower's or
Parent's business;
(6) Judgment and other similar Liens arising in
connection with court proceedings to the extent the attachment or enforcement of
such Liens would not result in an Event of Default hereunder;
(7) Liens securing the Senior Secured Notes, subject
to the terms and conditions set forth in the Intercreditor Agreement;
(8) Purchase Money Liens;
(9) Liens in existence on the Closing Date which are
listed, and the property subject thereto described, in Schedule 9.19 (Liens
referred to in this clause (i) are herein referred to as "Existing Liens") but
only to the respective date, if any, set forth in such Schedule 9.19 for the
termination of any such Liens and Liens on property securing Debt which
constitutes an extension, renewal or refinancing of Existing Debt, which
extension, renewal or refinancing is permitted pursuant to Section 9.13;
provided that (i) the principal amount of such Debt does not exceed the
26
principal amount of the Existing Debt being extended, renewed or refinanced at
the time of such extension, renewal or refinancing, and (ii) such Lien secures
only such Debt and applies only to the property subject to the Existing Lien
securing the Existing Debt being extended, renewed or refinanced;
(10) Liens arising as a result of non-recourse,
sale-leaseback transactions with respect to any Real Estate, so long as the
respective transaction, and all documentation with respect thereto, is approved
by the Agent and additionally is either approved by the Majority Lenders or
permitted under Section 9.24;
(11) Liens upon assets subject to Capital Leases to
the extent permitted by Section 9.23, provided that (i) such Liens only serve to
secure the payment arising under such Capital Lease and (ii) the Lien
encumbering the asset giving rise to the Capital Lease does not encumber any
other asset of Parent or any of its Subsidiaries;
(12) deposits securing liabilities to insurance
carriers under insurance or self-insurance arrangements, provided that the
aggregate amount of cash and non-cash collateral so deposited shall at no time
exceed $15,000,000;
(13) with respect to any Real Estate subject to a
Mortgage assigned by Bankers Trust Company, as collateral agent, to the Agent as
contemplated by the Bank Assignment Agreement, such exceptions to title as are
set forth in the title insurance policy or title commitment delivered to such
collateral agent when such Mortgage was executed; and
(14) Liens on the assets of Lily Cup securing only
the Debt of Lily Cup permitted to be incurred pursuant to Section 9.13(d)(y).
"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower or Parent sponsors or maintains or to which
the Borrower or Parent makes, is making, or is obligated to make contributions
and includes any Pension Plan.
"Pledge Agreement" means the Pledge Agreement dated as of
August 30, 1993 made by the Borrower in favor of the Collateral Agent.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
27
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Premises" means the land identified by addresses on Schedule
8.12, together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which the Borrower or
Parent has any interests on the Closing Date.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders.
"Proprietary Rights" means all of the Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including, without limitation, those patents, registered trademarks,
registered service marks and registered copyrights set forth on Schedule 8.13
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing.
"Purchase Money Lien" means a lien granted on a fixed asset
(not including Inventory) to secure a Purchase Money Obligation permitted to be
incurred hereunder, and incurred solely to finance the acquisition of such
asset; provided, however, that such lien encumbers only such asset and is
granted within 180 days of such acquisition.
"Purchase Money Obligations" of any Person means any
obligations of such Person to any seller or any other Person incurred or assumed
to finance the acquisition of real or personal property (other than Inventory)
to be used in the business of such Person or any of its Subsidiaries in an
amount that is not more than 100% of the cost of such property, and incurred
within 180 days after the date of such acquisition (excluding accounts payable
to trade creditors incurred in the ordinary course of business).
"Real Estate" means all of the present and future interests of
the Borrower or Parent (as appropriate), as owner, lessee, or otherwise, in the
Premises, including, without limitation, any interest arising from an option to
purchase or lease the Premises or any portion thereof.
28
"Receivables Corp." means Sweetheart Receivables Corporation,
a Delaware corporation.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the migration of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rentals" has the meaning specified in Section 9.24.
"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 66_% of the Commitments or, if no Commitments shall
then be in effect, Lenders who hold more than 66_% of the aggregate principal
amount of the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate, the chief
financial officer or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means any acquisition of property by
Parent or any of its Subsidiaries (other than Lily Cup) in exchange for cash or
other property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except
acquisitions of the following: (a) Proprietary Rights and Fixed Assets to be
used in the business (to the extent such business is permitted under Section
9.18) of Parent, the Borrower or its Subsidiaries (other than Receivables Corp.
and Lily Cup) so long as the acquisition costs thereof constitute Capital
Expenditures permitted hereunder or costs for the purchase of General
Intangibles in the ordinary course of business or ordinary and customary
supplies, in each instance for such General Intangibles and supplies, for the
operation of the business (as limited as provided above) of Parent, the Borrower
or its Subsidiaries (other than Receivables Corp. and Lily Cup); (b) Inventory
in the ordinary course of business; (c) current assets arising from the sale or
lease of goods or the rendition of services in the ordinary course of business
29
of the Borrower or its Subsidiaries (other than Receivables Corp. and Lily Cup);
(d) direct obligations of the United States of America, or any agency thereof,
or obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof; (e)
certificates of deposit maturing within one year from the date of acquisition,
bankers' acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with a bank or trust company organized under
the laws of the United States or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) commercial paper given a rating of "A2"
or better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x
Investors Service, Inc. and maturing not more than 180 days from the date of
creation thereof; (g) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (d) above and
entered into with any bank meeting the qualifications specified in clause (e)
above; (h) money market funds substantially all of the assets of which are
comprised of securities of the types described in clauses (d) - (g) above; and
(i) stock, debt, indebtedness, obligations or any other property received in
consideration of any asset sale permitted under Section 9.9.
"Revolving Loans" has the meaning specified in Section 2.2 and
includes each Agent Advance and BABC Loan.
"Riverside Facility" means the property, plant, buildings,
warehouse, equipment, furniture, fixtures and other Fixed Assets of the Borrower
located at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx.
"Secured Note Collateral" has the meaning set forth in the
Intercreditor Agreement.
"Security Documents" means this Agreement, the Borrower
Security Agreement, the Trademark, Patent and Copyright Agreements, the Parent
Security Agreement, the Pledge Agreement, the Parent Pledge Agreement, the
Mortgages and all other security agreements, mortgages, pledges and assignments
at any time delivered by Parent or any of its Subsidiaries or any other Person
to the Agent pursuant to the terms of this Agreement or any other Loan Document.
"Senior Secured Notes" means the $190,000,000 face amount of
9_% Senior Secured Notes due 2000 issued by the Borrower (as successor to Cup
Acquisition Corporation) pursuant to an Indenture dated as of August 30, 1993.
"Senior Subordinated Notes" means the $110,000,000 face amount
of Senior Subordinated Notes due 2003 issued by the Borrower (as successor to
Cup Acquisition Corporation) pursuant to an Indenture dated as of August 30,
1993.
"Settlement" and "Settlement Date" have the meanings specified
in Section 2.2(j)(i).
30
"Shared Collateral" has the meaning set forth in the
Intercreditor Agreement.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(1) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including, without limitation,
contingent liabilities); and
(2) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts
become absolute and matured; and
(3) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(4) 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 September 30, 2000; provided
that in the event the Borrower has not refinanced, repaid or extended the Senior
Secured Notes on terms reasonably acceptable to the Agent and the Majority
Lenders prior to July 31, 2000, the Stated Termination Date means August 1,
2000.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of Parent.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a lending office.
31
"Test Period" means, for any determination, the four
consecutive fiscal quarters of the Borrower then last ended (taken as one
accounting period); provided that, with respect to determining the Fixed Charge
Coverage Ratio under Section 9.26 at the end of each of the fiscal quarters of
the Borrower ending December 31, 1997, March 31, 1998 and June 30, 1998, "Test
Period" means, respectively, the fiscal quarter of the Borrower ending December
31, 1997, the two consecutive fiscal quarters of the Borrower ending March 31,
1998 (taken as one accounting period) and the three consecutive fiscal quarters
of the Borrower ending June 30, 1998 (taken as one accounting period).
"Termination Date" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Total Facility is terminated either
by the Borrower pursuant to Section 4.2 or by the Majority Lenders pursuant to
Section 11.2, and (iii) the date this Agreement is otherwise terminated for any
reason whatsoever in accordance with the terms hereof.
"Total Facility" has the meaning specified in Section 2.1.
"Trademark, Patent and Copyright Agreements" means,
collectively, (i) the Collateral Assignment For Security in U.S. Patents, the
Collateral Assignment For Security in U.S. Trademarks, the Collateral Assignment
For Security in U.S. Copyrights, the Collateral Assignment For Security in
Canadian Patents and the Collateral Assignment For Security in Canadian
Trademarks, each dated as of August 30, 1993 by the Borrower in favor of Bankers
Trust Company, as collateral agent, the Borrower Intellectual Property Agreement
and the Holdings Intellectual Property Agreement, each dated as of August 30,
1993 and between the Borrower or Parent, respectively, and Bankers Trust
Company, as collateral agent, all of the foregoing agreements which have been
assigned to the Agent pursuant to the Bank Assignment Agreement and (ii) all
other intellectual property security agreements executed and delivered by Parent
or any of its Subsidiaries to the Agent to evidence and perfect the Agent's
security interest in such Person's present and future patents, trademarks,
copyrights and related licenses and rights, for the benefit of the Agent and the
Lenders.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of New York or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"Unused Letter of Credit Subfacility" means an amount equal to
$15,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus (b) without duplication, the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.5.
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"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"Wholly-Owned Subsidiary" means, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
1.2 Accounting Terms.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements. All calculations to be made
for the purposes of determining compliance with the financial covenants
contained in this Agreement (except as otherwise expressly provided herein)
shall be made by application of GAAP applied on a basis consistent with the most
recent annual or quarterly financial statements delivered pursuant to Section
7.2 (or, prior to the delivery of the first financial statements pursuant to
Section 7.2, consistent with GAAP effective on the Closing Date); provided,
however, that if (a) the Borrower shall object to determining such compliance on
such basis at the time of delivery of such financial statements due to any
change in GAAP or other rules promulgated with respect thereto or (b) the Agent
or the Majority Lenders shall so object in writing within 30 days after delivery
of such financial statements, then such calculations shall be made on a basis
consistent with the most recent annual or quarterly financial statements
delivered by the Borrower to the Agent as to which no objection shall have been
made.
1.3 Interpretive Provisions. (1) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(2) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(3) (1) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(2) The term "including" is not limiting and means
"including without limitation."
(3) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including," the
33
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including."
(4) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments 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.
(5) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(6) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(7) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
---------------------------
2.1 Total Facility.
Subject to all of the terms and conditions of this Agreement,
the Lenders severally agree to make available a total credit facility of up to
$135,000,000 (the "Total Facility") for the Borrower's use from time to time
during the term of this Agreement. The Total Facility shall be comprised of a
revolving line of credit consisting of revolving loans and letters of credit up
to the Maximum Revolver Amount, as described in Sections 2.2 and 2.4.
2.2 Revolving Loans
(1) Amounts. Subject to the satisfaction of the conditions
precedent set forth in Article 10, each Lender severally agrees, upon the
Borrower's request from time to time on any Business Day during the period from
the Closing Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower, in amounts not to exceed (except for BABC
34
with respect to BABC Loans or Agent Advances) such Lender's Pro Rata Share of
the Borrower's Availability. The Lenders, however, in their discretion, may
elect to make Revolving Loans or participate (as provided for in Section 2.4(f))
in the credit support or enhancement provided through the Agent to the issuers
of Letters of Credit in excess of the Availability on one or more occasions, but
if they do so, neither the Agent nor the Lenders shall be deemed thereby to have
changed the limits of the Maximum Revolver Amount or the Availability or to be
obligated to exceed such limits on any other occasion. If the sum of outstanding
Revolving Loans, the aggregate amount of Pending Revolving Loans, the undrawn
amount of outstanding Letters of Credit and any unpaid reimbursement obligations
in respect of Letters of Credit exceeds the Availability, the Lenders may refuse
to make or otherwise restrict the making of Revolving Loans as the Lenders
determine until such excess has been eliminated, subject to the Agent's
authority, in its sole discretion, to make Agent Advances pursuant to the terms
of Section 2.2(i). The Borrower acknowledges and agrees that the payment (the
"Assignment Payment") made on the Closing Date pursuant to Section 3(a)(i) of
the Bank Assignment Agreement by BABC to those banks and other financial
institutions party to the Existing Credit Agreement with respect to the purchase
of the outstanding loans made to the Borrower under the Existing Credit
Agreement shall constitute a Revolving Loan requested by the Borrower in the
amount of such payment.
(2) 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 together with a Borrowing Base Certificate
reflecting sufficient Availability, which must be received by the Agent (x)
prior to 11:00 a.m. (New York time) three Business Days prior to the requested
Funding Date, in the case of LIBOR Revolving Loans and (y) no later than 12:00
noon (New York time) on the requested Funding Date, in the case of Base Rate
Revolving Loans, specifying:
(1) the amount of the Borrowing;
(2) the requested Funding Date, which
shall be a Business Day;
(3) whether the Revolving Loans
requested are to be Base Rate Revolving Loans or LIBOR Revolving Loans; and
(4) the duration of the Interest Period
if the requested Revolving Loans are to be LIBOR Revolving Loans. If the
Notice of Borrowing fails to specify the duration of the Interest Period for
any Borrowing comprised of LIBOR Revolving Loans, such Interest Period shall be
three months;
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Revolving Loans only.
35
(2) After giving effect to any Borrowing, there may
not be more than six different Interest Periods in effect.
(3) With respect to any request for Base Rate
Revolving Loans, in lieu of delivering the above-described Notice of Borrowing
the Borrower may give the Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice but Agent shall be entitled to rely on the
telephonic notice in making such Revolving Loans.
(3) Reliance upon Authority. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), the Borrower shall deliver to
the Agent a writing setting forth (i) the account of the Borrower to which the
Agent is authorized to transfer the proceeds of the Revolving Loans requested
pursuant to this Section 2.2, and (ii) the names of the officers authorized to
request Revolving Loans on behalf of the Borrower, and shall provide the Agent
with a specimen signature of each such officer. The Agent shall be entitled to
rely conclusively on such officer's authority to request Revolving Loans on
behalf of the Borrower, the proceeds of which are to be transferred to any of
the accounts specified by the Borrower pursuant to the immediately preceding
sentence, until the Agent receives written notice to the contrary. The Agent
shall have no duty to verify the identity of any individual representing him or
herself as one of the officers authorized by the Borrower to make such requests
on its behalf.
(4) No Liability. The Agent shall not incur any liability to
the Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Agent believes in good faith to have been given
by an officer duly authorized by the Borrower to request Revolving Loans on its
behalf or for otherwise acting in good faith under this Section 2.2, and the
crediting of Revolving Loans to the Borrower's deposit account, or transmittal
to such Person as the Borrower shall direct, shall conclusively establish the
obligation of the Borrower to repay such Revolving Loans as provided herein.
(5) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and
the Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
(6) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the
Agent shall elect, in its discretion, (i) to have the terms of Section 2.2(g)
apply to such requested Borrowing, or (ii) to request BABC to make a BABC Loan
pursuant to the terms of Section 2.2(h) in the amount of the requested
Borrowing; provided, however, that if BABC declines in its sole discretion to
make a BABC Loan pursuant to Section 2.2(h), the Agent shall elect to have the
terms of Section 2.2(g) apply to such requested Borrowing.
36
(7) Making of Revolving Loans. (1) In the event that the Agent
shall elect to have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after receipt of a
Notice of Borrowing or telephonic notice pursuant to Section 2.2(b), the Agent
shall notify the Lenders by telecopy, telephone or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to the Agent
in same day funds, to such account of the Agent as the Agent may designate, not
later than 2:00 p.m. (New York time) on the Funding Date applicable thereto.
After the Agent's receipt of the proceeds of such Revolving Loans, upon
satisfaction of the applicable conditions precedent set forth in Article 10, the
Agent shall make the proceeds of such Revolving Loans available to the Borrower
on the applicable Funding Date by transferring same day funds equal to the
proceeds of such Revolving Loans received by the Agent to the account of the
Borrower, designated in writing by the Borrower and acceptable to the Agent;
provided, however, that the amount of Revolving Loans so made on any date shall
in no event exceed the Availability of the Borrower on such date.
(2) 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 for
the account of the Borrower the amount of that Lender's Pro Rata Share of the
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Funding Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such amount is so
made available, such payment to the Agent shall constitute such Lender's Loan on
the date of Borrowing for all purposes of this Agreement. If such amount is not
made available to the Agent on the Business Day following the Funding Date, the
Agent will notify the Borrower of such failure to fund and, upon demand by the
Agent, the Borrower shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such Borrowing. The failure of any Lender to make any
Loan on any Funding Date (any such Lender, prior to the cure of such failure,
being hereinafter referred to as a "Defaulting Lender") shall not relieve any
other Lender of any obligation hereunder to make a Loan on such Funding Date,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender on any Funding Date.
37
(3) 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. The Agent may hold and, in its discretion,
re-lend to Borrower the amount of all such payments received or retained by it
for the account of such Defaulting Lender. Any amounts so re-lent to the
Borrower shall bear interest at the rate applicable to Base Rate Revolving Loans
and for all other purposes of this Agreement shall be treated as if they were
Revolving Loans, provided, however, that for purposes of voting or consenting to
matters with respect to the Loan Documents and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (-0-). Until a Defaulting Lender cures its
failure to fund its Pro Rata Share of any Borrowing (1) such Defaulting Lender
shall not be entitled to any portion of the Unused Line Fee and (2) the Unused
Line Fee shall accrue in favor of the Lenders which have funded their respective
Pro Rata Shares of such requested Borrowing, shall be allocated among such
performing Lenders ratably based upon their relative Commitments, and shall be
calculated based upon the average amount by which the aggregate Commitments of
such performing Lenders exceeds the sum of outstanding Revolving Loans and the
undrawn face amount of all outstanding Letters of Credit. This section shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement. The terms of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by Borrower of its duties and obligations hereunder.
(8) Making of BABC Loans. (1) In the event the Agent shall
elect, with the consent of BABC, to have the terms of this Section 2.2(h) apply
to a requested Borrowing as described in Section 2.2(f), BABC shall make a
Revolving Loan in the amount of such Borrowing (any such Revolving Loan made
solely by BABC pursuant to this Section 2.2(h) being referred to as a "BABC
Loan" and such Revolving Loans being referred to collectively as "BABC Loans")
available to the Borrower on the Funding Date applicable thereto by transferring
same day funds to an account of the Borrower, designated in writing by the
Borrower and acceptable to the Agent. Each BABC Loan is a Revolving Loan
hereunder and shall be subject to all the terms and conditions applicable to
other Revolving Loans except that all payments thereon shall be payable to BABC
solely for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan). The Agent shall not
request BABC to make any BABC Loan if (i) the Agent shall have received written
notice from any Lender, or otherwise has actual knowledge, that one or more of
the applicable conditions precedent set forth in Article 10 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (ii)
the requested Borrowing would exceed the Availability of the Borrower on such
Funding Date. BABC shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Article 10 have been satisfied or
the requested Borrowing would exceed the Availability of the Borrower on the
Funding Date applicable thereto prior to making, in its sole discretion, any
BABC Loan. Notwithstanding Section 9.25, BABC may, in its sole discretion, make
38
BABC Loans which, after giving effect thereto, would result in Availability of
less than $5,000,000 (but not less than zero), provided that the Borrower shall
not permit the portion of any such BABC Loan which so results in Availability of
less than $5,000,000 to be outstanding for more than five consecutive days in
any calendar quarter or more than ten days in total in any calendar quarter.
(2) The BABC Loans shall be repayable on demand and
secured by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Revolving Loans
from time to time.
(9) Agent Advances. (1) Subject to the limitations set forth
in the provisos contained in this Section 2.2(i), the Agent is hereby authorized
by the Lenders, from time to time in the Agent's sole discretion, (1) after the
occurrence of a Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Article 10 have not been
satisfied, to make Revolving Loans to the Borrower on behalf of the Lenders
which the Agent, in its reasonable business judgment, deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion thereof, (B)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (C) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 15.7 (any of the advances described in
this Section 2.2(i) being hereinafter referred to as "Agent Advances");
provided, that the Required Lenders may at any time revoke the Agent's
authorization contained in this Section 2.2(i) to make Agent Advances, any such
revocation to be in writing and to become effective prospectively upon the
Agent's receipt thereof; and provided further, that the Agent shall not make
Agent Advances for purposes described in clauses (B) and (C) above which would
cause the Loans and Letters of Credit otherwise permitted to be outstanding
under this Agreement to exceed $135,000,000
(2) The Agent Advances shall be repayable on demand
and secured by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Revolving Loans
from time to time. The Agent shall notify each Lender in writing of each such
Agent Advance.
(10) Settlement. It is agreed that each Lender's funded
portion of the Revolving Loan is intended by the Lenders to be equal at all
times to such Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, BABC, 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 BABC Loans
and the Agent Advances shall take place on a periodic basis in accordance with
the following provisions:
(1) The Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if so determined
by the Agent, (1) on behalf of BABC, with respect to each outstanding BABC Loan,
39
(2) for itself, with respect to each Agent Advance, and (3) with respect to
collections received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone or other similar form of transmission, of such
requested Settlement, no later than 1:00 p.m. (New York time) on the date of
such requested Settlement (the "Settlement Date"). Each Lender (other than BABC,
in the case of BABC Loans) shall make the amount of such Lender's Pro Rata Share
of the outstanding principal amount of the BABC Loans and Agent Advances with
respect to which Settlement is requested available to the Agent, for itself or
for the account of BABC, in same day funds, to such account of the Agent as the
Agent may designate, not later than 3:00 p.m. (New York time), on the Settlement
Date applicable thereto, regardless of whether the applicable conditions
precedent set forth in Article 10 have then been satisfied. Such amounts made
available to the Agent shall be applied against the amounts of the applicable
BABC Loan or Agent Advance and, together with the portion of such BABC Loan or
Agent Advance representing BABC's Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not made available to the
Agent by any Lender on the Settlement Date applicable thereto, the Agent shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days from and
after the Settlement Date and thereafter at the Interest Rate then applicable to
the Revolving Loans.
