$10,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
December 1, 1998
between
DISC GRAPHICS, INC.
and
KEYBANK NATIONAL ASSOCIATION
AMENDED AND RESTATED CREDIT AGREEMENT dated December 1, 1998 between
Disc Graphics, Inc., 00 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, a Delaware
corporation ("Borrower") and KeyBank National Association, 0000 Xxxxx Xxxxxxx,
Xxxxxxxx, Xxx Xxxx 00000, a national banking association (the "Bank").
WHEREAS, Borrower and the Bank are parties to a credit agreement dated
February 26, 1997 (the "Prior Credit Agreement"); and
WHEREAS, Borrower desires to modify and extend the terms of the Prior
Credit Agreement; and WHEREAS, the Bank is willing to do in accordance with the
terms provided below; NOW, THEREFORE, in consideration of the foregoing, the
parties agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Acquisition" means any transaction pursuant to which Borrower or any
of its Subsidiaries (a) acquires equity securities (or warrants, options or
other rights to acquire such securities) of any corporation, partnership,
limited liability company or other business organization, or any entity which is
not then a Subsidiary of Borrower, pursuant to a solicitation of tenders
therefor, or in one or more negotiated block, market or other transactions not
involving a tender offer, or a combination of any of the foregoing, or (b) makes
any entity not then a Subsidiary of Borrower a Subsidiary of Borrower, or causes
any such entity to be merged into or purchased by Borrower or any of its
Subsidiaries, in any case pursuant to a merger, purchase of assets or any
reorganization providing for the delivery or issuance to the holders of such
entity's then outstanding securities, in exchange for such securities, of cash
or securities of Borrower or any of its Subsidiaries, or a combination thereof,
or (c) purchases all or substantially all of the business or assets of any
entity.
"Additional Costs" shall have the meaning given to that term in
Section 4.01 hereof.
"Affiliate" means, with respect to any Person, any Person (a) that
directly or indirectly controls, or is controlled by, or is under common control
with, such Person, (b) that directly or indirectly beneficially owns or holds 5%
or more of any class of voting stock of such Person, (c) 5% or more of the
voting stock of which is directly or indirectly beneficially
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owned or held by such Person, (d) which is a partnership or limited liability
company in which such Person is respectively a general partner or manager or (e)
who is among such Person's officers, directors joint venturers, managers or
partners. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Aggregate Outstandings" means, at a particular time, the aggregate
outstanding principal balance of all Revolving Credit Loans. "Agreement" means
this credit agreement, as amended or supplemented from time to time.
"Amortization" means amortization as determined in accordance with
GAAP.
"Bank" means KeyBank National Association and its successors and
assigns.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York State, and whenever such day relates
to a LIBOR Loan or notice with respect to any LIBOR Loan, a day on which
dealings in dollar deposits are also carried out in the London interbank market.
"Capital Lease" means any lease which is required to be capitalized on
the balance sheet of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been executed by
Borrower and the Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means all personal property of Borrower and its
Subsidiaries, whether now existing or hereafter arising, which is subject or
which is to be subject to the Liens granted by the Security Agreement.
"Commitment Fee" means the fee described in Section 3.01.
"Current Assets" means, at a particular date, all amounts which would,
in accordance with GAAP, be included under current assets on a consolidated
balance sheet of Borrower and its Subsidiaries as at such date.
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"Current Debt" means, on the date of determination with respect to any
entity, that portion of such entity's Total Funded Debt (including Capital
Leases) that is due and payable within 12 months of the date of determination.
"Current Liabilities" means, at a particular date, all amounts which
would, in accordance with GAAP, be included under current liabilities on a
consolidated balance sheet of Borrower and its Subsidiaries as at such date
including, without limitation, (a) all obligations payable on demand or within
one year after the date in which the determination is made, and (b) installment
and sinking fund payments required to be made within one year after the date on
which determination is made, but excluding all such liabilities or obligations
which are renewable or extendable at the option of Borrower to a date more than
one year from the date of determination.
"Current Ratio" means the ratio of (a) Current Assets of Borrower and
its Subsidiaries, on a consolidated basis to (b) Current Liabilities of Borrower
and its Subsidiaries on a consolidated basis.
"Debt" means, with respect to any Person (a) indebtedness of such
Person for borrowed money, (b) indebtedness for the deferred purchase price of
property or services, (c) the face amount of any outstanding letters of credit
issued for the account of such Person, (d) obligations arising under acceptance
facilities, (e) guaranties, endorsements (other than for collection in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person, or otherwise
to assure a creditor against loss, (f) obligations secured by any Lien on
property of such Person, (g) obligations of such Person as lessee under Capital
Leases and (h) indebtedness of such Person evidenced by a note, bond, indenture
or similar instrument.
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"Debt Coverage Ratio" means (a) the consolidated EBITDA of Borrower
and its Subsidiaries, minus any cash Dividends paid or declared to be paid to
shareholders of Borrower during such period, (b) divided by the sum of the
Current Debt and Interest Expense of Borrower and its Subsidiaries all on a
consolidated basis, as determined at the end of each fiscal quarter, based upon
Borrower's financial statements delivered in accordance with Section 8.08 for
the period of 12 months preceding the date of determination.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and,
to the extent permitted by law, any other amount payable by Borrower under this
Agreement or the Note a rate per annum equal to 2% above the rate of interest
otherwise applicable to such Loan or other amount.
"Depreciation" means depreciation as determined in accordance with
GAAP.
"Dividends" means, for any period, dividends paid by Borrower or any
Subsidiary during such period.
"EBITDA" means, for any period, the sum of (a) Net Income, (b) income
taxes paid or payable to any government or government instrumentality, (c) all
Interest Expense paid or accrued on any Debt, (d) Depreciation and (e)
Amortization during such period.
"Environmental Laws" means (i) the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), (ii) the Resource
Conservation and Recovery Act ("RCRA"), (iii) the Federal Water Pollution
Control Act, (iv) the Clean Air Act, (v) the Toxic Substances Control Act, (vi)
the Safe Drinking Water Act, (vii) the Occupational Safety and Health Act of
1970, and (viii) the New York State Environmental Conservation Law ("ECL"),
Articles 1 through 71, (ix) the Hazardous Material Transportation Act, and (x)
any so-called federal, state or local "Superfund" or "Superlien" laws and (b)
any and all other laws, rules or regulations, relating to or imposing liability,
including without limitation (i) strict liability, (ii) standards of conduct
concerning hazardous materials, (iii) protection of the environment (including,
without limitation, air, surface water, ground water, or soil), including,
without limitation, any of the same relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
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"ERISA Affiliate" means any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Borrower or is under common control (within the
meaning of Section 414(c) of the Code) with Borrower.
"Event of Default" has the meaning given such term in Section 11.01.
"Extension and Modification Fee" means the fee described in Section
2.09(b) hereof.
"Facility Fee" means the fee described in Section 2.09(a) hereof.
"Forfeiture Proceeding" means the commencement of any prejudgment
action or proceeding affecting Borrower or any of its Subsidiaries pursuant to
any statute, rule or regulation which permits any governmental agency or
instrumentality to obtain a prejudgment seizure or forfeiture of any of their
property.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 7.05.
"Guaranty" means the Guaranty in the form of Exhibit B executed by
each of the Guarantors, secured by a Security Agreement.
"Guarantor Confirmation Agreement" means the Guarantor Confirmation
Agreement in the form of Exhibit B-1, to be executed by each of the Guarantors.
"Guarantors" means Four Seasons Litho, Inc., Disc Graphics Label
Group, Inc., and Cosmetic Sampling Technologies, Inc., each a Subsidiary of
Borrower and each a party to the Guaranty and the Guaranty Confirmation.
Guarantors shall include each future Subsidiary which is required to become a
party to the Guaranty in accordance with Section 9.10 hereof.
"Hazardous Substance" means any substance, waste or material regulated
under by any Environmental Law, and any substance which, due to its toxicity or
reactivity (as determined by any court, governmental or regulatory authority or
agency having jurisdiction or interpretative power thereon), poses a threat to
human health or the environment, including, but not limited to, all materials,
wastes, substances, pollutants and contaminants from time to time defined or
classified as such under any Environmental Law.
"Interest Expense" means interest expense of Borrower and its
Subsidiaries on a consolidated basis for a particular period as reflected in its
financial statements and calculated in accordance with GAAP.
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"Interest Period" means the period commencing on the date a LIBOR Loan
is made (or, with respect to a LIBOR Loan that represents the continuation of a
previous LIBOR Loan, the day immediately following the last day of the Interest
Period of such previous LIBOR Loan), and ending, as Borrower may select on the
30th, 60th or 90th day thereafter, provided that no Interest Period shall extend
beyond the Revolving Credit Termination Date.
"LIBOR" means, for any LIBOR Loan, the rate per annum (rounded upwards
if necessary to the nearest 1/16 of 1%) quoted by the Bank two Banking Days
prior to the first day of the Interest Period for such Revolving Credit Loan for
the offering to leading banks in the London interbank market of U.S. dollar
deposits in immediately available funds, for a period, and in an amount,
comparable to such Interest Period and principal amount of the LIBOR Loan which
shall be outstanding during such Interest Period.
"LIBOR Loan" means any Revolving Credit Loan when and to the extent
the interest rate therefor is determined on the basis of LIBOR.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, Capital Lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loan" means any loan made by the Bank pursuant to Section 2.01 or
3.01 hereof.
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
Guarantor Confirmation Agreement, the Security Agreements, the Security
Agreement Confirmations, the Notice of Borrowing and all other documents or
instruments executed in connection herewith or therewith.
"Margin" means (a) if Borrower's Debt Coverage Ratio is equal to or
less than 1.30:1.0, 150 basis points per annum, (b) if Borrower's Debt Coverage
Ratio is greater than 1.30:1.0 but less than or equal to 2.25:1.0, 125 basis
points per annum, and (c) if Borrower's Debt Coverage Ratio is greater than
2.25:1.0, 100 basis points per annum.
"Multiemployer Plan" means a Plan defined as such in Section
4001(a)(3) of ERISA to which contributions have been made by Borrower or any
ERISA affiliate and which is covered by Title IV of ERISA.
"Net Income" means, with respect to any entity for any period, such
entity's net income after taxes for such period as reflected on such entity's
financial statements.
"Notes" mean the Revolving Credit Note and the Term Note.