(2) 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 BABC Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase and receive
from BABC or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BABC Loan or Agent Advance to the
extent of such Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such BABC Loan or
Agent Advance. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest Rate
then applicable to the Revolving Loans.
(3) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in any BABC Loan or
Agent Advance pursuant to subsection (ii) above, the Agent shall promptly
distribute to such Lender at such address as such Lender may request in writing,
such Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such BABC Loan or
Agent Advance.
(4) Between Settlement Dates, the Agent, to the
extent no Agent Advances or BABC Loans are outstanding, may pay over to BABC any
payments received by Agent, which in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to
40
BABC's other outstanding Revolving Loans. If, as of any Settlement Date,
collections received since the then immediately preceding Settlement Date have
been applied to BABC's other outstanding Revolving Loans other than to BABC
Loans or Agent Advances, as provided for in the previous sentence, BABC 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,
BABC with respect to BABC Loans, the Agent with respect to Agent Advances, and
each Lender with respect to the Revolving Loans other than BABC 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
BABC, the Agent and the other Lenders.
(11) Notation. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including the BABC
Loans owing to BABC, and the Agent Advances owing to the Agent, from time to
time. In addition, each Lender is authorized, at such Lender's option, to note
the date and amount of each payment or prepayment of principal of such Lender's
Revolving Loans in its books and records, including computer records, such books
and records constituting rebuttably presumptive evidence, absent manifest error,
of the accuracy of the information contained therein.
(12) Lenders' Failure to Perform. All Loans (other than BABC
Loans and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (a) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any 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 Loans hereunder, (b) no failure by any Lender to perform
its obligation to make any Loans hereunder shall excuse any other Lender from
its obligation to make any Loans hereunder, and (c) the obligations of each
Lender hereunder shall be several, not joint and several.
2.3 [Reserved.]
2.4 Letters of Credit
(1) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent agrees to take reasonable
steps to cause to be issued for the account of the Borrower and to provide
credit support or other enhancement to banks reasonably acceptable to the Agent,
which issue Letters of Credit for the account of the Borrower (any such credit
support or enhancement being herein referred to a "Credit Support") in
accordance with this Section 2.4 from time to time during the term of this
Agreement.
41
(2) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to take steps to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (1) the maximum
undrawn amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof exceed the Availability of the
Borrower at such time; or (3) such Letter of Credit has an expiration date later
than thirty (30) days prior to the Stated Termination Date or more than twelve
(12) months from the date of issuance in the case of standby letters of credit
or six (6) months from the date of issuance in the case of letters of credit
issued to support purchases of Inventory.
(3) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 10, the
obligation of the Agent to take reasonable steps to cause to be issued any
Letter of Credit or to provide Credit Support for any Letter of Credit is
subject to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent:
(1) The Borrower shall have delivered to the proposed
issuer of such Letter of Credit, at such times and in such manner as such
proposed issuer may prescribe, an application in form and substance satisfactory
to such proposed issuer and the Agent for the issuance of the Letter of Credit
and such other documents as may be required pursuant to the terms thereof, and
the form and terms of the proposed Letter of Credit shall be satisfactory to the
Agent and such proposed issuer; and
(2) As of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit.
(4) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall give the
Agent two (2) Business Days' prior written notice of the Borrower's request for
the issuance of a Letter of Credit. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit is
to expire (which date shall be a Business Day), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
42
Credit. The Borrower shall attach to such notice the proposed form of the Letter
of Credit.
(2) Responsibilities of the Agent; Issuance. The
Agent shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set forth in the
notice from the Borrower pursuant to Section 2.4(d)(1), (i) the amount of the
applicable Unused Letter of Credit Subfacility and (ii) the Availability of the
Borrower as of such date. If (i) the undrawn amount of the requested Letter of
Credit is not greater than the applicable Unused Letter of Credit Subfacility
and (ii) the issuance of such requested Letter of Credit and all commissions,
fees, and charges due from the Borrower in connection with the opening thereof
would not exceed the Availability of the Borrower, the Agent shall take
reasonable steps to cause such issuer to issue the requested Letter of Credit on
such requested effective date of issuance.
(3) Notice of Issuance. On each Settlement Date the
Agent shall give notice to each Lender of the issuance of all Letters of Credit
issued since the last Settlement Date.
(4) No Extensions or Amendment. The Agent shall not
be obligated to cause any Letter of Credit to be extended or amended unless the
requirements of this Section 2.4(d) are met as though a new Letter of Credit
were being requested and issued. With respect to any Letter of Credit which
contains any "evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any such Lender
shall have provided to the Agent, not less than 30 days prior to the last date
on which the applicable issuer can in accordance with the terms of the
applicable Letter of Credit decline to extend or renew such Letter of Credit,
written notice that it declines to consent to any such extension or renewal,
provided, that if all of the requirements of this Section 3.4 are met and no
Default or Event of Default exists, no Lender shall decline to consent to any
such extension or renewal.
(5) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The
Borrower agrees to reimburse the issuer for any draw under any Letter of Credit
and the Agent for the account of the Lenders upon any payment pursuant to any
Credit Support immediately upon demand, and to pay the issuer of the Letter of
Credit the amount of all other obligations and other amounts payable to such
issuer under or in connection with any Letter of Credit immediately when due,
irrespective of any claim, setoff, defense or other right which the Borrower may
have at any time against such issuer or any other Person.
(2) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the issuer of any Letter of Credit honors a draw
under such Letter of Credit or the Agent shall have made any payment pursuant to
any Credit Support and the Borrower shall not have repaid such amount to the
43
issuer of such Letter of Credit or the Agent, as applicable, pursuant to Section
2.4(e)(1), the Agent shall, upon receiving notice of such failure, notify each
Lender of such failure, and each Lender shall unconditionally pay to the Agent,
for the account of such issuer or the Agent, as applicable, as and when provided
hereinbelow, an amount equal to such Lender's Pro Rata Share of the amount of
such payment in Dollars and in same day funds. If the Agent so notifies the
Lenders prior to 1:00 p.m. (New York time) on any Business Day, each Lender
shall make available to the Agent the amount of such payment, as provided in the
immediately preceding sentence, on such Business Day. Such amounts paid by the
Lenders to the Agent shall constitute Revolving Loans which shall be deemed to
have been requested by the Borrower pursuant to Section 2.2 as set forth in
Section 4.7.
(6) Participations.
(1) Purchase of Participations. Immediately upon
issuance of any Letter of Credit in accordance with Section 2.4(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and participation in the
Letter of Credit or the Credit Support provided through the Agent to such issuer
in connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit or the amount of such
Credit Support (including, without limitation, all obligations of the Borrower
with respect thereto, and any security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from the Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit Support as
to which the Agent has previously received for the account of the issuer thereof
payment from a Lender pursuant to Section 2.4(e)(2), the Agent shall promptly
pay to such Lender such Lender's Pro Rata Share of such payment from the
Borrower in Dollars. Each such payment shall be made by the Agent on the
Business Day on which the Agent receives immediately available funds paid to
such Person pursuant to the immediately preceding sentence, if received prior to
1:00 p.m. (New York time) on such Business Day and otherwise on the next
succeeding Business Day.
(3) Documentation. Upon the request of any Lender,
the Agent shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreements executed in connection therewith, application for any
Letter of Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each
Lender to make payments to the Agent with respect to any Letter of Credit or
with respect to any Credit Support provided through the Agent with respect to a
Letter of Credit, and the obligations of the Borrower to make payments to the
Agent, for the account of the Lenders, shall be irrevocable, not subject to any
44
qualification or exception whatsoever, including, without limitation, 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 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; or
(5) the occurrence of any Default or Event
of Default.
(7) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrower received by the Agent with respect to
any Letter of Credit or Credit Support provided for any Letter of Credit (or any
guaranty by the Borrower or reimbursement obligation of the Borrower relating
thereto) and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it.
(8) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower agrees to pay
to the Agent with respect to each Letter of Credit, for the account of the
Lenders, the Letter of Credit Fee specified in, and in accordance with the terms
of, Section 3.6.
(2) Issuer Fees and Charges. The Borrower shall pay
to the issuer of any Letter of Credit, or to the Agent, for the account of the
issuer of any such Letter of Credit, solely for such issuer's account, such fees
and other charges as are charged by such issuer for letters of credit issued by
45
it, including, without limitation, its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and all other
customary fees associated with issuing or servicing letters of credit, as and
when assessed.
(9) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts payable
as elsewhere provided in this Section 2.4, the Borrower hereby agrees to
protect, indemnify, pay and save the Lenders and the Agent harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which any Lender or
the Agent may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit or the provision of any credit support or
enhancement in connection therewith. The agreement in this Section 2.4(i)(1)
shall survive payments of all Obligations.
(2) Assumption of Risk by the Borrower. As among the
Borrower, the Lenders, and the Agent, the Borrower assumes all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; or (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including, without limitation,
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto Governmental Authority. None of the foregoing shall affect,
impair or prevent the vesting of any rights or powers of the Agent or any Lender
under this Section 2.4(i). Further, none of the foregoing shall prejudice any
rights of the Borrower against any issuer of a Letter of Credit.
(3) Exoneration. In furtherance and extension, and
not in limitation, of the specific provisions set forth above, any action taken
or omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in the
46
absence of gross negligence or willful misconduct, shall not put the Agent or
any Lender under any resulting liability to the Borrower or relieve the Borrower
of any of its obligations hereunder to any such Person.
(4) Power of Attorney. In connection with all
Inventory financed by Letters of Credit, the Borrower hereby appoints the Agent,
or the Agent's designee, as its attorney, with full power and authority: (a) to
sign and/or endorse the Borrower's name upon any warehouse or other receipts;
(b) to sign the Borrower's name on bills of lading and other negotiable and
non-negotiable documents; (c) to clear Inventory through customs in the Agent's
or the Borrower's name, and to sign and deliver to customs officials powers of
attorney in the Borrower's name for such purpose; (d) to complete in the
Borrower's or the Agent's name, any order, sale, or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof;
and (e) to do such other acts and things as are necessary in order to enable the
Agent to obtain possession of the Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as the Borrower's attorney,
will be liable for any acts or omissions, nor for any error of judgement or
mistakes of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(5) Account Party. The Borrower hereby authorizes and
directs any issuer of a Letter of Credit to name the Borrower as the "Account
Party" therein and to deliver to the Agent all instruments, documents and other
writings and property received by the issuer pursuant to the Letter of Credit,
and to accept and rely upon the Agent's instructions and agreements with respect
to all matters arising in connection with the Letter of Credit or the
application therefor.
(6) Control of Inventory. In connection with all
Inventory financed by Letters of Credit, the Borrower will, at the Agent's
request, instruct all suppliers, carriers, forwarders, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
the Agent holds a security interest to deliver them to the Agent and/or subject
to the Agent's order, and if they shall come into the Borrower's possession, to
deliver them, upon request, to the Agent in their original form. The Borrower
shall also, at the Agent's request, designate the Agent as the consignee on all
bills of lading and other negotiable and non-negotiable documents.
(10) Supporting Letter of Credit. If, notwithstanding the
provisions of Section 2.4(b) and Section 12.1, any Letter of Credit is
outstanding upon the termination of this Agreement, then upon such termination
the Borrower shall deposit with the Agent, for the ratable benefit of the Agent
and the Lenders, with respect to each Letter of Credit then outstanding, a
standby letter of credit (a "Supporting Letter of Credit") in form and substance
reasonably satisfactory to the Agent, issued by an issuer reasonably
satisfactory to the Agent in an amount equal to the greatest amount for which
such Letter of Credit may be drawn plus any fees and expenses associated with
such Letter of Credit, under which Supporting Letter of Credit the Agent is
47
entitled to draw amounts necessary to reimburse the Agent and the Lenders for
payments made by the Agent and the Lenders under such Letter of Credit or under
any credit support or enhancement provided through the Agent with respect
thereto and any fees and expenses associated with such Letter of Credit. Such
Supporting Letter of Credit shall be held by the Agent, for the ratable benefit
of the Agent and the Lenders, as security for, and to provide for the payment
of, the aggregate undrawn amount of such Letters of Credit remaining
outstanding.
ARTICLE 3
INTEREST AND FEES
-----------------
3.1 Interest
(1) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate or
the LIBOR Rate and Sections 3.1(a)(i) or (ii), as applicable, but not to exceed
the Maximum Rate described in Section 3.3. Subject to the provisions of Section
3.2, any of the Loans may be converted into, or continued as, Base Rate
Revolving Loans or LIBOR Revolving Loans in the manner provided in Section 3.2.
If at any time Loans are outstanding with respect to which notice has not been
delivered to the Agent in accordance with the terms of this Agreement specifying
the basis for determining the interest rate applicable thereto, then those Loans
shall be Base Rate Revolving Loans and shall bear interest at a rate determined
by reference to the Base Rate until notice to the contrary has been given to the
Agent in accordance with this Agreement and such notice has become effective.
Except as otherwise provided herein, the outstanding Obligations shall bear
interest as follows:
(1) For all Base Rate Revolving Loans and other
Obligations (other than LIBOR Revolving Loans) at a fluctuating per annum rate
equal to the Base Rate plus the Applicable Margin; and
(2) 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 described
in (i) above as of the effective date of such change. All interest charges shall
be computed on the basis of a year of 360 days and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). Interest accrued on all Loans will be payable in arrears on the first day
of each month hereafter; provided that interest accrued on all LIBOR Revolving
Loans having an Interest Period of one, two or three months will be payable in
arrears on the last day of each Interest Period and interest accrued on all
LIBOR Revolving Loans having an Interest Period of six months will be payable in
48
arrears on the date which occurs three months after the initial date of each
such Interest Period, each of the dates which occur one and two months after the
end of such third month and the last day of each such Interest Period.
(2) Default Rate. If any Event of Default occurs and is
continuing and the Majority Lenders in their discretion so elect, then, while
any such Event of Default is outstanding, all of the Obligations shall bear
interest at the Default Rate applicable thereto.
3.2 Conversion and Continuation Elections.
(1) The Borrower may, upon irrevocable written notice
to the Agent in accordance with Subsection 3.2(b):
(1) elect, as of any Business Day, in the case of
Base Rate Revolving Loans to convert any such Loans (or any part thereof in an
amount not less than $3,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof) into LIBOR Revolving Loans; or
(2) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Revolving Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than $3,000,000,
or that is in an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Revolving Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $3,000,000, such LIBOR Revolving Loans shall
automatically convert into Base Rate Revolving Loans, and on and after such date
the right of the Borrower to continue such Loans as, and convert such Loans
into, LIBOR Revolving Loans, as the case may be, shall terminate.
(2) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 11:00 a.m.
(New York time) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as LIBOR Revolving Loans and specifying:
(1) the proposed Conversion/Continuation Date;
(2) the aggregate amount of Loans to be converted or
renewed;
(3) the type of Loans resulting from the proposed
conversion or continuation; and
(4) the duration of the requested Interest Period.
(3) If upon the expiration of any Interest Period applicable
to LIBOR Revolving Loans, the Borrower has failed to select timely a new
Interest Period to be applicable to LIBOR Revolving Loans or if any Default or
Event of Default then exists, the Borrower shall be deemed to have elected to
49
convert such LIBOR Revolving Loans into Base Rate Revolving Loans effective as
of the expiration date of such Interest Period.
(4) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(5) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as a LIBOR
Revolving Loan.
(6) After giving effect to any conversion or continuation of
Loans, there may not be more than six different Interest Periods in effect.
3.3 Maximum Interest Rate.
In no event shall any interest rate provided for hereunder
exceed the maximum rate legally chargeable by the Lenders under applicable law
for loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum Rate.
In the event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest which would, but for this Section 3.3, have been paid
or accrued if the interest rates otherwise set forth in this Agreement had at
all times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Agent, for the account of the Lenders, an amount equal
to the difference between (a) the lesser of (i) the amount of interest which
would have been charged if the Maximum Rate had, at all times, been in effect or
(ii) the amount of interest which would have accrued had the interest rates
otherwise set forth in this Agreement, at all times, been in effect and (b) the
amount of interest actually paid or accrued under this Agreement. In the event
that a court determines that the Agent and/or any Lender has received interest
and other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to the
Borrower such excess.
3.4 Certain Fees.
The Borrower agrees to pay BABC for its own account the fees
(the "BABC Fees") referred to in the Fee Letter as and when payable as provided
in such letter. The Agent, the Lenders and the Borrower agree that the BABC Fees
may be financed by the Lenders as Revolving Loans.
50
3.5 Unused Line Fee.
Until the Obligations have been paid in full and this
Agreement is terminated, the Borrower agrees to pay, on the first day of each
month and on the Termination Date, to the Agent, for the ratable account of the
Lenders, an unused line fee equal to one-half of one percent (.5%) per annum on
the average daily amount by which the Maximum Revolver Amount exceeded the sum
of the average daily outstanding amount of Revolving Loans and the undrawn face
amount of all outstanding Letters of Credit, during the immediately preceding
month or shorter period if calculated on the Termination Date. The unused line
fee shall be computed on the basis of a 360-day year for the actual number of
days elapsed. All payments received by the Agent on account of Accounts or as
proceeds of other Collateral shall be deemed to be credited to the Borrower's
Loan Account immediately upon receipt for purposes of calculating the unused
line fee pursuant to this Section 3.5.
3.6 Letter of Credit Fee.
The Borrower agrees to pay to the Agent, for the ratable
account of the Lenders, for each Letter of Credit, a fee (the "Letter of Credit
Fee") equal to one and three-quarters percent (1-3/4%) per annum of the undrawn
face amount of each Letter of Credit issued for the Borrower's account at the
Borrower's request, plus all out-of-pocket costs, fees and expenses reasonably
incurred by the Agent in connection with the application for, issuance of, or
amendment to any Letter of Credit, which costs, fees and expenses could include
a "fronting fee" required to be paid by the Agent to such issuer for the
assumption of the settlement risk in connection with the issuance of such Letter
of Credit. The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains outstanding. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
3.7 Collateral Management Fee.
The Borrower agrees to pay to the Agent, for the account of
the Agent, a non-refundable collateral management fee in the amount of $150,000
per annum, payable in advance on the Closing Date and each Anniversary Date
(other than an Anniversary Date occurring on or after the Payment and
Termination Date).
ARTICLE 4
PAYMENTS AND PREPAYMENTS
------------------------
4.1 Revolving Loans. The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrower may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided, however, that with
respect to any LIBOR Revolving Loans prepaid by the Borrower prior to the
expiration date of the Interest Period applicable thereto, the Borrower promises
to pay to the Agent for account of the Lenders the amounts described in Section
5.4. In addition, and without limiting the generality of the foregoing, upon
51
demand the Borrower promises to pay to the Agent, for account of the Lenders,
the amount, without duplication, by which the sum of outstanding Revolving
Loans, the aggregate amount of Pending Revolving Loans, the aggregate undrawn
amounts of all outstanding Letters of Credit and the amount of all unpaid
reimbursement obligations with respect to the Letters of Credit exceeds the
Availability (with Availability being determined for purposes of this sentence
as if clause (b) thereof were zero).
4.2 Termination of Facility. The Borrower may terminate this Agreement upon
at least ten (10) Business Days' notice to the Agent and the Lenders, upon (a)
the payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, and the cancellation of all outstanding Letters of Credit, (b)
the payment of the early termination fee set forth in the next sentence, (c) the
payment in full in cash of all other outstanding monetary Obligations together
with accrued interest thereon, if any, and (d) with respect to any LIBOR
Revolving Loans prepaid in connection with such termination prior to the
expiration date of the Interest Period applicable thereto, the payment of the
amounts described in Section 5.4. If this Agreement is terminated at any time
prior to the Stated Termination Date, whether pursuant to this Section or
pursuant to Section 11.2, the Borrower shall pay to the Agent, for the account
of the Lenders, an early termination fee determined in accordance with the
following table:
PERIOD DURING WHICH EARLY EARLY TERMINATION FEE
TERMINATION OCCURS ---------------------
------------------
On or prior to the first Anniversary Date $2,700,000
After the first Anniversary Date but on or prior to $1,350,000
the second Anniversary Date
After the second Anniversary Date 0
provided that in the event this Agreement is refinanced pursuant to a credit
agreement under which BABC or an Affiliate of BABC is the agent or the sole
lender, then no early termination fee shall be payable hereunder.
4.3 [Reserved]
4.4 [Reserved]
4.5 [Reserved]
4.6 Payments by the Borrower. (1) All payments to be made by the Borrower
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrower shall be made to the
Agent for the account of the Lenders at the Agent's address set forth in Section
15.8, and shall be made in Dollars and in immediately available funds, no later
than 1:00 p.m. (New York time) on the date specified herein; provided, however,
52
that, except as otherwise provided herein (including, in any event, Section
6.9(d)), any payments by the Borrower which the Borrower has notified the Agent
prior to 12:00 noon (New York time) on a Business Day that such payments will be
received by the Agent via wire transfer prior to 4:00 p.m. (New York time) on
such Business Day shall be deemed to have been received by the Agent for this
purpose prior to 1:00 p.m. (New York time) on such Business Day, but only if
such payment is actually received by the Agent via wire transfer no later than
4:00 p.m. (New York time) on such Business Day and the Borrower hereby agrees to
indemnify and hold harmless the Agent and each Lender from and against any and
all actual out-of-pocket liabilities, obligations, losses, damages, penalties,
costs or expenses incurred by the Agent or such Lender in the event such payment
is not actually received by the Agent via wire transfer by such time. Any
payment received by the Agent later than 1:00 p.m. (New York time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(2) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(3) Unless the Agent receives notice from the Borrower prior
to the date on which any payment is due to the Lenders that the Borrower will
not make such payment in full as and when required, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
4.7 Payments as Revolving Loans. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including all reimbursement for expenses
pursuant to Section 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.7, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrower pursuant to Section 2.2 or a deemed request as provided in this
Section 4.7. The Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans (including
BABC Loans and Agent Advances) and that all such Revolving Loans so made shall
be deemed to have been requested by Borrower pursuant to Section 2.2. The Agent
agrees, so long as no Event of Default is continuing, to provide the Borrower
with three days' prior notice of any such charge to the Loan Account for the
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purpose of paying expenses owing by the Borrower under Section 15.7. All amounts
charged to the Loan Account pursuant to this Section 4.7 shall be deemed correct
and binding on the Borrower, subject to Section 4.10.
4.8 Apportionment, Application and reversal of payments. Aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any fees, indemnities
or expense reimbursements then due to the Agent from the Borrower; second, to
pay any fees or expense reimbursements then due to the Lenders from the
Borrower; third, to pay interest due in respect of all Revolving Loans,
including BABC Loans and Agent Advances; fourth, to pay or prepay principal of
the BABC Loans and Agent Advances; fifth, to pay or prepay principal of the
Revolving Loans (other than BABC Loans and Agent Advances) and unpaid
reimbursement obligations in respect of Letters of Credit; and sixth, to the
payment of any other Obligation due to the Agent or any Lender by the Borrower.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrower, or unless an Event of Default is outstanding, neither
the Agent nor any Lender shall apply any payments which it receives to any LIBOR
Revolving Loan, except (a) on the expiration date of the Interest Period
applicable to any such LIBOR Revolving Loan, or (b) in the event, and only to
the extent, that there are no outstanding Base Rate Revolving Loans. The Agent
shall promptly distribute to each Lender, pursuant to the applicable wire
transfer instructions received from each Lender in writing, such funds as it may
be entitled to receive, subject to a Settlement delay as provided for in Section
2.2(j). The Agent and the Lenders shall have the continuing and exclusive right
to apply and reverse and reapply any and all such proceeds and payments to any
portion of the Obligations.
4.9 Indemnity for Returned Payments. If, after receipt of any payment of,
or proceeds applied to the payment of, all or any part of the Obligations, the
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force as
if such payment or proceeds had not been received by the Agent or such Lender,
and the Borrower shall be liable to pay to the Agent, and hereby does indemnify
the Agent and the Lenders and hold the Agent and the Lenders harmless for, the
amount of such payment or proceeds surrendered. The provisions of this Section
4.9 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Agent's and the Lenders' rights under this Agreement and shall
54
be deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this Section 4.9 shall
survive the termination of this Agreement.
4.10 Agent's and Lender's Books and Records; Monthly Statements. The
Borrower agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute rebuttably presumptive proof thereof, irrespective of whether
any Obligation is also evidenced by a promissory note or other instrument. The
Agent will provide to the Borrower a monthly statement of Loans, payments, and
other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Borrower and an account stated (except for
reversals and reapplications of payments made as provided in Section 4.8 and
corrections of errors discovered by the Agent), absent manifest error or unless
the Borrower notifies the Agent in writing to the contrary within thirty (30)
days after such statement is rendered. In the event a timely written notice of
objections is given by the Borrower, only the items to which exception is
expressly made will be considered to be disputed by the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
5.1 Taxes. (1) 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.
(2) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days after
the date the Lender or the Agent makes written demand therefor.
(3) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(1) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under this
Section) such Lender or the Agent, as the case may be, receives an amount equal
to the sum it would have received had no such deductions or withholdings been
made;
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(2) the Borrower shall make such deductions and
withholdings;
(3) the Borrower shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(4) the Borrower shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes or
Other Taxes had not been imposed.
(4) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(5) If the Borrower is required to pay additional amounts to
any Lender or the Agent pursuant to subsection (c) of this Section, then such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
5.2 Illegality. (1) 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 Revolving Loans, then, on notice thereof by the Lender to the Borrower
through the Agent, any obligation of that Lender to make LIBOR Revolving Loans
shall be suspended until the Lender notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(2) If a Lender determines that it is unlawful to maintain any
LIBOR Revolving 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 Revolving Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under Section 5.4, either on the last day
of the Interest Period thereof, if the Lender may lawfully continue to maintain
such LIBOR Revolving Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such LIBOR Revolving Loan. If the Borrower is
required to so prepay any LIBOR Revolving Loan, then concurrently with such
prepayment, the Borrower shall borrow from the affected Lender, in the amount of
such repayment, a Base Rate Revolving Loan.
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5.3 Increased Costs and Reduction of Return. (1) If any Lender
determines that, due to either (i) the introduction of or any change in the
interpretation of any law or regulation or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or maintaining
any LIBOR Revolving Loans, then the Borrower shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the Agent),
pay to the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs. If the Borrower
is required to pay additional amounts to any Lender pursuant to this Section
5.3(a) that increase the effective lending rate of such Lender with respect to
its share of the Loans to greater than 25 basis points in excess of the
effective lending rate of the other Lenders, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its lending office with respect to making LIBOR Revolving
Loans so as to eliminate any such additional payment by the Borrower which may
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender. In the event that any one or more
Lenders, pursuant to this Section 5.3(a) , incur any increased costs (other than
increased costs to the extent such increased costs are not a recurring cost) for
which any such Lender demands compensation pursuant to this Section 5.3(a) which
increases the effective lending rate of such Lender with respect to its share of
the Loans to greater than 25 basis points in excess of the effective lending
rate of the other Lenders and such Lender has not mitigated such costs within 60
days after receipt by such Lender from the Borrower of a written notice that
such Lender's effective lending rate has so exceeded the effective lending rate
of the other Lenders, then and in any such event, the Borrower may substitute
another financial institution for such Lender which is reasonably acceptable to
the Agent to assume the Commitment of such Lender and to purchase the Loans of
such Lender hereunder, without recourse to or warranty by, or expense to, such
Lender for a purchase price equal to the outstanding principal amount of the
Loans owing to such Lender plus any accrued but unpaid interest on such Loans
and accrued but unpaid fees and other amounts in respect of that Lender's
Commitment and share of the Loans (other than any prepayment penalty or other
premium; it being agreed that amounts payable under Section 5.4 are not
prepayment penalties or other premiums). Upon such purchase such Lender shall no
longer be a party hereto or have any rights or benefits hereunder (except for
rights or benefits that such Lender would retain hereunder and under the other
Loan Documents upon payment in full of all of the Obligations) and the
replacement Lender shall succeed to the rights and benefits, and shall assume
the obligations, of such Lender hereunder and thereunder. The Agent and the
Lenders shall cooperate with the Borrower to amend the Loan Documents to reflect
such substitution. In no event may the Borrower replace a Lender which is also
an issuer of a Letter of Credit or Credit Support or whose Affiliate has issued
a Letter of Credit or Credit Support unless (x) all Letters of Credit and Credit
Support issued by such Lender and its Affiliates have expired or have been
terminated or canceled and such Lender and/or Affiliate, as the case may be,
shall have been reimbursed for all payments made by it under the Letters of
Credit and Credit Support issued by it or (y) such Lender and/or Affiliate, as
the case may be, shall have been indemnified in a manner satisfactory to it for
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any outstanding Letters of Credit and Credit Support issued by it and other
obligations, absolute or contingent, with respect to Letters of Credit and
Credit Support issued by it.
(2) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender or any corporation or other entity controlling the
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by the Lender or any
corporation or other entity controlling the Lender and (taking into
consideration such Lender's or such corporation's or other entity's policies
with respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrower through the Agent, the Borrower shall pay
to the Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase.
5.4 Funding Losses. The Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or reasonable expense which the Lender may
sustain or incur as a consequence of:
(1) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Revolving Loan;
(2) the failure of the Borrower to borrow, continue or convert
a Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(3) the prepayment or other payment (including after
acceleration thereof) of an LIBOR Revolving Loan on a day that is not the last
day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Revolving Loans or from fees
payable to terminate the deposits from which such funds were obtained.
5.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Revolving
Loan, or that the LIBOR Rate for any requested Interest Period with respect to a
proposed LIBOR Revolving 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 Revolving Loans hereunder shall be suspended until the Agent revokes such
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notice in writing. Upon receipt of such notice, the Borrower may,
notwithstanding any other provision herein to the contrary, revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Revolving Loans instead of LIBOR Revolving
Loans.
5.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrower (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Borrower in the absence of manifest error.
5.7 Survival. The agreements and obligations of the Borrower in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
----------
6.1 Grant of Security Interest. (1) As security for all present and
future Obligations, the Borrower hereby grants to the Agent, for the ratable
benefit of the Agent and the Lenders, a continuing security interest in, lien
on, and right of set-off against, all of the following property of the Borrower,
whether now owned or existing or hereafter acquired or arising, regardless of
where located:
(1) all Accounts;
(2) all Inventory;
(3) all contract rights, letters of credit, Assigned
Contracts, chattel paper, instruments, notes, documents, and documents of title;
(4) all General Intangibles;
(5) all Equipment; provided that, with respect to any
item of Equipment which is subject to a Purchase Money Lien or Capital Lease
permitted hereunder, such item shall not, so long as the Debt with respect to
such Purchase Money Lien or Capital Lease is outstanding, constitute Collateral
hereunder but only if (i) the documentation with respect thereto prohibits a
Lien on such Equipment in favor of the Agent and (ii) such item of Equipment is
not collateral security for the payment of the Senior Secured Notes;
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(6) all money, investment property, securities and
other property of any kind of the Borrower in the possession or under the
control of the Agent or any Lender, any assignee of or participant in the
Obligations, or a bailee of any such party or such party's affiliates;
(7) all deposit accounts, credits and balances with
and other claims against the Agent or any Lender or any of its affiliates or any
other financial institution in which the Borrower maintains deposits;
(8) all books, records and other property related to
or referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of
the foregoing; and
(9) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with the Real Estate covered by the Mortgage(s),
and all other property of Parent or any of its Subsidiaries in which the Agent
or any Lender may at any time be granted a Lien, is herein collectively referred
to as the "Collateral." The foregoing grant by the Borrower in favor of the
Agent of Liens on the Borrower's property shall be in addition to any grants by
the Borrower in favor of the Agent of Liens on the Borrower's property provided
under the Borrower Security Agreement or any other Security Document.
(2) Not later than 60 days after the Closing Date, the Agent
shall have received:
(1) fully executed counterparts of Mortgages (or with
respect to Mortgages assigned by Bankers Trust Company, as collateral agent, to
the Agent as contemplated by the Bank Assignment Agreement, amendments to such
Mortgages), in each case in form and substance reasonably satisfactory to the
Agent, covering the Real Estate and Premises owned by the Borrower or Parent,
and arrangements reasonably satisfactory to the Agent shall be in place to
provide that counterparts of such Mortgages (or amendments thereto, if
applicable) shall be recorded in all places to the extent necessary, in the
reasonable judgment of the Agent, to create a valid and enforceable first
priority Lien, subject only to Permitted Liens, on such Real Estate and Premises
in favor of the Agent (or such other agent or trustee as may be required or
desired under local law) for the benefit of the Agent and the Lenders or, with
respect to any such amendments, to conform the related Mortgage to the terms
hereof and to make such other modifications to such Mortgages as the Agent may
reasonably request in order to give effect to the transactions contemplated
hereby ;
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(2) mortgagee title insurance policies (the "Mortgage
Policies") issued by title insurers reasonably satisfactory to the Agent (it
being agreed that Chicago Title Insurance Company is acceptable to the Agent) in
amounts reasonably satisfactory to the Agent, not to exceed the value of such
Real Estate and Premises as reasonably determined by the Agent, and assuring the
Agent that the Mortgages in respect of such owned Real Estate and Premises are
valid and enforceable first priority mortgage Liens (subject only to Permitted
Liens) on such Real Estate and Premises, free and clear of all defects and
encumbrances except Permitted Liens. Such Mortgage Policies shall be in form and
substance reasonably satisfactory to the Agent and shall include an endorsement
for future advances under this Agreement and the Mortgages, for mechanics liens
and for any other matter that the Agent in its reasonable commercial discretion
may request so long as such requested endorsements are legally available in the
applicable jurisdiction;
(3) a survey, in form and substance reasonably
satisfactory to the Agent, of each such owned Real Estate and Premises, each
certified by a licensed professional surveyor reasonably satisfactory to the
Agent and revealing no facts (other than Permitted Liens) which would materially
interfere with the use of such properties by the Borrower and Parent, or an
update of an existing survey provided the title company will delete the
exception for existing facts which a current survey would disclose.
(3) Not later than 60 days after the Closing Date, the Agent
shall have received:
(1) to the extent requested by the Agent, fully
executed counterparts of leasehold Mortgages (or with respect to leasehold
Mortgages assigned by Bankers Trust Company, as collateral agent, to the Agent
as contemplated by the Bank Assignment Agreement, amendments to such mortgages),
in each case in form and substance reasonably satisfactory to the Agent,
covering the Real Estate and Premises leased by the Borrower or Parent, and
arrangements reasonably satisfactory to the Agent shall be in place to provide
that counterparts of such leasehold Mortgages (or amendments thereto, if
applicable) shall be recorded in all places to the extent necessary, in the
reasonable judgment of the Agent, to create a valid and enforceable first
priority Lien, subject only to Permitted Liens, with respect to such leased Real
Estate and Premises in favor of the Agent (or such other agent or trustee as may
be required or desired under local law) for the benefit of the Agent and the
Lenders or, with respect to any such amendments, to conform the related
leasehold Mortgage to the terms hereof and to make such other modifications to
such leasehold Mortgages as the Agent may reasonably request in order to reflect
the transactions contemplated by this Agreement; and
(2) to the extent requested by the Agent, fully
executed counterparts of collateral assignments of leases in form and substance
reasonably satisfactory to the Agent covering the Real Estate and Premises
leased out by the Borrower or Parent.
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(4) Each of Parent and the Borrower will, and will cause its
respective Subsidiaries (other than Lily Cup) to, at the expense of the
Borrower, grant to the Agent security interests and mortgages (each an
"Additional Mortgage") in such real property of Parent, the Borrower and their
respective Subsidiaries (other than Lily Cup) acquired after the Closing Date as
may be requested in writing from time to time by the Agent. Such Additional
Mortgages shall be granted pursuant to documentation reasonably satisfactory in
form and substance to the Agent and shall constitute valid and enforceable Liens
superior to and prior to the rights of all third Persons (except holders of
Permitted Liens with respect to Permitted Liens) and subject to no other Liens
except for Permitted Liens. The Additional Mortgages or instruments related
thereto shall have been duly recorded or filed in such manner and in such places
as are required by law to establish, perfect, preserve and protect the Liens in
favor of the Agent required to be granted pursuant to the Additional Mortgages
and all taxes, fees and other charges payable in connection therewith shall have
been paid in full.
(5) If at any time after the Closing Date, any Person shall
become a Subsidiary of the Borrower or Parent (the foregoing not constituting a
consent thereto), the Borrower or Parent will promptly notify the Agent in
writing thereof and will, at the expense of the Borrower and at the written
request of the Agent, promptly cause (i) such Subsidiary to guaranty the
Obligations and grant to the Agent for the benefit of the Agent and the Lenders
a security interest in and lien on the property and assets of such Subsidiary to
secure its obligations under such guaranty, and (ii) the capital stock or other
equity interests of such Subsidiary to be pledged to the Agent for the benefit
of the Agent and the Lenders. All such security interests, pledges and
guaranties shall be granted or made pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons
(except holders of Permitted Liens with respect to Permitted Liens) and subject
to no other Liens except for Permitted Liens. All documents or instruments
related thereto shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Agent required to be granted pursuant to this clause
(e) and all taxes, fees and other charges payable in connection therewith shall
have been paid in full.
(6) Each of the Borrower and Parent will, and will cause its
respective Subsidiaries to, at the expense of the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfers, endorsements, certificates, real property surveys,
reports and other assurances or instruments and take such further steps relating
to the collateral covered by any of the Loans Documents as the Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to the
Agent such opinions of counsel, title insurance and other related documents as
may be reasonably requested by the Agent to assure themselves that this Section
6.1 has been complied with (such opinions to be consistent generally with the
opinions given on the Closing Date to the extent the relevant opinion matter was
covered in such opinions and any opinions with respect to Mortgages to be
consistent with the opinions given on such type of collateral under the Existing
Credit Agreement).
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(7) In the event that the Agent at any time after the date
hereof determines in its good faith discretion that real estate appraisals
satisfying the requirements set forth in 12 CFR., Part 34-Subpart C, or any
successor or similar statute, rule, regulation, guideline or order (any such
appraisal, a "Required Appraisal") are or were required to be obtained, or
should be obtained, in connection with any or all of the properties subject to a
Mortgage, then, such Required Appraisal shall be delivered, at the expense of
the Borrower, to the Agent, which Required Appraisal, and the respective
appraiser, shall be reasonably satisfactory to the Agent.
(8) All of the Obligations shall be secured by all of the
Collateral.
6.2 Perfection and Protection of Security Interest. (1) The Borrower
shall, at its expense, perform all steps requested by the Agent at any time to
perfect, maintain, protect, and enforce the Agent's Liens, including, without
limitation: (i) executing, delivering and/or filing and recording of the
Mortgage(s), the Trademark Patent and Copyright Agreements and/or amendments
thereto and executing and filing financing or continuation statements, and
amendments thereof, in form and substance reasonably satisfactory to the Agent;
(ii) delivering to the Agent the originals of all instruments, documents, and
chattel paper, and all other Collateral having a value in excess of $250,000 in
the aggregate of which the Agent determines it should have physical possession
in order to perfect and protect the Agent's security interest therein (other
than Secured Note Collateral), duly pledged, endorsed or assigned to the Agent
without restriction; provided that with respect to any Collateral that
constitutes Shared Collateral, the Collateral Agent may continue to remain in
possession thereof, subject to the terms of the Pledge Agreement, the Parent
Pledge Agreement and the Intercreditor Agreement; (iii) delivering to the Agent
negotiable warehouse receipts covering any portion of the Collateral (other than
Secured Note Collateral) located in warehouses and for which negotiable
warehouse receipts are issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses designated by the Agent; (v) placing
notations on the Borrower's books of account to disclose the Agent's security
interest; (vi) delivering to the Agent all letters of credit (other than Secured
Note Collateral) on which the Borrower is named beneficiary; and (vii) taking
such other steps as are deemed necessary or reasonably desirable by the Agent to
maintain and protect the Agent's Liens. To the extent permitted by applicable
law, the Agent may file, without the Borrower's signature, one or more financing
statements disclosing the Agent's Liens. The Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(2) If any Collateral with an aggregate value in excess of
$100,000 is at any time in the possession or control of any warehouseman, bailee
or any of the Borrower's agents or processors, then the Borrower shall notify
the Agent thereof and shall notify such Person of the Agent's security interest
in such Collateral and, upon the Agent's request, instruct such Person to hold
all such Collateral (other than Secured Note Collateral and subject to the terms
63
of the Intercreditor Agreement) for the Agent's account subject to the Agent's
instructions. If at any time any Collateral (other than Secured Note Collateral
and subject to the terms of the Intercreditor Agreement) is located on any
operating facility of the Borrower which is not owned by the Borrower, then the
Borrower shall, at the request of the Agent, obtain written waivers, in form and
substance reasonably satisfactory to the Agent, of all present and future Liens
to which the owner or lessor of such premises may be entitled to assert against
the Collateral.
(3) From time to time, the Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Agent and the Lenders, the Collateral with
respect to the Borrower, but the Borrower's failure to do so shall not affect or
limit the Agent's security interest or the Agent's other rights in and to the
Collateral with respect to the Borrower. So long as this Agreement is in effect
and until the Payment and Termination Date, the Agent's Liens shall continue in
full force and effect in all Collateral (whether or not deemed eligible for the
purpose of calculating the Availability or as the basis for any advance, loan,
extension of credit, or other financial accommodation).
6.3 Location of Collateral. The Borrower represents and warrants to the
Agent and the Lenders that except as modified by notices from the Borrower
pursuant to and in accordance with the immediately succeeding sentence: (a)
Schedule 6.3 is a correct and complete list of the Borrower's chief executive
office, the location of its books and records, the locations where the Borrower
maintains its Collateral (other than Secured Note Collateral), and the locations
of all of its other places of business; and (b) Schedule 6.3 correctly
identifies any of such facilities and locations that are not owned by the
Borrower and sets forth the names of the owners and lessors or sublessors of
and, to the best of the Borrower's knowledge, the holders of any mortgages on,
such facilities and locations. The Borrower covenants and agrees that it will
not (i) maintain any Collateral at any location other than those locations
listed for the Borrower on Schedule 6.3, (ii) otherwise change or add to any of
such locations, or (iii) change the location of its chief executive office from
the location identified in Schedule 6.3, unless it gives the Agent at least
thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith. Without limiting the foregoing, the Borrower represents
that all of its Inventory (other than Inventory in transit) is, and covenants
that all of its Inventory will be, maintained either (a) on premises owned by
the Borrower, (b) on premises leased by the Borrower, provided that the Agent
has received an executed landlord waiver from the landlord of such premises in
form and substance reasonably satisfactory to the Agent (except that with
respect to premises leased by the Borrower on the date hereof, such landlord
waivers shall be received by the Agent no later than 90 days after the Closing
Date), or (c) in a public warehouse, provided that the Agent has received an
executed bailee letter from the applicable public warehouseman in form and
substance reasonably satisfactory to the Agent (except that with respect to
public warehouses utilized by the Borrower on the date hereof, such bailee
letters shall be received by the Agent no later than 90 days after the Closing
Date).
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6.4 Title to, Liens on, and Sale and Use of Collateral. The Borrower
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of the Collateral of the Borrower is and will
continue to be owned by the Borrower free and clear of all Liens whatsoever,
except for Permitted Liens; (b) the Agent's Liens in the Collateral, other than
Shared Collateral and Secured Note Collateral, will not be subject to any prior
Lien (other than Purchase Money Liens on fixed assets in respect of Purchase
Money Obligations permitted hereunder and Existing Liens); (c) the Borrower will
use, store, and maintain the Collateral with all reasonable care and will use
such Collateral for lawful purposes only; and (d) the Borrower will not, without
the Majority Lenders' prior written approval, sell or dispose of or permit the
sale or disposition of any of the Collateral except as permitted by Section 9.9.
The inclusion of proceeds in the Collateral shall not be deemed to constitute
the Agent's or any Lender's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.