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"Notice of Borrowing" means the document signed by an officer of
Borrower in the form annexed as Exhibit F.
"Original Closing Date" shall mean February 26, 1997.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, limited liability company, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA or to which Section 412 of
the Code applies provided that such term shall not include plans terminated
prior to the date hereof.
"Prime Rate" means that rate of interest from time to time determined
or announced by the Bank at its Principal Office from time to time as its prime
lending rate. The Prime Rate is not necessarily the lowest rate of interest
charged by the Bank on loans or other credit relationships.
"Prime Rate Loans" mean any Revolving Credit Loan when and to the
extent the interest rate for such Revolving Credit Loan is determined in
relation to the Prime Rate.
"Principal Office" means the principal office of the Bank, presently
located at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means any change after the date of this Agreement
in federal, state, municipal or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks including the Bank of any
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA as to which events the PBGC by regulation has not waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section
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302 of ERISA shall be a Reportable Event regardless of any waivers given under
Section 412(d) of the Code.
"Revolving Credit Commitment" means the obligation of the Bank to
extend revolving credit to Borrower in accordance with the terms hereof in the
aggregate principal amount not to exceed $10,000,000, as such amount may be
reduced or otherwise modified from time to time in accordance with the terms
hereof.
"Revolving Credit Facility" means the Revolving Credit Facility
provided for in Article II hereof.
"Revolving Credit Loans" mean any Loan made by the Bank pursuant to
Section 2.01 hereof.
"Revolving Credit Note" means a promissory note of Borrower in the
form of Exhibit A-1 hereto evidencing the Revolving Credit Loans made by the
Bank hereunder.
"Revolving Credit Termination Date" means the earlier of (i) the date
on which the Revolving Credit Loan is paid in full and the Revolving Credit
Commitments shall terminate hereunder and the obligations of Borrower in
connection therewith have been satisfied or (ii) February 25, 2001 unless such
date is not a Banking Day, then the next succeeding Banking Day.
"Security Agreement" means, with respect to Borrower, the Security
Agreement in substantially the form of Exhibit C-I, and with respect to each
Guarantor, in the form of Exhibit C-2, delivered by Borrower under the terms of
this Agreement.
"Security Agreement Confirmations" means, with respect to Borrower,
the Confirmation of Security Agreement in substantially the form of Exhibit C-3,
and with respect to each Guarantor, the Confirmation of Security Agreement, in
the form of Exhibit C-4, to be delivered by Borrower under the terms of this
Agreement.
"Solvent" means, when used with respect to any Person on a particular
date, that on such date (a) the fair saleable value of its assets is in excess
of the total amount of its liabilities, including, without limitation, the
reasonably expected amount of such Person's obligations with respect to
contingent liabilities, (b) the present fair saleable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its Debts as they become absolute and
matured, (c) such Person does not intend to and does not believe that it will
incur Debts or liabilities beyond such Person's ability to pay as such Debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, for which such Person's property, would constitute an unreasonably
small capital.
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"Subsidiary" means, as to any Person, any corporation, partnership,
limited liability company or other business organization or entity of which at
least a majority of the securities or other ownership interests having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by such Person.
"Tangible Net Worth" means, at any particular date, the amount of
excess of Total Assets over Total Liabilities which would, in accordance with
GAAP, be included under shareholders' equity on a consolidated balance sheet of
Borrower and its Subsidiaries as at such date, excluding, however, from the
determination of Total Assets all intangible assets, including, without
limitation, organizational expenses, patents, trademarks, copyrights, goodwill,
covenants not to compete, research and developmental costs, training costs,
treasury stock, deferred charges and any loans receivable from officers or
Affiliates.
"Term Loan" means the Loan to Borrower pursuant to Section 3.01.
"Term Loan Maturity Date" means February 25, 2005.
"Term Loan Note" means the promissory note of Borrower in the form of
Exhibit A-2 hereto evidencing a Term Loan made by the Bank hereunder.
"Total Assets" means, at a particular date, all amounts which would,
in accordance with GAAP, be included under assets on a consolidated balance
sheet of Borrower and its Subsidiaries as at such date.
"Total Funded Debt" means, with respect to any Person, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
as lessee under Capital Leases, (c) indebtedness of such Person evidenced by a
note, bond, indenture or a similar instrument evidencing an obligation to repay
money and (d) the face amount of any outstanding letters of credit issued for
the account of such Person.
"Total Liabilities" means, at a particular date, all amounts which
would, in accordance with GAAP, be included under liabilities on a consolidated
balance sheet of Borrower and its Subsidiaries as at such date.
"Unfunded Vested Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of Borrower or
any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.
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Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. REVOLVING CREDIT FACILITY
Section 2.01. Revolving Credit Loans.
(a) Subject to the terms and conditions of this Agreement, the Bank
agrees to make Revolving Credit Loans to Borrower from time to time from and
including the date hereof to but excluding the Revolving Credit Termination Date
up to but not exceeding at any one time outstanding the amount of its Revolving
Credit Commitment; provided, that no Revolving Credit Loan shall be made if,
after giving effect to such Revolving Credit Loan, the Aggregate Outstandings at
the time would exceed the Revolving Credit Commitment in effect on such date.
The Revolving Credit Loans may be Prime Rate Loans or LIBOR Loans; provided,
however, that during the occurrence and continuance of an Event of Default, the
Bank shall have no obligation to make any Revolving Credit Loans. Subject to the
foregoing limits, Borrower may borrow, repay and reborrow, on or after the date
hereof and prior to the Revolving Credit Termination Date, all or a portion of
the Revolving Credit Commitment hereunder.
(b) If at any time for any reason the Aggregate Outstandings exceed
the amount of the Revolving Credit Commitment, Borrower shall pay the amount of
such excess to the Bank immediately on demand.
Section 2.02. The Revolving Credit Note. The Revolving Credit Loans
shall be evidenced by a single Revolving Credit Note in favor of the Bank
substantially in the form of Exhibit A-1 with appropriate insertions, duly
executed and completed by Borrower. The Bank is authorized to record the date,
type and amount of each Revolving Credit Loan, the date and amount of each
payment or prepayment of principal thereof, the date of each interest rate
conversion pursuant to Section 2.05 and the principal amount subject thereto and
the Interest Period and interest rate with respect thereto in its records or on
the schedules annexed to and constituting a part of the Revolving Credit Note,
and, absent manifest error, any such recordation shall constitute conclusive
evidence of the information so recorded; provided that the failure to make any
such recordation shall not in any way affect Borrower's obligation to repay the
Revolving Credit Loans. The Revolving Credit Note shall (a) be dated the date
hereof, (b) mature on the Revolving Credit Termination Date and (c) bear
interest from and including the date hereof on the unpaid principal amount
thereof from time to time outstanding as provided herein.
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Section 2.03. Use of Proceeds.
(a) Borrower shall use the proceeds of the Revolving Credit Loans to
repay existing bank indebtedness, for general working capital purposes, and
subject to the sublimit described in Section 2.08, to finance Acquisitions. No
part of the proceeds of any of the Loans will be used for any purpose which
violates the provisions of Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System as in effect on the date of making such Loans.
(b) Borrower shall indemnify the Bank and hold it harmless from and
against any and all liabilities, losses, damages, costs and expenses (including,
without limitation, the reasonable fees and disbursements of counsel for the
Bank in connection with any investigative, administrative or judicial
proceeding, whether or not the Bank is designated a party thereto) which may be
incurred by the Bank, relating to or arising out of this Agreement or any actual
or proposed use of proceeds of Loans hereunder; provided, that the Bank shall
not have the right to be indemnified hereunder for its own gross negligence or
willful misconduct.
Section 2.04. Borrowing Procedures for Revolving Credit Loans.
Borrower may request a borrowing under the Revolving Credit Commitment as
provided in Section 4.01. Not later than 2:00 p.m. New York City time on the
date of such borrowing as stated in the Notice of Borrowing, subject to the
conditions of this Agreement, the Bank shall make available to Borrower, in
immediately available funds, the amount of such Revolving Credit Loan by
crediting a designated account of Borrower maintained with the Bank.
Section 2.05. Interest on Revolving Credit Loans.
(a) Base Rate Loans. Borrower shall pay interest on the outstanding
and unpaid principal amount of each Prime Rate Loan made under this Agreement at
a fluctuating rate per annum equal to the Prime Rate from time to time in
effect. Each change in the interest rate shall take effect simultaneously with
the corresponding change in the Prime Rate. Borrower shall pay interest on Prime
Rate Loans in arrears on the first day of each month and on the Revolving Credit
Termination Date, calculated on the basis of the actual number of days elapsed
divided by a 360 day year. Any principal amount not paid when due (at maturity,
on acceleration, or otherwise) shall bear interest thereafter until paid at the
Default Rate.
(b) LIBOR Loans. Borrower shall pay interest on the outstanding
principal amount of each LIBOR Loan made under this Agreement at a fixed rate
equal to LIBOR plus the applicable Margin. Borrower shall pay interest on LIBOR
Loans calculated on the basis of the actual number of days elapsed divided by a
360 day year. Any principal amount not paid when due (at maturity or
acceleration or otherwise) shall bear interest thereafter until paid at the
Default Rate. Accrued interest on LIBOR Loans shall be due and payable in
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arrears upon any payment of principal and on the last day of the Interest Period
with respect thereto; provided that, after an Event of Default, interest shall
accrue at the Default Rate and shall be due and payable from time to time on
demand of the Bank. Any principal amount of LIBOR Loans not paid when due (at
maturity, on acceleration, or otherwise) shall bear interest thereafter until
paid at such Default Rate.
(c) Adjustments to Margin. The applicable Margin shall be adjusted for
all LIBOR Loans based upon Borrower's Debt Coverage Ratio as reflected in its
financial statements delivered to the Bank from time to time as required
hereunder. Once determined, the Margin shall remain in effect until the fifth
Banking Day after the Bank's receipt on or before the dates set forth in Section
8.08 of the relevant financial statements, whereupon if appropriate based upon
the then existing Debt Coverage Ratio, the Margin shall adjust for all new LIBOR
Loans and for any continuation of an existing LIBOR Loan at the end of an
Interest Period. If Borrower delivers its annual audited statements more than 90
days after the end of its fiscal year and if the Debt Coverage Ratio as reported
in such financial statements is lower than the Debt Coverage Ratio as reported
in Borrower's quarterly financial statements for the third quarter of such
fiscal year with the result that a higher Margin would apply, Borrower shall pay
the Bank, within ten Banking Days of demand, an amount equal to the excess of
the interest that would have been paid at such higher rate over the interest
actually paid during the relevant period between March 30th and the date the
annual statements are delivered. In no event shall Borrower receive a refund of
interest paid to the Bank under the provision of this Section.