6.5 Appraisals. Whenever a Default or Event of Default exists, and at
such other times not more frequently than once a year as the Agent requests, the
Borrower shall, at its expense and upon the Agent's request, provide the Agent
with appraisals or updates thereof of any or all of the Collateral from an
appraiser, and prepared on a basis, reasonably satisfactory to the Agent, such
appraisals and updates to include, without limitation, information required by
applicable law and regulation and by the internal policies of the Lenders.
6.6 Access and Examination; Confidentiality. (1) The Agent, accompanied
by any Lender which so elects, may, upon reasonable prior notice to the Borrower
(and without notice when a Default or Event of Default exists), at all
reasonable times during regular business hours (and at any time when a Default
or Event of Default exists) have access to, examine, audit, make extracts from
or copies of and inspect any or all of the Borrower's records, files, and books
of account and the Collateral, and discuss the Borrower's affairs with the
Borrower's officers and management. The Borrower will deliver to the Agent any
instrument necessary for the Agent to obtain records from any service bureau
maintaining records for the Borrower. The Agent may, and at the direction of the
Majority Lenders shall, at any time when a Default or Event of Default exists,
and at the Borrower's expense, make copies of all of the Borrower's books and
records, or require the Borrower to deliver such copies to the Agent. During the
continuance of an Event of Default, the Agent may, without expense to the Agent,
use such of the Borrower's respective personnel, supplies, and premises as may
be reasonably necessary for maintaining or enforcing the Agent's Liens. The
Agent shall have the right, at any time, in the Agent's name (during the
continuance of an Event of Default) or in the name of a nominee of the Agent
(whether or not an Event of Default is continuing), to verify the validity,
amount or any other matter relating to the Accounts, Inventory, or other
Collateral, by mail, telephone, or otherwise.
(2) The Borrower agrees that, subject to the Borrower's prior
consent for uses other than in a traditional tombstone, which consent shall not
be unreasonably withheld or delayed, the Agent and each Lender may use the
Borrower's name in advertising and promotional material and in conjunction
therewith disclose the general terms of this Agreement. The Agent and each
65
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to the Agent or such Lender by or on
behalf of the Borrower, under this Agreement or any other Loan Document, and
neither the Agent, nor such Lender nor any of their respective Affiliates shall
use any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable requirement of law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (6)
to the Agent's or such Lender's independent auditors, accountants, attorneys and
other professional advisors so long as they are informed of the confidential
nature of such information; (7) to any prospective Participating Lender or
assignee under any Assignment and Acceptance, actual or potential, provided that
such prospective Participating Lender or assignee agrees to keep such
information confidential to the same extent required of the Agent and the
Lenders hereunder; (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is party
or is deemed party with the Agent or such Lender, and (9) to its Affiliates so
long as they are informed of the confidential nature of such information.
6.7 Collateral Reporting. The Borrower shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) on a daily basis, a Borrowing Base Certificate (reflecting the calculation
of the Accounts and Inventory components thereof as provided in the definition
of Borrowing Base Certificate) and on a weekly basis, or more frequently if
requested by the Agent, a schedule of the Borrower's sales, Accounts,
collections and credits, in each case created, received or granted since the
last such schedule; (b) on a weekly basis, not later than Tuesday of the
following week, an aging of the Borrower's Accounts, together with, if requested
by the Agent, a reconciliation to the previous week's aging of the Borrower's
Accounts and to the Borrower's general ledger; (c) on a monthly basis, not later
than the fifteenth day of the following month, a report indicating for each
Account Debtor to whom the Borrower owes $10,000 or more as of the last day of
the previous month the name of such Account Debtor, the amount owed by the
Borrower to such Account Debtor as of the last day of such previous month and
the amount owed by such Account Debtor to the Borrower as of the last day of
such previous month; (d) on a monthly basis (or more frequently if requested by
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the Agent), Inventory reports by category, with additional detail, if requested
by the Agent, showing additions to and deletions from the Inventory, and, on a
weekly basis, a summary Inventory report; (e) upon request during the
continuance of a Default, copies of invoices in connection with the Borrower's
Accounts, customer statements, credit memos, remittance advices and reports,
deposit slips, shipping and delivery documents in connection with the Borrower's
Accounts and for Inventory and Equipment acquired by the Borrower, purchase
orders and invoices; (f) upon request, a statement of the balance of each of the
Intercompany Accounts; (g) upon request, an open voucher and cash requirements
report; (h) such other reports as to the Collateral of the Borrower as the Agent
shall reasonably request from time to time; and (i) with the delivery of each of
the foregoing, a certificate of the Borrower executed by an officer thereof
certifying as to the accuracy and completeness of the foregoing. If any of the
Borrower's records or reports of the Collateral are prepared by an accounting
service or other agent, the Borrower hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders.
6.8 Accounts. (1) The Borrower hereby represents and warrants to the
Agent and the Lenders, with respect to the Borrower's Accounts, that: (i) each
existing Account represents, and each future Account will represent, a bona fide
sale or lease and delivery of goods by the Borrower, or rendition of services by
the Borrower, in the ordinary course of the Borrower's business; (ii) each
existing Account is, and each future Account will be, for a liquidated amount
payable by the Account Debtor thereon on the terms set forth in the invoice
therefor or in the schedule thereof delivered to the Agent, without, with
respect to Eligible Accounts, any offset, deduction, defense, or counterclaim
except those known to the Borrower and disclosed to the Agent and the Lenders
pursuant to this Agreement; (iii) no payment will be received with respect to
any Account, and no credit, discount, or extension, or agreement therefor will
be granted on any Account, except as reported to the Agent and the Lenders in
accordance with this Agreement; (iv) each copy of an invoice required to be
delivered to the Agent by the Borrower will be a genuine copy of the original
invoice sent to the Account Debtor named therein; and (v) all goods described in
each invoice will have been delivered to the Account Debtor and all services of
the Borrower described in each invoice will have been performed in all material
respects.
(2) The Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in the Borrower's business or
extend or modify any Account (other than in the ordinary course of business
consistent with past practices). If the Borrower becomes aware of any matter
adversely affecting the collectibility of any Account or Account Debtor
involving an amount greater than $1,000,000, including information regarding the
Account Debtor's creditworthiness, the Borrower will promptly so advise the
Agent.
(3) The Borrower shall not accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Eligible Account or, with respect to any ineligible Account, in
an amount in excess of $250,000, without the Agent's written consent. If the
67
Agent consents to the acceptance of any such instrument, it shall be considered
as evidence of the Account and not payment thereof and the Borrower will
promptly deliver such instrument to the Agent, endorsed by the Borrower to the
Agent in a manner satisfactory in form and substance to the Agent. Regardless of
the form of presentment, demand, notice of protest with respect thereto, the
Borrower shall remain liable thereon until such instrument is paid in full.
(4) The Borrower shall notify the Agent promptly of all
disputes and claims in excess of $250,000, individually, or $1,000,000 in the
aggregate with any Account Debtor, and agrees to settle, contest, or adjust such
dispute or claim at no expense to the Agent or any Lender. No discount, credit
or allowance shall be granted to any such Account Debtor without the Agent's
prior written consent, except for discounts, credits and allowances made or
given in the ordinary course of the Borrower's business when no Event of Default
exists hereunder. The Borrower shall send the Agent a copy of each credit
memorandum in excess of $250,000 as soon as issued. The Agent may, and at the
direction of the Majority Lenders shall, at all times when an Event of Default
exists hereunder, settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent will credit
the Borrower's Loan Account with only the net amounts received by the Agent in
payment of any Accounts.
(5) If an Account Debtor returns any Inventory to the Borrower
when no Event of Default exists, then the Borrower shall in the ordinary course
of its business consistent with past practices promptly determine the reason for
such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. The Borrower shall immediately report to the Agent any
return involving an amount in excess of $250,000. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to the
Borrower when an Event of Default exists, the Borrower, upon request of the
Agent, shall: (i) hold the returned Inventory in trust for the Agent; (ii)
segregate all returned Inventory from all of its other property; (iii) dispose
of the returned Inventory solely according to the Agent's written instructions;
and (iv) not issue any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory shall be subject to the
Agent's Liens thereon. Whenever any Inventory is returned, the related Account
shall be deemed ineligible to the extent of the amount owing by the Account
Debtor with respect to such returned Inventory.
6.9 Collection of Accounts; Payments. (1) The Borrower shall maintain
lock-box accounts and other lock-box arrangements reasonably satisfactory to the
Agent with such banks as are reasonably acceptable to the Agent to which all
Account Debtors shall be instructed to make payments on Accounts. If,
notwithstanding such instructions, the Borrower receives any payments with
respect to Accounts or, subject to the terms of the Intercreditor Agreement with
respect to Senior Secured Collateral or Shared Collateral, if the Borrower
receives any payments on account of Inventory and other Collateral or any other
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payments from whatever source (other than immaterial amounts not to exceed
$50,000 in the aggregate at any one time), whether in the form of cash, checks,
notes, drafts, bills of exchange, money orders or otherwise (collectively all of
the foregoing, including without limitation, payments with respect to Accounts,
referred to herein as "Payments"), the Borrower will, at its own cost and
expense, cause all such Payments to be deposited not less often than daily in
one of the lock-box accounts referred to above or in a Payment Account. All
funds in such lock-box accounts shall be transferred on each Business Day to one
or more concentration accounts designated by the Agent with a bank reasonably
acceptable to the Agent. Each bank requested by the Agent at which a lock-box
account is maintained and each bank at which a concentration account referred to
in the immediately preceding sentence is maintained shall execute and deliver to
the Agent such agreements, in form and substance satisfactory to the Agent, as
the Agent shall request with respect to such accounts, including, without
limitation, with respect to prohibitions on the Borrower withdrawing funds from
such accounts or otherwise directing or modifying actions with respect to such
accounts. Each agreement with a bank at which a concentration account is
established shall provide, among other things, that all funds deposited into
such account shall be transferred directly to the Agent on a daily basis. The
Agent or the Agent's designee may, at any time after the occurrence and during
the continuance of a Default or an Event of Default, notify Account Debtors that
the Accounts have been assigned to the Agent and of the Agent's security
interest therein, and may collect them directly and charge the collection costs
and expenses to the Borrower's Loan Account as a Revolving Loan. So long as an
Event of Default has occurred and is continuing, the Borrower, at the Agent's
request, shall execute and deliver to the Agent such documents as the Agent
requires to grant the Agent access to any post office box in which collections
of Accounts are received.
(2) If sales of Inventory are made for cash, the Borrower
shall immediately deliver to the Agent or deposit into a Payment Account the
cash which the Borrower receives.
(3) All payments, including immediately available funds
received by the Agent at a bank designated by it, received by the Agent on
account of Accounts or as proceeds of other Collateral (other than Senior Note
Collateral and Shared Collateral except as provided in the Intercreditor
Agreement) will be the Agent's sole property for its benefit and the benefit of
the Lenders and will be credited to the Borrower's Loan Account (conditional
upon final collection) on the Business Day following receipt by the Agent
(except for any such payments received by the Agent by 1:00 p.m. (New York time)
on a Business Day, in which case such payments shall be credited to the
Borrower's Loan Account (conditional upon final collection) on the Business Day
received by the Agent; it being agreed that, except as otherwise provided herein
(including, in any event, Section 6.9(d)), any such payments which the Borrower
has notified the Agent prior to 12:00 noon (New York time) on a Business Day
that such payment will be received by the Agent via wire transfer prior to 4:00
p.m. (New York time) on such Business Day shall be deemed to be received by the
69
Agent for this purpose prior to 1:00 p.m. (New York time) on such Business Day,
but only if such payment is actually received by the Agent via wire transfer no
later than 4:00 p.m. (New York time) on such Business Day and the Borrower
hereby agrees to indemnify and hold harmless the Agent and each Lender from and
against any and all actual out-of-pocket liabilities, obligations, losses,
damages, penalties, costs or expenses incurred by the Agent or such Lender in
the event such payment is not actually received by the Agent via wire transfer
by such time); provided, however, that such payments shall be deemed to be
credited to the Borrower's Loan Account immediately upon receipt for purposes of
(i) determining Availability, (ii) calculating the unused line fee pursuant to
Section 3.5, and (iii) calculating the amount of interest to be distributed by
the Agent to the Lenders (but not the amount of interest payable by the
Borrower).
(4) In the event the Borrower repays all of the Obligations
upon the termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrower's Loan Account one (1) Business Day after
the Agent's receipt of such funds (except for any such payment received by the
Agent by 1:00 p.m. (New York time) on a Business Day, in which case such payment
shall be credited to the Borrower's Loan Account (conditional upon final
collection) on the Business Day received by the Agent).
6.10 Inventory; Perpetual Inventory. The Borrower represents and
warrants to the Agent and the Lenders and agrees with the Agent and the Lenders
that all of the Inventory owned by the Borrower is and will be held for sale or
lease, or to be furnished in connection with the rendition of services, in the
ordinary course of the Borrower's business, and is and will be fit for such
purposes. The Borrower will use commercially reasonable efforts to keep its
Inventory in good and saleable condition, at its own expense. The Borrower will
not, without the prior written consent of the Agent, acquire or accept any
Inventory on consignment or approval. The Borrower agrees that all Inventory
produced in the United States will be produced in accordance in all material
respects with the Federal Fair Labor Standards Act of 1938, as amended, and all
rules, regulations, and orders thereunder. The Borrower will conduct a physical
count of the Inventory at least once per Fiscal Year, and after and during the
continuation of an Event of Default, at such other times as the Agent requests.
The Borrower will maintain a perpetual inventory reporting system at all times.
The Borrower will not, without the Agent's written consent, sell any Inventory
on a xxxx-and-hold, guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis (other than for damage).
6.11 Equipment. (1) The Borrower represents and warrants to the Agent
and the Lenders and agrees with the Agent and the Lenders that all of the
Equipment owned by the Borrower which is necessary for the conduct of the
Borrower's business is and will be used or held for use in the Borrower's
business, and is and will be fit for such purposes. The Borrower shall keep and
maintain such Equipment in good operating condition and repair (ordinary wear
and tear excepted) and shall make all necessary replacements thereof.
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(2) The Borrower shall promptly inform the Agent of any
material additions to or deletions from the Equipment. The Borrower shall not
permit any Equipment to become a fixture with respect to real property or to
become an accession with respect to other personal property with respect to
which real or personal property the Agent does not have a Lien. The Borrower
will not, without the Agent's prior written consent, alter or remove any
identifying symbol or number on any of the Borrower's Equipment consisting of
Collateral.
(3) The Borrower shall not, without the Majority Lenders'
prior written consent, sell, lease as a lessor, or otherwise dispose of any of
the Borrower's Equipment; provided, however, that the Borrower may dispose of
(i) Equipment to the extent permitted pursuant to Section 9.9, and (ii) obsolete
or unusable Equipment having an orderly liquidation value no greater than
$10,000,000 in the aggregate in any Fiscal Year, or $30,000,000 in the aggregate
during the term of this Agreement, without the Majority Lenders' consent,
subject to the conditions set forth in the next sentence. In the event any of
such Equipment is sold, transferred or otherwise disposed of pursuant to the
proviso contained in the immediately preceding sentence, then the Borrower shall
use the proceeds of such sale, transfer or disposition to purchase replacement
Equipment or to repay Obligations hereunder and shall deliver to the Agent
written evidence of the use of the proceeds for such purchase. All replacement
Equipment purchased by the Borrower shall be free and clear of all Liens except
the Agent's Lien, the Liens in favor of the holders of the Senior Secured Notes
and Purchase Money Liens in respect of Purchase Money Obligations permitted
hereunder.
6.12 Assigned Contracts. The Borrower shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment. Without limiting the generality of the foregoing, the
Borrower shall take all action necessary or appropriate to permit, and shall not
take any action which would have any materially adverse effect upon, the full
enforcement of all indemnification rights under its Assigned Contracts taken as
a whole. The Borrower shall notify the Agent and the Lenders in writing,
promptly after the Borrower becomes aware thereof, of any event or fact which
could reasonably be expected to give rise to a claim by it for indemnification
in excess of $250,000 under any of its Assigned Contracts, and shall diligently
pursue such right and report to the Agent on all further developments with
respect thereto. Except as provided otherwise in the Intercreditor Agreement,
the Borrower shall remit directly to the Agent for application to the
Obligations in such order as the Majority Lenders shall determine, all amounts
received by the Borrower as indemnification or otherwise pursuant to its
Assigned Contracts. If the Borrower shall fail after the Agent's demand to
pursue diligently any material right under its Assigned Contracts, or if an
Event of Default then exists, the Agent may, and at the direction of the
Majority Lenders shall, directly enforce such right in its own or the Borrower's
name and may enter into such settlements or other agreements with respect
thereto as the Agent or the Majority Lenders, as applicable, shall determine. In
any suit, proceeding or action brought by the Agent for the benefit of the
Lenders under any Assigned Contract for any sum owing thereunder or to enforce
any provision thereof, the Borrower shall indemnify and hold the Agent and
Lenders harmless from and against all expense, loss or damage suffered by reason
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of any defense, setoff, counterclaims, recoupment, or reduction of liability
whatsoever of the obligor thereunder arising out of a breach by the Borrower of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing from the Borrower to or in favor of such obligor or
its successors. All such obligations of the Borrower shall be and remain
enforceable only against the Borrower and shall not be enforceable against the
Agent. Notwithstanding any provision hereof to the contrary, the Borrower shall
at all times remain liable to observe and perform all of its duties and
obligations under its Assigned Contracts, and the Agent's or any Lender's
exercise of any of their respective rights with respect to the Collateral shall
not release the Borrower from any of such duties and obligations. Neither the
Agent nor any Lender shall be obligated to perform or fulfill any of the
Borrower's duties or obligations under its Assigned Contracts or to make any
payment thereunder, or to make any inquiry as to the nature or sufficiency of
any payment or property received by it thereunder or the sufficiency of
performance by any party thereunder, or to present or file any claim, or to take
any action to collect or enforce any performance, any payment of any amounts, or
any delivery of any property.
6.13 Documents, Instruments, and Chattel Paper. The Borrower represents
and warrants to the Agent and the Lenders that (a) all documents, instruments,
and chattel paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon (except those of Persons other than the
Borrower or any of its Affiliates which shall be only to the knowledge of the
Borrower), are and will be complete in all material respects, valid, and
genuine, and (b) all goods evidenced by such documents, instruments, and chattel
paper are and will be owned by the Borrower, free and clear of all Liens other
than Permitted Liens.
6.14 Right to Cure. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of the
Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which the Borrower fails to pay or do, including, without
limitation, payment of any judgment against the Borrower, any insurance premium,
any warehouse charge, any finishing or processing charge, any landlord's claim,
and any other Lien upon or with respect to the Collateral. All payments that the
Agent makes under this Section 6.14 and all reasonable out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Borrower's Loan Account as a Revolving Loan.
Any payment made or other action taken by the Agent under this Section 6.14
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed thereafter as herein provided.
6.15 Power of Attorney. The Borrower hereby appoints the Agent and the
Agent's designee as the Borrower's attorney, with power: (a) so long as any
Event of Default has occurred and is continuing, to endorse the Borrower's name
on any checks, notes, acceptances, money orders, or other forms of payment or
security that come into the Agent's or any Lender's possession; (b) to sign the
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Borrower's name on any invoice, xxxx of lading, warehouse receipt or other
document of title relating to any Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and
other public records and to file any such financing statements by electronic
means with or without a signature as authorized or required by applicable law or
filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of the Borrower's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to the Borrower; (d) to send
requests for verification of Accounts to customers or Account Debtors (in the
name of the Borrower or a nominee of the Agent or, with the consent of the
Borrower, in the name of the Agent so long as no Event of Default has occurred
and is continuing, and in the name of the Borrower, the Agent or a nominee of
the Agent if an Event of Default has occurred and is continuing); (e) so long as
any Event of Default has occurred and is continuing, to clear Inventory, the
purchase of which was financed with Letters of Credit, through customs in the
Borrower's name, the Agent's name or the name of the Agent's designee, and to
sign and deliver to customs officials powers of attorney in the Borrower's name
for such purpose; and (f) so long as any Event of Default has occurred and is
continuing, to do all things necessary to carry out this Agreement. The Borrower
ratifies and approves all acts of such attorney. None of the Lenders or the
Agent nor their attorneys will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law unless determined by a final and
non-appealable decision of a court of competent jurisdiction to constitute the
gross negligence or willful misconduct of the Agent. This power, being coupled
with an interest, is irrevocable until this Agreement has been terminated and
the Obligations have been fully satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities. The
Borrower assumes all responsibility and liability arising from or relating to
the use, sale or other disposition of the Collateral. The Obligations shall not
be affected by any failure of the Agent or any Lender to take any steps to
perfect the Agent's Liens or to collect or realize upon the Collateral, nor
shall loss of or damage to the Collateral release the Borrower from any of the
Obligations. Following the occurrence and continuation of an Event of Default,
the Agent may (but shall not be required to), and at the direction of the
Majority Lenders shall, without notice to or consent from the Borrower, xxx upon
or otherwise collect, extend the time for payment of, modify or amend the terms
of, compromise or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or releases, and take or
omit to take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable thereto, or
any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of the
Borrower for the Obligations or under this Agreement or any other agreement now
or hereafter existing between the Agent and/or any Lender and the Borrower.
6.17 Intercreditor Agreement. Notwithstanding anything to the contrary
contained in this Agreement or in any other Loan Document, the priority of the
Agent's Lien in, and the rights and remedies of the Agent with respect to, the
Senior Secured Collateral and the Shared Collateral are limited by and subject
to the terms of the Intercreditor Agreement.
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ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
-------------------------------------------------
7.1 Books and Records. Each of the Borrower and Parent shall maintain
(and shall cause each of their respective Subsidiaries to maintain), at all
times, correct and complete books, records and accounts in which complete (in
all material respects), correct and timely entries are made of its transactions
in conformity with past practices. Each of the Borrower and Parent shall (and
shall cause each of their respective Subsidiaries to), by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. Each of the
Borrower and Parent shall maintain (and shall cause each of their respective
Subsidiaries to maintain) at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts;
(b) the return, rejections, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory; and (c) all other dealings affecting the
Collateral.
7.2 Financial Information. Each of the Borrower and Parent shall
promptly furnish to each Lender, all such financial information as the Agent or
any Lender shall reasonably request, and notify its auditors and accountants
that the Agent, on behalf of the Lenders, is authorized to obtain such
information directly from them. Without limiting the foregoing, each of the
Borrower and Parent will furnish to the Agent, in sufficient copies for
distribution by the Agent to each Lender, in such detail as the Agent or the
Lenders shall reasonably request, the following:
(1) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated audited and
consolidating audited balance sheets, and statements of income and expense, cash
flow and of stockholders' equity for the Borrower and its Subsidiaries for such
Fiscal Year, and the accompanying notes thereto, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable detail,
fairly presenting in all material respects the financial position and the
results of operations of the Borrower and its consolidated Subsidiaries as at
the date thereof and for the Fiscal Year then ended, and prepared in accordance
with GAAP. Such statements shall be examined in accordance with generally
accepted auditing standards by and, in the case of such statements prepared on a
consolidated basis, accompanied by a report thereon unqualified as to scope of
independent certified public accountants selected by the Borrower and reasonably
satisfactory to the Agent. The Agent agrees that Xxxxxx Xxxxxxxx LLP is
reasonably satisfactory to the Agent. The Borrower, simultaneously with
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retaining such independent public accountants to conduct such annual audit,
shall send a letter to such accountants, with a copy to the Agent and the
Lenders, notifying such accountants that one of the primary purposes for
retaining such accountants' services and having audited financial statements
prepared by them is for use by the Agent and the Lenders. The Borrower hereby
authorizes the Agent to communicate directly with its certified public
accountants and, by this provision, authorizes those accountants to disclose to
the Agent any and all financial statements and other supporting financial
documents and schedules relating to the Borrower and to discuss directly with
the Agent the finances and affairs of the Borrower. The Agent agrees to provide
the Borrower with reasonable prior notice of the Agent's intention to
communicate with the Borrower's certified public accountants and an opportunity
to be present at any such communications.
(2) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated and consolidating
unaudited balance sheets of the Borrower and its consolidated Subsidiaries as at
the end of such month, and consolidated and consolidating unaudited statements
of income and expense and cash flow for the Borrower 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 in
all material respects the financial position and results of operations of the
Borrower and its consolidated Subsidiaries as at the date thereof and for such
periods, and prepared in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section 7.2(a)
(except for the absence of footnotes and subject to normal year-end
adjustments). The Borrower shall certify by a certificate signed by its chief
financial officer or treasurer that all such statements have been prepared in
accordance with GAAP and present fairly in all material respects (except for the
absence of footnotes and subject to normal year-end adjustments) the Borrower's
financial position as at the dates thereof and its results of operations for the
periods then ended.
(3) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than the
fourth quarter of a Fiscal Year, consolidated and consolidating unaudited
balance sheets of the Borrower and its consolidated Subsidiaries as at the end
of such quarter, and consolidated and consolidating unaudited statements of
income and expense and statement of cash flows for the Borrower and its
Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, all in reasonable detail, fairly
presenting in all material respects the financial position and results of
operation of the Borrower and its Subsidiaries as at the date thereof and for
such periods, prepared in accordance with GAAP consistent with the audited
Financial Statements required to be delivered pursuant to Section 7.2(a) (except
for the absence of footnotes and subject to normal year-end adjustments). The
Borrower shall certify by a certificate signed by its chief financial officer or
treasurer that all such statements have been prepared in accordance with GAAP
and present fairly in all material respects (except for the absence of footnotes
and subject to normal year-end adjustments) the Borrower's financial position as
at the dates thereof and its results of operations for the periods then ended.
(4) With each of the audited Financial Statements delivered
pursuant to Section 7.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that they have reviewed
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and are familiar with this Agreement and that, in the course of its audit of
such Financial Statements, they did not become aware of any fact or condition
which then constituted a Default or Event of Default, except for those, if any,
described in reasonable detail in such certificate.
(5) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within forty-five (45) days after the
end of each fiscal quarter, a certificate of the chief financial officer or
treasurer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish that the Borrower was in compliance with the
covenants set forth in Sections 9.23 and 9.26 during the period covered in such
Financial Statements and as at the end thereof, and (ii) stating that, except as
explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrower contained in this Agreement and
the other Loan Documents are correct and complete in all material respects as at
the date of such certificate as if made at such time, (B) the Borrower is, at
the date of such certificate, in compliance in all material respects with all of
its respective covenants and agreements in this Agreement and the other Loan
Documents, (C) no Default or Event of Default then exists or existed during the
period covered by such Financial Statements, (D) describing and analyzing in
reasonable detail all material trends, changes, and developments in each and all
Financial Statements; and (E) explaining the variances of the figures in the
corresponding budgets and prior Fiscal Year financial statements. If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrower has taken or proposes to take with respect thereto.
(6) No later than 60 days after the beginning of each Fiscal
Year, annual forecasts (to include forecasted consolidated and consolidating
balance sheets, statements of income and expenses and statements of cash flow)
for the Borrower and its Subsidiaries as at the end of and for each month of
such Fiscal Year.
(7) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other material filing filed with respect to each Plan of
the Borrower or Parent.
(8) Promptly upon the filing thereof, copies of all reports,
if any, to or other documents filed by the Borrower, Parent or any of its
Subsidiaries with the Securities and Exchange Commission under the Exchange Act,
and all reports, notices, or statements sent or received by the Borrower, Parent
or any of its Subsidiaries to or from the holders of any equity interests of
Borrower, Parent (other than routine non-material correspondence sent by
shareholders of Parent to Parent) or any such Subsidiary or of any Debt of
Parent or any of its Subsidiaries registered under the Securities Act of 1933 or
to or from the trustee under any indenture under which the same is issued.
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(9) As soon as available, but in any event not later than 15
days after the Borrower's or Parent's receipt thereof, a copy of all management
reports and management letters prepared for the Borrower or Parent by Xxxxxx
Xxxxxxxx LLP or any other independent certified public accountants of the
Borrower or Parent.
(10) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Borrower or Parent
makes available to its shareholders.
(11) Upon request of the Agent, a copy of each tax return
filed by Parent or by any of its Subsidiaries.
(12) Such additional information as the Agent and/or any
Lender may from time to time reasonably request regarding the financial and
business affairs of Parent or any Subsidiary.
7.3 Notices to the Lenders. The Borrower or Parent shall notify the
Agent, in writing of the following matters at the following times:
(1) Immediately after becoming aware of any Default or Event
of Default.
(2) Immediately after becoming aware of the assertion by the
holder of any capital stock of Parent, the Borrower or any Subsidiary thereof or
of any Debt of Parent or any of its Subsidiaries in excess of $2,500,000 that a
default exists with respect thereto or that Parent, the Borrower or any
Subsidiary is not in compliance with the terms thereof, or the actual threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance.
(3) Immediately after becoming aware of any event which has
resulted in, or which could reasonably be expected to result in, a Material
Adverse Effect.
(4) Immediately after becoming aware of any pending or actual
threatened action, suit, proceeding, or counterclaim by any Person, or any
pending or actual threatened investigation by a Governmental Authority, which
may reasonably be expected to materially and adversely affect the Collateral,
the repayment of the Obligations, the Agent's or any Lender's rights under the
Loan Documents, or the property, business, operations, or condition (financial
or otherwise) of the Borrower and Parent taken as a whole.
(5) Immediately after becoming aware of any pending or actual
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting Parent or any of its Subsidiaries in a manner which could
reasonably be expected to have a Material Adverse Effect.
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(6) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority affecting
Parent or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
(7) Immediately after receipt of any notice of any violation
by Parent or any of its Subsidiaries of any Environmental Law where such
violation could reasonably be expected to have a Material Adverse Effect or that
any Governmental Authority has asserted that Parent or any Subsidiary thereof is
not in compliance with any Environmental Law or is investigating Parent's or
such Subsidiary's compliance therewith which, in either case, is reasonably
likely to give rise to liability in excess of $1,000,000.
(8) Immediately after receipt of any written notice that
Parent or any of its Subsidiaries is or may be liable to any Person as a result
of the Release or threatened Release of any Contaminant or that Parent or any
Subsidiary is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability in excess of $1,000,000.
(9) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property owned by Parent or any
of its Subsidiaries.
(10) Any change in the Borrower's name, state of
incorporation, or form of organization, trade names or styles under which the
Borrower will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, in each case at least thirty (30) days
prior thereto.
(11) Within ten (10) Business Days after the Borrower, Parent
or any ERISA Affiliate knows or has reason to know, that an ERISA Event or a
non-exempt prohibited transaction (as defined in Sections 406 of ERISA and 4975
of the Code) has occurred, and, when known, any action taken or threatened by
the IRS, the DOL or the PBGC with respect thereto.
(12) Upon request, or, in the event that such filing reflects
a significant change with respect to the matters covered thereby, within ten
(10) Business Days after the filing thereof with the PBGC, the DOL or the IRS,
as applicable, copies of the following: (i) each annual report (form 5500
series), including Schedule B thereto, filed with the PBGC, the DOL or the IRS
with respect to each Plan, (ii) a copy of each funding waiver request filed with
the PBGC, the DOL or the IRS with respect to any Plan and all communications
received by the Borrower, Parent or any ERISA Affiliate from the PBGC, the DOL
or the IRS with respect to such request, and (iii) a copy of each other filing
or notice filed with the PBGC, the DOL or the IRS, with respect to each Plan of
either Borrower, Parent or any ERISA Affiliate.
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(13) Upon request, copies of each actuarial report for any
Plan or Multi-employer Plan and annual report for any Multi-employer Plan; and
within ten (10) Business Days after receipt thereof by the Borrower, Parent or
any ERISA Affiliate, copies of the following: (i) any notices of the PBGC's
intention to terminate a Plan or to have a trustee appointed to administer such
Plan; (ii) any favorable or unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Code; or (iii)
any notice from a Multi-employer Plan regarding the imposition of withdrawal
liability.
(14) Within ten (10) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plans which increase
the Borrower's or Parent's annual costs with respect thereto by an amount in
excess of $1,000,000 in the aggregate for all such Plans, or the establishment
of any new Plan or the commencement of contributions to any Plan to which the
Borrower, Parent or any ERISA Affiliate was not previously contributing; or (ii)
any failure by the Borrower, Parent or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment.
(15) Within ten (10) Business Days after the Borrower, Parent
or any ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (i) a Multi-employer Plan has been or will be
terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan
intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multi-employer Plan.
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth the action that
Parent, the Borrower, its Subsidiary, or any ERISA Affiliate, as applicable, has
taken or proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
--------------------------------------
Each of the Borrower and Parent, jointly and severally, warrants and
represents to the Agent and the Lenders that except as hereafter disclosed to
and accepted by the Agent and the Majority Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents. Each of the Borrower and Parent has the corporate power and
authority to execute, deliver and perform this Agreement and the other Loan
Documents to which it is a party, to incur the Obligations, and to grant to the
Agent Liens upon and security interests in the Collateral. Each of the Borrower
and Parent has taken all necessary corporate action (including without
limitation, obtaining approval of its stockholders if necessary) to authorize
its execution, delivery, and performance of this Agreement and the other Loan
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Documents to which it is a party. No consent, approval, exemption or
authorization or other action of, or notice to, or declaration or filing with,
any Governmental Authority, and no consent of any other Person, is required in
connection with the execution, delivery or performance by, or enforcement
against, the Borrower or Parent of this Agreement and the other Loan Documents,
except for those already duly obtained or made and except for the filing of
Uniform Commercial Code financing statements, Mortgages and security documents
relating to Proprietary Rights in the appropriate governmental filing offices in
order to perfect the Agent's Liens in certain of the Collateral. This Agreement
and the other Loan Documents have been duly executed and delivered by the
Borrower and Parent party thereto, and constitute the legal, valid and binding
obligations of the Borrower and Parent, enforceable against each of the Borrower
and Parent in accordance with their respective terms without defense, setoff or
counterclaim. The Borrower's and Parent's execution, delivery, and performance
of this Agreement and the other Loan Documents do not and will not conflict
with, or constitute a violation or breach of, or constitute a default under, or
result in the creation or imposition of any Lien upon the property of Parent or
any of its Subsidiaries by reason of the terms of (a) any contract, mortgage,
Lien, lease, agreement, indenture, or instrument to which Parent or any of its
Subsidiaries is a party or which is binding upon it (except to the extent with
respect to the foregoing such conflicts, violations, breaches or defaults could
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect), (b) any material Requirement of Law applicable to Parent or any
of its Domestic Subsidiaries, or (c) the certificate or articles of
incorporation or by-laws of Parent or any of its Domestic Subsidiaries. Each
borrowing of a Loan and issuance of a Letter of Credit or Credit Support and
each delivery by the Borrower of a Borrowing Base Certificate constitutes a
representation and warranty by the Borrower and Parent that, as of the date of
such borrowing, issuance or delivery, as the case may be, the financial
accommodations provided to the Borrower under this Agreement do not as of such
date violate the borrowing limits set forth in the Indentures relating to the
Senior Secured Notes and Senior Subordinated Notes (which as of the Closing Date
is 80% of the Borrower's accounts not more than 60 days past due plus 50% of the
Borrower's inventory, each calculated in accordance with GAAP).
8.2 Validity and Priority of Security Interest. The provisions of this
Agreement, the Mortgage(s) (when executed), and the other Loan Documents create
legal and valid Liens on all the Collateral in favor of the Agent, for the
ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the Collateral, and with respect to Credit
Agreement Collateral, having priority over all other Liens on such Collateral,
securing all the Obligations, and enforceable against the Borrower and all third
parties.
8.3 Organization and Qualification. Each of the Borrower and Parent (a)
is duly incorporated and organized and validly existing in good standing under
the laws of the state of its incorporation, (b) is qualified to do business as a
foreign corporation and is in good standing in the jurisdictions set forth on
Schedule 8.3 as updated from time to time by written notice to the Agent, which
are the only jurisdictions in which qualification is necessary in order for it
to own or lease its property and conduct its business except for those
80
jurisdictions in which the failure to so qualify or be in good standing could
not reasonably be expected to have a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and to own its property.
8.4 Corporate Name; Prior Transactions. Except as otherwise expressly
permitted hereunder for any of the following occurring after the Closing Date
(and for which written notice thereof has been given to the Agent), neither the
Borrower nor Parent has, during the past five (5) years, been known by or used
any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and complete
list as of the Closing Date of the name and relationship to Parent of each and
all of Parent's Subsidiaries (other than the Borrower) and other Affiliates.
Each Subsidiary of Parent is (a) duly incorporated and organized and validly
existing in good standing under the laws of its state of incorporation set forth
on Schedule 8.5, and (b) qualified to do business as a foreign corporation and
in good standing in each jurisdiction in which the failure to so qualify or be
in good standing could reasonably be expected to have a Material Adverse Effect
and (c) has all requisite power and authority to conduct its business and own
its property.
8.6 Financial Statements and Projections. (1) The Borrower has
delivered to the Agent and the Lenders the audited balance sheet and related
statements of income, retained earnings, cash flows, and changes in stockholders
equity for the Borrower and its consolidated Subsidiaries as of September 30,
1996, and for the Fiscal Year then ended, accompanied by the report thereon of
the Borrower's independent certified public accountants, Xxxxxx Xxxxxxxx LLP.
The Borrower has also delivered to the Agent and the Lenders the unaudited
balance sheet and related statements of income and cash flows for the Borrower
and its consolidated Subsidiaries as of August 31, 1997. Such financial
statements are attached hereto as Exhibit C. All such financial statements have
been prepared in accordance with GAAP (other than, with respect to the interim
financial statements, the absence of footnotes and being subject to normal
year-end adjustments) and present fairly in all material respects the financial
position of the Borrower and its consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.
(2) The Latest Projections when submitted to the Lenders as
required herein represent the Borrower's reasonable best estimate of the future
financial performance of the Borrower and its consolidated Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Borrower believes are fair
and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lender.
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(3) The pro forma balance sheet of the Borrower as at August
31, 1997, attached hereto as Exhibit C, presents fairly and accurately in all
material respects the Borrower's financial condition as at such date assuming
the transactions contemplated herein had occurred on such date and the Closing
Date had been such date, and has been prepared in accordance with GAAP (subject
to the absence of footnotes and normal year-end adjustments).
8.7 Capitalization. The Borrower's authorized capital stock consists of
500 shares of common stock, par value $.05 per share, all of which shares are
validly issued and outstanding, fully paid and non-assessable and are owned
beneficially and of record by Parent.
8.8 Solvency. The Borrower is Solvent prior to and after giving effect
to the making of the Revolving Loans to be made on the Closing Date, the
issuance of the Letters of Credit to be issued on the Closing Date and the
consummation on the Closing Date of the transactions contemplated by the Bank
Assignment Agreement, and shall remain Solvent during the term of this
Agreement.
8.9 Debt. After giving effect to the making of the Revolving Loans to
be made on the Closing Date and the consummation on the Closing Date of the
transactions contemplated by the Bank Assignment Agreement, the Borrower and its
Subsidiaries have no Debt, except as permitted by Section 9.13.
8.10 Distributions. Since September 30, 1996, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of the Borrower or any of its Subsidiaries except as otherwise
permitted hereby.
8.11 Title to Property. Each of the Borrower and Parent has good and
marketable title in fee simple to its real property listed in Schedule 8.12
hereto (except for any such real property which has been sold in accordance with
Section 9.9), and each of the Borrower and Parent has good, indefeasible and
valid title to all of its inventory, accounts and other material property owned
by it (including, without limitation, the assets reflected on the August 31,
1997 Financial Statements of the Borrower and Parent delivered to the Agent and
the Lenders except as disposed of in the ordinary course of business since the
date thereof or pursuant to Section 9.9), free of all Liens except Permitted
Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth a correct and
complete list as of the Closing Date of all Real Estate owned by the Borrower,
Parent or any of its other Subsidiaries, all leases and subleases of real or
personal property by the Borrower, Parent or its other Subsidiaries as lessee or
sublessee (other than leases of personal property as to which the Borrower,
Parent or any of its other Subsidiaries is lessee or sublessee for which the
82
value of such personal property is less than $50,000 individually or $1,000,000
in the aggregate), and all leases and subleases of real or personal property by
the Borrower, Parent or its other Subsidiaries as lessor or sublessor. Each of
such leases and subleases is valid and enforceable in accordance with its terms
and is in full force and effect, and no default by any party to any such lease
or sublease exists (other than such invalidity, unenforceability or defaults
which could not reasonably be expected to have a Material Adverse Effect).
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and
complete list as of the Closing Date of all of the Borrower's and Parent's
patents, registered trademarks, registered service marks and registered
copyrights and applications for any of the foregoing. None of the Proprietary
Rights is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 8.13. To the best of the Borrower's and Parent's
knowledge, none of the Proprietary Rights infringes on or conflicts with any
other Person's property in any material respect, and no other Person's property
infringes on or conflicts with the Proprietary Rights. To the best of the
Borrower's and Parent's knowledge, the Proprietary Rights described on Schedule
8.13 constitute as of the Closing Date all of the property of such type
necessary to the current and anticipated future conduct of the Borrower's and
Parent's business.
8.14 Trade Names. All trade names or styles under which Parent or any
of its Subsidiaries will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
8.14 as updated in writing from time to time by the Borrower to the Agent.
8.15 Litigation. Except as set forth on Schedule 8.15, there is no
pending or (to the best of the Borrower's and Parent's knowledge) threatened,
action, suit, proceeding, or counterclaim by any Person, or investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to cause a Material Adverse Effect.
8.16 Restrictive Agreements. Neither Parent nor any of its Subsidiaries
is a party to any contract or agreement, or subject to any charter or other
corporate restriction, which affects its ability to execute, deliver, and
perform the Loan Documents and repay the Obligations or which, insofar as the
Borrower and Parent can reasonably foresee, could reasonably be expected to have
a Material Adverse Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of Parent or any of its Subsidiaries, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) to the best knowledge of the Borrower and
Parent, no union or other labor organization is seeking to organize, or to be
recognized as, a collective bargaining unit of employees of Parent or any of its
Subsidiaries or for any similar purpose, and (d) there is no pending or (to the
best of the Borrower's and Parent's knowledge) threatened, strike, work
stoppage, material unfair labor practice claim, or other material labor dispute
against or affecting Parent or its Subsidiaries or their employees.
8.18 Environmental Laws. Except as otherwise disclosed on Schedule
8.18:
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(1) Parent and its Subsidiaries have complied with all
Environmental Laws applicable to its Premises and business except for such
non-compliance which could not reasonably be expected to have a Material Adverse
Effect, and neither Parent nor any Subsidiary nor any of its present Premises or
operations, nor its past property or operations, is subject to any enforcement
order from or liability agreement with any Governmental Authority or private
Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant where such enforcement order or liability
agreement could reasonably be expected to have a Material Adverse Effect.
(2) Parent and its Subsidiaries have obtained all permits
necessary for their current operations under Environmental Laws, and all such
permits are in good standing and Parent and its Subsidiaries are in compliance
with all terms and conditions of such permits, except where the failure to
obtain or comply with such permits could not reasonably be expected to have a
Material Adverse Effect.
(3) Neither Parent nor any of its Subsidiaries, nor, to the
best of the Borrower's and Parent's knowledge, any of its predecessors in
interest, has stored, treated or disposed of any hazardous waste on any
Premises, as defined pursuant to 40 CFR Part 261 or any equivalent Environmental
Law in a manner that could reasonably be expected to have a Material Adverse
Effect.
(4) Neither Parent nor any of its Subsidiaries has received
any summons, complaint, order or similar written notice that it is not currently
in compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant
where such non-compliance or liability could reasonably be expected to have a
Material Adverse Effect.
(5) None of the present or past operations of Parent and its
Subsidiaries is the subject of any investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to a Release or
threatened Release of a Contaminant where such remedial action, if so needed,
could reasonably be expected to have a Material Adverse Effect.
(6) Neither Parent nor any of its Subsidiaries has filed any
notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted release or discharge of a Contaminant into the
environment where such spill, release or discharge could reasonably be expected
to have a Material Adverse Effect.