(d) Interest Periods for LIBOR Loans. In the case of each LIBOR Loan,
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.01, subject to the following
limitations: (a) no Interest Period shall have a duration less than one month,
and if any such proposed Interest Period would otherwise be for a shorter
period, such Interest Period shall not be available and (b) if an Interest
Period would end on a day which is not a Banking Day, such Interest Period shall
be extended to the next Banking Day, unless such Banking Day would fall in the
next calendar month in which event such Interest Period shall end on the
immediately preceding Banking Day. Any Interest Period which would otherwise
extend beyond the Revolving Credit Termination Date shall end on the Revolving
Credit Termination Date.
(e) Conversions. Upon the expiration of an Interest Period for any
LIBOR Loan, or any portion thereof, such LIBOR Loan or portion thereof shall be
automatically converted to a Prime Rate Loan except to the extent that such
Revolving Credit Loan shall be repaid hereunder or shall be required to be paid
hereunder or unless Borrower shall have notified the Bank, as provided in
Section 4.01 hereof, of its intention to continue such LIBOR Loan or any portion
thereof as a LIBOR Loan. Subject to the following conditions and to the terms
and conditions of this Agreement, Borrower may convert any Revolving Credit Loan
or portion thereof to a different type of Revolving Credit Loan:
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(i) if less than all Revolving Credit Loans at the time
outstanding shall be converted, the notice given by Borrower to the Bank shall
specify the aggregate amount of Revolving Credit Loans in each case to be
converted;
(ii) in the case of a conversion of less than all outstanding
Revolving Credit Loans, the aggregate principal amount of Revolving Credit Loans
to be converted shall not be less than $50,000 (and if greater in integral
multiples of $10,000);
(iii) no Revolving Credit Loan may be converted to a LIBOR Loan
less than one month before the Revolving Credit Termination Date;
(iv) a LIBOR Loan may be converted to a Prime Rate Loan only on
the last day of an Interest Period; and
(v) no Revolving Credit Loan or portion thereof may be converted
to a LIBOR Loan during the occurrence and continuance of an Event of Default.
Section 2.06. Changes of Commitment. Borrower may reduce or terminate
the amount of unused Revolving Credit Commitment from time to time but not more
than four times during the term of this Agreement or more than once during any
calendar year by giving notice to the Bank of each such reduction or termination
to the Bank as provided in Section 4.01. Any partial reduction shall be in a
minimum aggregate amount of $1,000,000 or, if greater, in integral multiples of
$250,000. Once reduced or terminated, the Revolving Credit Commitment may not be
reinstated.
Section 2.07. Minimum Amounts. Except for borrowings which exhaust the
full remaining amount of the Revolving Credit Commitment, and prepayments (in
the case of Prime Rate Loans only) which result in the prepayment of all Loans,
each borrowing and each prepayment of principal shall be at least $50,000, and
if greater, in integral multiples of $10,000.
Section 2.08. Acquisitions. Subject to the terms and conditions
hereof, the Bank agrees to make one or more Revolving Credit Loans to finance
Borrower's Acquisitions, provided that, (a) the requirements of Section 9.07 are
satisfied and (b) no Revolving Credit Loan for Acquisitions shall be permitted
if (i) an Event of Default has occurred which continues at such time, (ii) after
giving effect to such Loan, the Aggregate Outstandings at the time of such
issuance would exceed the Revolving Credit Commitment in effect on such date or
(iii) as a result of such Acquisition or the making of such Loan, an Event of
Default would occur.
Section 2.09. Fees. (a) Borrower has paid to the Bank a Facility Fee
equal to $5,000 on the Original Closing Date and shall continue to pay a
Facility Fee on each anniversary of the Original Closing Date until the
Revolving Credit Termination Date.
- 13 -
(b) Borrower shall pay to the Bank an Extension and Modification Fee
equal to $5,000 on the Closing Date.
Section 2.10. Conversion to Term Loan. On the Revolving Credit
Termination Date, provided there has been no Default or Event of Default,
Borrower may convert all or a part, but not less than $2,000,000 of the
outstanding principal balance of the Revolving Credit Loans to the Term Loan,
having the terms and conditions specified in Article 3.
- 14 -
ARTICLE 3. TERM LOAN.
Section 3.01. Term Loan. If Borrower exercises the option described in
Section 2.10, Borrower shall give the Bank notice three Banking Days prior to
the Revolving Credit Termination Date, and together with such notice, pay the
Bank a Commitment Fee equal to 0.5% of the amount of the Revolving Credit Loans
to be converted to a Term Loan. Subject to the terms and conditions hereof, the
Bank shall make a four year Term Loan to Borrower in the amount of the Aggregate
Outstandings or such lesser amount permitted under Section 2.10 at and effective
as of the Revolving Credit Termination Date.
Section 3.02. The Term Note. The Term Loan shall be evidenced by a
single promissory note of Borrower substantially in the form of Exhibit A-2
hereto, with appropriate insertions, payable to the order of the Bank and
representing the obligation of Borrower to pay the unpaid principal amount of
the Term Loan, with interest thereon as described herein. The Term Loan Note
shall (a) be dated the Revolving Credit Termination Date, mature in 48 equal
consecutive monthly installments, be payable on the first day of each month
commencing on the first day of the month following the Revolving Credit
Termination Date and ending on the Term Loan Maturity Date, and (c) bear
interest for a period from the date hereof until the Term Maturity Loan Date on
the unpaid principal amount thereof at the applicable rates per annum specified
herein. All accrued and unpaid interest and fees shall be due and payable on the
Term Loan Maturity Date.
Section 3.03. Interest on the Term Loans. Borrower shall pay interest
on the outstanding and unpaid principal balance of the Term Loan a fluctuating
rate per annum equal to (i) the Prime Rate or (ii) LIBOR plus a margin of 250
basis points. Each change in the interest rate shall take effect simultaneously
with the corresponding change in the Prime Rate. Interest on the Term Loan shall
be calculated on the basis of a 360 day year and shall be paid in arrears on the
first day of each month and on the Term Loan Maturity Date. Any principal amount
not paid when due (at maturity, on acceleration or otherwise) shall bear
interest thereafter until paid at the Default Rate. At Borrower's election made
during the period beginning on the Revolving Credit Termination Date through two
years thereafter, provided no Default or Event of Default then exists, Borrower
may effect a change in the interest rate on the Term Loan to a fixed rate from
the Prime Rate by entering into a Swap Agreement between the Borrower and the
Bank, at the rate established by exchange, through Key Capital Markets, Inc., of
the obligation evidenced by the Term Loan Note for an obligation bearing
interest at a fixed rate having a term that is equivalent to the term of the
Term Loan. The rights and obligations of Borrower and the Bank respecting such
exchange shall be set forth in a Swap Agreement to be executed between them.
ARTICLE 4. GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.
Section 4.01. Certain Notices. Borrower shall give Notice of Borrowing
to the Bank of each borrowing pursuant to Section 2.04, each prepayment pursuant
to Section 4.02,
- 15 -
each conversion or continuation of LIBOR Loans pursuant to Section 2.05 and each
reduction or termination of Revolving Credit Commitment pursuant to Section
2.06. Each such notice shall be irrevocable, and shall be effective on the date
of receipt only if received by the Bank not later than 11:00 a.m., New York City
time as follows:
(a) In the case of borrowings and prepayments of Prime Rate Loans, at
least one Banking Day prior thereto;
(b) In the case of LIBOR Loans, at least three Banking Days prior
thereto;
(c) In the case of reductions or termination of the Revolving Credit
Commitment, ten days prior thereto; and
(d) In the case of conversions or continuations of Loans pursuant to
Section 2.05, three Banking Days prior thereto.
Each such notice relating to the borrowing, conversion or prepayment of a Loan
shall specify the Loans to be borrowed, converted or prepaid and the amount and
type of the Loans to be borrowed or prepaid and the date of borrowing,
conversion or prepayment (which shall be a Banking Day). Each such notice of
reduction or termination of the Revolving Credit Commitment shall specify the
amount of the Revolving Credit Commitment to be reduced or terminated.
Section 4.02. Prepayments.
(a) Borrower shall have the right at any time and from time to time to
prepay any Prime Rate Loan, in whole or in part, upon at least one Banking Day's
prior written notice to the Bank; provided, however, that each such partial
prepayment of Prime Rate Loans shall not be less than $50,000 or if greater, in
amounts which are integral multiples of $10,000. Except as required by paragraph
(b) below or on the last day of an Interest Period with respect thereto,
Borrower shall not be permitted to prepay LIBOR Loans.
(b) On the date of any reduction of the Revolving Credit Commitment as
provided in Section 2.06, Borrower shall pay or prepay so much of the Loans as
shall be necessary in order that the Aggregate Outstandings will not exceed the
Revolving Credit Commitment after giving effect to such reduction. All
prepayments of LIBOR Loans due to a reduction of the Revolving Credit Commitment
shall be subject to Section 5.05.
(c) All prepayments of principal required by paragraph (b) above shall
be applied first to Prime Rate Loans outstanding, and then to LIBOR Loans
outstanding.
- 16 -
(d) All prepayments of principal shall be accompanied by the payment
of all accrued interest on the amount so prepaid and, in the case of LIBOR
Loans, by all amounts required to be paid pursuant to Section 5.05.
Section 4.03. Default Interest. Notwithstanding any other provision of
this Agreement, upon the occurrence and continuance of an Event of Default, each
Loan outstanding hereunder shall bear interest at a rate per annum equal to the
Default Rate.
Section 4.04. Payments Generally. All payments under this Agreement or
the Notes shall be made in immediately available funds not later than 1:00 p.m.
New York City time on the relevant dates specified above at the Bank's office at
0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
(a) Any payment made after such time on such due date shall be deemed
to have been made on the next succeeding Banking Day.
(b) Whenever a new Loan is to be made on a date Borrower repays any
principal of an outstanding Loan, the Bank shall apply the proceeds of such new
Loan to the payment of the principal to be repaid and only an amount equal to
the difference between the principal to be borrowed and the principal to be
repaid shall be made available by the Bank to Borrower as provided in Section
2.04 or paid by Borrower to the Bank pursuant to this Section 4.04, as the case
may be.
(c) The Bank may (but shall not be obligated to) debit the amount of
any such payment which is not made by the time specified in Section 4.04(a) to
any ordinary deposit account of Borrower with the Bank. Borrower shall, at the
time of making each payment under this Agreement or the Note, specify to the
Bank the principal or other amount payable by Borrower under this Agreement. If
Borrower fails to so specify, the payment will be applied first to interest and
then to principal, unless a Default or Event of Default has occurred and is
continuing, in which case the Bank may apply such payment as it may elect in its
sole discretion. If the due date of any payment under this Agreement or the Note
would otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the period of such extension.
ARTICLE 5. YIELD PROTECTION; ETC.
Section 5.01. Additional Costs.
(a) Borrower shall pay directly to the Bank from time to time on
demand such amounts as the Bank may determine (in the manner set forth in
Section 5.01(d)) to be necessary to compensate it for any increases in costs
attributable to its making or maintaining any LIBOR Loans under this Agreement
or its Note or its obligation to make any LIBOR
- 17 -
Loans hereunder or any reduction in any amount receivable by the Bank hereunder
in respect of any LIBOR Loans or such obligation or capital in respect of this
Agreement (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to the Bank under this
Agreement or the Revolving Credit Note in respect of any of such LIBOR Loans
(other than taxes imposed on the overall net income of the Bank for any LIBOR
Loans by the jurisdiction in which the Bank has its principal office); or (ii)
imposes or modifies any reserve, special deposit, deposit insurance or
assessment, minimum capital, capital ratio or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of, the Bank; or (iii) imposes any other condition affecting this
Agreement or the Note (or any of such extensions of credit or liabilities). The
Bank will notify Borrower of any event occurring after the date of this
Agreement which will entitle the Bank to compensation pursuant to this Section
as promptly as practicable after it obtains knowledge thereof by furnishing
Borrower a written statement describing the Additional Costs entitling it to
compensation hereunder and the Bank's method of allocating to Borrower such
Additional Costs. If the Bank requests compensation from Borrower under this
Section or under Section 5.01(c), Borrower may suspend the obligation of the
Bank to make Loans of the type with respect to which such compensation is
requested.
(b) Without limiting the effect of the foregoing provisions of this
Section if by reason of any Regulatory Change, the Bank either (i) incurs
Additional Costs based on or measured by the excess above a specified level of a
category of deposits or other liabilities of the Bank which includes deposits by
reference to which the interest rate on LIBOR Loans is determined as provided in
this Agreement or a category of extensions of credit or other assets of the Bank
which includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if the Bank
so elects by notice to Borrower, the obligation of the Bank to make Loans of
such type hereunder shall be suspended until the date such Regulatory Change
ceases to be in effect.
(c) Without limiting the effect of the foregoing provisions of this
Section, Borrower shall pay directly to the Bank from time to time on request
such amounts as the Bank may determine (in the manner set forth in Section
5.01(d)) to be necessary to compensate the Bank for any Additional Costs which
are attributable to the maintenance by it or any of its affiliates (pursuant to
any Regulatory Change) of capital in respect of its Loans hereunder or its
obligation to make Loans hereunder (such compensation to include, without
limitation, an amount equal to any reduction in return on assets or equity of
the Bank to a level below that which it would have achieved but for such
Regulatory Change). The Bank will notify Borrower if it is entitled to
compensation pursuant to this Section as promptly as practicable after it
obtains knowledge thereof by furnishing Borrower with a written statement
describing the Additional Costs entitling it to compensation hereunder and the
Bank's method of allocating to Borrower such Additional Costs.
- 18 -
(d) Reasonable determinations and allocations by the Bank for purposes
of the effect of any Regulatory Change pursuant to Sections 5.01(a), (b) or (c)
on its costs of making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it in respect of Loans or
such obligation, and of the additional amounts required to compensate the Bank,
shall be conclusive absent demonstrated error.
(e) Any amounts the Bank receives pursuant to the foregoing provisions
of this Section 5.01 shall not be duplicative of compensation payable to the
Bank under Section 5.05.
Section 5.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if:
(a) the Bank determines (which determination shall be conclusive
absent demonstrated error) that quotations of interest rates for the relevant
deposits referred to in the definition of "LIBOR" in Section 1.01 are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for any type of LIBOR Loans as provided in this
Agreement; or
(b) the Bank determines (which determination shall be conclusive
absent demonstrated error) that the relevant rates of interest referred to in
the definition of LIBOR in Section 1.01 upon the basis of which the rate of
interest for any type of LIBOR Loans is to be determined do not adequately cover
the cost to the Bank of making or maintaining such Loans;
then the Bank shall give Borrower prompt notice thereof, and so long as such
condition remains in effect, the obligations of the Bank to make LIBOR Loans
shall be suspended (in which case the provisions of Section 5.04 shall be
applicable).
Section 5.03. Illegality. Notwithstanding any other provision in this
Agreement, if it becomes unlawful for the Bank to honor its obligation to make
or maintain LIBOR Loans hereunder, the Bank shall promptly notify Borrower and
the Bank's obligation to make or maintain LIBOR Loans hereunder shall be
suspended until such time as the Bank may again make and maintain such affected
Loans (in which case the provisions of Section 5.04 shall be applicable).
Section 5.04. Conversion to Prime Rate Loans. If the obligations of
the Bank to make LIBOR Loans shall be suspended pursuant to any of the foregoing
Sections all Loans which would otherwise be made by the Bank as LIBOR Loans
shall be made instead as Prime Rate Loans and, if an event referred to in
Section 5.01(b) or 5.03 has occurred and the Bank so requests by notice to
Borrower, all LIBOR Loans of the Bank then outstanding shall be automatically
converted into Prime Rate Loans on the date specified by the Bank in such
notice, and, to the extent that LIBOR Loans are so made as (or converted into)
Prime Rate
- 19 -
Loans, all payments of principal which would otherwise be applied to the Bank's
LIBOR Loans shall be applied instead to its Prime Rate Loans. If any LIBOR Loan
is converted to a Prime Rate Loan pursuant to this Section prior to the last day
of the Interest Period with respect to such LIBOR Loan, Borrower shall pay to
the Bank all amounts required to be paid pursuant to Section 5.05 hereof.
Section 5.05. Certain Compensation.
(a) Borrower shall pay to the Bank such reasonable amount or amounts
as shall be sufficient (in the reasonable opinion of the Bank) to compensate it
for any loss, cost or expense which the Bank determines is attributable to:
(i) Borrower's prepayment of a LIBOR Loan (whether by reason of
the mandatory or voluntary prepayment provisions of this Agreement or otherwise)
or failure to pay principal or interest on a LIBOR Loan when due; or
(ii) Borrower's failure to borrow, convert into or continue a
LIBOR Loan on the date specified therefor in the relevant notice given under
Section 4.01; or
(iii) Borrower's failure to prepay a LIBOR Loan on the date
specified therefor in the relevant notice under Section 4.02.
(b) A reasonable determination by the Bank of amounts payable pursuant
to this Section shall be conclusive absent manifest error. In the case of
prepayments of LIBOR Loans, Borrower shall pay to the Bank a prepayment premium
equal to any costs, loss or expense that it may sustain or incur as a result of
Borrower's prepaying the LIBOR Loan, including (but not limited to) the Bank's
loss of anticipated interest on such LIBOR Loan at the applicable interest rate,
or any interest or other charge payable by the Bank to others who provided funds
to the Bank to enable it to make or maintain such LIBOR Loan. In addition,
Borrower shall reimburse the Bank for all administrative costs incurred by the
Bank as a result of such prepayment.
ARTICLE 6. CONDITIONS PRECEDENT.
Section 6.01. Conditions to the Initial Borrowings. The obligations of
the Bank to make the Loans constituting the initial borrowing under 3.01, or the
Term Loan under 3.01, were subject to the conditions precedent listed below, all
of which were satisfied by the Borrower:
(a) the Bank's receipt of each of the following, in form and substance
satisfactory to the Bank and its counsel:
- 20 -
(i) the Revolving Credit Note or the Term Loan Note, as
applicable, duly executed by Borrower;
(ii) a certificate of the Secretary or Assistant Secretary of
Borrower and of each Guarantor, dated the Original Closing Date or the Revolving
Credit Termination Date, as applicable, attesting to all corporate action taken
by Borrower or such Guarantor, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of the Loan Documents and
each other document delivered pursuant to this Agreement and certifying the
names and true signatures of the officers of Borrower or each Guarantor
executing the Loan Documents and the other documents delivered by Borrower or
such Guarantor under this Agreement;
(iii) certified copies of the certificate or articles of
incorporation and the by-laws of Borrower or such Guarantor, as the case may be,
stating that the resolutions and corporate documents thereby certified had not
been amended, modified, revoked or rescinded as of the date of such certificate;
(iv) a certificate of a duly authorized officer of Borrower,
dated the Original Closing Date or the Revolving Credit Termination Date, as
applicable, stating that the representations and warranties in Article 7 were
true and correct on such date as though made on and as of such date (unless made
as of a specific date earlier than the date hereof, in which case they shall be
true and correct as of such earlier date) and that no event had occurred and was
continuing which would constitute a Default or Event of Default;
(v) the Guaranty duly executed by each of the Guarantors;
(vi) the Security Agreement, duly executed by Borrower, together
with such UCC-1 financing statements as were required by the Bank;
(vii) such duly executed UCC-3 Revolving Credit Termination
Statements as were necessary to terminate existing liens on the assets of
Borrower;
(viii) a favorable opinion of counsel for Borrower, dated the
Original Closing Date or the Revolving Credit Termination Date, as applicable,
in substantially the form of Exhibit E and as to such other matters as the Bank
had reasonably requested;
(ix) satisfactory evidence that Borrower and each of the
Guarantors were duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; and
(x) such other documents, instruments, approvals, opinions and
evidence of compliance with the terms hereof as the Bank had required;
- 21 -
(b) Borrower's payment of all fees required to be paid hereunder or in
connection herewith and all accrued fees and expenses of the Bank in connection
with the preparation, execution and delivery of this Agreement, and the other
Loan Documents and the consummation of the transactions contemplated thereby;
(c) Borrower's and Guarantors' obtainment of all consents, permits and
approvals required in connection with the execution, delivery and performance by
Borrower and the Guarantors of their respective obligations hereunder and under
the other Loan Documents and such consents, permits and approvals shall continue
in full force and effect; and
(d) all legal matters in connection with this financing were
satisfactory to the Bank and its counsel.