(7) Neither Parent nor any of its Subsidiaries has entered
into any negotiations or settlement agreements with any Person (including,
without limitation, the prior owner of its property) imposing obligations or
liabilities on Parent or any of its Subsidiaries with respect to any remedial
action in response to the Release of a Contaminant or environmentally related
claim where such obligations or liabilities could reasonably be expected to have
a Material Adverse Effect.
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(8) None of the products manufactured, distributed or sold by
Parent or any of its Subsidiaries contain asbestos.
(9) No Environmental Lien has attached to any Premises of
Parent or any of its Subsidiaries.
8.19 No Violation of Law. Neither Parent nor any of its Subsidiaries is
in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.
8.20 No Default. Neither Parent nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which Parent or such Subsidiary is a party or by
which it is bound, which default could reasonably be expected to have a Material
Adverse Effect.
8.21 ERISA Compliance. Except as specifically disclosed in Schedule
8.21 and subject to the last sentence of this Section 8.21:
(1) Each Plan is in compliance with the applicable provisions
of ERISA, the Code and other federal or state law. Each Plan which is intended
to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and to the best knowledge of the Borrower and
Parent, nothing has occurred which would cause the loss of such qualification.
The Borrower, Parent and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(2) There are no pending or, to the best knowledge of Borrower
and Parent, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan.
(3) (i) No ERISA Events have occurred or are reasonably
expected to occur; (ii) no Pension Plans have any Unfunded Pension Liability;
(iii) none of the Borrower, Parent nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) none of the Borrower, Parent nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
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result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multi-employer Plan; and (v) none of the Borrower, Parent nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
Breaches of one or more of the representations and warranties
made under this Section 8.21 shall not constitute a Default or Event of Default
under this Section 8.21 unless the aggregate liability incurred or reasonably
expected to be incurred by the Borrower, Parent or any ERISA Affiliate under
this Section 8.21 for all such breaches shall exceed $5,000,000 in the aggregate
for all such Persons.
8.22 Taxes. Parent and its Subsidiaries have filed all Federal,
provincial and other material tax returns and reports required to be filed, and
have paid all Federal, provincial and other taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable (except for non-payment of any such taxes,
assessments, fees and other governmental charges permitted by Section 9.1).
8.23 Regulated Entities. None of Parent, any Person controlling Parent,
or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. Neither the Borrower nor Parent is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for working capital purposes and to purchase from Receivables
Corp. on the Closing Date for a purchase price of approximately $32,727,815 all
accounts and other assets (other than immaterial assets) of Receivables Corp. as
contemplated by Section 10.1(f). Immediately after giving effect to the
transactions contemplated by Section 10.1 (f) and at all times thereafter,
Receivables Corp. will own assets having an aggregate value not in excess of
$75,000. Neither Parent nor any Subsidiary is engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. Each of Parent
and its Subsidiaries owns or is licensed or otherwise has the right to use all
of the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of its businesses, without conflict with the rights of any other
Person except such conflicts which could not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Borrower and Parent, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by Parent or
any Subsidiary infringes upon any rights held by any other Person, except such
infringement which could not reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or to
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the knowledge of the Borrower and Parent threatened, and no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard
or code is pending or, to the knowledge of the Borrower and Parent, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
8.26 No Material Adverse Change. No Material Adverse Effect has
occurred since the date of the Financial Statements referred to in Section 8.6.
8.27 Full Disclosure. None of the representations or warranties made by
Parent or any Subsidiary in 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 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.
8.28 Material Agreements. Schedule 8.28 sets forth all material
agreements and contracts to which Parent or any of its Subsidiaries is a party
or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains a complete and accurate list
of all bank accounts maintained by the Borrower with any bank or other financial
institution; provided that such schedule may by written notice to the Agent be
updated from time to time by the Borrower to add or delete bank accounts so long
as (i) any bank or other financial institution to be added to such schedule and
not theretofore on such schedule shall be reasonably satisfactory to the Agent
and (ii) if any bank account is to be added to such schedule, the Borrower shall
have notified the Agent thereof prior to opening such bank account and shall
have caused the bank or other financial institution at which such bank account
is maintained to execute such agreements, in form and substance reasonably
satisfactory to the Agent, as the Agent may request with respect to such bank
account.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Each of the Borrower and Parent covenants to the Agent and
each Lender that, until the Payment and Termination Date:
9.1 Taxes and Other Obligations. Parent shall, and shall cause each of
its Subsidiaries to, (a) file when due all federal, provincial and other
material tax returns and other reports which it is required to file; (b) pay, or
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provide for the payment, when due, of all taxes, fees, assessments and other
governmental charges against it or upon its property, income and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Agent and the
Lenders, upon request, reasonably satisfactory evidence of its timely compliance
with the foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords and other like Persons
(except, with respect to such claims, to the extent the aggregate amount of all
such claims not paid when due does not exceed $1,000,000) and all other
indebtedness owed by it (except, with respect to such Debt, claims and other
indebtedness and subject to the immediately preceding parenthetical with respect
to claims, to the extent the aggregate amount of all such Debt, claims and other
indebtedness not paid when due does not exceed $5,000,000 (with the Agent having
the right in its reasonable commercial discretion to establish reserves against
Availability for any amount of such Debt, claims and other indebtedness not paid
when due in excess of $100,000 in the aggregate)) and perform and discharge in a
timely manner all other obligations undertaken by it; provided, however, so long
as Borrower or Parent has notified the Agent in writing, neither Parent nor any
of its Subsidiaries need pay any tax, fee, assessment, or governmental charge,
that (i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) Parent or its Subsidiary, as the case may be, has established
proper reserves for as provided in GAAP, and (iii) no Lien (other than a
Permitted Lien) results from such non-payment.
9.2 Corporate Existence and Good Standing. Parent shall, and shall
cause each of its Subsidiaries to, maintain its corporate existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements; Maintenance of Licenses. Parent
shall comply, and shall cause each Subsidiary to comply, with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act) except where the liability for
non-compliance could not reasonably be expected to exceed $2,000,000 in the
aggregate for all such non-compliances (except that where another provision in
Article 6 or this Article 9 contains a different level of materiality or
liability with respect to non-compliance with a specific type of laws
(including, without limitation, Sections 9.7(a) and 9.8), the level of
materiality or liability under the other provision shall control with respect to
the type of laws within the scope of such provision). Parent shall, and shall
cause each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date, except for such licenses,
permits, franchises and governmental authorizations the failure to obtain and
maintain which could not reasonably be expected to have a Material Adverse
Effect. The Borrower shall not modify, amend or alter its certificate or article
of incorporation other than in a manner which does not adversely affect the
rights of the Lenders or the Agent.
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9.4 Maintenance of Property. Parent shall, and shall cause each of its
Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
9.5 Insurance. (1) Parent shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A-VII or better by Best Rating Guide, insurance against loss
or damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption; public liability and third
party property damage; and such other hazards or of such other types as is
customary for Persons engaged in the same or similar business, as the Agent, in
its discretion, or acting at the direction of the Majority Lenders, shall
specify, in amounts, and under policies reasonably acceptable to the Agent and
the Majority Lenders. Without limiting the foregoing, Parent shall also
maintain, and shall cause each of its Subsidiaries to maintain, flood insurance,
in the event of a designation of the area in which any real property covered by
the Mortgages and any of the Equipment and Inventory located on such real
property is located as "flood prone" or a "flood risk area," (hereinafter
"SFHA") as defined by the Flood Disaster Protection Act of 1973, in an amount to
be reasonably determined by the Agent, and shall comply with the additional
requirements of the National Flood Insurance Program as set forth in said Act.
Upon the Majority Lenders' request, the Borrower shall maintain flood insurance
for its Inventory and Equipment which is, at any time, located in a SFHA. The
Agent acknowledges that the insurance coverage of Parent and its Subsidiaries as
in effect on the date hereof is acceptable to the Agent; provided, however that
if the rating of any insurer worsens or circumstances with respect to Parent or
any of its Subsidiaries or any of their respective properties, operations,
business, liabilities or financial condition shall change in any material
respect, such insurance may no longer be acceptable to the Agent.
(2) The Borrower and Parent shall cause the Agent, for the
ratable benefit of the Agent and the Lenders, to be named in each such policy as
secured party or mortgagee and loss payee or additional insured, in a manner
reasonably acceptable to the Agent. Each policy of insurance shall contain a
clause or endorsement requiring the insurer to give not less than thirty (30)
days' prior written notice to the Agent in the event of cancellation of the
policy for any reason whatsoever and a clause or endorsement stating that the
interest of the Agent shall not be impaired or invalidated by any act or neglect
of Parent or any of its Subsidiaries or the use of any premises for purposes
more hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the Borrower or Parent when due, and certificates of
insurance and, if requested by the Agent or any Lender, photocopies of the
policies, shall be delivered to the Agent, in each case in sufficient quantity
for distribution by the Agent to each of the Lenders. If the Borrower or Parent
fails to procure such insurance or to pay the premiums therefor when due, the
Agent may, and at the direction of the Majority Lenders shall, do so from the
proceeds of Revolving Loans.
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(3) The Borrower or Parent shall promptly notify the Agent and
the Lenders of any loss, damage, or destruction to Collateral in excess of
$500,000 arising from its or any other Person's use, whether or not covered by
insurance. The Agent is hereby authorized to collect all insurance proceeds
directly, and to apply or remit them as follows:
(1) With respect to insurance proceeds relating to
Credit Agreement Collateral, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(2) With respect to insurance proceeds relating to
Collateral other than Credit Agreement Collateral, except as provided in the
Intercreditor Agreement, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
9.6 Condemnation. (1) The Borrower or Parent shall, immediately upon
learning of the institution of any proceeding for the condemnation or other
taking of any of its or any of its Subsidiaries' property having a value in
excess of $500,000, notify the Agent of the pendency of such proceeding, and
agrees that the Agent may participate in any such proceeding, and the Borrower
and Parent will deliver to the Agent all instruments reasonably requested by the
Agent to permit such participation.
(2) Except as provided in the Intercreditor Agreement, the
Agent is hereby authorized to collect the proceeds of any condemnation claim or
award directly, and to apply or remit them as follows:
(1) With respect to condemnation proceeds relating to
property other than Credit Agreement Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall remit to the Borrower such
proceeds.
(2) With respect to condemnation proceeds relating to
Credit Agreement Collateral, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
9.7 Environmental Laws. (1) Parent shall, and shall cause each of its
Subsidiaries to, conduct its business in compliance with all Environmental Laws
applicable to it, including, without limitation, those relating to the
generation, handling, use, storage, and disposal of any Contaminant, except for
such non-compliance that could not reasonably be expected to have or result in a
Material Adverse Effect. Parent shall, and shall cause each of its Subsidiaries
to, take prompt and appropriate action to respond to any non-compliance with
Environmental Laws.
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(2) Without limiting the generality of the foregoing, the
Borrower or Parent shall submit to the Agent and the Lenders annually,
commencing on the first Anniversary Date, and on each Anniversary Date
thereafter, an update of the status of each material environmental compliance or
liability issue. The Agent or any Lender may request copies of technical reports
prepared by Parent or any of its Subsidiaries and its communications with any
Governmental Authority to determine whether Parent or any of its Subsidiaries is
proceeding reasonably to correct, cure or contest in good faith any alleged
non-compliance or environmental liability. The Borrower shall, at the Agent's or
the Majority Lenders' reasonable request and at the Borrower's expense, (a)
retain an independent environmental consultant reasonably acceptable to the
Agent to evaluate the environmental non-compliance or liability issue, including
tests if appropriate, and prepare and deliver to the Agent, in sufficient
quantity for distribution by the Agent to the Lenders, a report setting forth
the results of such evaluation, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof,
and (b) provide to the Agent and the Lenders a supplemental report of such
consultant whenever the scope of the environmental problems, or the response
thereto or the estimated costs thereof, shall change in any material respect.
9.8 Compliance with ERISA. Except as specifically disclosed in Section
8.21 with respect to the litigation therein described and subject to the last
sentence of this Section 9.8, Parent shall, and shall cause each of its ERISA
Affiliates to: (a) maintain each Plan in compliance with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) make all required contributions to any Plan subject to
Section 412 of the Code; (d) not engage in a non-exempt prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan; and
(e) not engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA. Breaches of one or more of the covenants contained in this Section 9.8
shall not constitute a Default or Event of Default under this Section 9.8 unless
the aggregate liability incurred or reasonably expected to be incurred by Parent
and its ERISA Affiliates for all such breaches shall exceed $5,000,000 in the
aggregate for all such Persons.
9.9 Mergers, Consolidations or Sales. Neither Parent nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except:
(1) for sales of Inventory in the ordinary course of its
business;
(2) for sales or other dispositions of Equipment and
Proprietary Rights in the ordinary course of business that are obsolete
or no longer usable by the Borrower or Parent in its business as
permitted by Section 6.11;
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(3) for transactions which are part or all of the
Divestiture;
(4) for the sale of the Borrower's bakery division on the
same terms as set forth in clauses (a), (b), (c) and (d) (iii) and (iv)
of the defined term "Divestiture" as if such clauses were applicable to
the Borrower's bakery division (except that the amount of $15,000,000
in clause (b) thereof shall for purposes of this clause (iv) be
$3,000,000);
(5) that, in addition to any of the other clauses of this
Section 9.9, so long as no Default or Event of Default exists, the
Borrower and its Subsidiaries may (A) sell other assets which do not
constitute Senior Note Collateral at fair market value (determined in
good faith by the Board of Directors of the Borrower) in the ordinary
course of business, provided that (1) the gross proceeds thereof shall
consist of at least 75% in cash or Cash Equivalents, (2) the aggregate
net cash proceeds from which shall not exceed $200,000 per sale so long
as all such net cash proceeds do not exceed $1,000,000 in any Fiscal
Year and (3) the aggregate gross cash proceeds received by the Borrower
with respect to Accounts and Inventory, if any, included as part of
such sale shall be in an amount not less than the then book value of
all such Accounts and Inventory as shown on a balance sheet of the
Borrower prepared in accordance with GAAP, (B) sell assets which
constitute Senior Note Collateral at fair market value (determined in
good faith by the Board of Directors of the Borrower), provided that
(1) the gross proceeds thereof shall consist of at least 75% in cash or
Cash Equivalents and (2) the aggregate net cash proceeds from which
shall not exceed $3,000,000 in any Fiscal Year and shall not exceed
$15,000,000 in the aggregate during the term of this Agreement or (C)
sell the Riverside Facility for gross proceeds of not less than
$6,500,000;
(6) that investments or other transfers or sales may be made
to the extent expressly permitted by Section 9.10;
(7) the Borrower and its Subsidiaries may sell or discount,
in each case without recourse and only to non-Affiliated Persons, in
the ordinary course of business ineligible accounts receivable arising
in the ordinary course of business, but only in connection with the
compromise or collection thereof consistent with customary industry
practice (and not as part of any bulk sale or financing receivables);
provided, that (A) the account debtor thereon is no longer a customer
of the Borrower or any of its Subsidiaries and no other accounts
receivable which are Eligible Accounts are owing by such account debtor
to the Borrower or any of its Subsidiaries and (B) the gross proceeds
from any sale shall be immediately deposited in a lockbox account
pursuant to Section 6.9;
(8) for licenses of Proprietary Rights (x) in the ordinary
course of business or (y) to Lily Cup consistent with past practices;
and
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(9) that, with the prior written consent of the Majority
Lenders, any other assets may be sold or transferred.
Except in the case of the transfer of assets between or among Parent
and any of its Subsidiaries (the foregoing not constituting a consent to any
such transfer except as expressly permitted hereunder and in which case if so
permitted there shall be no release of Collateral, and all steps deemed
necessary or, in the reasonable opinion of the Agent or the Majority Lenders,
desirable to maintain the priority and perfection of the security interests of
the Agent in the Collateral shall be taken in connection therewith), to the
extent any Collateral is sold as expressly permitted by this Section 9.9, such
Collateral shall be sold free and clear of the Liens created by any of the Loan
Documents (so long as such Collateral is also sold free and clear of the Liens
created by the documents granting collateral security for the payment of the
Senior Secured Notes, and, subject to the terms of the Intercreditor Agreement,
the net cash proceeds from such sale are deposited in the lock-box accounts
referred to in Section 6.9(a) or in a Payment Account; nothing contained in this
paragraph constituting a release of any of the Liens created by any of the Loan
Documents in the proceeds of such sale), and in such event all Exhibits and
Schedules hereto or to any of the other Loan Documents evidencing a present or
prospective interest of Parent or its Subsidiaries in such Collateral shall be
deemed amended automatically (without any consent or notice) to reflect such
sale. In case of any release as described in the immediately preceding sentence,
the Agent is hereby authorized and directed to take such action as may be deemed
necessary or desirable by it to effect the release.
9.10 Distributions; Capital Change; Restricted Investments. Neither
Parent nor any of its Subsidiaries shall (i) directly or indirectly declare or
make, or incur any liability to make, any Distribution, except Distributions to
the Borrower by its Subsidiaries, (ii) make any change in its capital structure
which could have a Material Adverse Effect or (iii) make any Restricted
Investment; provided, however that notwithstanding clauses (i) and (iii) above:
(1) the Borrower may (a) pay cash dividends and make loans and
advances to Parent, in each instance, for the purpose of paying, and so
long as all proceeds thereof are promptly used by Parent to pay, its
operating expenses incurred in the ordinary course of business and
other corporate overhead costs and expenses of Parent (including,
without limitation, any payments, fees and expenses owing by Parent
pursuant to this Agreement or the transactions contemplated by this
Agreement and which are paid by Parent to the Agent or a Lender, as
appropriate), (b) pay cash dividends and make loans and advances to
Parent, in each instance, for the purpose of paying, and so long as all
proceeds thereof are promptly used by Parent to pay, franchise taxes
and federal, state and local income taxes, in each instance, with
respect to the operations of the Borrower and interest and penalties
with respect thereto, if any, payable by Parent (provided that any
refund shall be promptly returned by Parent to the Borrower and
provided that dividends may be made pursuant to this clause (b) if all
proceeds thereof are immediately used to repay loans made by the
Borrower to Parent pursuant to this clause (b)), and (c) so long as no
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Default or Event of Default then exists or would exist after giving
effect thereto, upon the death, disability or termination of employment
of any officer or employee of Parent or any of its Subsidiaries, and
pursuant to the terms and conditions set forth in any subscription
agreements with respect thereto, pay cash dividends and make loans and
advances to Parent, in each instance, for the purpose of purchasing or
making payments in respect of, and so long as all proceeds thereof are
promptly used by Parent to purchase or make payments in respect of,
common stock of Parent held by such Persons, their estates or certain
other related Persons, provided that (x) the total cash consideration
paid after the Closing Date in respect of all such purchases shall not
exceed $3,000,000 (with cash permitted to be paid pursuant to this
clause (x) only to the extent such cash payment would be permitted
pursuant to the terms of the indentures relating to each of the Senior
Secured Notes and the Senior Subordinated Notes) and (y) all other
consideration paid to such Persons or their estates for such purchases
shall be subordinated to the payment of all Obligations (including,
without limitation, the obligations of Parent under the Parent
Guaranty) and be evidenced by a subordinated promissory note in the
form of Exhibit H (each, a "Stockholder Subordinated Note");
(2) Parent and its Subsidiaries may make loans, advances and
other payments to officers, employees and agents of Parent and its
Subsidiaries in the ordinary course of business, including with respect
to travel and relocation expenses, so long as the aggregate principal
amount thereof at any time outstanding (determined without regard to
any write-downs or write-offs of such loans and advances) shall not
exceed $4,500,000;
(3) the Borrower may make intercompany loans to Lilly Cup,
provided that (i) all such intercompany loans are evidenced by an
intercompany promissory note in the form of Exhibit I payable by Lily
Cup to the Borrower, which is pledged by the Borrower as Shared
Collateral pursuant to the Pledge Agreement, (ii) the aggregate
principal amount of all loans outstanding pursuant to this clause (C)
shall at no time exceed $5,000,000, and (iii) prior to making any such
loan, the Borrower shall provide the Agent with evidence reasonably
acceptable to the Agent that, after giving effect to such loan,
Availability shall be no less than $10,000,000, with Availability being
determined after giving effect to all of the Borrower's obligations
being current;
(4) the Borrower may hold non-cash proceeds from assets sales
permitted pursuant to Section 9.9, such proceeds to be held subject to
the Agent's Lien therein;
(5) Parent may own the stock of the Borrower, and the Borrower
may own the stock of its Subsidiaries in existence on the Closing Date
as set forth on Schedule 8.5; provided that no additional investments
shall be permitted in Subsidiaries of the Borrower except as provided
in clause (C) above;
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(6) the Borrower and its Subsidiaries may establish
Wholly-Owned Subsidiaries with the prior written consent of the Agent
and the Majority Lenders;
(7) to the extent otherwise prohibited by this Section 9.10,
the Borrower and its Subsidiaries may make investments which constitute
Debt permitted pursuant to Section 9.13;
(8) any Subsidiary of the Borrower may make intercompany loans
to the Borrower, provided that the aggregate principal amount of all
loans outstanding pursuant to this clause shall at no time exceed
$5,000,000;
(9) Parent may make loans to certain of its employees in
aggregate principal amount not to exceed $ 5,000,000 so long as (a)
such loans are used by such employees solely to purchase common stock
of Parent, (b) such loans are evidenced by full recourse promissory
notes executed by such employees and pledged to the Collateral Agent
pursuant to the Pledge Agreement; and (c) no cash is actually remitted
to any such employee as proceeds of any such loan; and
(10) the Borrower and Parent may effect transactions related
to assets other than Credit Agreement Collateral in accordance with the
terms of the Asset Transfer Documents as in effect on the date hereof.
All loans and advances made by the Borrower to Parent (pursuant to this
Section 9.10 or otherwise) shall be evidenced by an intercompany note payable
from Parent to the Borrower and pledged as Shared Collateral pursuant to the
Pledge Agreement.
9.11 Transactions Affecting Collateral or Obligations. Neither Parent
nor any of its Subsidiaries shall enter into any transaction which would be
reasonably expected to have a Material Adverse Effect.
9.12 Guaranties. Neither Parent nor any of its Subsidiaries shall make,
issue, or become liable on any Guaranty, except Guaranties of the Obligations in
favor of the Agent and guaranties of the Senior Secured Notes.