Section 6.02. Conditions to All Borrowings. The obligations of the
Bank to make any Loan (including the initial Revolving Credit Loan) hereunder
have been and shall continue to be subject to the further conditions precedent
that on the date of such Loan:
(a) the truth of the following statements:
(i) the representations and warranties contained in Article 7
were and are true and correct on and as of the date of such Loan as though made
on and as of such date (unless such representations and warranties are made as
of a specific earlier date in which case they shall be true and correct as at
such date);
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such Loan; and
(iii) no material adverse change has occurred in the business,
financial condition or operations of Borrower since the date of the most recent
financial statements of Borrower delivered to the Bank hereunder or in
connection herewith; and
(b) the Bank's receipt of such approvals, opinions, documents or
instruments as the Bank may have reasonably requested.
Section 6.03. Deemed Representations. Unless Borrower otherwise
notifies the Bank prior to any borrowing hereunder, the acceptance by Borrower
of the proceeds of any Loan shall constitute a representation and warranty that
the statements contained in Section 6.02(a) are true and correct as of the date
of such Loan.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants that:
- 22 -
Section 7.01. Incorporation, Good Standing and Due Qualification;
Compliance with Law. Each of Borrower and the Guarantors is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged, and
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required except where
the failure to so qualify and/or be in good standing could not in any case or in
the aggregate, have a material adverse effect on the operations, business,
property or financial condition of any of Borrower or any Guarantor or on its
respective ability to perform its respective obligations hereunder. In addition,
each of Borrower and the Guarantors is in compliance with all laws, treaties,
rules or regulations, or determination of an arbitration or a court or other
governmental authority, in each case applicable to or binding upon it or any of
its property or to which it or any of its property is subject, except to the
extent that the failure to so comply could not, in any case or in the aggregate,
have a material adverse effect on the operations, business, property or
financial condition of Borrower and the Guarantors, taken as a whole, or on
their ability to perform their obligations under the Loan Documents.
Section 7.02. Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by each of Borrower and each of the
Guarantors of the Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (a) require any consent or approval of
its stockholders that has not been obtained, (b) contravene its charter or
by-laws, (c) violate any provision of, or require any filing (other than filings
contemplated hereby and/or by the other Loan Documents), registration, consent
or approval under, any law, rule, regulation (including, without limitation, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System as in effect from time to time), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Borrower or such Guarantor, (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which Borrower
or such Guarantor is a party or by which any of its properties may be bound or
affected, (e) result in, or require, the creation or imposition of any Lien,
upon or with respect to any of the properties now owned or hereafter acquired by
Borrower or such Guarantor other than Liens created by this Agreement and/or the
other Loan Documents, or (f) cause Borrower or such Guarantor to be in default
under any such rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
Section 7.03. Legally Enforceable Agreements. Each Loan Document is,
or when delivered under this Agreement will be, a legal, valid and binding
obligation of Borrower or each Guarantor party thereto, enforceable against
Borrower or such Guarantor in accordance with its terms.
Section 7.04. Litigation. There are no actions, suits or proceedings
pending or to Borrower's knowledge, threatened against or affecting Borrower or
any of the Guarantors
- 23 -
or any of their respective Subsidiaries before any court, governmental agency or
arbitrator, which could, in any one case or in the aggregate, adversely affect
the financial condition, operations, properties or business of Borrower and the
Guarantors, taken as a whole, or their ability to perform their respective
obligations under the Loan Documents.
Section 7.05. Financial Statements. The consolidated balance sheet of
Borrower and its Subsidiaries as at December 31, 1997 and the related
consolidated income statement and statement of cash flow of Borrower and its
Subsidiaries for the fiscal year then ended, and the accompanying notes,
together with the opinion thereon, of KPMG Peat Marwick LLP, independent
certified public accountants (the "Auditor"), and the consolidated financial
statements for the six month period ended June 30, 1998, copies of which were
delivered to the Bank, fairly present the consolidated financial condition of
Borrower and its Subsidiaries as at such dates and the consolidated results of
the operations of Borrower and its Subsidiaries for the periods covered by such
statements, all in accordance with GAAP consistently applied. As of the date
hereof, there are no liabilities of Borrower and its Subsidiaries, fixed or
contingent, which are material but are not reflected in such financial
statements or in the notes thereto, other than liabilities arising in the
ordinary course of business since June 30, 1998 and the liabilities created by
this Agreement. Since the date of the most recent financial statements delivered
to the Bank and the Closing Date, there has been no material adverse change in
the condition (financial or otherwise), business, operations or, to the
knowledge of Borrower, prospects of any of Borrower or the Guarantors. With
respect to any Loans made after the Original Closing Date, since the date of the
most recent financial statements delivered to the Bank hereunder and the date of
such Loan, there has been no material adverse change in the condition (financial
or otherwise), business, operations or, to the knowledge of Borrower, prospects
of Borrower and the Guarantors, taken as a whole.
Section 7.06. Ownership and Liens. Each of Borrower and the Guarantors
has title to, or valid leasehold interests in, all of its properties and assets,
real and personal, reflected in the financial statements referred to in Section
7.05 (other than any properties or assets disposed of since the date of such
financial statements as no longer used or useful in the conduct of their
respective business or as have been disposed of in the ordinary course of
business), and none of the properties and assets owned by Borrower or the
Guarantors, or any of them, and none of their leasehold interests, is subject to
any Lien, except as disclosed in Schedule I or as may be permitted hereunder.
Section 7.07. Taxes. Each of Borrower and the Guarantors has filed all
tax returns (federal, state and local) required to be filed except where the
failure to file could not, in any case or in the aggregate, have an adverse
effect upon the operations, business, property or financial condition of any of
Borrower or the Guarantors or on their ability to perform their obligations
under the Loan Documents. Each of Borrower and the Guarantors has paid when due
all taxes, assessments and governmental charges and levies shown thereon to be
due, including interest and penalties, other than taxes, assessments and
governmental charges
- 24 -
and levies being contested in good faith by appropriate proceedings and with
respect to which adequate reserves in conformity with GAAP shall have been
provided on the books of Borrower or the Guarantors, as the case may be.
Section 7.08. ERISA. Each of Borrower and the Guarantors is in
compliance in all material respects with all applicable provisions of ERISA. No
Reportable Event has occurred with respect to any Plan, no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated, no
circumstance exists which constitutes grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings, none of
Borrower nor its ERISA Affiliates has completely or partially withdrawn under
Sections 4201 or 4204 of ERISA from a Multiemployer Plan and each of Borrower
and each of its ERISA Affiliates has met its minimum funding requirements under
ERISA with respect to all of its Plans and there are no Unfunded Vested
Liabilities. None of Borrower nor its ERISA Affiliates has incurred any
liability to the PBGC under ERISA, other than to make contributions in the
ordinary course and other than contingent liabilities that would arise on the
termination of any Plan (no such termination being reasonably foreseen by
Borrower).
Section 7.09. Subsidiaries and Ownership of Stock. Schedule II is a
complete and accurate list of the Subsidiaries of Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and the
percentage of Borrower's ownership of the outstanding stock or other interest of
each such Subsidiary.
Section 7.10. Credit Arrangements. Schedule III is a complete and
correct list of all credit agreements, indentures, purchase agreements outside
the ordinary course of Borrower's business, guaranties, Capital Leases and other
investments, agreements and arrangements in effect on the date of this Agreement
providing for or relating to extensions of credit to Borrower or to the
Guarantors or to any of them (including agreements and arrangements for the
issuance of letters of credit or for acceptance financing) in respect of which
Borrower, the Guarantors or any of them is in any manner directly or
contingently obligated. Schedule III shows the maximum principal or face amounts
of the credit in question, outstanding and which can be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule and
Schedule I.
Section 7.11. Operation of Business. Each of Borrower and each
Guarantor possesses all material licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct their
business as now conducted and as presently proposed to be conducted and to
Borrower's best knowledge, none of Borrower nor any of the Guarantors is in
violation of any valid rights of others with respect to any of the foregoing.
Section 7.12. Hazardous Substances. Each of Borrower and the
Guarantors is in compliance with all Environmental Laws, and has obtained all
necessary licenses and
- 25 -
permits required to be issued pursuant to any Environmental Law. None of
Borrower nor any of the Guarantors has received any written notice or
communication from any governmental agency with respect to any Hazardous
Substance relative to its operations, property or acts or any investigation,
demand or request pursuant to or enforcing any Environmental Law relating to it
or its operations, and no such investigation is pending or, to the knowledge of
Borrower, threatened.
Section 7.13. Compliance with Loans and Judgments. Borrower and each
Subsidiary are in compliance, in all material respects, with all laws, rules,
regulations, orders and decrees which are applicable to Borrower or its
Subsidiaries, or to any of their respective properties. Each of Borrower and the
Guarantors has satisfied all judgments and none of Borrower nor any of the
Guarantors is in default with respect to any judgment, writ, injunction, decree,
rule or regulation of any court, arbitrator or federal, state, municipal or
other governmental authority, commission, board, bureau, agency or
instrumentality, domestic or foreign.
Section 7.14. No Defaults on Other Agreements. Except as disclosed on
Schedule IV, none of Borrower nor any of the Guarantors is a party to any
indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction which would in any
case or in the aggregate have an adverse effect on its ability to carry out its
obligations under the Loan Documents. None of Borrower nor any of the Guarantors
is in default in any respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party except where such
default would not, in any case or in the aggregate, have a material and adverse
effect on the business, properties, assets, operations or condition, financial
or otherwise, of Borrower and the Guarantors, taken as a whole, or on their
ability to perform their obligations under the Loan Documents.
Section 7.15. Labor Disputes and Force Xxxxxx. Neither the business
nor the properties of Borrower or any of the Guarantors is affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, force xxxxxx or of the public enemy or other casualty
(whether or not covered by insurance), materially and adversely affecting such
business or properties or the operations of Borrower and the Guarantors, taken
as a whole, or their ability to perform their obligations under the Loan
Documents.