9.13 Debt. Neither Parent nor any of its Subsidiaries shall incur or
maintain any Debt, other than:
(1) the Obligations;
(2) Purchase Money Obligations and Capital Leases, in an
aggregate principal amount not to exceed $25,000,000 during the term of
this Agreement;
(3) other Debt existing on the Closing Date and set forth on
Schedule 9.13 and any and all interest and other amounts owing in
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respect thereof ("Existing Debt"), but no increases in the principal
amount thereof and no refinancings or renewals thereof except to the
extent that such refinancing or renewal does not increase the principal
amount of such Debt outstanding immediately prior to such refinancing
or renewal, or add guarantors, obligors or security from that which
applied to such Debt being refinanced or renewed, and all other terms
of such refinancing or renewal are no more restrictive or less
favorable to the Borrower or its Subsidiary, as applicable, than
previously existing with respect to such Debt;
(4) Lily Cup may (x) incur Debt as described in Section 9.10
(C) and (y) incur or suffer to exist Debt not in excess of Cd.
$20,000,000 in an aggregate principal amount at any time outstanding
under the Lily Credit Facility and any refinancing or renewal thereof
on terms and conditions which are no more restrictive or less favorable
to Lily Cup than previously existing with respect to such Debt;
provided, however, that the Debt permitted pursuant to clause (y) shall
not be secured by any assets of Parent, the Borrower or any Subsidiary
of Parent other than Lily Cup but may be guaranteed (on an unsecured
basis) by Parent and/or the Borrower;
(5) unsecured Debt under any Interest Rate Protection or Other
Hedging Agreement or under any similar type of agreement entered into
with a Person not a Lender, in each case to the extent the respective
agreement relates to Debt outstanding as otherwise permitted under this
Section 9.13;
(6) unsecured Debt under any Permitted Commodities Agreements;
(7) unsecured Debt owing to non-Affiliated Persons in an
aggregate principal amount not to exceed $5,000,000 at any time
outstanding;
(8) Debt subject to Liens permitted under clauses (c) and (d)
of the definition of Permitted Liens (such Debt to be subject to any
limitations (including, without limitation, as to amount) set forth in
such clauses); and
(9) upon the purchase by Parent of common stock of Parent as
permitted by Section 9.10(A)(c), Debt of Parent represented by the
Stockholder Subordinated Note issued as the consideration therefor.
9.14 Prepayment. Neither Parent nor any of its Subsidiaries shall
voluntarily prepay, redeem or repurchase prior to its final stated maturity any
Debt (not including refinancings, refundings or replacements thereof expressly
permitted hereunder) (including, without limitation, the Senior Secured Notes
and the Senior Subordinated Notes), except the Obligations in accordance with
the terms of this Agreement and except for other Debt (other than the Senior
Secured Notes and Senior Subordinated Notes) so long as the aggregate principal
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amount of such prepayments, redemptions and repurchases of such other Debt shall
not exceed $2,500,000 during the term of this Agreement. Neither Parent, the
Borrower nor any of its Subsidiaries shall incur any liability to make any
payment or prepayment of the Senior Secured Notes or the Senior Subordinated
Notes prior to their final stated maturity date. Notwithstanding the foregoing,
(x) the Borrower may make offers to redeem the Senior Secured Notes in
accordance with the terms thereof (provided that (i) such offers (and
redemptions therefor) shall only be made with proceeds of the sale of Secured
Note Collateral permitted pursuant to Sections 9.9 (ii), (iii) and (iv) which is
not required, pursuant to the penultimate sentence of Section 9.23, to be used
to incur Capital Expenditures and (ii) the Borrower shall, concurrently with the
making of any such offer, deliver a copy of such offer to the Agent) and (y)
after January 1, 1998, up to 80% of the net cash proceeds from any sale or
issuance of common equity by Parent may be applied to optionally redeem (or
acquire in market purchases and retire) Senior Secured Notes.
9.15 Transactions with Affiliates. Except as set forth below or as
otherwise permitted by Section 9.10, neither Parent nor any of its Subsidiaries
shall sell, transfer, distribute, or pay any money or property, including, but
not limited to, any fees or expenses of any nature (including, but not limited
to, any fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, Parent and its Subsidiaries may engage in transactions with
Affiliates in the ordinary course of business, in amounts and upon terms fully
disclosed to the Agent and the Lenders, and no less favorable to Parent and its
Subsidiaries than would be obtained in a comparable arm's-length transaction
with a third party who is not an Affiliate. Further, notwithstanding the
foregoing, (1) so long as no Event of Default exists at the time of payment or
would exist immediately after giving effect thereto, Parent or the Borrower may
pay the fees as required pursuant to the Management Services Agreement as in
effect on the Closing Date in an aggregate amount not to exceed $2,000,000 in
any Fiscal Year (payable semi-annually 45 days after each interest payment date
with respect to, and as defined in, the Senior Subordinated Notes) and
reimbursement for reasonable out-of-pocket expenses, provided, however, that all
obligations of Parent or the Borrower to pay fees pursuant to said Management
Services Agreement shall also be subordinated to the payment of all Obligations
in respect of this Agreement and the other Loan Documents (including, without
limitation, pursuant to the Parent Guaranty) to at least the same extent as the
obligations of the Borrower in respect of the Senior Subordinated Notes are
subordinated to the prior payment of "Senior Indebtedness" (as defined in the
Indenture for the Senior Subordinated Notes); (b) Parent and its Subsidiaries
may enter into transactions with employees and/or officers of Parent and its
Subsidiaries in the ordinary course of business so long as any such material
transactions have been approved by the Board of Directors of Parent or such
Subsidiaries; (c) Parent and its Subsidiaries may engage in immaterial
transactions with each other; and (d) Parent and its Subsidiaries may, subject
to Section 9.10(A)(b), make payments under tax sharing, disaffiliation, tax
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allocation and other similar agreements entered into by Parent or any Subsidiary
of Parent after the date hereof with the prior written approval of the Agent and
the Majority Lenders (and in the form as originally executed) so long as, in
each instance, the Borrower shall not, and shall not be liable or required to,
make any payments thereunder in excess of any tax payments of the type covered
by such agreement that the Borrower would have to make had such agreement not
been in effect. Notwithstanding anything herein to the contrary, neither Parent
nor any of its Subsidiaries may make any payment, sale, transfer or other
disposition of cash or any other property to Receivables Corp. except for the
payment by the Borrower to Receivables Corp. on the Closing Date in the amount
of approximately $32,727,815 to purchase all accounts and other assets (other
than immaterial assets) owned by Receivables Corp. on such date as contemplated
by Section 10.1(f).
9.16 Investment Banking and Finder's Fees. Neither Parent nor any of
its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Borrower shall defend and indemnify the Agent and the Lenders against and
hold them harmless from all claims of any Person that Parent, the Borrower or
any of its Subsidiaries is obligated to pay for any such fees, and all costs and
expenses (including without limitation, attorneys' fees) incurred by the Agent
and/or any Lender in connection therewith.
9.17 Amendments of Senior Secured Notes and Senior Subordinated Notes.
Neither Parent nor any of its Subsidiaries shall, directly or indirectly, amend
or modify, or permit the amendment or modification of, the Senior Secured Notes,
the Senior Subordinated Notes or any indenture or other agreement or document
related thereto, except for Permitted Amendments and Consents (as defined in the
Intercreditor Agreement as in effect on the Closing Date) with respect thereto
(assuming for this purpose that Permitted Amendments and Consents applied to the
Senior Subordinated Notes and related agreements and documents).
9.18 Business Conducted. Neither Parent nor the Borrower shall, and
neither Parent nor the Borrower shall permit any of its Subsidiaries to, engage
directly or indirectly, in any line of business other than the businesses in
which the Borrower is engaged on the Closing Date and reasonable extensions
thereof. Receivables Corp. shall not engage in any line of business or
activities or incur any Debt.
9.19 Liens. Neither Parent nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
9.20 . Neither Parent nor any of its Subsidiaries shall, directly or
indirectly, enter into any arrangement with any Person providing for Parent or
such Subsidiary to lease or rent property that Parent or such Subsidiary has
sold or will sell or otherwise transfer to such Person, except for any such
transactions with non-Affiliates relating to Fixed Assets for an aggregate sales
price for all such transactions not to exceed $10,000,000 in any Fiscal Year and
$30,000,000 during the term of this Agreement.
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9.21 New Subsidiaries. Parent shall not, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than those
listed on Schedule 8.5.
9.22 Fiscal Year. Neither the Borrower nor Parent shall change its
Fiscal Year without the prior written consent of the Agent (such consent not to
be unreasonably withheld) and the receipt by the Agent of a duly executed
amendment to the financial covenants herein contained, in form and substance
reasonably satisfactory to the Agent and the Majority Lenders, to equitably
reflect the effect of such change in Fiscal Year.
9.23 Capital Expenditures. Neither Parent nor any of its Subsidiaries
shall make or incur any Capital Expenditure in any Fiscal Year if, after giving
effect thereto, the aggregate amount of all Capital Expenditures by Parent and
its Subsidiaries on a consolidated basis from October 1, 1997 through the end of
such Fiscal Year on a cumulative basis after taking into account all such
Capital Expenditures from October 1, 1997 shall exceed the amounts set forth
below opposite such Fiscal Year.
Fiscal Year Cumulative Amount
----------- -----------------
1998 $ 67,000,000
1999 $ 165,000,000
2000 $ 243,000,000
The Borrower will use its commercially reasonable best efforts to use the net
proceeds (but in any event shall use not less than 75% of the net proceeds) of
each sale of Secured Note Collateral permitted pursuant to Sections 9.9(ii),
(iii) and (iv) to incur Capital Expenditures, to the extent otherwise permitted
under this Section. The Borrower agrees to promptly notify the Agent of any such
sale and the amount of net proceeds to be derived from each such sale.
9.24 [Reserved.]
9.25 Minimum Availability. The Borrower will maintain at all times
Availability of not less than $5,000,000, except as permitted by Section 2.2(h).
9.26 Fixed Charge Coverage Ratio. The Borrower will maintain a Fixed
Charge Coverage Ratio for each Test Period ended at the end of the fiscal
quarter of the Borrower set forth below of not less than the ratio set forth
below opposite such fiscal quarter:
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Fiscal Quarter Ending Ratio
--------------------- -----
December 31, 1997 .15/1
March 31, 1998 .15/1
June 30, 1998 .20/1
September 30, 1998 .25/1
December 31, 1998 .30/1
March 31, 1999 .37/1
June 30, 1999 .44/1
September 30, 1999 .51/1
December 31, 1999 .60/1
March 31, 2000 .76/1
June 30, 2000 .76/1
September 30, 2000 .80/1
. The Borrower shall not, and shall not suffer or permit Parent or any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i)
to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Borrower or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
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9.28 Senior Indebtedness and Secured Note Collateral. (1) Each of
Parent and the Borrower covenants and agrees that its obligations in respect of
this Agreement and the other Loan Documents and its obligations in respect of
the Senior Secured Notes are and will be prior to the Stated Termination Date
the only obligations designated as "Material Senior Indebtedness" for purposes
of, and as such term is defined in, the indenture governing the Senior
Subordinated Notes.
(2) Neither Parent nor the Borrower shall designate any
documents with respect to any Debt (other than this Agreement) as the "Credit
Agreement" or "Bank Credit Agreement" for purposes of the receipt of notices by
the Agent, and delivery of blockage notices pursuant to the subordination
provisions of the documents with respect to the Senior Subordinated Notes.
(3) Neither Parent nor the Borrower shall designate any Debt
as "Material Senior Indebtedness," as such term is defined in the indenture
governing the Senior Subordinated Notes as in effect on the date hereof or
pursuant to any analogous provision.
(4) Neither Parent, nor the Borrower, nor any of its
Subsidiaries shall assign, transfer or otherwise dispose of any Secured Note
Collateral except in accordance with Section 3.5(b) of the Intercreditor
Agreement (for this purpose, without giving effect to changes thereto not agreed
to by the Borrower).
9.29 Further Assurances. The Borrower and Parent shall execute and
deliver, or cause to be executed and delivered, to the Agent and/or the Lenders
such documents and agreements, and shall take or cause to be taken such actions,
as the Agent or any Lender may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
---------------------
10.1 Conditions Precedent to Making 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 to be issued or provide Credit
Support for any Letter of Credit on the Closing Date and the obligation of the
Lenders to participate in Letters of Credit issued on the Closing Date or in
Credit Support for any Letters of Credit, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender:
(1) This Agreement and the other Loan Documents have been
executed by each party thereto (including, without limitation, if requested by
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the Agent, amendments, in form and substance reasonably satisfactory to the
Agent, to Credit Documents (as defined in the Existing Credit Agreement)
assigned to BABC or the Agent pursuant to the Bank Assignment Agreement) and the
Borrower and Parent shall have performed and complied with all covenants,
agreements and conditions contained herein and the other Loan Documents which
are required to be performed or complied with by the Borrower or Parent before
or on such Closing Date.
(2) Upon making the Revolving Loans on the Closing Date
(including such Revolving Loans made to finance the Closing Fee or otherwise
pursuant to Section 4.7 as reimbursement for fees, costs and expenses then
payable under this Agreement) and with all its obligations current and after
giving effect to the effectiveness of the assignments and transfers contemplated
by the Bank Assignment Agreement, the Borrower would have Availability in an
amount no less than $13,500,000.
(3) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as of the Closing Date as if
made on such date.
(4) No Default or Event of Default shall exist on the Closing
Date, or would exist immediately after giving effect to the Loans to be made on
such date.
(5) The Agent and the Lenders shall have received such
opinions of counsel for Parent and its Subsidiaries as the Agent or any Lender
shall reasonably request, each such opinion to be in a form, scope, and
substance satisfactory to the Agent, the Lenders, and their respective counsel.
(6) The Agent shall have received evidence reasonably
satisfactory to it that (i) Receivables Corp. shall have transferred to the
Borrower all of its assets (including in any event all accounts receivable and
cash) other than immaterial assets and terminated any and all present and future
receivables transfers by the Borrower to Receivables Corp., in each instance, on
terms and conditions and pursuant to agreements satisfactory to the Agent and
(ii) the receivables securitization facility entered into by Receivables Corp.
shall have been terminated on terms and conditions satisfactory to the Agent.
(7) The Agent shall have received:
(1) acknowledgment copies of proper financing
statements duly filed on or before the Closing Date under the UCC of all
jurisdictions that the Agent may deem necessary or desirable in order to perfect
the Agent's Lien.
(2) duly executed UCC-3 Termination Statements and
such other instruments, in form and substance satisfactory to the Agent, as
shall be necessary to terminate and satisfy all Liens on the property of Parent
and its Subsidiaries (including, without limitation, UCC-3 Termination
Statements terminating all UCC filings made under the receivables transfer and
receivables securitization facilities referred to in clause (f) above), except
Permitted Liens.
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(3) the Bank Assignment Agreement duly executed and
delivered by all the parties thereto and all conditions to the effectiveness of
the assignments and transfers contemplated thereby (other than the payment of
any monies by BABC under Section 3(a)(i) thereof and the return to the agent
under the Existing Credit Agreement of the BT Letter of Credit (as defined in
the Bank Assignment Agreement)) shall have been satisfied.
(4) a duly executed acknowledgment and agreement to
the Intercreditor Agreement, in form and substance satisfactory to the Agent,
acknowledging the Agent as the "Credit Agent" under and as defined in the
Intercreditor Agreement.
(8) The Borrower shall have paid all fees and expenses of the
Agent and the Attorney Costs reasonably incurred by the Agent in connection with
any of the Loan Documents and the transactions contemplated thereby.
(9) The Agent shall have received evidence, in form, scope,
and substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by the Agreement.
(10) The Agent and the Lenders shall have had an opportunity,
if they so choose, to examine the books of account and other records and files
of Parent and its Subsidiaries and to make copies thereof, and to conduct a
pre-closing audit which shall include, without limitation, verification of
Inventory, Accounts, and Availability, and the results of such examination and
audit shall have been satisfactory to the Agent and the Lenders in all respects.
(11) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and the
Lenders.
(12) The Agent shall have received certified copies of the
Senior Secured Notes, the Senior Subordinated Notes, the Intercreditor
Agreement, the Asset Transfer Documents and all documents, instruments and
agreements entered into pursuant thereto or in connection therewith.
The acceptance by the Borrower of any Loans made on the Closing Date
shall be deemed to be a representation and warranty made by the Borrower to the
effect that all of the conditions precedent to the making of such Loans have
been satisfied, with the same effect as delivery to the Agent and the Lenders of
a certificate signed by a Responsible Officer of the Borrower, dated the 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
103
conditions precedent in this Section 10.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart of this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this Section 10.1.
10.2 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 take reasonable steps to cause to be issued
or to provide Credit Support for any Letter of Credit and the obligation of the
Lenders to participate in Letters of Credit or Credit Support for Letters of
Credit, shall be subject to the further conditions precedent that on and as of
the date of any such extension of credit:
(1) the following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (i) and (ii), with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(1) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all material respects
on and as of the date of such extension of credit as though made on and as of
such date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Agent and the Lenders have
been notified by the Borrower that any representation or warranty is not correct
and the Majority Lenders have explicitly waived in writing compliance with such
representation or warranty; and
(2) 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
(2) without limiting Section 10.1(b), the amount of the
Availability shall be sufficient to make such Revolving Loan or permit the
issuance of such Letter of Credit or Credit Support without exceeding the
Availability, provided, however, that the foregoing conditions precedent are not
conditions to each Lender participating in or reimbursing BABC or the Agent for
such Lenders' Pro Rata Share of any BABC Loan or Agent Advance as provided in
Sections 2.2(h), (i) and (j).
ARTICLE 11
DEFAULT; REMEDIES
-----------------
11.1 Events of Default. It shall constitute an event of default ("Event
of Default") if any one or more of the following shall occur for any reason:
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(1) (1) any failure to pay the principal in respect of any
Obligations when due, whether upon demand or otherwise, or (ii) any failure to
pay interest or premium on any of the Obligations or any fees owing hereunder
within 3 Business Days of when due, whether upon demand or otherwise;
(2) any representation or warranty made or deemed made by the
Borrower or Parent in this Agreement or by Parent or any of its Subsidiaries in
any of the other Loan Documents, any Financial Statement, or any certificate
furnished by Parent or any of its Subsidiaries at any time to the Agent or any
Lender shall prove to be untrue in any material respect as of the date on which
made, deemed made, or furnished;
(3) (1) any default shall occur in the observance or
performance of any of the covenants and agreements contained in Sections 6.2,
6.3, 6.7 or 6.9 or in Article 7 or in Article 9 (other than Sections 9.4, 9.6,
9.16, 9.20, 9.24 or 9.29) of this Agreement (provided, however, to the extent
that any covenant in Article 7 specifies the number of days within which the
Borrower or Parent must comply (including, without limitation, for the giving of
notice or delivery of a financial statement, forecast or report), the Borrower
or Parent, as the case may be, shall have the numbers of days specified in such
covenant plus 5 days within which to comply before such non-compliance becomes
an Event of Default under this clause (i)), or (ii) any default shall occur in
the observance or performance of any of the covenants and agreements contained
in any of Sections 9.4, 9.6, 9.16, 9.20, 9.24 or 9.29 of this Agreement and such
default shall continue unremedied for a period of 10 days after the earlier to
occur of (x) notice thereof from the Agent or any Lender to Parent or the
Borrower or (y) Parent's or the Borrower's actual knowledge thereof, or (iii)
any default shall occur in the observance or performance of any of the covenants
and agreements contained in this Agreement (other than as specified in clause
(a) or (c)(i) or (ii) above), any other Loan Documents, or any other agreement
entered into at any time to which the Borrower, Parent or any Subsidiary and the
Agent or any Lender are party and such default shall continue unremedied for a
period of 30 days after the earlier to occur of (x) notice thereof from the
Agent or any Lender to Parent or the Borrower or (y) Parent's or the Borrower's
actual knowledge thereof, or (iv) if any agreement or document referred to in
clauses (i), (ii) or (iii) above shall terminate (other than in accordance with
its terms or the terms hereof or with the written consent of the Agent and the
Majority Lenders) or become void or unenforceable, without the written consent
of the Agent and the Majority Lenders;
(4) default shall occur with respect to the Senior Secured
Notes or the Senior Subordinated Notes or with respect to any other Debt (other
than the Obligations) in an aggregate outstanding principal amount for all such
other Debt which exceeds $5,000,000, or under any agreement or instrument under
or pursuant to which the Senior Secured Notes, the Senior Subordinated Notes or
any such other Debt may have been issued, created, assumed, or guaranteed by
Parent or any of its Subsidiaries, and such default shall continue for more than
the period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to accelerate,
105
or to permit the holders of the Senior Secured Notes, the Senior Subordinated
Notes or any such other Debt to accelerate, the maturity of any such Debt; or
any such Debt shall be declared due and payable or be required to be prepaid
(other than by a regularly scheduled required prepayment) prior to the stated
maturity thereof;
(5) Parent or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(6) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of Parent or any of its Subsidiaries
or for any other relief under the federal Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing and either (i) such petition, proposal, action or proceeding
shall not have been dismissed within a period of sixty (60) days after its
commencement or (ii) an order for relief against Parent or such Subsidiary shall
have been entered in such proceeding;
(7) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for Parent or any of its Subsidiaries or for
all or any part of its property shall be appointed or a warrant of attachment,
execution or similar process shall be issued against any part of the property of
Parent or any of its Subsidiaries;
(8) Parent or any of its Subsidiaries shall file a certificate
of dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or shall take any corporate action
in furtherance thereof;
(9) all or any material part of the property of Parent or any
of its Subsidiaries shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of Parent or
such Subsidiary shall be assumed by any Governmental Authority or any court of
competent jurisdiction at the instance of any Governmental Authority, except
where contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
(10) any guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
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(11) one or more judgments or orders for the payment of money
aggregating in excess of $2,500,000, which amount shall not be fully covered by
insurance, shall be rendered against Parent or any of its Subsidiaries;
(12) any loss, theft, damage or destruction of any item or
items of Collateral or other property of Parent or any Subsidiary occurs which
materially and adversely affects the property, business, operation or financial
condition of Parent and the Borrower taken as a whole;
(13) there occurs a Material Adverse Effect;
(14) there is filed against Parent or any of its Subsidiaries
any criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within one hundred twenty (120) days, and (2) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(15) 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;
(16) (i) one or more ERISA Events shall occur; (ii) any
Pension Plans shall have any Unfunded Pension Liability; or (iii) Parent, the
Borrower or any ERISA Affiliate shall fail to pay when due, after the expiration
of any applicable grace period, one or more installment payments with respect to
its withdrawal liability under Section 4201 of ERISA under any Multi-employer
Plans; provided, however, that (x) the events, acts or conditions described in
clauses (i), (ii) and (iii) above shall not constitute a Default or Event of
Default under this clause (p) unless the aggregate liability incurred or
reasonably expected to be incurred by Parent, the Borrower or any ERISA
Affiliates for all such events, acts or conditions shall exceed $5,000,000 in
the aggregate for all such Persons and (y) the Agent and the Majority Lenders
hereby agree that the occurrence of any event set forth above, resulting
directly from the litigation described in Schedule 8.21 so long as the aggregate
amount of, without duplication, liens, security interests and liabilities
resulting therefrom shall not exceed $17,500,000, shall not be deemed to be or
otherwise constitute a Default or Event of Default under this clause (p)
(however, notwithstanding the foregoing, the Agent shall have the right, in its
sole discretion, to establish reserves against Availability if any liens or
security interests on the assets of Parent or any of its Subsidiaries securing
greater than $100,000 in liabilities in the aggregate for Parent and its
Subsidiaries shall attach or otherwise arise as a result of such litigation); or
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(17) there occurs a Change of Control.