Section 7.16. Governmental Regulation. None of Borrower or the
Guarantors is subject to regulation under the Public Utility Holding Company Act
of 1935, the Investment Company Act of 1940 or any other statute or regulation
limiting its ability to incur indebtedness for money borrowed as contemplated
hereby.
Section 7.17. Partnerships. None of Borrower or the Guarantors is a
partner in any partnership or a member of any joint venture or limited liability
company.
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Section 7.18. No Forfeiture. None of Borrower nor any of the
Guarantors is engaged in or proposes to be engaged in any unlawful activity
which is reasonably likely to result in a Forfeiture Proceeding and no
Forfeiture Proceeding against any of them is pending or, to the best of
Borrower's knowledge, threatened.
Section 7.19. Security Agreement. The provisions of the Security
Agreements, as confirmed by the Security Agreement Confirmations, are effective
to create in favor of the Bank legal, valid and enforceable security interests
in all right, title and interest of Borrower in all the Collateral described
therein, assuming the same has been duly executed by the Bank and the Bank has
filed the forms UCC-1 referred to therein.
Section 7.20. Disclosure. This Agreement, each Loan Document and,
except as set forth in Section 7.21, each other document, certificate, exhibit,
report or written statement furnished to the Bank by or on behalf of Borrower or
for use in connection with the Loans, do not contain any untrue statement of
material fact or omit to state a material fact necessary to make the statement
contained herein or therein not misleading under the circumstances in which they
were made.
Section 7.21. Projections and Forecasts. Any financial
projection or forecast furnished by Borrower or any Guarantor shall be prepared
in accordance with GAAP to the extent applicable, based on the good faith
judgment of Borrower's management of present circumstances, expected conditions
and expected courses of action, and with respect to projections, based on the
occurrence of the hypothetical events described therein. The underlying
assumptions in such forecasts and projections shall be appropriate and
reasonable under the circumstances and, if the forecast or projection presents a
range, such range shall not be selected in a misleading manner.
ARTICLE 8. AFFIRMATIVE COVENANTS.
So long as the Note shall remain unpaid or the Bank shall have any
obligations under this Agreement, Borrower shall and shall cause the Guarantors
to:
Section 8.01. Maintenance of Existence. Except as otherwise provided
in this Agreement, preserve and maintain its corporate existence and good
standing in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is required.
Section 8.02. Conduct of Business. Continue to engage in its current
business or related businesses.
Section 8.03. Maintenance of Properties. Maintain, keep and preserve
all of its properties (tangible and intangible) necessary to the conduct of its
business in good working order and condition, ordinary wear and tear excepted.
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Section 8.04. Maintenance of Records. Keep records and books of
account, in which complete entries will be made in accordance with GAAP.
Section 8.05. Maintenance of Insurance. Maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated.
Section 8.06. Compliance with Laws. Comply in all respects with all
applicable laws, rules, regulations and orders.
Section 8.07. Right of Inspection. At any reasonable time and from
time to time, upon reasonable notice during normal business hours, permit the
Bank or any agent or representative thereof, to examine and make copies and
abstracts from the records and books of account of, and visit the properties of,
such entity, to discuss the affairs, finances and accounts of such entity with
any of their respective officers and directors and such entity's independent
accountants, and from time to time at Borrower's expense to conduct such
collateral and other audits as the Bank deems necessary.
Section 8.08. Reporting Requirements. Furnish directly to each of the
Bank:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of Borrower, consolidated financial statements of
Borrower and its Consolidated Subsidiaries which shall include a consolidated
balance sheet of Borrower and its Subsidiaries as of the end of such fiscal year
and a consolidated income statement and statement of cash flows of such entities
for such fiscal year, stating in comparative form the respective consolidated
figures for the corresponding date and period in the prior fiscal year and all
prepared in accordance with GAAP, accompanied by an opinion thereon acceptable
to the Bank by the Auditor, which opinion neither includes an exception as to
adherence with GAAP nor contains a disclaimer;
(b) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of Borrower, a
consolidated balance sheet of Borrower and its Subsidiaries as of the end of
such quarter and a consolidated income statement and statements of cash flows of
such entities for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, all in reasonable detail and stating in
comparative form the respective consolidated figures for the corresponding date
and period in the previous fiscal year and all prepared in accordance with GAAP
and attested to by the president or chief financial officer of Borrower (subject
to year-end adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in (a) and (b) above, a certificate of the president or chief
financial officer of Borrower (i) certifying that to the best of his knowledge
no Default or Event of Default has occurred and
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is continuing or, if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Article 10;
(d) within 30 days after the delivery of the financial statements
referred to in (a) above, annual forecasts and Borrower's budget for the
upcoming fiscal year, with a comparison of actual results to budget for the
fiscal year then ended;
(e) promptly upon receipt thereof, a copy of the management letter, if
any, prepared by the Auditor;
(f) on or prior to the fifteenth day of each calendar month, a
schedule of inventory of the Company and its Subsidiaries certified by the
President or Chief Financial Officer and current as of the last Banking Day of
the preceding month, which shall contain a breakdown of the inventory by type,
amount and location and such other information reasonably requested by the Bank;
(g) promptly after Borrower becomes aware of the commencement thereof,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, involving claims of $150,000 or more affecting Borrower, or any of its
Subsidiaries, including, without limitation, any such proceeding relating to any
alleged violation of any Environmental Law;
(h) as soon as possible and in any event within five days after the
occurrence of each Default or Event of Default, a written notice specifying and
describing in reasonable detail such Default or Event of Default and describing
in reasonable detail the action which is proposed to be taken by Borrower with
respect thereto;
(i) promptly after the commencement thereof or promptly after Borrower
knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding;
(j) promptly after submission to any government or regulatory agency,
all documents and information furnished to such government or regulatory agency
other than such documents and information prepared in the normal course of
business and which would not result in any adverse action to be taken by such
agency;
(k) as soon as possible and in any event within five Banking Days
after Borrower knows that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan have occurred or exist, a statement
signed by a chief financial officer of Borrower setting forth details respecting
such event or condition and the action, if any, which Borrower or the ERISA
Affiliate propose to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by Borrower or an ERISA
Affiliate with respect to such event or condition):
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(i) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, with respect to a Plan, as to which PBGC
has not by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA shall be a reportable event regardless of the issuance of
any waivers in accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of intent
to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by Borrower or any ERISA Affiliate, of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal by Borrower or any ERISA
Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the
receipt by Borrower, or any ERISA Affiliate, of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under Section 4041A of
ERISA; and
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section
515 of ERISA, which proceeding is not dismissed within 30 days;
(l) promptly, and in any event within five business days after the
sending or filing thereof, copies of all proxy statements, financial statements,
and reports which Borrower sends to its stockholders, and copies of all regular,
periodic and special reports and all registration statements which Borrower
files with the Securities and Exchange Commission or any other governmental
authority, or with any national securities exchange;
(m) such other information respecting the condition or operations,
financial or otherwise, of Borrower, or any Guarantor, as the Bank may from time
to time reasonably request.
Section 8.09. Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all material Debt except for any Debt which is being contested in good faith
and with respect to which, on a consolidated basis, adequate reserves are
maintained in conformity with GAAP.
Section 8.10. Payment of Taxes. Pay and discharge promptly all taxes,
assessments and government charges or levies imposed upon it or upon its income
and profits, or upon any of its property, real, personal or mixed, or upon any
part thereof, before the same
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shall become in default, and all other material obligations (including lawful
claims for labor, materials and supplies which, if unpaid, might become a Lien)
except that neither the Company nor any Guarantor shall be required to pay any
such tax, assessment, charge, levy or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings and there shall have
been set aside on its books adequate reserves determined in accordance with GAAP
with respect to any such tax, assessment, charge, levy or claim so contested,
provided that, except as provided in Section 9.02, the Company and each
Guarantor shall pay all such taxes, assessments, charges, levies or claims
promptly if any Lien has attached as security therefor.
Section 8.11. Acquisitions. Prior to entering into any letter of
intent, agreement or other commitment or proposed commitment relating to any
Acquisition, furnish the Bank with notice of same and with such information
relating to the Acquisition as Borrower possesses at the time it provides notice
to the Bank and which the Bank may reasonably request.
Section 8.12. Management. Use its best efforts to cause Xxxxxx Xxxxxx,
Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx and Xxxx Xxxxxxxx to continue in the employ of
the Borrower in their present positions with their existing authority as
executive officers of Borrower, and consult with the Bank regarding the
replacement of any of them.
ARTICLE 9. NEGATIVE COVENANTS.
So long as the Note shall remain unpaid or the Bank shall have any
obligations under this Agreement, Borrower shall not:
Section 9.01. Debt and Guaranties.
(a) Create, incur, assume or suffer to exist, or permit any Guarantors
to create, incur, assume or suffer to exist any Debt, except:
(i) Debt arising under this Agreement or the Note;
(ii) Debt described in Schedule III, and any renewals, extensions
or refinancings thereof, provided that such renewals, extensions or refinancing
are on terms no less favorable to Borrower or the Guarantor than the original
terms of such Debt (except for increases in interest rates not inconsistent with
increases in prevailing interest rates);
(iii) Debt incurred in connection with operating leases entered
into by Borrower, the Guarantors, or any of them, consistent with past practices
or in the ordinary course of business; and
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(iv) Debt of Borrower, or the Guarantors, or any of them, secured
by purchase money Liens permitted by Section 9.02.
(b) Guaranty, endorse, become surety for or otherwise in any way
become or be responsible for the Debt or obligations of any Person, whether by
agreement to maintain capital, equity, net worth or solvency of any Person, by
agreement to purchase or discharge the Debt of any Person, or agreement to
purchase merchandise, materials, supplies or other property, if such agreement
provides that payment shall be made whether or not delivery of such merchandise,
materials, supplies or other property is ever made or tendered except:
(i) guarantees executed prior to the date hereof as described on
Schedule V attached hereto;
(ii) endorsements of negotiable instruments for collection or
deposit in the ordinary course of business; and
(iii) guarantees under this Agreement or of Debt of Borrower or
any Guarantor owing to the Bank.
Section 9.02. Liens. Create, incur, assume or suffer to exist, or
permit any of the Guarantors to create, incur, assume or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens in favor of the Bank securing the Loans hereunder;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained in conformity with GAAP;
(c) Liens (i) imposed by law, such as mechanic's, supplier's,
materialmen's, landlord's, warehousemen's and carrier's Liens, and other similar
Liens, securing obligations incurred in the ordinary course of business which
are not past due for more than 30 days or (ii) which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established which, when aggregated with all indebtedness secured by all such
other Liens, secure indebtedness having an aggregate principal balance not in
excess of $50,000;
(d) Liens under workers' compensation unemployment insurance, social
security or similar legislation (other than ERISA);
(e) judgment and other similar Liens arising in connection with court
proceedings that have been in existence for fewer than 30 days after entry of
the judgment or
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the execution or other enforcement of which is effectively stayed, and the
claims secured thereby are being actively contested, in Borrower's reasonable
judgment, in good faith and by appropriate proceedings, or which relate to
judgments which, when aggregated with all other judgments secured by such Liens,
total less than $50,000; and
(f) purchase money Liens on any property heretofore or hereafter
acquired or the assumption of any Lien on property existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or other
title retention agreement or a Capital Lease; provided that such liens attach
only to the property as acquired and do not extend to any additional property of
Borrower.
Section 9.03. Investments and Advances. Make or permit any Subsidiary
to make any loan or advance to any Person, or purchase, redeem or otherwise
acquire, or permit any such Subsidiary to purchase, redeem or otherwise acquire
any capital stock, assets, obligations or other securities, or make any capital
contribution to otherwise invest in or acquire any interest in any Person
(including, without limitation, any Borrower or any Subsidiary or Affiliate of
any Borrower), except:
(a) obligations issued or guaranteed by states or municipalities
within the United States of American and rated at least A-1 by Standard &
Poor's;
(b) obligations issued or guaranteed by the United States of America
or any agency or subdivision thereof, the payment or guarantee of which
constitutes a full faith and credit obligation of the United States of America;
(c) certificates of deposit, time deposits, Eurodollar certificates of
deposit, bankers acceptances and other money market instruments issued by any
bank, trust company or financial institution organized under the laws of the
United States of America or any state (or in the case of Eurodollar certificates
of deposit, a branch of any such bank, trust company or financial institution)
having capital and surplus in an aggregate amount not less than $200,000,000 and
with such instrument rated at least A-1 by Standard & Poor's;
(d) commercial paper rated at least Prime-1 by Xxxxx'x Investor
Services or A-1 by Standard & Poor's;
(e) repurchase agreements entered into with any bank, trust company or
other financial institution organized under the laws of the United States of
America or any state having capital and surplus in an aggregate amount not less
than $200,000,000 and which are fully secured by obligations of the type
described in Section 9.03(b);
(f) Acquisitions permitted pursuant to Section 9.07 hereof; and
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(g) Investments of Borrower in any Subsidiary or investment of any
Subsidiary in any other Subsidiary.
Section 9.04. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of the Guarantors to sell, lease, assign,
transfer or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests) except for (i) assets
disposed of as no longer used or useful in the conduct of their respective
business or as have been disposed of in the ordinary course of business
consistent with Borrower's past practice or (ii) transfers of assets between or
among Borrower and Subsidiaries of Borrower, provided all such Subsidiaries are
Guarantors which have executed Security Agreements.
Section 9.05. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate or permit any of
the Guarantors to enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Guarantors business and upon fair and
reasonable terms not materially less favorable to Borrower or such Guarantor
than would be obtained in a comparable arm's length transaction with a Person
not an Affiliate.
Section 9.06. Mergers. Except as permitted in Section 9.07, and except
for mergers of any Subsidiary with and into either Borrower or any Subsidiary
which is at such time a Guarantor, merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of the Guarantors to do so.
Section 9.07. Acquisitions. Make any Acquisition, unless the entity to
be acquired is primarily in the business of manufacturing and printing of
specialty packaging and the Bank has been furnished with (a) such documents as
are necessary in the Bank's discretion to provide the Bank with a Guaranty of
the entity to be acquired (if it is to be a Subsidiary) and to grant the Bank a
perfected lien upon the assets so acquired, (b) satisfactory evidence that the
ratio of Borrower's Total Funded Debt to EBITDA, on a consolidated basis and
after giving effect to such Acquisition, does not exceed 3.0:1, (c) a
certificate of the president or chief financial officer of Borrower certifying
that no Default or Event of Default has occurred and is continuing and that no
Default or Event of Default would occur as a result of Borrower's making such
Acquisition and (d) within 15 days of completing such Acquisition, a balance
sheet of the Borrower prepared by Borrower's management demonstrating
compliance, on a pro forma basis, with the covenants contained in Article 10
immediately after the Acquisition.
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Section 9.08. No Activities Leading to Forfeiture Proceeding. Engage
in or permit any Guarantor to engage in any unlawful activity which could
reasonably be expected to result in a Forfeiture Proceeding.
Section 9.09. Corporate Documents; Fiscal Year. Change its fiscal
year, or amend, modify or supplement its certificate or articles of
incorporation or by-laws in any way with the result that any of the individuals
identified in Section 8.12 have diminished responsibilities or operating and
management authority over Borrower and its Subsidiaries.
Section 9.10. New Subsidiaries. Form, or permit any Guarantor to form,
any Subsidiary unless such Subsidiary shall become a party to the Guaranty.
ARTICLE 10. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or the Bank has any
obligations under this Agreement:
Section 10.01. Net Income. Borrower shall maintain at all times a
positive Net Income on a fiscal year basis.
Section 10.02. Current Ratio. Borrower shall maintain at all times a
Current Ratio of not less than 1.25:1.00.
Section 10.03. Maximum Liabilities to Worth Ratio. Borrower shall
maintain on a consolidated basis at all times a ratio of Total Liabilities to
Tangible Net Worth of not more than 2.75:1.0.
Section 10.04. Debt Coverage Ratio. Borrower shall maintain on a
consolidated basis at all times a Debt Coverage Ratio of not less than 1.25:1.0.
Section 10.05. Total Funded Debt to EBITDA Ratio. Borrower shall
maintain on a consolidated basis at all times a ratio of Total Funded Debt to
EBITDA of not more than 3.00:1.00.
Section 10.06. Determination of Compliance. Compliance with these
financial covenants shall be determined by reference to the consolidated
financial statements of Borrower and its Subsidiaries delivered to the Bank in
accordance with Section 8.08. Except as set forth in 10.01, all financial
covenants shall be applicable at all times and shall be tested at the end of
each fiscal quarter based upon the balance sheet information and the results of
operations for the period of 12 months preceding the date of determination. For
purposes of calculating compliance with Sections 10.02, 10.03 and 10.04, the
principal portion of all
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Revolving Credit Loans and the Revolving Credit Note shall be deemed to be a
current liability and not long-term indebtedness.
ARTICLE 11. EVENTS OF DEFAULT.
Section 11.01. Events of Default. The occurrence of any of the
following events shall be an "Event of Default":
(a) Borrower shall fail to pay within five days of due date (i)
principal of the Note, (ii) interest on the Note or (iii) any fee or other
amount due hereunder as and when due and payable.
(b) Any representation or warranty made or deemed made by Borrower in
this Agreement, or by Borrower or any Guarantor in any certificate delivered
pursuant to this Agreement or any other Loan Document, or which is contained in
any certificate, document, opinion, financial or other statement furnished to
the Bank at any time pursuant to any Loan Document, shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
(c) Borrower shall fail to perform or observe any term, covenant or
agreement contained in Section 2.03 or Articles 8, 9 or 10;
(d) Borrower or any Guarantor shall fail to perform or observe any
term, covenant or agreement on its part to be performed or observed in any Loan
Document and such failure shall continue for 15 consecutive days;
(e) Borrower or any Guarantor shall (i) fail to pay any amounts with
respect to any Debt in favor of the Bank, including but not limited to
indebtedness for borrowed money (other than the payment obligations described in
(a) above) of Borrower or such Guarantor, as the case may be, or any interest or
premium thereon, when due (giving effect to any applicable grace period),
whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise, (ii) fail to pay any amounts in excess of $50,000 in the aggregate
with respect to any other Debt, including but not limited to indebtedness for
borrowed money of Borrower or such Guarantor, as the case may be, or any
interest or premium thereon, when due (giving effect to any applicable grace
period), whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise, (iii) fail to perform or observe any term, covenant or
condition on its part to be performed or observed under any agreement or
instrument relating to any Debt when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate, or to permit
the acceleration of, after the giving of notice or passage of time or both, the
maturity of such Debt, whether or not such failure to perform or observe shall
be waived by the holder of such
- 36 -
Debt or (iv) any Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;
(f) Borrower or any Guarantor shall (i) generally not, be unable to or
admit in writing its or their inability to, pay its or their debts as such debts
become due; or (ii) make an assignment for the benefit of creditors, petition or
apply to any court or otherwise for the appointment of a custodian, receiver or
trustee for it or a substantial part of its or their assets, (iii) as debtor,
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, (iv) have had any such
petition or application filed or any such proceeding shall have been commenced,
against it or them, in which an adjudication or appointment is made or order for
relief is entered, and which petition, application or proceeding remains
undismissed for a period of 30 days or more, or (v) by any act or omission shall
indicate its or their consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its or their
property, (vi) suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of 30 days or more or (vii) cease to be
Solvent;
(g) one or more judgments, decrees or orders for the payment of money
in excess of $50,000 in the aggregate in respect of uninsured or unbonded claims
shall be rendered against Borrower or any of Guarantor and such judgments,
decrees or orders shall continue unsatisfied and in effect for a period of 30
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal;
(h) An event or condition specified in Section 8.08(m) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
Borrower or any ERISA Affiliate shall incur or in the opinion of the Bank shall
be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or
PBGC (or any combination of the foregoing) which is, in the determination of the
Bank, material in relation to the financial condition, operations, business or
prospects of Borrower or the Guarantors;
(i) Any Forfeiture Proceeding shall have been commenced; or
(j) The Security Agreement shall at any time after its execution and
delivery and for any reason cease to create a valid and perfected first security
interest in the Collateral or to be in full force and effect, or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by Borrower, or Borrower shall deny that it has any further liability
or obligation under a Security Agreement to which it is a party, or Borrower
shall fail to perform any of its material obligations under any Security
Agreement.