11.2 Remedies. (1) If a Default or an Event of Default exists, the
Agent may, in its discretion, and shall, at the direction of the Majority
Lenders, do one or more of the following at any time or times and in any order,
without notice to or demand on the Borrower or Parent: (i) reduce the Maximum
Revolver Amount, or the advance rates against Eligible Accounts and/or Eligible
Inventory used in computing the Availability, or reduce one or more of the other
elements used in computing the Availability; (ii) restrict the amount of or
refuse to make Revolving Loans; and (iii) restrict or refuse to arrange for or
provide Letters of Credit or Credit Support. If an Event of Default exists, the
Agent shall, at the direction of the Majority Lenders, do one or more of the
following, in addition to the actions described in the preceding sentence, at
any time or times and in any order, without notice to or demand on the Borrower
or Parent: (a) terminate the Commitments and this Agreement; (b) declare any or
all Obligations to be immediately due and payable; provided, however, that upon
the occurrence of any Event of Default described in Sections 11.1(e), 11.1(f),
11.1(g), or 11.1(h), the Commitments shall automatically and immediately expire
and all Obligations shall automatically become immediately due and payable
without notice or demand of any kind; and (c) pursue its other rights and
remedies under the Loan Documents and applicable law.
(2) If an Event of Default exists, except as provided in the
Intercreditor Agreement with respect to Secured Note Collateral and Shared
Collateral: (i) the Agent shall have for the benefit of the Agent and the
Lenders, in addition to all other rights of the Agent and the Lenders, the
rights and remedies of a secured party under the UCC; (ii) the Agent may, at any
time, take possession of the Collateral and keep it on the Borrower's and/or
Parent's premises, at no cost to the Agent or any Lender, or remove any part of
it to such other place or places as the Agent may desire, or the Borrower shall,
upon the Agent's demand, at the Borrower's cost, assemble or cause to be
assembled the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of sale. Without in
any way requiring notice to be given in the following manner, each of Parent and
the Borrower agrees that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the UCC
or otherwise, shall constitute reasonable notice to it if such notice is mailed
by registered or certified mail, return receipt requested, postage prepaid, or
is delivered personally against receipt, at least five (5) Business Days prior
to such action to Parent's or the Borrower's address, as appropriate, specified
in or pursuant to Section 15.8. If any Collateral is sold on terms other than
payment in full at the time of sale, no credit shall be given against the
Obligations until the Agent or the Lenders receive payment, and if the buyer
defaults in payment, the Agent may resell the Collateral without further notice
to the Borrower or Parent . In the event the Agent seeks to take possession of
all or any portion of the Collateral by judicial process, each of Parent and the
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Borrower irrevocably waives: (a) the posting of any bond, surety or security
with respect thereto which might otherwise be required; (b) any demand for
possession prior to the commencement of any suit or action to recover the
Collateral; and (c) any requirement that the Agent retain possession and not
dispose of any Collateral until after trial or final judgment. Each of Parent
and the Borrower agrees that the Agent has no obligation to preserve rights to
the Collateral or marshal any Collateral for the benefit of any Person. The
Agent is hereby granted a license or other right to use, without charge, the
Borrower's and Parent's labels, patents, copyrights, name, trade secrets, trade
names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and the
Borrower's and Parent's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit for such purpose. The proceeds of sale shall
be applied first to all expenses of sale, including attorneys' fees, and then to
the Obligations in whatever order the Agent elects. The Agent will, subject to
the terms of the Intercreditor Agreement and any applicable law or court order,
return any excess to the Borrower or Parent, as appropriate, and each of Parent
and the Borrower shall remain liable for any deficiency.
(3) If an Event of Default occurs, each of Parent and the
Borrower hereby waives all rights to notice and hearing prior to the exercise by
the Agent of the Agent's rights to repossess the Collateral without judicial
process or to replevy, attach or levy upon the Collateral without notice or
hearing.
ARTICLE 12
TERM AND TERMINATION
--------------------
12.1 Term and Termination. The term of this Agreement shall end on the
Stated Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all outstanding monetary Obligations
(including, without limitation, all unpaid principal, accrued interest and any
early termination or prepayment fees or penalties) shall become immediately due
and payable and the Borrower shall immediately arrange for the cancellation of
Letters of Credit then outstanding. Notwithstanding the termination of this
Agreement, until all outstanding monetary Obligations are indefeasibly paid in
full in cash and the Payment and Termination Date shall have occurred, each of
Parent and the Borrower shall remain bound by the terms of this Agreement and
shall not be relieved of any of its Obligations hereunder, and the Agent and the
Lenders shall retain all their rights and remedies hereunder (including, without
limitation, the Agent's Liens in and all rights and remedies with respect to all
then existing and after-arising Collateral). From and after the Payment and
Termination Date, the Agent shall, at the reasonable request of the Borrower and
at the Borrower's sole cost and expense, execute and deliver to the Borrower
such instruments and agreements in form reasonably acceptable to the Agent, to
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release the Agent's Liens in the Collateral. Such instruments and agreements
shall be without representation or warranty by, and without recourse to, the
Agent or any Lender.
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
-----------------------------------------------------------
13.1 No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document or any present or future supplement thereto, or in any other
agreement between or among the Borrower and/or Parent or any of its other
Subsidiaries and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will not operate as a waiver thereof. No waiver
by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by the Agent or the Lenders on
any occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower and Parent of any
provision of this Agreement. The Agent's and each Lender's rights under this
Agreement will be cumulative and not exclusive of any other right or remedy
which the Agent or any Lender may have.
13.2 Amandments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower, Parent or any of its other Subsidiaries therefrom,
shall be effective unless the same shall be in writing and signed by the
Majority Lenders (or by the Agent at the written request of the Majority
Lenders), the Borrower and Parent and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders, the Borrower and Parent and
acknowledged by the Agent, do any of the following:
(1) increase or extend the Commitment of any Lender;
(2) 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;
(3) 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;
(4) 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;
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(5) increase any of the percentages set forth in the
definition of Availability;
(6) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(7) release Collateral other than as permitted by Section
14.12 or any guaranty of any Obligations;
(8) change the definitions of "Majority Lenders" or "Required
Lenders."
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3 Assignments; Participations. (1) Any Lender may, with the written
consent of the Agent, assign and delegate to one or more assignees (provided
that no written consent of the Agent shall be required in connection with any
assignment and delegation by a Lender to an Affiliate of such Lender) (each an
"Assignee") all, or any ratable part of all, of the Loans, the Commitments and
the other rights and obligations of such Lender hereunder, in a minimum amount
of $10,000,000 or if less the entire amount of such Lender's Commitment and
Loans (provided, that unless an assignor Lender has assigned and delegated all
of its Commitment and Loans, no such assignment and/or delegation shall be
permitted unless, after giving effect to such assignment and/or delegation, such
assignor Lender retains a Commitment in a minimum amount of $10,000,000);
provided, however, that the Borrower, Parent and the Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower (on behalf of the Borrower and
Parent) and the Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Borrower (on behalf of the Borrower and
Parent) and the Agent an Assignment and Acceptance in substantially the form of
Exhibit G ("Assignment and Acceptance") and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $3,000.
(2) 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
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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).
(3) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto; (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, Parent or any of its other Subsidiaries or
the performance or observance by the Borrower, Parent or any of its other
Subsidiaries of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (4) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (5) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and (6)
such Assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(4) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(5) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the Borrower
(a "Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower, Parent and the Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
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interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(6) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
ARTICLE 14
THE AGENT
---------
14.1 Appointment and Authorization. Each Lender hereby designates and
appoints BankAmerica Business Credit, Inc. as its Agent under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this Article
14. The provisions of this Article 14 are solely for the benefit of the Agent
and the Lenders and the Borrower and Parent shall have no rights as a third
party beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
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Loan Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Availability, (b) the making of Agent Advances pursuant to Section 2.2(i), and
(c) the exercise of remedies pursuant to Section 11.2, and any action so taken
or not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
14.1 Reliance by Agent. (1) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders.
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(2) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
14.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries and Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries and Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries and Affiliates. Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by the Agent, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Borrower or any of its Subsidiaries or Affiliates which
may come into the possession of any of the Agent-Related Persons.
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14.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities as such term is
defined in Section 15.11; provided, however, that no Lender shall be liable for
the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrower. The undertaking in this Section 14.7 shall survive the payment
of all Obligations hereunder and the resignation or replacement of the Agent.
14.8 Agent in Individual CApacity. BABC 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 BABC were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BABC or its Affiliates may receive information
regarding the Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrower or such
Affiliate) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BABC 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 BABC in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders and the Borrower. If the Agent resigns under this
Agreement, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 14 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Majority Lenders
appoint a successor agent as provided for above.
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14.10 Witholding Tax. (1) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(1) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(2) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form 4224 before the payment of
any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and
(3) such other form or forms as may be required under
the Code or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(2) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Lender. To the extent of
such percentage amount, the Agent will treat such Lender's IRS Form 1001 as no
longer valid.
(3) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(4) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
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such reduction. If the forms or other documentation required by subsection (a)
of this Section 14.10 are not delivered to the Agent, then the Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(5) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent and the Borrower
(but in the case of the Borrower only if the appropriate form was either not
delivered or not properly executed either at the time that such Lender first
became a Lender hereunder or at any later time if such form then could have been
legally delivered by such Lender) fully for all amounts paid, directly or
indirectly, by the Agent or the Borrower as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section 14.10, together with all
costs and expenses (including Attorney Costs), and the Borrower shall not have
any obligation pursuant to Section 5.1 for such withholding taxes if the
appropriate form is not delivered under the circumstances set forth in the
second immediately preceding parenthetical. The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
14.11 [Reserved.]
14.12 Collateral Matters. (1) The Lenders hereby irrevocably authorize
the Agent, at its option and in its sole discretion, to release any Agent's Lien
upon any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by the Borrower of all Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and, subject to Section
2.4(j), the termination of all outstanding Letters of Credit (whether or not any
of such obligations are due) and all other outstanding monetary Obligations;
(ii) constituting property being sold or disposed of if the Borrower certifies
to the Agent that the sale or disposition is made in compliance with Section 9.9
(and the Agent may rely conclusively on any such certificate, without further
inquiry); (iii) constituting property in which neither the Borrower nor any
other grantor of Collateral owned any interest at the time the Lien was granted
or at any time thereafter; (iv) constituting property leased to the Borrower or
any other grantor of Collateral under a lease which has expired or been
terminated in a transaction permitted under this Agreement; or (v) as and when
provided or required by the terms of the Intercreditor Agreement. Except as
provided above, the Agent will not release any of the Agent's Liens without the
prior written authorization of the Lenders; provided that the Agent may, in its
discretion, release the Agent's Liens on Collateral valued in the aggregate not
in excess of $5,000,000 without the prior written authorization of the Lenders.
Upon request by the Agent or the Borrower at any time, the Lenders will confirm
in writing the Agent's authority to release any Agent's Liens upon particular
types or items of Collateral pursuant to this Section 14.12.
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(2) Upon receipt by the Agent of any authorization required
pursuant to Section 14.12(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and upon
at least five (5) Business Days' prior written request by the Borrower, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Agent's Liens
upon such Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Borrower or any other grantor of Collateral in respect of)
all interests retained by the Borrower or any other grantor of Collateral,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(3) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by the Borrower or
any other grantor of Collateral or is cared for, protected or insured or has
been encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant to any
of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent's own
interest in the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments. (1) Each
of the Lenders agrees that it shall not, without the express consent of all
Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of all Lenders, set off against the Obligations or any guarantee
thereof, any amounts owing by such Lender to the Borrower or any other party
liable for any Obligations or any guarantee thereof or any grantor of any
Collateral or any accounts of the Borrower or such other party or grantor now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent, take or cause
to be taken any action to enforce its rights under this Agreement or any other
Loan Document or against the Borrower or any other party liable for any
Obligations or any guarantee thereof or any grantor of any Collateral,
including, without limitation, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
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(2) 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.
14.14 Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 Payments by Agents 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:
if to BABC: BankAmerica Business Credit, Inc.
Account No. 000-0-000000
Chase Manhattan Bank
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
ABA No. 000000000
Reference: Sweetheart Cup Co. Inc.
Contact: Xxxx Xxxxxxx (Tel: 000-000-0000;
Fax: 000-000-0000)
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.
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14.16 Concerning the Collateral and Related Loan Dcouments. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents relating to the Collateral, for the ratable benefit of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders or Required Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral, and the
exercise by the Agent, the Majority Lenders, or the Required Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(1) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent;
(2) expressly agrees and acknowledges that neither BABC 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;
(3) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrower or any of its Affiliates and will rely significantly upon the
Borrower's and/or such Affiliate's books and records, as well as on
representations of the Borrower's and/or such Affiliate's personnel;
(4) 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
(5) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to the Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of the Borrower; and (ii) to pay and protect, and indemnify,
defend and hold the Agent and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including, without limitation attorney costs) incurred by the
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
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14.18 Relation among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 15
MISCELLANEOUS
-------------
15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of one
right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, proceed
directly against the Borrower or any other Person to collect the Obligations
without any prior recourse to the Collateral. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
15.2 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver. (1) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK;
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(2) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, PARENT, THE
AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, PARENT,
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THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OF THE
BORROWER, PARENT OR THEIR RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(3) EACH OF THE BORROWER AND PARENT HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO IT
AT ITS ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE
U.S. MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE
LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(4) No provision of this Agreement shall limit the right of
the Agent or the Lenders to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property collateral or
security, or obtaining provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right of either
party to resort to arbitration or reference. At the Agent's option, foreclosure
under a deed of trust or mortgage may be accomplished either by exercise of
power of sale under the deed of trust or mortgage or by judicial foreclosure.
15.4 WIVER OF JURY TRIAL. THE BORROWER, PARENT, THE LENDERS AND THE
AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
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AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER, PARENT, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
15.5 Survival of Reprsentations and Warranties. All of the Borrower's
and Parent's representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
15.6 Other Security and Guaranties. The Agent, may, without notice or
demand and without affecting the Borrower's or Parent's obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
15.7 Fees and Expanses. The Borrower agrees to pay to the Agent, for
its benefit, on demand, all reasonable costs and expenses that Agent pays or
incurs in connection with the negotiation, preparation, consummation,
administration, syndication, enforcement, and termination of this Agreement,
including, without limitation or duplication: (a) Attorney Costs; (b) reasonable
costs and expenses (including reasonable attorneys' and paralegals' fees and
disbursements which shall include the reasonable allocated costs of Agent's
in-house counsel fees and disbursements) for any amendment, supplement, waiver,
consent, or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for recording
the Mortgages, filing financing statements and continuations, and other actions
to perfect, protect, and continue the Agent's Liens (including costs and
expenses paid or incurred by the Agent in connection with the consummation of
this Agreement); (e) sums paid or incurred to pay any amount or take any action
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required of the Borrower, Parent or any of its other Subsidiaries under the Loan
Documents that the Borrower, Parent or such other Subsidiary fails to pay or
take; (f) costs of appraisals, inspections, and verifications of the Collateral,
including, without limitation, travel, lodging, and meals for inspections of the
Collateral and the Borrower's operations by the Agent plus the Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $750 per day (or portion thereof) for
each agent or employee of the Agent with respect to each field examination or
audit) (such field examinations and audits to be conducted not more often than
three times each calendar year unless an Event of Default shall have occurred);
(g) costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining Payment Accounts and lock
boxes; (h) costs and expenses of preserving and protecting the Collateral; and
(i) costs and expenses (including attorneys' and paralegals' fees and
disbursements which shall include the allocated cost of Agent's in-house counsel
fees and disbursements) paid or incurred to obtain payment of the Obligations,
enforce the Agent's Liens, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Loan Documents, or to defend any claims
made or threatened against the Agent or any Lender arising out of the
transactions contemplated hereby (including without limitation, preparations for
and consultations concerning any such matters). The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by the Borrower. All of the foregoing costs and expenses
shall be charged to the Borrower's Loan Account as Revolving Loans as described
in Section 4.7.
15.8 Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Agent or to BABC:
BankAmerica Business Credit, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Division Manager
Telecopy No. (000) 000-0000
with copies to:
Bank of America NT & SA
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Telecopy No. (000) 000-0000
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If to the Borrower or Parent:
Sweetheart Cup Company Inc.
or Sweetheart Holdings Inc. (as appropriate)
00000 Xxxxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telecopy No. (000) 000-0000
with copies to:
Sweetheart Cup Company Inc.
00000 Xxxxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx, Vice President and Secretary
Telecopy No. (000) 000-0000
-and-
Xxxxxxxx & Xxxxx
000 00xx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy No. (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 Waiver of Notices. Unless otherwise expressly provided herein,
each of the Borrower and Parent waives presentment, protest and notice of demand
or dishonor and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any and
all other notices to which it might otherwise be entitled. No notice to or
demand on the Borrower or Parent which the Agent or any Lender may elect to give
shall entitle the Borrower or Parent to any or further notice or demand in the
same, similar or other circumstances.
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15.10 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by the Borrower or Parent without prior written consent of the Agent
and each Lender. The rights and benefits of the Agent and the Lenders hereunder
shall, if such Persons so agree, inure to any party acquiring any interest in
the Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by the Borrower. The
Borrower agrees to defend, indemnify and hold the Agent-Related Persons, and
each Lender and each of its respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Lender) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement, any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities to the extent resulting from the willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
15.12 Limitation of Liability. No claim may be made by the Borrower,
Parent, any Lender or other Person against the Agent, any Lender, or the
affiliates, directors, officers, officers, employees, or agents of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
the Borrower, Parent and each Lender hereby waive, release and agree not to xxx
upon any claim for such damages, whether or not accrued and whether or not know
or suspected to exist in its favor.
15.13 Final Agrement. This Agreement and the other Loan Documents are
intended by the Borrower, Parent, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof (including, without limitation, the terms of the Existing Credit
Agreement, which terms are being amended and restated in their entirety pursuant
to this Agreement). Further, the terms of the Borrower Security Agreement, the
Parent Security Agreement and each of the Amended and Restated Borrower
Intellectual Property Agreement and the Amended and Restated Holdings
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Intellectual Property Agreement, each dated as of the date hereof, between the
Borrower or Parent, respectively, and the Agent supersede in their entirety the
terms of the predecessors thereof, which are being amended and restated (such
amendments and restatements not affecting the security interests and liens
created under the predecessor agreements (which shall remain in full force and
effect) or the time of creation thereof, except as modified by such amendments
and restatements). No modification, rescission, waiver, release, or amendment of
any provision of this Agreement or any other Loan Document shall be made, except
by a written agreement signed by the Borrower and Parent and a duly authorized
officer of each of the Agent and the requisite Lenders.
15.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, the Borrower and Parent in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
15.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.16 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower or Parent, any such notice being waived by
the Borrower and Parent to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by, such
Lender to or for the credit or the account of the Borrower or Parent against any
and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Borrower or
Parent, as appropriate, and the Agent after any such set-off and application
made by such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. NOTWITHSTANDING
THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR
THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF THE BORROWER OR PARENT HELD
OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE
LENDERS.
15.17 Credit Agreement and Conflicts. This Agreement is and is hereby
deemed to be a "Credit Agreement" for all purposes of the Intercreditor
Agreement. In the event of a conflict between any of the terms and provisions of
this Agreement and any of the terms and provisions of the Borrower Security
Agreement, the terms and provisions of this Agreement shall control.
15.18 INTERCREDITOR AGREEMENT. (1) EACH LENDER HEREBY GRANTS TO THE
AGENT ALL REQUISITE AUTHORITY TO EXECUTE AND DELIVER THE INTERCREDITOR AGREEMENT
(OR OTHERWISE TO BECOME BOUND THEREBY) AND TO BIND THE LENDERS THERETO BY THE
AGENT'S EXECUTION AND DELIVERY THEREOF OR BY THE AGENT OTHERWISE BECOMING BOUND
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THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART OF THE LENDERS IS OR
WILL BE REQUIRED IN CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE OF
THE INTERCREDITOR AGREEMENT.
(2) EACH LENDER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT
AND THE OTHER SECURITY DOCUMENTS (INCLUDING THE ALLOCATION OF PROCEEDS OF
COLLATERAL) ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWER"
SWEETHEART CUP COMPANY INC.
By:
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Name: Xxxxx X. Xxxxxxx
Title: Treasurer
"PARENT"
SWEETHEART HOLDINGS INC.
By:
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
"AGENT"
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
"LENDERS"
Commitment: $135,000,000 BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