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Section 11.02. Remedies. If any Event of Default shall occur, the Bank
shall (a) declare the Revolving Credit Commitment to be terminated, whereupon
the same shall forthwith terminate, and (b) declare the outstanding principal of
the Notes, all interest thereon and all other amounts payable under this
Agreement and the Notes to be forthwith due and payable, whereupon the Notes,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by Borrower; provided that, in the case of
an Event of Default referred to in Section 11.01(e) or Section 11.01(h) above,
the Commitments shall be immediately terminated, and the Note, all interest
thereon and all other amounts payable under this Agreement and the Note shall be
immediately due and payable without notice, presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by
Borrower.
ARTICLE 12. MISCELLANEOUS
Section 12.01. All of Borrower's and each Subsidiary's computer
hardware and software which performs or supports Borrower's principal business
functions, or its accounting, financial reporting or management information
systems (collectively, "Principal Systems") have the ability to (a) consistently
handle date information before, during and after January 1, 2000, including but
not limited to accepting date input, providing date output and performing
calculations on dates or portions of dates, (b) function accurately in
accordance with the specifications of such computer hardware or software and
without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century, (c) respond
to two-digit date input in a way that resolves any ambiguity as to century in a
disclosed, defined and predetermined manner and (d) store and provide output of
date information in ways that are unambiguous as to century. With respect to the
Principal Systems, any reprogramming or other corrective modifications required
to permit the proper functioning beginning immediately after December 31, 1999
of (i) the computer systems of Borrower, its Subsidiaries and Affiliates and
(ii) equipment containing embedded microchips (including systems and equipment
supplied by others or with which systems of Borrower, its Subsidiaries and
Affiliates interface) and the testing of all such systems and equipment, as so
reprogrammed, has been completed.
Section 12.02. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by Borrower and the Bank, and
any provision of this Agreement may be waived by Borrower or by the Bank;
provided that no amendment, modification or waiver shall be effective, unless by
an instrument signed by the Bank. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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Section 12.03. Usury. Anything herein to the contrary notwithstanding,
the obligations of Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of applicable law limiting
rates of interest which the Bank may charge or collect.
Section 12.04. Expenses. Borrower shall reimburse the Bank on demand
for all reasonable costs, expenses, and charges (including, without limitation,
reasonable fees and charges of external legal counsel for the Bank) incurred by
the Bank in connection with the preparation or performance of this Agreement and
the Loan Documents. In addition, Borrower shall reimburse the Bank for all of
its reasonable costs and expenses in connection with the enforcement or
preservation of any rights under this Agreement, the Note or the other Loan
Documents. Borrower agrees to indemnify the Bank and its directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them arising
out of or by reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other proceedings)
relating to any actual or proposed use by Borrower, of the proceeds of the
Loans, including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified).
Section 12.05. Survival. The obligations of Borrower under Section
2.03(b), Article 5 and Section 12.03 shall survive the repayment of the Loans
for a period corresponding to the maximum applicable statute of limitations in
effect in the State of New York from time to time.
Section 12.06. Assignment. This Agreement shall be binding upon, and
shall inure to the benefit of, Borrower and the Bank and their respective
successors and assigns, except that Borrower may not assign or transfer its
rights or obligations hereunder.
Section 12.07. Notices. All notices, consents, approvals and other
communications required or permitted to be given to a party under this Agreement
shall be in writing and shall be delivered personally to the party, sent by any
national overnight courier or mailed first class certified mail, return receipt
requested, to the party at the address indicated on page one, to the attention
of Xxxxxx Xxxxx for the Bank and to the attention of Xxxxxxxx Xxxxxxxx for
Borrower. Any item delivered in accordance with the provisions of this Section
shall be deemed to have been delivered (i) on the date of personal delivery,
(ii) on the business day following the date sent by overnight courier or (ii) on
the fifth day following the date on which it was so mailed, as the case may be.
Section 12.08. Setoff. Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim the
Bank may otherwise have,
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the Bank shall be entitled, at its option without any prior notice to Borrower
(any such notice being expressly waived by Borrower to the extent permitted by
applicable law), to offset balances (general or special, time or demand,
provisional or final) held by it for the account of Borrower at any of the
Bank's offices against any amount then due and payable by Borrower to the Bank
under this Agreement or the Note which is not paid when due (regardless of
whether such balances are then due to Borrower), in which case it shall promptly
notify Borrower thereof, provided that the Bank's failure to give such notice
shall not affect the validity thereof. Payments by Borrower hereunder shall be
made without setoff or counterclaim.
Section 12.09. Jurisdiction; Immunities.
(a) Borrowers hereby irrevocably submits to the jurisdiction of any
New York State or United States Federal court sitting in Suffolk or Nassau
County over any action or proceeding arising out of or relating to this
Agreement or the Note, and Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State or Federal court. To the extent permitted by applicable law, Borrower
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing (by certified or registered mail) of copies of such
process to it. Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. To the extent
permitted by applicable law, Borrower further waives any objection to venue in
such State or Federal Court and any objection to an action or proceeding in such
State or Federal Court on the basis of forum non conveniens. Borrower further
agrees that any action or proceeding brought against the Bank shall be brought
only in New York State or United States Federal court sitting in Suffolk or
Nassau County.
(b) THE PARTIES WAIVE ANY RIGHT TO A JURY TRIAL.
(c) Nothing in this Section shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the right of
the Bank to bring any action or proceeding against Borrower or its property in
the courts of any other jurisdictions.
(d) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, Borrower hereby
irrevocably waives, to the extent permitted by applicable law, such immunity in
respect of its obligations under this Agreement and the Note.
Section 12.10. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such
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jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
Section 12.11. Integration. The Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
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Section 12.12. Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York
applicable to agreements made and to be performed wholly within the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
DISC GRAPHICS, INC. KEYBANK NATIONAL ASSOCIATION
By:____________________________ By:______________________
Name: Xxxxxx Xxxxxx Name: Xxxxxx Xxxxx
Title: President and Title: Vice President
Chief Executive Officer
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List of Schedules and Exhibits
Schedule I Description of Liens
Schedule II List of subsidiaries of Borrower
Schedule III List of Credit Agreements
(including indentures, purchase
agreements, guaranties, Capital
Leases, etc.)
Schedule IV Agreements effecting Loan Documents
Schedule V List of Guaranties
* * * * *
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Term Note
Exhibit B Form of Guaranty
Exhibit B-1 Form of Guarantor Confirmation Agreement
Exhibit C-1 Security Agreement of Borrower
Exhibit C-2 Security Agreement of Guarantors
Exhibit C-3 Security Agreement Confirmation of Borrower
Exhibit C-4 Security Agreement Confirmation of Guarantors
Exhibit E Form of Opinion of Counsel
Exhibit F Form of Notice of Borrowing
- 43 -
EXHIBIT A-1
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$10,000,000 December 1, 1998
Islandia, New York
For value received, Disc Graphics, Inc., a Delaware corporation
("Borrower"), hereby promises to pay to the order of KeyBank National
Association, a national banking association (the "Bank"), at the Bank's office
at 0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000, on or before February 25, 2001,
the principal amount of $10,000,000, or the actual amount loaned by the Bank to
Borrower pursuant to the "Credit Agreement" (defined below), in lawful money of
the United States of America and in immediately available funds, on the date and
in the manner provided in the Credit Agreement. Borrower also promises to pay
interest on the unpaid principal balance hereof at the rate or rates of interest
as provided in the Credit Agreement, on the dates and in the manner provided
therein.
The holder of this Revolving Credit Note shall record the date and
amount of each Revolving Credit Loan made by the Bank, and the date and amount
of each payment of principal or interest, either on the schedule attached
hereto, or on such computer, magnetic disk, tape or other such electronic data
storage and retrieval system as the Bank considers adequate for such purpose, in
its sole and absolute discretion. Any such record shall constitute prima facie
evidence of the accuracy of the information so recorded, but no failure so to
record, or any error in so recording, shall affect the obligation of the
Borrower to repay any Revolving Credit Loans, with interest thereon, as provided
herein or in the Credit Agreement.
This is the Revolving Credit Note referred to in that certain
Revolving Credit Agreement dated February 26, 1997 between Borrower and the Bank
as amended and restated on December 1, 1998 (the "Credit Agreement"), and
evidences the Revolving Credit Loans made by the Bank thereunder. This Note is a
substitute for the one given by Borrower in the same amount on February 26,
1997. All terms not defined herein shall have the meanings given to them in the
Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default, for a Default Rate
of interest and for prepayments on the terms and conditions specified therein.
Borrower waives presentment, notice of dishonor, protest and any other
notice or formality with respect to this Revolving Credit Note, except as may be
set forth in the Credit Agreement.
The terms of this Revolving Credit Note may not be changed orally, but
only by an instrument duly executed by Borrower and the Bank.
This Revolving Credit Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
DISC GRAPHICS, INC.
By:_______________________________
Name:
Title:
SCHEDULE OF REVOLVING CREDIT LOANS
Date Type Principal Principal
of of Interest Amount of Maturity Paid or
Loan Loan Rate Loan of Loan
Unpaid
EXHIBIT A-2
TERM NOTE
$ February 25, 2001
Islandia, New York
For value received, Disc Graphics, Inc., a Delaware corporation
("Borrower"), hereby promises to pay to the order of KeyBank National
Association, a national banking association (the "Bank"), at the Bank's office
at 0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000, the principal sum of [insert
amount between $2,000,000 and $10,000,000] in 48 equal consecutive monthly
installments of [insert principal amount divided by 48], in lawful money of the
United States of America and in immediately available funds, in the manner
provided in the "Credit Agreement" (defined below) on the first day of each
calendar month commencing on __________, 2001 and ending with a final
installment of all unpaid principal hereunder on the Term Loan Maturity Date.
Borrower also promises to pay interest on the unpaid principal balance hereof at
the fluctuating annual rate of interest equal to the Base Rate plus a margin of
0.5%, as provided in the Credit Agreement, on the dates and in the manner set
forth therein.
This is the Term Loan Note referred to in that certain Credit
Agreement dated February 26, 1997 by and between Borrower and the Bank, as
amended and restated on December 1, 1998 (the "Credit Agreement"), and evidences
the Term Loan made by the Bank thereunder. All terms not defined herein shall
have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default, for a Default Rate
of interest and for prepayments on the terms and conditions specified therein.
Borrower waives presentment, notice of dishonor, protest and any other
notice or formality with respect to this Term Loan Note. The terms of this Term
Loan Note may not be changed orally, but only by an instrument duly executed by
Borrower and the Bank.
This Term Loan Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
DISC GRAPHICS, INC.
By:_______________________________
Name:
Title:
