LOAN AND SECURITY AGREEMENT
by and among
AEP INDUSTRIES INC.,
as Borrower
and
CONGRESS FINANCIAL CORPORATION,
as Agent
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders
Dated: November 20, 2001
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.....................................................................................1
SECTION 2. CREDIT FACILITIES..............................................................................30
2.1 Loans..........................................................................................30
2.2 Letter of Credit Accommodations................................................................31
2.3 Commitments....................................................................................35
2.4 Optional Reduction in Maximum Credit...........................................................35
SECTION 3. INTEREST AND FEES..............................................................................36
3.1 Interest.......................................................................................36
3.2 Fees...........................................................................................37
3.3 Changes in Laws and Increased Costs of Loans...................................................38
SECTION 4. CONDITIONS PRECEDENT...........................................................................41
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations......................41
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations..........................44
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST......................................................44
SECTION 6. COLLECTION AND ADMINISTRATION..................................................................52
6.1 Borrower's Loan Accounts.......................................................................52
6.2 Statements.....................................................................................52
6.3 Collection of Accounts.........................................................................53
6.4 Payments.......................................................................................54
6.5 Taxes..........................................................................................55
6.6 Authorization to Make Loans....................................................................57
6.7 Use of Proceeds................................................................................58
6.8 Pro Rata Treatment.............................................................................58
6.9 Sharing of Payments, Etc.......................................................................58
6.10 Settlement Procedures..........................................................................59
SECTION 7. COLLATERAL REPORTING AND COVENANTS.............................................................62
7.1 Collateral Reporting...........................................................................62
7.2 Accounts Covenants.............................................................................63
7.3 Inventory Covenants...........................................................................64
7.4 Equipment and Real Property Covenants..........................................................64
7.5 Power of Attorney..............................................................................65
7.6 Right to Cure..................................................................................66
7.7 Access to Premises.............................................................................66
(i)
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................................................67
8.1 Corporate Existence, Power and Authority.......................................................67
8.3 Financial Statements; No Material Adverse Change...............................................68
8.4 Priority of Liens; Title to Properties.........................................................68
8.5 Tax Returns....................................................................................68
8.6 Litigation.....................................................................................69
8.7 Compliance with Other Agreements and Applicable Laws...........................................69
8.8 Environmental Compliance.......................................................................69
8.9 Employee Benefits..............................................................................70
8.10 Bank Accounts..................................................................................71
8.11 Intellectual Property..........................................................................71
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.............................................71
8.13 Labor Disputes.................................................................................72
8.14 Restrictions on Subsidiaries...................................................................72
8.15 Material Contracts.............................................................................73
8.16 Payable Practices..............................................................................73
8.17 Accuracy and Completeness of Information.......................................................73
8.18 Survival of Warranties; Cumulative.............................................................73
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................73
9.1 Maintenance of Existence. ....................................................................73
9.2 New Locations..................................................................................74
9.3 Compliance with Laws, Regulations, Etc.........................................................74
9.4 Payment of Taxes and Claims....................................................................75
9.5 Insurance......................................................................................76
9.6 Financial Statements and Other Information.....................................................78
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc........................................79
9.8 Encumbrances...................................................................................83
9.9 Indebtedness...................................................................................86
9.10 Loans, Investments, Etc........................................................................93
9.11 Dividends and Redemptions.....................................................................101
9.12 Transactions with Affiliates..................................................................102
9.13 Compliance with ERISA. ......................................................................102
9.14 End of Fiscal Years; Fiscal Quarters..........................................................102
9.16 Limitation of Restrictions Affecting Subsidiaries.............................................103
9.17 Minimum EBITDA................................................................................103
9.18 License Agreements............................................................................103
9.19 Costs and Expenses............................................................................104
9.20 Further Assurances............................................................................105
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................................................105
10.1 Events of Default.............................................................................105
10.2 Remedies......................................................................................108
(ii)
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS......................................................................
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.........................111
11.2 Waiver of Notices.............................................................................112
11.3 Amendments and Waivers. .....................................................................113
11.4 Waiver of Counterclaims.......................................................................114
11.5 Indemnification...............................................................................114
SECTION 12. THE AGENT..........................................................................................115
12.1 Appointment, Powers and Immunities............................................................115
12.2 Reliance by Agent.............................................................................115
12.3 Events of Default.............................................................................116
12.4 Congress in its Individual Capacity...........................................................116
12.5 Indemnification...............................................................................117
12.6 Non-Reliance on Agent and Other Lenders.......................................................117
12.7 Failure to Act................................................................................117
12.8 Additional Loans..............................................................................118
12.9 Concerning the Collateral and the Related Financing Agreements................................118
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders.................118
12.11 Collateral Matters............................................................................119
12.12 Agency for Perfection.........................................................................120
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS...................................................................121
13.1 Term..........................................................................................121
13.2 Interpretative Provisions.....................................................................123
13.3 Notices.......................................................................................124
13.4 Partial Invalidity............................................................................125
13.5 Confidentiality...............................................................................125
13.6 Successors....................................................................................126
13.7 Assignments; Participations...................................................................127
13.8 Entire Agreement..............................................................................130
(iii)
LOAN AND SECURITY AGREEMENT
---------------------------
This
Loan and Security Agreement dated November 20, 2001 is entered
into by and among AEP Industries, Inc., a Delaware corporation ("Borrower"), the
financial institutions from time to time parties hereto as lenders, whether by
execution of this Agreement or an Assignment and Acceptance (each individually,
a "Lender" and collectively, "Lenders") and Congress Financial Corporation, a
Delaware corporation, in its capacity as agent for Lenders (in such capacity,
"Agent").
W I T N E S S E T H:
------------- - - -
WHEREAS, Borrower has requested that Agent and Lenders enter into
financing arrangements with Borrower pursuant to which Lenders may make loans
and provide other financial accommodations to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrower on a PRO
RATA basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment of a monetary obligation, whether or not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve
requirement which is or would be applicable to deposits of United States dollars
in a non-United States or an international banking office of Reference Bank used
to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the
proceeds of such deposit, whether or not the Reference Bank actually holds or
has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
1.3 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds ten (10%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds ten (10%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds ten
(10%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.4 "Agent" shall mean Congress Financial Corporation, in its capacity
as agent on behalf of Lenders pursuant to the terms hereof and any replacement
or successor agent hereunder.
1.5 "Agent Payment Account" shall mean account no. 50000 00000000 of
Agent at First Union National Bank or such other account of Agent as Agent may
from time to time designate to Borrower as the Agent Payment Account for
purposes of this Agreement and the other Financing Agreements.
1.6 "Applicable Margin" shall mean, at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is at or within the amounts indicated for such percentage or the
Leverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at or within the levels indicated for
such percentage:
Applicable Applicable
Prime Eurodollar
Excess Availability Leverage Ratio Rate Margin Rate Margin
------------------- -------------- ----------- -----------
(a) $50,000,000 or more Less than 2.00 to 1.00 1/4% 2 1/4%
2
(b) Greater than or equal to Greater than 2.00 to 1/2% 2 1/2%
$25,000,000 and less than 1.00 but equal to or
$50,000,000 less than 3.00 to 1.00
(c) Greater than or equal to Greater than 3.00 to 3/4% 2 3/4%
$10,000,000 and less than 1.00 but equal to or
$25,000,000 less than 4.00 to 1.00
(d) Less than $10,000,000 Greater than 4.00 to 1% 3%
1.00
PROVIDED, THAT, (i) the Applicable Margin shall be calculated and established
once each fiscal quarter (commencing with the fiscal quarter ending on or about
January 30, 2002) and shall remain in effect until such date thereafter as it
may be adjusted in accordance with Sections 1.58(b) or 1.58(c) hereof and (ii)
the Applicable Margin shall be the lower percentage set forth above based on the
Quarterly Average Excess Availability or the Leverage Ratio
1.7 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.8 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.9 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the amount equal to:
(A) eighty-five (85%) percent of the Net Amount of the
Eligible Accounts, PLUS
(B) the lesser of (1) the Inventory Loan Limit or (2)
sixty (60%) percent multiplied by the Value of the Eligible Inventory, PLUS
(C) the Equipment Availability, PLUS
(D) the New Equipment Availability, PLUS
(E) the Real Property Availability,
MINUS
(b) Reserves.
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letter of Credit Accommodations for the purpose
of purchasing Eligible
3
Inventory as Loans to the extent Agent is in effect basing the issuance of the
Letter of Credit Accommodations on the Value of the Eligible Inventory being
purchased with such Letter of Credit Accommodations. In determining the actual
amounts of such Letter of Credit Accommodations to be so treated for purposes of
the sublimit, the outstanding Loans and Reserves shall be attributed first to
any components of the lending formulas set forth above that are not subject to
such sublimit, before being attributed to the components of the lending formulas
subject to sublimit. The amounts of Eligible Inventory of Borrower shall, at
Agent's option, exercised in good faith, be determined based on the lesser of
the amount of Inventory set forth in the general ledger of Borrower or the
perpetual inventory record maintained by Borrower.
1.10 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of
New York, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.11 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.12 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, joint venture, limited liability
company or other equity interests at any time outstanding, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock or other interests (but excluding any debt security that is exchangeable
for or convertible into such capital stock).
1.13 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of any
agency or instrumentality thereof; PROVIDED, THAT, the full faith and credit of
the United States is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of one hundred eighty (180) days or less of
any financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of one hundred eighty (180) days or less issued by a corporation
(except an Affiliate of any Borrower ) organized under the laws of any State of
the United States or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc. or at
least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital and surplus and undivided profits of not less than
$250,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or
4
unconditionally guaranteed by the United States or issued by any governmental
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one hundred eighty (180) days or less from the date of
acquisition; PROVIDED, THAT, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.14 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act); (b) the liquidation or dissolution of Borrower or the adoption of
a plan by the stockholders of Borrower relating to the dissolution or
liquidation of Borrower; (c) the acquisition by any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act), except for one or more
Permitted Holders, of beneficial ownership, directly or indirectly, of a
majority of the voting power of the total outstanding Voting Stock of Borrower
or the Board of Directors of any Borrower; or (d) during any period of two (2)
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of Borrower (together with any new directors who have
been appointed by any Permitted Holder, or whose nomination for election by the
stockholders of Borrower, as the case may be, was approved by a vote of at least
sixty-six and two-thirds (66 2/3%) percent of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Borrower then still in office
1.15 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.16 "Collateral" shall have the meaning set forth in Section 5 hereof
(and shall include the shares of Capital Stock of AEP Industries (Australia) Pty
Ltd).
1.17 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent, from any lessor of premises to
Borrower, or any other person to whom any Collateral is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, INTER ALIA, acknowledges the
first priority security interest of Agent in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Agent access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Agent's rights and
remedies and otherwise deal with such Collateral and in the case of any
consignee or other person who at any time has custody, control or possession of
any Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and agrees to follow all
instructions of Agent with respect thereto. The form of Collateral Access
5
Agreement provided by Agent to Borrower prior to the date hereof is in form and
substance satisfactory to Agent, PROVIDED, THAT, as to the Collateral Access
Agreement with any lessor or other person as to a specific location, Agent may
require such changes to the form as it may in good xxxxx xxxx appropriate or
desirable under the circumstances at the time or as to the applicable location.
1.18 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.19 "Congress" shall mean Congress Financial Corporation, a Delaware
corporation, in its individual capacity, and its successors and assigns.
1.20 "Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis (except as to Borrower for purposes of
Section 9.17(a) hereof, the aggregate of the net income (loss) of Borrower on a
stand-alone basis without regard to its Subsidiaries), for such period
(excluding to the extent included therein (i) any extraordinary and/or one time
or unusual and non-recurring gains and (ii) any extraordinary and/or one time or
unusual and non-recurring losses) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period and, without
duplication, after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; PROVIDED, THAT,
(a) the net income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid or payable to such
Person or a Subsidiary of such Person;
(b) except to the extent included pursuant to the foregoing
clause, the net income of any Person accrued prior to the date it becomes a
Subsidiary of such Person or is merged into or consolidated with such Person or
any of its Subsidiaries or that Person's assets are acquired by such Person or
by its Subsidiaries shall be excluded;
(c) as to Borrower, the non-cash expenses relating to the
post-retirement plans sponsored by Borrower as of the date hereof shall be
excluded;
(d) as to Borrower, the non-cash expenses relating to the
employee stock option plan of Borrower as in effect on the date hereof shall be
excluded;
(e) as to Borrower, the non-cash expenses consisting of imputed
interest shall be excluded;
6
(f) as to Borrower, the non-cash expenses consisting of deferred
compensation shall be excluded (without duplication of any other non-cash
expenses excluded pursuant to the terms hereof);
(g) as to Borrower, such other non-cash expenses as are not
specified above as Agent may at its option determine shall be excluded;
(h) for the purposes of this definition, net income excludes any
gain or non-cash loss, together with any related Provision for Taxes for such
gain or non-cash loss, realized upon the sale or other disposition of any assets
that are not sold in the ordinary course of business (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or of any
Capital Stock of such Person or a Subsidiary of such Person and any net income
realized or loss incurred as a result of changes in accounting principles or the
application thereof to such Person.
1.21 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to Sections
2.1 and 2.2 hereof.
1.22 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.23 "Defaulting Lender" shall have the meaning set forth in Section 6.9
hereof.
1.24 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower with a deposit account at any bank and the bank at which such deposit
account is at any time maintained which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by Borrower and such other terms and
conditions as Agent may require, including as to any such agreement with respect
to any Blocked Account, providing that all items received or deposited in the
Blocked Accounts are the property of Agent, that the bank has no lien upon, or
right to setoff against, the Blocked Accounts, the items received for deposit
therein, or the funds from time to time on deposit therein and that the bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis to the Agent Payment Account all funds received or deposited into the
Blocked Accounts. The form of Deposit Account Control Agreement provided by
Agent to Borrower prior to the date hereof is in form and substance satisfactory
to Agent, PROVIDED, THAT, as to a Deposit Account Control Agreement with any
specific bank, Agent may require such changes to the form as it may in good
xxxxx xxxx appropriate or desirable under the circumstances at the time.
1.25 "Domestic Subsidiary" shall mean any Subsidiary of Borrower, other
than a Foreign Subsidiary.
1.26 "EBITDA" shall mean, as to any Person, with respect to any period,
an amount equal to: (a) the Consolidated Net Income of such Person for such
period, PLUS (b) depreciation and amortization for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person), all
in accordance with GAAP, PLUS (c) Interest Expense for such period
7
(to the extent deducted in the computation of Consolidated Net Income of such
Person), PLUS (d) the Provision of Taxes for such period (to the extent deducted
in the computation of Consolidated Net Income of such Person).
1.27 "Eligible Accounts" shall mean Accounts created by Borrower which
are and continue to be acceptable to Agent in good faith based on the criteria
set forth below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and BONA FIDE sale and
delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than the earlier of sixty
(60) days after the original due date for them or one hundred twenty (120) days
after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States or Canada (PROVIDED, THAT, at
any time promptly upon Agent's request, Borrower shall execute and deliver, or
cause to be executed and delivered, such other agreements, documents and
instruments as may be required by Agent to perfect the security interests of
Agent in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at Agent's option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is located
other than in the United States or Canada, then if either: (i) the account
debtor has delivered to Borrower an irrevocable letter of credit issued or
confirmed by a bank satisfactory to Agent and payable only in the United States
and in U.S. Dollars, sufficient to cover such Account, in form and substance
satisfactory to Agent and if required by Agent, the original of such letter of
credit has been delivered to Agent or Agent's agent and the issuer thereof, and
Borrower has complied with the terms of Section 5.4(f) hereof with respect to
the assignment of the proceeds of such letter of credit to Agent or naming Agent
as transferee beneficiary thereunder, as Agent may specify, or (ii) such Account
is subject to credit insurance payable to Agent issued by an insurer and on
terms and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);
8
(f) such Accounts do not consist of progress xxxxxxxx (such that
the obligation of the account debtors with respect to such Accounts is
conditioned upon Borrower's satisfactory completion of any further performance
under the agreement giving rise thereto), xxxx and hold invoices or retainage
invoices, except as to xxxx and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts),
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of Borrower;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States, any State, political subdivision, department, agency or
instrumentality thereof, upon Agent's request, the Federal Assignment of Claims
Act of 1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Agent;
(l) there is no proceeding or action known to Borrower or Agent
which is threatened or pending against the account debtors with respect to such
Accounts which is reasonably likely result in any material adverse change in any
such account debtor's financial condition (including, without limitation, any
bankruptcy, dissolution, liquidation, reorganization or similar proceeding);
(m) such Accounts are not evidenced by or arising under any
instrument or chattel paper;
(n) the aggregate amount of such Accounts owing by a single account
debtor (other than the subsidiaries of Royal Ahold B.V.) do not constitute more
than ten (10%) percent of the aggregate amount of all otherwise Eligible
Accounts and the aggregate amount of such Accounts
9
owing by the subsidiaries of Royal Ahold B.V. do not constitute more than
fifteen (15%) percent of the aggregate amount of all otherwise Eligible
Accounts;
(o) such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of sixty (60) days after the original due
date for them or one hundred twenty (120) days after the original invoice date
for them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(p) the account debtor is not located in a state requiring the
filing of a Notice of Business Activities Report or similar report in order to
permit Borrower to seek judicial enforcement in such State of payment of such
Account, unless Borrower has qualified to do business in such state or has filed
a Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
(q) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to such
account debtors as is deemed acceptable to Agent in good faith (but the portion
of the Accounts not in excess of such credit limit may be deemed Eligible
Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy
at all times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Accounts in the good faith determination of Agent. Any Accounts which are
not Eligible Accounts shall nevertheless be part of the Collateral.
1.28 "Eligible Equipment" shall mean Equipment owned by Borrower as of
the date hereof and included in the appraisal of the Equipment by Hilco
Industrial, LLC received by Agent on or before the date hereof and which is
addressed to Agent and upon which Agent is expressly permitted to rely, which
Equipment is in good order, repair, running and marketable condition, and
acceptable to Agent in good faith all respects. In general, Eligible Equipment
shall not include: (a) Equipment at premises other than those owned or leased
and controlled by Borrower, except as to premises that are leased by Borrower,
only if Agent shall have received a Collateral Access Agreement from the owner
and lessor of such premises in form and substance satisfactory to Agent; (b)
Equipment subject to a security interest or lien in favor of any person other
than Agent except those permitted in this Agreement (but without limiting the
right of Agent to establish any Reserves with respect to amounts secured by such
security interest or lien in favor of any Person even if permitted herein); (c)
Equipment which is not located in the continental United States; (d) Equipment
which is not subject to the first priority, valid and
10
perfected security interest of Agent; (e) worn-out obsolete, damaged or
defective Equipment or Equipment not used or usable in the ordinary course of
Borrower's business as presently conducted; (f) computer hardware; (g) fixtures;
(h) Equipment which is leased; or (i) tooling. Any Equipment which is not
Eligible Equipment shall nevertheless be part of the Collateral.
1.29 "Eligible Inventory" shall mean Inventory of Borrower consisting of
finished goods held for resale in the ordinary course of the business of
Borrower and raw materials for such finished goods, in each case which are
acceptable to Agent in good faith based on the criteria set forth below. In
general, Eligible Inventory shall not include (a) work-in-process; (b) spare
parts for equipment; (c) packaging and shipping materials; (d) supplies used or
consumed in Borrower's business; (e) Inventory at premises other than those
owned and controlled by Borrower, EXCEPT any Inventory which would otherwise be
deemed Eligible Inventory that is not located at premises owned and operated by
Borrower may nevertheless be considered Eligible Inventory: (i) as to locations
which are leased by a Borrower, if Agent shall have received a Collateral Access
Agreement from the owner and lessor of such location, duly authorized, executed
and delivered by such owner and lessor, or if Agent shall not have received such
Collateral Access Agreement (or Agent shall determine to accept a Collateral
Access Agreement which does not include all required provisions or provisions in
the form otherwise required by Agent), Agent may, at its option, nevertheless
consider Inventory at such location to be Eligible Inventory to the extent Agent
shall have established such Reserves in respect of amounts at any time payable
by Borrower to the owner and lessor thereof as Agent shall determine in good
faith, and (ii) as to locations owned and operated by a third person, if Agent
shall have received a Collateral Access Agreement from such owner and operator
with respect to such location, duly authorized, executed and delivered by such
owner and operator or if Agent shall not have received such Collateral Access
Agreement (or Agent shall determine to accept a Collateral Access Agreement
which does not include all required provisions or provisions in the form
otherwise required by Agent), Agent may, at its option, nevertheless consider
Inventory at such location to be Eligible Inventory to the extent Agent shall
have established such Reserves in respect of amounts at any time payable by
Borrower to the owner and operator thereof as Agent shall determine in good
faith, and, in addition, if required by Agent: (A) UCC financing statements
between the owner and operator, as consignee or bailee and Borrower, as
consignor or xxxxxx, in form and substance satisfactory to Agent, which are duly
assigned to Agent and (B) a written notice to any lender to the owner and
operator of the first priority security interest in such Inventory of Agent; (f)
Inventory subject to a security interest or lien in favor of any Person other
than Agent except those permitted in this Agreement (but without limiting the
right of Agent to establish any Reserves with respect to amounts secured by such
security interest or lien in favor of any Person even if permitted herein); (g)
xxxx and hold goods; (h) obsolete or slow moving Inventory; (i) Inventory which
is not subject to the first priority, valid and perfected security interest of
Agent; (j) returned, damaged and/or defective Inventory; (k) Inventory purchased
or sold on consignment and (l) Inventory located outside the United States. The
criteria for Eligible Inventory set forth above may only be changed and any new
criteria for Eligible Inventory may only be established by Agent in good faith
based on either: (i) an event, condition or other circumstance arising after the
date hereof, or (ii) an event, condition or other circumstance existing on the
date hereof to the extent Agent has no written notice thereof from Borrower
prior to the date hereof, in either case under clause (i) or (ii) which
adversely affects or could
11
reasonably be expected to adversely affect the Inventory in the good faith
determination of Agent. Any Inventory which is not Eligible Inventory shall
nevertheless be part of the Collateral.
1.30 "Eligible New Equipment" shall mean, Equipment owned by Borrower and
acquired after the date hereof and which is not included in the appraisal
referred to in Section 1.28 above, which would otherwise constitute Eligible
Equipment pursuant to the criteria set forth in Section 1.28 above. Any
Equipment which is not Eligible New Equipment shall nevertheless be part of the
Collateral.
1.31 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, that represents to Agent that it has a tangible net worth calculated in
accordance with the applicable generally accepted accounting principles
consistently applied (or the equivalent thereof in the case of an investment
partnership, managed account, limited liability company or similar entity) of
not less than $250,000,000 and in each case is approved by Agent and (d) any
other commercial bank or financial institution, and in each case approved by
Agent, PROVIDED, THAT, (i) neither Borrower nor any Obligor or any Affiliate of
Borrower or any Obligor shall qualify as an Eligible Transferee and (ii) no
Person to whom any Indebtedness which is in any way subordinated in right of
payment to any other Indebtedness of Borrower or any Obligor shall qualify as an
Eligible Transferee, except as Agent may otherwise specifically agree.
1.32 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal
12
Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws
and (iii) any common law or equitable doctrine that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Materials.
1.33 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, wherever located, including machinery, data processing and
computer equipment (whether owned or licensed and including embedded software),
vehicles, tools, furniture, fixtures, all attachments, accessions and property
now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.
1.34 "Equipment Availability" shall mean, at any time, $15,300,000 as
reduced effective as of the first day of each month commencing January 1, 2002
by an amount equal to $255,000.
1.35 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.36 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower, or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.37 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan (for which reporting has not been waived); (b) the adoption of any
amendment to a Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the occurrence of a "prohibited transaction" with respect to which
Borrower or any of its respective Subsidiaries (other than any Foreign
Subsidiary) is a "disqualified person" (within the meaning of Section 4975 of
the Code) or with respect to which Borrower or any of its Subsidiaries (other
than any Foreign Subsidiary) could otherwise be liable; (f) a complete or
partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan
or a cessation of operations which is treated as such a withdrawal or
notification that a Multiemployer Plan is in reorganization; (g) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate in excess of $250,000 and (j) any other event or condition with
respect to a Plan including any Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of Borrower in excess of $250,000.
13
1.38 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Agent) on or
about 9:00 a.m. (
New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by or on behalf of Borrower.
1.39 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.40 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.41 "Excess Availability" shall mean the amount, as determined by Agent
in good faith, calculated at any date, equal to: (a) the lesser of: (i) the
Borrowing Base (but without regard to Reserves established in respect of Letter
of Credit Accommodations to the extent such Letter of Credit Accommodations are
included in the Obligations for purposes of clause (b)(i) of this definition)
and (ii) the Maximum Credit, MINUS (b) the sum of: (i) the amount of all then
outstanding and unpaid Obligations (after giving effect to the repayments
received by Agent in respect of the Obligations in accordance with Section
6.3(b) hereof), plus (ii) the aggregate amount of all then outstanding and
unpaid trade payables and other obligations of Borrower which are outstanding
more than sixty (60) days past due as of such time (other than trade payables or
other obligations being contested or disputed by Borrower in good faith), plus
(iii) without duplication, the amount of checks issued by Borrower to pay trade
payables and other obligations which are more than sixty (60) days past due as
of such time (other than trade payables or other obligations being contested or
disputed by Borrower in good faith), but not yet sent.
1.42 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.43 "Existing Lenders" shall mean the lenders to Borrower pursuant to
the Credit Agreement, dated as of October 11, 1996, by and among the lenders
party thereto, JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank
successor by merger to Xxxxxx Guaranty Trust Company of
New York) in its
capacity as agent acting for such lenders, Borrower, and the Eligible
Subsidiaries referred to therein, and including JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank successor by merger to Xxxxxx Guaranty Trust
Company of
New York) in its capacity as agent acting for such lenders and in
each case their respective predecessors, successors and assigns.
1.44 "Existing Letters of Credit" shall mean, collectively, the letters
of credit issued for the account of Borrower or for which Borrower is otherwise
liable listed on Schedule 1.44 hereto, as
14
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.45 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and between Borrower and Agent, setting forth certain fees payable
by Borrower to Agent for the benefit of itself and Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.46 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
or any Obligor in connection with this Agreement.
1.47 "Foreign Subsidiaries" shall mean the Subsidiaries of Borrower
organized or incorporated under the laws of any jurisdiction outside the United
States and which have substantially all of their respective assets outside the
United States; sometimes being referred to herein individually as a "Foreign
Subsidiary".
1.48 "Funded Debt" shall mean, with respect to any person, any
Indebtedness of such person and its Subsidiaries consisting of any liability (a)
in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof) or
evidenced by bonds, notes, debentures or similar instruments; (b) representing
the balance deferred and unpaid of the purchase price of any property or
services (except any such balance that constitutes an account payable to a trade
creditor (whether or not an Affiliate) created, incurred, assumed or guaranteed
by such Person in the ordinary course of business of such Person in connection
with obtaining goods, materials or services that is not overdue by more than
ninety (90) days, unless the trade payable is being contested in good faith);
and (c) all obligations as lessee under leases which have been, or should be, in
accordance with GAAP recorded as Capital Leases.
1.49 "GAAP" shall mean generally accepted accounting principles in the
United States as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied, except that, for purposes
of Section 9.17 hereof, GAAP shall be determined on the basis of such principles
in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered to Agent prior to the
date hereof.
1.50 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
15
1.51 "Hard Costs" shall mean, with respect to the purchase by Borrower of
an item of Eligible New Equipment, the net cash amount actually paid to acquire
title to such item, net of all incentives, trade-in allowances, discounts and
rebates, and exclusive of freight, delivery charges, installation costs and
charges, software costs, charges and fees, warranty costs, taxes, insurance and
other incidental costs or expenses and all indirect costs or expenses of any
kind.
1.52 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.53 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances, drafts or similar documents or
instruments issued for such Person's account; (g) all indebtedness of such
Person in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on any asset of
such Person, whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of such time; (h)
all obligations, liabilities and indebtedness of such Person (marked to market)
arising under swap agreements, cap agreements and collar agreements and other
agreements or arrangements designed to protect such person against fluctuations
in interest rates or currency or commodity values; and (i) all obligations
16
owed by such Person under License Agreements with respect to non-refundable,
advance or minimum guarantee royalty payments.
1.54 "Information Certificate" shall mean the Information Certificates of
Borrower constituting Exhibit B hereto containing material information with
respect to Borrower, its respective businesses and assets provided by or on
behalf of Borrower to Agent in connection with the preparation of this Agreement
and the other Financing Agreements and the financing arrangements provided for
herein.
1.55 "Intellectual Property" shall mean all of Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.
1.56 "Interest Expense" shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts and bank fees, commissions, discounts
and other fees and charges owed with respect to letters of credit, banker's
acceptances or similar instruments, but excluding interest paid in property
other than cash and any other interest expense not payable in cash.
1.57 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), three (3) months or six (6) months duration
as Borrower may elect, the exact duration to be determined in accordance with
the customary practice in the applicable Eurodollar Rate market; PROVIDED, THAT,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
1.58 "Interest Rate" shall mean,
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans, a rate equal to three-quarters
(3/4%) percent per annum in excess of the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to two and
three-quarters (2 3/4%) percent per annum in excess of the Adjusted Eurodollar
Rate (in each case, based on the
17
Eurodollar Rate applicable for the Interest Period selected by Borrower as in
effect two (2) Business Days prior to the commencement of such Interest Period,
whether such rate is higher or lower than any rate previously quoted to
Borrower).
(b) Subject to clause (c) of this definition below, effective as
of the first (1st) day of the second month of each fiscal quarter (commencing
with the fiscal quarter ending on or about January 31, 2002), the Interest Rate
payable by Borrower shall be increased or decreased, as the case may be, (i) as
to Prime Rate Loans, to the rate equal to the Applicable Margin on a per annum
basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the
rate equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate.
(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall
be the highest percentage set forth in the definition of the term Applicable
Margin for each category of Loans (without regard to the amount of Quarterly
Average Excess Availability or the Leverage Ratio) plus two (2%) percent per
annum, at Agent's option, (i) for the period (A) from and after the effective
date of termination or non-renewal hereof until Agent and Lenders have received
full and final payment of all outstanding and unpaid Obligations which are not
contingent and cash collateral or letter of credit, as Agent may specify, in the
amounts and on the terms required under Section 13.1 hereof for contingent
Obligations (notwithstanding entry of a judgment against Borrower) and (B) from
and after the date of the occurrence of an Event of Default and for so long as
such Event of Default is continuing and (ii) on Loans to Borrower at any time
outstanding in excess of the Borrowing Base or the Maximum Credit (whether or
not such excess(es) arise or are made with or without the knowledge or consent
of Agent or any Lender and whether made before or after an Event of Default).
1.59 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by Borrower under a contract of service;
or (d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business.
1.60 "Inventory Loan Limit" shall mean $40,000,000.
1.61 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower and any securities intermediary, commodity intermediary or other person
who has custody, control or possession of any investment property of Borrower
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
of Agent, that it will comply with entitlement orders originated by Agent with
respect to such investment property, or other instructions of Agent, or (as the
case may be) apply any value distributed on account of any commodity contract as
directed by Agent, in each case, without the further consent of Borrower and
including such other terms and conditions as Agent may require.
18
1.62 "Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.63 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
Borrower or any Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
Borrower or any Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Letter of Credit Accommodation".
1.64 "Leverage Ratio" shall mean, at any time, as to any Person, the
ratio of: (a) the Funded Debt of such Person as of such time (and as to Borrower
including for this purpose, (i) the Indebtedness of Borrower evidenced by or
arising under the Senior Subordinated Notes, (ii) the Indebtedness of Borrower
evidenced by or arising under the Wrightsville Bond Agreements, (iii all Funded
Debt of any Subsidiary of Borrower, and (iv) the Obligations) to (b) the EBITDA
of such Person for the four (4) immediately preceding fiscal quarters of such
Person (treated as a single accounting period).
1.65 "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.66 "Loans" shall mean the loans now or hereafter made by or on behalf
of any Lender or by Agent on a revolving basis (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.
1.67 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Borrower
(taken as a whole); or (b) the legality, validity or enforceability of this
Agreement or any of the other Financing Agreements; (c the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Agent upon the Collateral (taken as a whole); (d) the Collateral or its value
taken as a whole; (e the ability of Borrower to repay the Obligations or of
Borrower to perform its obligations under this Agreement or any of the other
Financing Agreements as and when to be performed; or (f the ability of Agent or
any Lender to enforce the Obligations or realize upon the Collateral or
otherwise with respect to the rights and remedies of Agent and Lenders under
this Agreement or any of the other Financing Agreements.
1.68 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of Borrower involving
monetary liability of or to any Person in an amount in excess of $4,000,000 in
any fiscal year and (b) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which Borrower is a party as
to which the breach, nonperformance, cancellation or failure to renew by any
party thereto would have a Material Adverse Effect.
19
1.69 "Maximum Credit" shall mean the amount of $85,000,000.
1.70 "Mortgages" shall mean, individually and collectively, each of the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Deed of Trust,
Security Agreement and Assignment of Leases and Rents, dated of even date
herewith, by Borrower in favor of Agent with respect to the Real Property and
related assets of Borrower located in Xxxxxxx, North Carolina; (b) the Deed of
Trust, Security Agreement and Assignment of Leases and Rents, dated of even date
herewith, by Borrower in favor of Agent with respect to the Real Property and
related assets of Borrower located in Chino, California; (c) the Deed of Trust,
Security Agreement and Assignment of Leases and Rents, dated of even date
herewith, by Borrower in favor of Agent with respect to the Real Property and
related assets of Borrower located in Waxahachie, Texas; (d) the Deed of Trust,
Security Agreement and Assignment of Leases and Rents, dated of even date
herewith, by Borrower in favor of Agent with respect to the Real Property and
related assets of Borrower located in Gainesville, Texas; (e) the Open-End
Mortgage, Security Agreement and Assignment of Leases and Rents, dated of even
date herewith, by Borrower in favor of Agent with respect to the Real Property
and related assets of Borrower located in Alsip, Illinois; and (f) the Deed to
Secure Debt, Security Agreement and Assignment of Leases and Rents, dated of
even date herewith, by Borrower in favor of Agent with respect to the Real
Property and related assets of Borrower located in Griffin, Georgia.
1.71 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by Borrower or
any ERISA Affiliate.
1.72 "Net Amount of Eligible Accounts" shall mean, the gross amount of
the Eligible Accounts of Borrower less (a) sales, excise or similar taxes
included in the amount thereof and (b returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed with respect thereto.
1.73 "NET PROCEEDS" SHALL MEAN THE AGGREGATE CASH PROCEEDS PAYABLE TO
BORROWER OR ANY OF ITS SUBSIDIARIES IN RESPECT OF ANY SALE OR OTHER DISPOSITION
OF ANY ASSETS OR PROPERTIES, NET OF THE DIRECT COSTS RELATING TO SUCH SALE OR
OTHER DISPOSITION (INCLUDING, WITHOUT LIMITATION, LEGAL, ACCOUNTING AND
INVESTMENT BANKING FEES, AND SALES COMMISSIONS) AND TAXES PAID OR PAYABLE AS A
RESULT THEREOF (AFTER TAKING INTO ACCOUNT ANY AVAILABLE TAX CREDITS OR
DEDUCTIONS AND ANY TAX SHARING ARRANGEMENTS), AND AMOUNTS APPLIED TO THE
REPAYMENT OF INDEBTEDNESS SECURED BY LIEN ON THE ASSET OR ASSETS THAT ARE THE
SUBJECT OF SUCH SALE OR OTHER DISPOSITION REQUIRED TO BE REPAID IN CONNECTION
WITH SUCH TRANSACTION. NET PROCEEDS SHALL EXCLUDE ANY NON-CASH PROCEEDS RECEIVED
FROM ANY SALE OR OTHER DISPOSITION, BUT SHALL INCLUDE SUCH PROCEEDS WHEN AND AS
CONVERTED BY BORROWER OR SUBSIDIARY OF BORROWER TO CASH OR OTHER IMMEDIATELY
AVAILABLE FUNDS.
20
1.74 "New Equipment Availability" shall mean, from time to time after the
date hereof, subject to the terms and conditions set forth herein, the amount
equal to sixty (60%) percent of the Hard Costs of Eligible New Equipment
purchased by Borrower after the date hereof or at Agent's option, the amount
equal to eighty (80%) percent of the orderly liquidation value of Eligible New
Equipment purchased by Borrower after the date hereof (net of operating
expenses, liquidation expenses and commissions), with such orderly liquidation
value calculated based on an appraisal as provided below, PROVIDED, THAT,
(a) as of the date hereof, the New Equipment Availability is zero;
(b) the initial New Equipment Availability and each increase
thereto shall arise in increments of not less than $1,000,000 (each such
increment, including the initial New Equipment Availability, being referred to
herein as a "tranche") pursuant to a separate written request therefor received
by Agent from Borrower as provided below, PROVIDED, THAT, in no event shall the
aggregate amount of all tranches of New Equipment Availability in any twelve
(12) consecutive month period commencing on the date hereof exceed $3,000,000;
(c) each tranche of New Equipment Availability (including the
initial tranche), shall be subject to the satisfaction of each of the following
conditions precedent (in addition to the conditions precedent otherwise provided
for herein) as determined in good faith by Agent:
(i) Agent shall have received a written request from
Borrower for the applicable tranche of New Equipment Availability not less than
fifteen (15) Business Days prior to the effectiveness of such tranche of New
Equipment Availability and not more than thirty (30) days prior to the
effectiveness thereof, and together with such written request for such tranche,
Agent shall have received from Borrower the following with respect to the
Eligible New Equipment that is to be the basis for such tranche of New Equipment
Availability: (A) the date of the purchase of such Eligible New Equipment and
the seller thereof, (B) a list and description of such Eligible New Equipment
(by model, make, manufacturer, serial no. and/or such other identifying
information as may be appropriate, as determined in good faith by Agent), (C)
the Hard Costs and the total purchase price for the Eligible New Equipment that
is to be the basis for such tranche of New Equipment Availability (and the terms
of the payment of such purchase price), and (D) such other information and
documents as Agent may from time to time reasonably require thereto with respect
thereto,
(ii) Agent shall have a valid and perfected first security
interest in and lien upon the Eligible New Equipment which is to be the basis
for such tranche of New Equipment Availability and such Eligible New Equipment
shall be free and clear of all other liens, security interests, claims or other
encumbrances, and Agent shall have received such evidence thereof, as Agent may
from time to time require,
(iii) Agent shall have received copies, or upon Agent's
request, the originals, of all agreements, documents and instruments relating to
the purchase by Borrower of the Eligible New Equipment which is to be the basis
for such tranche of New Equipment Availability,
21
including, without limitation, any purchase orders, invoices, bills of sale or
similar documents, and
(iv) at Agent's option, Agent shall have received an
appraisal of the Eligible New Equipment which is the basis for such tranche of
New Equipment Availability pursuant to its rights under clause (d) of this
definition below, which appraisal shall be as of a date no more than thirty (30)
days prior to the date of the effectiveness of such tranche of New Equipment
Availability;
(d) Agent may at any time and from time to time obtain an
appraisal with respect to any Eligible New Equipment which has not been
previously subject to an appraisal within the same twelve (12) month period
(without limiting any other rights of Agent to obtain appraisals of Equipment
hereunder) by an independent appraiser acceptable to Agent and in form, scope
and methodology reasonably acceptable to Agent addressed to Agent and upon which
Agent and Lenders are expressly permitted to rely;
(e) in no event shall the amount equal to sixty (60%) percent of
the Hard Costs of the Eligible New Equipment which is the basis for a request by
Borrower for a tranche of New Equipment Availability or any increase thereto (or
at Agent's option, eighty (80%) percent of the orderly liquidation value of such
Eligible New Equipment (net of operating expenses, liquidation expenses and
commissions) calculated based on an appraisal as provided above), be less than
$1,000,000;
(f) the amount of each tranche of New Equipment Availability shall
be reduced effective as of the first day of each month after date of the
effectiveness thereof by an amount equal to: (i) the amount of such tranche of
New Equipment Availability divided by (ii) sixty (60);
(g) at Agent's option, at any time and from time to time, the New
Equipment Availability may be reduced to the amount equal to eighty (80%)
percent of the orderly liquidation value of all Eligible New Equipment (net of
operating expenses, liquidation expenses and commissions) calculated based on an
appraisal as provided above, if such amount is less than the New Equipment
Availability as otherwise then in effect.
1.75 "OBLIGATIONS" SHALL MEAN (a) ANY AND ALL LOANS, LETTER OF CREDIT
ACCOMMODATIONS AND ALL OTHER OBLIGATIONS, LIABILITIES AND INDEBTEDNESS OF EVERY
KIND, NATURE AND DESCRIPTION OWING BY BORROWER TO AGENT OR ANY LENDER AND/OR ANY
OF THEIR AFFILIATES, INCLUDING PRINCIPAL, INTEREST, CHARGES, FEES, COSTS AND
EXPENSES, HOWEVER EVIDENCED, WHETHER AS PRINCIPAL, SURETY, ENDORSER, GUARANTOR
OR OTHERWISE, ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS WHETHER NOW EXISTING OR HEREAFTER ARISING, WHETHER ARISING BEFORE,
DURING OR AFTER THE INITIAL OR ANY RENEWAL TERM OF THIS AGREEMENT OR AFTER THE
COMMENCEMENT OF ANY CASE WITH RESPECT TO BORROWER UNDER THE UNITED STATES
BANKRUPTCY CODE OR ANY SIMILAR STATUTE (INCLUDING THE PAYMENT OF INTEREST AND
OTHER AMOUNTS WHICH WOULD ACCRUE AND BECOME
22
DUE BUT FOR THE COMMENCEMENT OF SUCH CASE, WHETHER OR NOT SUCH AMOUNTS ARE
ALLOWED OR ALLOWABLE IN WHOLE OR IN PART IN SUCH CASE), WHETHER DIRECT OR
INDIRECT, ABSOLUTE OR CONTINGENT, JOINT OR SEVERAL, DUE OR NOT DUE, PRIMARY OR
SECONDARY, LIQUIDATED OR UNLIQUIDATED OR SECURED OR UNSECURED AND (b) for
purposes only of Section 5.1 hereof, with the consent of Agent, any and all
obligations, liabilities and indebtedness of any kind, nature and description
owing by Borrower to any Lender, any Affiliate of any Lender (including First
Union National Bank) or any other Person, in each case acceptable to Agent,
arising under or in connection with interest rate swap agreements between
Borrower and such Lender, Affiliate or other Person, PROVIDED, THAT, (i) in no
event shall the amount of such obligations, liabilities and indebtedness secured
by the Collateral pursuant hereto or any of the other Financing Agreements in
the aggregate outstanding at any time exceed the amount of the Reserve
established with respect thereto as in effect at such time, and (ii) Agent shall
have entered into an agreement, in form and substance satisfactory to Agent,
with such Lender, Affiliate or other Person that is a counterparty to such
interest rate swap agreement, as acknowledged and agreed to by Borrower,
providing for the delivery to Agent by such counterparty of information with
respect to the amount of such indebtedness, obligations and liabilities and
providing for the other rights of Agent and such Lender, Affiliate or other
Person, as the case may be, in connection with such arrangements.
1.76 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.77 "OTHER TAXES" SHALL MEAN ANY PRESENT OR FUTURE STAMP OR DOCUMENTARY
TAXES OR ANY OTHER EXCISE OR PROPERTY TAXES, CHARGES OR SIMILAR LEVIES WHICH
ARISE FROM ANY PAYMENT MADE HEREUNDER OR FROM THE EXECUTION, DELIVERY OR
REGISTRATION OF, OR OTHERWISE WITH RESPECT TO, THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS.
1.78 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.7 of this Agreement governing participations.
1.79 "Permitted Holders" shall mean the persons listed on Schedule 1.79
hereto and their respective successors and assigns.
1.80 "Permitted Transactions" shall mean any one or more of the following
after the date hereof: (a) the payment by Borrower of any dividend in respect of
its Capital Stock consisting of common stock, or any repurchase or redemption by
Borrower of such common stock; (b) the redemption, repurchase or repayment of
the principal of any Indebtedness of Borrower evidenced by or arising under the
Senior Subordinated Notes; (c) the redemption, repurchase or repayment of the
principal of any Indebtedness of Borrower evidenced by or arising under the
Wrightsville Notes; or (d) any payments by Borrower in respect of loans or
investments provided for in Section 9.10(g) hereof.
23
1.81 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.82 "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which Borrower sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multiemployer Plan has
made contributions at any time during the immediately preceding six (6) plan
years.
1.83 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.84 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.85 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; PROVIDED, THAT, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.86 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.87 "Quarterly Average Excess Availability" shall mean, at any time, the
daily average of the Excess Availability for the immediately preceding fiscal
quarter as calculated by Agent in good faith.
1.88 "Real Property" shall mean all now owned and hereafter acquired real
property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgages.
1.89 "Real Property Availability" shall mean $7,000,000 as reduced
effective as of the first day of each month commencing January 1, 2002 by an
amount equal to $116,666.
24
1.90 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of Borrower: (a) all Accounts; (b) all interest,
fees, late charges, penalties, collection fees and other amounts due or to
become due or otherwise payable in connection with any Account; (c) all payment
intangibles; (d) letters of credit, indemnities, guarantees, security or other
deposits and proceeds thereof issued and payable to Borrower or otherwise in
favor of or delivered to Borrower in connection with any Account; or (e) all
other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to Borrower, whether from the
sale and lease of goods or other property, licensing of any property (including
Intellectual Property or other general intangibles), rendition of services or
from loans or advances by Borrower or to or for the benefit of any third person
(including loans or advances to any Affiliates or Subsidiaries of Borrower) or
otherwise associated with any Accounts, Inventory or general intangibles of
Borrower (including, without limitation, choses in action, causes of action, tax
refunds, tax refund claims, any funds which may become payable to Borrower in
connection with the termination of any Plan or other employee benefit plan and
any other amounts payable to Borrower from any Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, casualty
or any similar types of insurance and any proceeds thereof and proceeds of
insurance covering the lives of employees on which Borrower is a beneficiary).
1.91 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.92 "Reference Bank" shall mean First Union National Bank, or such other
bank as Agent may from time to time designate to be used for similar purposes as
provided for herein generally for borrowers from Congress or only for new
borrowers from Congress.
1.93 "REFINANCING INDEBTEDNESS" SHALL HAVE MEANING SET FORTH IN
SECTION 9.9 HEREOF.
1.94 "Renewal Date" shall the meaning set forth in Section 13.1 hereof.
1.95 "Register" shall have the meaning set forth in Section 13.7
hereof.
1.96 "Required Lenders" shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of the
aggregate of the Commitments of all Lenders, or if the Commitments shall have
been terminated, Lenders to whom at least sixty-six and two-thirds (66 2/3%)
percent of the then outstanding Obligations are owing.
25
1.97 "Reserves" shall mean as of any date of determination, such amounts
as Agent may from time to time establish in good faith and revise in good faith
reducing the amount of Loans and Letter of Credit Accommodations which would
otherwise be available to Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Agent in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets
or business of Borrower or any Obligor or (iii) the security interests and other
rights of Agent or any Lender in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect Agent's good faith belief
that any collateral report or financial information furnished by or on behalf of
Borrower or any Obligor to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof or (d) IN RESPECT OF THE
OBLIGATIONS, LIABILITIES OR INDEBTEDNESS OF BORROWER OF ANY KIND, NATURE OR
DESCRIPTION OWING BY BORROWER TO ANY LENDER, ANY AFFILIATE OF ANY LENDER
(INCLUDING FIRST UNION NATIONAL BANK) OR ANY OTHER PERSON ARISING UNDER OR IN
CONNECTION WITH ANY INTEREST RATE SWAP AGREEMENT OF BORROWER WITH SUCH LENDER,
AFFILIATE OR OTHER PERSON TO THE EXTENT THAT ANY OF SUCH OBLIGATIONS,
LIABILITIES OR INDEBTEDNESS CONSTITUTE OBLIGATIONS AS SUCH TERM IS DEFINED
HEREIN OR OTHERWISE RECEIVE THE BENEFIT OF THE SECURITY INTEREST OF AGENT IN ANY
COLLATERAL OR (e) in respect of any state of facts which Agent determines in
good faith constitutes a Default or an Event of Default. Without limiting the
generality of the foregoing, Reserves may be established to reflect that
dilution with respect to the Accounts of Borrower (based on the ratio of the
aggregate amount of non-cash reductions in Accounts of Borrower for any period
to the aggregate dollar amount of the sales of Borrower for such period) as
calculated by Agent for any period is or is reasonably anticipated to be greater
than five (5%) percent or to reflect that the orderly liquidation value of the
Equipment as set forth in the most recent acceptable appraisal received by Agent
with respect thereto has declined so that the Equipment Availability is more
than eighty-five (85%) percent of such appraised value. To the extent Agent may
revise the lending formulas used to determine the Borrowing Base or establish
new criteria or revise existing criteria for Eligible Accounts or Eligible
Inventory so as to address any circumstances, condition, event or contingency in
a manner satisfactory to Agent, Agent shall not establish a Reserve for the same
purpose. The amount of any Reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for such
reserve as determined by Agent in good faith.
1.98 "Senior Subordinated Notes" shall mean, collectively, the 9.875%
Senior Subordinated Notes due 2007 issued by Borrower in the original aggregate
principal amount of $200,000,000 pursuant to the Senior Subordinated Indenture,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.99 "Senior Subordinated Indenture" shall mean the Indenture, dated as
of November 19, 1997, by and between Borrower, as issuer, and The Bank of
New
York, as trustee, with respect to the Senior Subordinated Notes, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
26
1.100 "Solvent" shall mean, at any time with respect to any Person, that
at such time such Person (a) is able to pay its debts as they mature and has
(and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.101 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.102 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.103 "TAXES" SHALL MEAN ANY AND ALL PRESENT OR FUTURE TAXES, LEVIES,
IMPOSTS, DEDUCTIONS, CHARGES OR WITHHOLDINGS, AND ALL LIABILITIES WITH RESPECT
THERETO, EXCLUDING, IN THE CASE OF ANY LENDER, SUCH TAXES (INCLUDING INCOME
TAXES, FRANCHISE TAXES OR CAPITAL TAXES) AS ARE IMPOSED ON OR MEASURED BY SUCH
LENDER'S NET INCOME OR CAPITAL BY ANY JURISDICTION (OR ANY POLITICAL SUBDIVISION
THEREOF).
1.104 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of
New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of
New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute).
1.105 "United States" shall mean the United States of America and its
territories and possessions and including the Commonwealth of Puerto Rico.
1.106 "US Dollar Equivalent" shall mean at any time (a) as to any amount
denominated in US Dollars, the amount thereof at such time, and (b) as to any
amount denominated in any other currency, the equivalent amount in US Dollars
calculated by Agent at such time using the Exchange Rate in effect on the
Business Day of determination. For purposes hereof, the term "Exchange Rate"
shall mean shall mean the prevailing spot rate of exchange of such bank as
27
Agent may reasonably select for the purpose of conversion of one currency to
another, at or around 11:00 a.m.
New York City time, on the date on which any
such conversion of currency is to be made under this Agreement.
1.107 "US Dollars", "US$" and "$" shall mean the lawful currency of the
United States.
1.108 "Value" shall mean, as determined by Agent, with respect to
Inventory, the lower of (a) cost computed on a first-in first-out basis in
accordance with GAAP or (b) market value, PROVIDED, THAT, for purposes of the
calculation of the Borrowing Base, (i) the Value of the Inventory shall not
include: (A) the portion of the value of Inventory equal to the profit earned by
any Affiliate on the sale thereof to Borrower or (B) write-ups or write-downs in
value with respect to currency exchange rates and (ii) notwithstanding anything
to the contrary contained herein, the cost of the Inventory shall be computed in
the same manner and consistent with the most recent appraisal of the Inventory
received and accepted by Agent prior to the date hereof, if any.
1.109 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.110 "WEIGHTED AVERAGE LIFE TO MATURITY" SHALL MEAN, WHEN APPLIED TO ANY
INDEBTEDNESS AT ANY DATE, THE NUMBER OF YEARS OBTAINED BY DIVIDING (a) THE THEN
OUTSTANDING PRINCIPAL AMOUNT OF SUCH INDEBTEDNESS INTO (b) THE TOTAL OF THE
PRODUCT OBTAINED BY MULTIPLYING (i) THE AMOUNT OF EACH THEN REMAINING
INSTALLMENT, SINKING FUND, SERIAL MATURITY OR OTHER REQUIRED PAYMENTS OF
PRINCIPAL, INCLUDING PAYMENT AT FINAL MATURITY, IN RESPECT THEREOF, BY (ii) THE
NUMBER OF YEARS (CALCULATED TO THE NEAREST ONE-TWELFTH) THAT WILL ELAPSE BETWEEN
SUCH DATE AND THE MAKING OF SUCH PAYMENT.
1.111 "Wrightsville Authority" shall mean, collectively, the following
(together with their respective successors and assigns): (a) the Pennsylvania
Department of Commerce and (b) the Pennsylvania Industrial Development
Authority.
1.112 "Wrightsville Deed" shall mean the Deed, dated June 13, 1996,
between Borrower and the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. pursuant to
which the land located at 00 Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxx was conveyed by Borrower to the Greater Xxxxxx-Xxxxx
Industrial Fund, Inc.
1.113 "Wrightsville Installment Sale Agreement" shall mean the
Installment Sale Agreement, dated June 20, 1996, by and between the Greater
Xxxxxx-Xxxxx Industrial Fund, Inc. and Borrower pursuant to which the Greater
Xxxxxx-Xxxxx Industrial Fund, Inc. sold the land
28
located at 00 Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxx with all improvements now and then located thereon to Borrower, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.114 "Wrightsville Loan Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced):
(a)(i) the Wrightsville Deed, (ii) the Loan Agreement, dated June
20, 1996, by and between the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. and the
Commonwealth of Pennsylvania, acting by and through the Pennsylvania Department
of Commerce, (iii) the Open End Mortgage, dated June 20, 1996, between the
Greater Xxxxxx-Xxxxx Industrial Fund, Inc. and the Commonwealth of Pennsylvania,
acting by and through the Pennsylvania Department of Commerce, (iv) the
Wrightsville Installment Sale Agreement, and (v) the Assignment of the
Wrightsville Installment Sale Agreement, dated June 20, 1996, by and among the
Greater Xxxxxx-Xxxxx Industrial Fund, Inc., Borrower and the Pennsylvania
Department of Commerce;
(b)(i) the Loan Agreement, effective as of July 2, 1996, by and
between the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. and the Pennsylvania
Industrial Development Authority, (ii) the Open End Mortgage, effective as of
July 2, 1996, between the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. and the
Pennsylvania Industrial Development Authority, and (iii) the Assignment of the
Wrightsville Installment Sale Agreement, effective as of July 2, 1996, by and
among the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. and the Pennsylvania
Industrial Development Authority;
(c)(i) the Loan Agreement, dated June 20, 1996, by and between
Borrower and the Commonwealth of Pennsylvania acting by and through the
Department of Commerce, and (ii) the Security Agreement, dated June 20, 1996, by
and between the Pennsylvania Department of Commerce and Borrower; and
(d) the Wrightsville Notes.
1.115 "Wrightsville Fixed Assets" shall mean the Real Property owned by
Borrower as of the date hereof located at 00 Xxxxxxx Xxxxxx, Xxxxxxxxx
Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxxxx and the Equipment located at such
Real Property as of the date hereof, in each case as to such Real Property and
Equipment to the extent subject to the mortgage and security interest of the
Wrightsville Authority pursuant to the Wrightsville Loan Agreements as in effect
on the date hereof.
1.116 "Wrightsville Notes" shall mean, collectively, the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the Note, dated June 20, 1996, of
the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. in the amount of $3,300,000
payable to the Commonwealth of Pennsylvania and assumed by Borrower pursuant to
the Consent, Subordination and Assumption Agreement, dated June 20, 1996, by
Borrower and the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. in favor of the
Commonwealth of Pennsylvania; (b) the Note, dated July 2, 1996, of the Greater
Xxxxxx-Xxxxx Industrial Fund, Inc.
29
in the amount of $2,000,000 payable to the order of the Pennsylvania Industrial
Development Authority and assumed by Borrower pursuant to the Consent,
Subordination and Assumption Agreement, effective as of July 2, 1996, by
Borrower and the Greater Xxxxxx-Xxxxx Industrial Fund, Inc. in favor of the
Pennsylvania Industrial Development Authority; and (c) the Note, dated June 20,
1996, of Borrower in the amount of $400,000 payable to the order of the
Commonwealth of Pennsylvania, acting by and through the Pennsylvania Department
of Commerce.
SECTION 2. CREDIT FACILITIES
-----------------
2.1 LOANS.
(a) Subject to and upon the terms and conditions contained herein,
each Lender severally (and not jointly) agrees to fund its Pro Rata Share of
Loans to Borrower from time to time in amounts requested by Borrower up to the
amount outstanding at any time equal to the lesser of: (i) the Borrowing Base at
such time or (ii) the Maximum Credit.
(b) Agent may, in its good faith discretion, from time to time,
upon not less than ten (10) days prior notice to Borrower, reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Agent
determines in good faith that: (i) the number of days of the turnover of the
Inventory for any period has adversely changed in any material respect or (ii)
the value of the Eligible Inventory, or any category thereof, has decreased in
any material respect, including any decrease attributable to a change in the
nature, quality or mix of the Inventory or a decline in resin prices. The amount
of any decrease in the lending formulas shall have a reasonable relationship to
the event, condition or circumstance which is the basis for such decrease as
determined by Agent in good faith. In determining whether to reduce the lending
formula(s), Agent may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory or in
establishing Reserves.
(c) Except in Agent's discretion, with the consent of all Lenders,
or as otherwise provided herein, (i) the aggregate principal amount of the Loans
and the Letter of Credit Accommodations outstanding at any time shall not exceed
the Maximum Credit, and (ii) the aggregate principal amount of the Loans and
Letter of Credit Accommodations outstanding at any time to Borrower based on the
Eligible Inventory shall not exceed the Inventory Loan Limit.
(d) In the event that the aggregate principal amount of the Loans
and Letter of Credit Accommodations outstanding to Borrower exceed the Borrowing
Base, or the aggregate principal amount of Loans and Letter of Credit
Accommodations outstanding based on the Eligible Inventory exceed the Inventory
Loan Limit, or the aggregate amount of the outstanding Letter of Credit
Accommodations exceed the sublimit for Letter of Credit Accommodations set forth
in Section 2.2(e), or the aggregate amount of the Loans and Letter of Credit
Accommodations outstanding exceed the Maximum Credit, such event shall not
limit, waive or otherwise affect any rights of Agent or Lenders in such
circumstances or on any future occasions and Borrower shall, within five (5)
Business Days after written demand by Agent, which may be made at any
30
time or from time to time, immediately repay to Agent the entire amount of any
such excess(es) for which payment is demanded.
2.2 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to and upon the terms and conditions contained herein,
at the request of Borrower, Agent agrees, for the ratable risk of each Lender
according to its Pro Rata Share, to provide or arrange for Letter of Credit
Accommodations for the account of Borrower containing terms and conditions
acceptable to Agent and the issuer thereof. Any payments made by or on behalf of
Agent or any Lender to any issuer thereof and/or related parties in connection
with the Letter of Credit Accommodations provided to or for the benefit of
Borrower shall constitute additional Loans to Borrower pursuant to this
Section 2.
(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrower
shall pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate
equal to two (2%) percent per annum, on the daily outstanding balance of the
Letter of Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Agent may, and upon the written direction of Required Lenders shall,
require Borrower to pay to Agent for the ratable benefit of Lenders such letter
of credit fee, at a rate equal to four (4%) percent per annum on such daily
outstanding balance for: (i) the period from and after the date of termination
hereof until Agent and Lenders have received full and final payment of all
Obligations (notwithstanding entry of a judgment against Borrower) and (ii) the
period from and after the date of the occurrence of an Event of Default for so
long as such Event of Default is continuing as determined by Agent in good
faith. Such letter of credit fee shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed and the obligation of
Borrower to pay such fee shall survive the termination of this Agreement.
(c) Borrower shall give Agent two (2) Business Days' prior written
of Borrower's request for the issuance of a Letter of Credit Accommodation. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit Accommodation requested, the effective date (which date shall
be a Business Day) of issuance of such requested Letter of Credit Accommodation,
whether such Letter of Credit Accommodations may be drawn in a single or in
partial draws, the date on which such requested Letter of Credit Accommodation
is to expire (which date shall be a Business Day), the purpose for which such
Letter of Credit Accommodation is to be issued, and the beneficiary of the
requested Letter of Credit Accommodation. Borrower shall attach to such notice
the proposed form of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Agent in good faith: (i) Borrower shall
have delivered to the proposed issuer of such Letter of Credit Accommodation at
such times and in such manner as such proposed issuer may require, an
application, in form and substance
31
satisfactory to such proposed issuer and Agent, for the issuance of the Letter
of Credit Accommodation and such other documents as may be required pursuant to
the terms thereof, and the form and terms of the proposed Letter of Credit
Accommodation shall be satisfactory to Agent and such proposed issuer, (ii) as
of the date of issuance, no order of any court, arbitrator or other Governmental
Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit Accommodation, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit Accommodation refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit Accommodation; and (iii) the Excess Availability, prior to giving effect
to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be
equal to or greater than: (A) if the proposed Letter of Credit Accommodation is
for the purpose of purchasing Eligible Inventory and the documents of title with
respect thereto are consigned to the issuer, the sum of (1) the percentage equal
to one hundred (100%) percent minus the then applicable percentage with respect
to Eligible Inventory set forth in the definition of the term Borrowing Base
multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes,
duty and other amounts which Agent estimates must be paid in connection with
such Inventory upon arrival and for delivery to one of Borrower's locations for
Eligible Inventory within the United States and (B) if the proposed Letter of
Credit Accommodation is for any other purpose or the documents of title are not
consigned to the issuer in connection with a Letter of Credit Accommodation for
the purpose of purchasing Inventory, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Agent with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Lenders,
the amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $20,000,000.
(f) Borrower shall indemnify and hold Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs and
expenses which Agent or any Lender may suffer or incur in connection with any
Letter of Credit Accommodations and any documents, drafts or acceptances
relating thereto, including any losses, claims, damages, liabilities, costs and
expenses due to any action taken by any issuer or correspondent with respect to
any Letter of Credit Accommodation, except for such losses, claims, damages,
liabilities, costs or expenses that are a direct result of the gross negligence
or wilful misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Borrower assumes all
risks with respect to the acts or omissions of the drawer under or beneficiary
of any Letter of Credit Accommodation and for such purposes the drawer or
beneficiary shall be deemed Borrower's agent. Borrower assumes all risks for,
and agrees to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any
32
Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Agent and Lenders harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except for the gross negligence
or wilful misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the termination
of this Agreement. In no event shall the foregoing be construed to waive or
otherwise affect any rights of Borrower against the issuer or any correspondent
as a result of the failure of such issuer or correspondent to pay the
beneficiary under a Letter of Credit Accommodation upon a draw by such
beneficiary in accordance with the terms of such Letter of Credit Accommodation.
(g) In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, Borrower shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver them to Agent and/or subject to Agent's
order, and if they shall come into Borrower's possession, to deliver them, upon
Agent's request, to Agent in their original form. Borrower shall also, at
Agent's request, designate Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents.
(h) Borrower hereby irrevocably authorizes and directs any issuer
of a Letter of Credit Accommodation to name Borrower as the account party
therein and to deliver to Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Agent's instructions and agreements with respect to
all matters arising in connection with the Letter of Credit Accommodations or
the applications therefor. Nothing contained herein shall be deemed or construed
to grant Borrower any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent or any Lender unless Agent has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrower shall be bound by any reasonable
interpretation made in good faith by Agent, or any other issuer or correspondent
under or in connection with any Letter of Credit Accommodation or any documents,
drafts or acceptances thereunder, notwithstanding that such interpretation may
be inconsistent with any instructions of Borrower. Agent shall have the sole and
exclusive right and authority to, and Borrower shall not: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, and (ii) at all times (PROVIDED, THAT, no Event of Default exists or has
occurred and is continuing, Agent shall not exercise any of the following unless
agreed to by or on behalf of Borrower), (A) grant any extensions of the maturity
of, time of payment for, or time of presentation of, any drafts, acceptances, or
documents, and (B) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit
33
included in the Collateral. Agent may take such actions either in its own name
or in Borrower's name.
(i) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Agent for the ratable benefit of
Lenders. Any duties or obligations undertaken by Agent to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or any
other agreement by Agent in favor of any issuer or correspondent to the extent
relating to any Letter of Credit Accommodation, shall be deemed to have been
undertaken by Borrower to Agent for the ratable benefit of Lenders and to apply
in all respects to Borrower.
(j) Immediately upon the issuance or amendment of any Letter of
Credit Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(k) Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent any amounts paid by an issuer of
a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that Borrower fails to pay Agent on the date
of any payment under a Letter of Credit Accommodation in an amount equal to the
amount of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each Lender of the unreimbursed amount of such payment and each
Lender agrees, upon one (1) Business Day's notice, to fund to Agent the purchase
of its participation in such Letter of Credit Accommodation in an amount equal
to its Pro Rata Share of the unpaid amount. The obligation of each Lender to
deliver to Agent an amount equal to its respective participation pursuant to the
foregoing sentence is absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other event
or circumstance. If such amount is not made available by a Lender when due,
Agent shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by Borrower in
respect of Loans that are Prime Rate Loans as set forth in Section 3.1(a)
hereof.
2.3 COMMITMENTS. The aggregate amount of each Lender's Pro Rata Share of
the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
2.4 OPTIONAL REDUCTION IN MAXIMUM CREDIT. AT ANY TIME AND FROM TIME TO
TIME AFTER THE FIRST ANNIVERSARY OF THE DATE HEREOF, SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED HEREIN, UPON NOT LESS THAN TEN (10) DAYS' PRIOR WRITTEN
34
NOTICE TO AGENT (WHICH NOTICE SHALL BE IRREVOCABLE), BORROWER MAY AT ITS OPTION
REDUCE THE AMOUNT OF THE MAXIMUM CREDIT TO AN AMOUNT NOT LESS THAN $50,000,000;
PROVIDED, THAT, AS TO ANY AND ALL SUCH REDUCTIONS, EACH OF THE FOLLOWING
CONDITIONS IS SATISFIED: (A) IN NO EVENT SHALL THE MAXIMUM CREDIT BE REDUCED TO
AN AMOUNT LESS THAN THE SUM OF THE THEN OUTSTANDING AMOUNT OF THE LOANS AND THE
LETTER OF CREDIT ACCOMMODATIONS AFTER GIVING EFFECT TO ANY PAYMENT RECEIVED ON
THE DATE OF SUCH REDUCTION; (b) ANY REDUCTION SHALL BE IN AN AMOUNT NOT LESS
THAN $5,000,000 OR AN INTEGRAL MULTIPLE THEREOF; (c) BORROWER MAY ONLY SO REDUCE
THE MAXIMUM CREDIT ONE (1) TIME; (d) AS OF THE DATE OF ANY SUCH REDUCTION AND
AFTER GIVING EFFECT THERETO, THERE SHALL BE EXCESS AVAILABILITY; (e) THE
REDUCTION SHALL BE EFFECTIVE ON THE DATE SPECIFIED IN THE NOTICE FROM BORROWER
TO AGENT OF BORROWER'S INTENTION TO EXERCISE ITS RIGHTS UNDER THIS SECTION,
WHICH DATE SHALL BE NO MORE THAN THIRTY (30) DAYS AFTER THE DATE OF THE RECEIPT
BY AGENT OF SUCH NOTICE; AND (f) IN THE EVENT THAT BORROWER MAY NOTIFY AGENT OF
ITS INTENTION TO TERMINATE THIS AGREEMENT OR THIS AGREEMENT IS OTHERWISE
TERMINATED AT ANY TIME WITHIN NINETY (90) DAYS OF THE EFFECTIVE DATE OF THE
REDUCTION IN THE MAXIMUM CREDIT AS PROVIDED HEREIN, THE AMOUNT OF THE MAXIMUM
CREDIT FOR PURPOSES OF SECTION 13.1(f) HEREOF SHALL BE THE AMOUNT OF THE MAXIMUM
CREDIT AS IN EFFECT IMMEDIATELY PRIOR TO SUCH REDUCTION, EXCEPT AS AGENT MAY
OTHERWISE AGREE.
SECTION 3. INTEREST AND FEES
-----------------
3.1 INTEREST.
(a) Borrower shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Borrower may from time to time request Eurodollar Rate Loans
or may request that Prime Rate Loans be converted to Eurodollar Rate Loans or
that any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from Borrower shall specify the amount of the Eurodollar
Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar
Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject
to the limits set forth below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions contained herein, two
(2) Business Days after receipt by Agent of such a request from Borrower, such
Eurodollar Rate Loans shall be made or such Prime Rate Loans shall be converted
to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the
case may be, PROVIDED, THAT, (i) no Default or Event of Default shall exist or
have occurred and be continuing, (ii) no party hereto shall have sent any notice
of termination of this Agreement, (iii) Borrower shall have complied with such
customary procedures as are established by Agent and specified by Agent to
Borrower from time to time for requests by Borrower for Eurodollar Rate Loans,
(iv) no more than four (4) Interest Periods may be in effect at any one time,
(v) the aggregate amount of the Eurodollar Rate Loans must be in an amount not
35
less than $1,000,000 or an integral multiple of $500,000 in excess thereof, and
(vi) Agent and each Lender shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Agent and such Lender and can be
readily determined as of the date of the request for such Eurodollar Rate Loan
by Borrower. Any request by or on behalf of Borrower for Eurodollar Rate Loans
or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to
the contrary contained herein, Agent and Lenders shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Agent and Lenders had purchased
such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
two (2) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Borrower, be subsequently converted to Prime Rate Loans in the event that
this Agreement shall terminate or not be renewed. Borrower shall pay to Agent,
for the benefit of Lenders, upon demand by Agent (or Agent may, at its option,
charge any loan account of any Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing. A certificate
of Agent or the applicable Lender or Participant setting forth the basis for the
determination of such amount necessary to compensate such Lender or Participant
as aforesaid shall be delivered to Borrower and shall be presumptive evidence of
such amount.
(d) Interest shall be payable by Borrower to Agent, for the
account of Lenders, monthly in arrears (or earlier as otherwise provided herein)
not later than the first day of each calendar month and shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of the
month in which any such change occurs. In no event shall charges constituting
interest payable by Borrower to Agent and Lenders exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 FEES.
(a) Borrower shall pay to Agent for the account of Lenders monthly
an unused line fee at a rate equal to the percentage (on a per annum basis) set
forth below calculated upon the amount by which the Maximum Credit as then in
effect exceeds the average daily principal balance of the outstanding Loans and
Letter of Credit Accommodations during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as any
Lender (or Agent on behalf of such Lender or itself) may continue to make any
Loans or any
36
Letter of Credit Accommodations are outstanding (and including any payments by
any Lender or on its behalf for the collection and enforcement of the
Obligations and for the protection, preservation, maintenance or sale,
disposition or other realization upon any of the Collateral and including any
Special Agent Advances). Such fee shall be payable on the first day of each
month in arrears. The percentage used for determining the unused line fee shall
be one-half (1/2%) percent, PROVIDED, THAT, effective as of the first (1st) day
of the second month of each fiscal quarter (commencing with the fiscal quarter
ending on or about January 31, 2002), the percentage used for determining the
unused line fee shall be as set forth below if either the Quarterly Average
Excess Availability for the immediately preceding fiscal quarter is at or within
the amounts indicated for such percentage or the Leverage Ratio as of the last
day of the immediately preceding fiscal quarter (which ratio for this purpose
shall be calculated based on the four (4) immediately preceding fiscal quarters)
is at or within the levels indicated for such percentage:
Unused Line
Excess Availability Leverage Ratio Fee Percentage
------------------- -------------- --------------
(i) $50,000,000 or more Less than 2.00 to 1.00 3/8%
(ii) Greater than or equal to Greater than 2.00 to 1.00 but 1/2%
$25,000,000 and less equal to or less than 3.00 to
than $50,000,000 1.00
(iii) Greater than or equal to Greater than 3.00 to 1.00 but 1/2%
$10,000,000 and less equal to or less than 4.00 to
than $25,000,000 1.00
(iv) Less than $10,000,000 Greater than 4.00 to 1.00 1/2%
PROVIDED, THAT, (A) the unused line fee percentage shall be calculated and
established once each fiscal quarter (commencing with the fiscal quarter ending
on or about January 31, 2002) and (B) the unused line fee percentage shall be
the lower percentage set forth above based on the Quarterly Average Excess
Availability or the Leverage Ratio.
(b) Borrower agree to pay to Agent the other fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
3.3 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable
37
law, rule or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or a
Funding Bank or any Lender complies with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, and in the case of any event set forth in
this clause (iii), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any Lender's capital
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration the Funding Bank's or Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, and the
result of any of the foregoing events described in clauses (i), (ii) or (iii) is
or results in an increase in the cost to any Lender of funding or maintaining
the Loans or the Letter of Credit Accommodations, then Borrower shall from time
to time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify Lenders against such increased cost on an after-tax basis (after
taking into account applicable deductions and credits in respect of the amount
indemnified). Notwithstanding anything to the contrary contained in this Section
3.3(a), if any Lender fails to notify Borrower of any event that will entitle
such Lender to indemnification under this Section 3.3(a) within ninety (90) days
after the date such Lender obtains actual knowledge of such event, then such
Lender shall not be entitled to indemnification from Borrower for such amounts
arising prior to the date that is ninety (90) days before the date on which such
Lender notifies Borrower of such event. A certificate as to the amount of such
increased cost shall be submitted to Borrower by Agent and shall be presumptive
evidence of amounts due, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent
shall have determined in good faith (which determination shall be conclusive and
binding upon Borrower) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, (ii) Agent has received notice from
the Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Eurodollar Rate Loans during such
Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy or
telephonic notice thereof to Borrower and Lenders as soon as practicable
thereafter, and will also give prompt written notice to Borrower when such
conditions no longer exist. If such notice is given (A) any Eurodollar Rate
Loans requested to be made on the first day of such Interest Period shall be
made as Prime Rate Loans, (B) any Loans that were to have been converted on the
first day of such Interest Period to or continued as Eurodollar Rate Loans shall
be converted to or continued as Prime Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Prime Rate Loans. Until such notice has been
withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall Borrower have the right to convert Prime Rate Loans to
Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption
of or any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a
38
court or other Governmental Authority or in the interpretation or application
thereof occurring after the date hereof shall make it unlawful for Agent or any
Lender to make or maintain Eurodollar Rate Loans as contemplated by this Loan
Agreement, (i) Agent or such Lender shall promptly give written notice of such
circumstances to Borrower and Agent (which notice shall be withdrawn whenever
such circumstances no longer exist), (ii) the commitment of such Lender
hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such
and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be
canceled and, until such time as it shall no longer be unlawful for such Lender
to make or maintain Eurodollar Rate Loans, such Lender shall then have a
commitment only to make a Prime Rate Loan when a Eurodollar Rate Loan is
requested and (iii) such Lender's Loans then outstanding as Eurodollar Rate
Loans, if any, shall be converted automatically to Prime Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Rate Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, Borrower shall pay to such Lender
such amounts, if any, as may be required pursuant to Section 3.3(d) below.
(d) Borrower shall indemnify Agent and each Lender and to hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur (other than through Agent's or such Lender's gross
negligence or wilful misconduct) as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after Borrower has given a notice requesting the same in accordance with the
provisions of this Loan Agreement, (ii) default by Borrower in making any
prepayment of a Eurodollar Rate Loan after Borrower has given a notice thereof
in accordance with the provisions of this Loan Agreement, and (iii) the making
of a prepayment of Eurodollar Rate Loans on a day which is not the last day of
an Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein OVER (B) the amount of interest (as reasonably
determined by Agent or such Lender) which would have accrued to Agent or such
Lender on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank Eurodollar market. This covenant shall
survive the termination of this Loan Agreement and the payment of the
Obligations.
(e) IF BORROWER IS REQUIRED TO PAY ADDITIONAL AMOUNTS TO ANY
LENDER PURSUANT TO SECTION 3.3(a) THAT INCREASE THE EFFECTIVE LENDING RATE OF
SUCH LENDER WITH RESPECT TO ITS SHARE OF THE LOANS TO GREATER THAN ONE-EIGHTH
(1/8%) PERCENT IN EXCESS OF THE PERCENTAGE OF THE EFFECTIVE LENDING RATE OF THE
OTHER LENDERS, THEN SUCH LENDER SHALL USE REASONABLE EFFORTS (CONSISTENT WITH
LEGAL AND REGULATORY RESTRICTIONS) TO CHANGE THE JURISDICTION OF ITS LENDING
OFFICE WITH RESPECT TO MAKING EURODOLLAR RATE LOANS SO AS TO ELIMINATE ANY SUCH
ADDITIONAL PAYMENT BY BORROWER WHICH MAY THEREAFTER
39
ACCRUE, IF SUCH CHANGE IN THE JUDGMENT OF SUCH LENDER IS NOT OTHERWISE
DISADVANTAGEOUS TO SUCH LENDER. IN THE EVENT THAT ANY ONE OR MORE LENDERS,
PURSUANT TO SECTION 3.3(a) HEREOF, INCUR ANY INCREASED COSTS (OTHER THAN
INCREASED COSTS TO THE EXTENT SUCH INCREASED COSTS ARE NOT A RECURRING COST) FOR
WHICH ANY SUCH LENDER DEMANDS COMPENSATION PURSUANT TO SECTION 3.3(a) HEREOF
WHICH INCREASES THE EFFECTIVE LENDING RATE OF SUCH LENDER WITH RESPECT TO ITS
SHARE OF THE LOANS TO GREATER THAN ONE-EIGHTH (1/8%) PERCENT IN EXCESS OF THE
PERCENTAGE OF THE EFFECTIVE LENDING RATE OF THE OTHER LENDERS AND SUCH LENDER
HAS NOT MITIGATED SUCH COSTS WITHIN SIXTY (60) DAYS AFTER RECEIPT BY SUCH LENDER
FROM BORROWER OF A WRITTEN NOTICE THAT SUCH LENDER'S EFFECTIVE LENDING RATE HAS
SO EXCEEDED THE EFFECTIVE LENDING RATE OF THE OTHER LENDERS, THEN AND IN ANY
SUCH EVENT, BORROWER MAY SUBSTITUTE ANOTHER FINANCIAL INSTITUTION WHICH IS AN
ELIGIBLE TRANSFEREE ACCEPTABLE TO AGENT FOR SUCH LENDER TO ASSUME THE COMMITMENT
OF SUCH LENDER AND TO PURCHASE THE LOANS OF SUCH LENDER HEREUNDER, WITHOUT
RECOURSE TO OR WARRANTY BY, OR EXPENSE TO, SUCH LENDER FOR A PURCHASE PRICE
EQUAL TO THE OUTSTANDING PRINCIPAL AMOUNT OF THE LOANS OWING TO SUCH LENDER PLUS
ANY ACCRUED BUT UNPAID INTEREST ON SUCH LOANS AND ACCRUED BUT UNPAID FEES AND
OTHER AMOUNTS IN RESPECT OF SUCH LENDER'S COMMITMENT AND SHARE OF THE LOANS
(OTHER THAN ANY PREPAYMENT PENALTY OR OTHER PREMIUMS). UPON SUCH PURCHASE SUCH
LENDER SHALL NO LONGER BE A PARTY HERETO OR HAVE ANY RIGHTS OR BENEFITS
HEREUNDER (EXCEPT FOR RIGHTS OR BENEFITS THAT SUCH LENDER WOULD RETAIN HEREUNDER
AND UNDER THE OTHER FINANCING AGREEMENTS UPON PAYMENT IN FULL OF ALL OF THE
OBLIGATIONS) AND THE REPLACEMENT LENDER SHALL SUCCEED TO THE RIGHTS AND
BENEFITS, AND SHALL ASSUME THE OBLIGATIONS, OF SUCH LENDER HEREUNDER AND
THEREUNDER. AGENT AND LENDERS SHALL COOPERATE WITH BORROWER TO AMEND THE
FINANCING AGREEMENTS TO REFLECT SUCH SUBSTITUTION. IN NO EVENT MAY BORROWER
REPLACE A LENDER THAT IS ALSO AGENT OR AN ISSUER OF A LETTER OF CREDIT
ACCOMMODATION.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance satisfactory
to Agent, all releases, terminations and such other documents as Agent may
request to evidence and effectuate the termination by the Existing Lenders of
their respective financing arrangements with Borrower and the termination and
release by it or them, as the case may be, of any interest in and to any assets
and properties of Borrower, duly authorized, executed and delivered by JPMorgan
Chase Bank, formerly known as The Chase Manhattan Bank successor by merger to
Xxxxxx Guaranty Trust Company of
New York on behalf of the other Existing
Lenders, including, but not limited to, (i) UCC termination statements for all
UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and Borrower, as debtor (and the authorization to
40
file the same) and (ii) satisfactions and discharges of any mortgages, deeds of
trust or deeds to secure debt by Borrower in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be reasonably
satisfactory in form and substance to Agent, and Agent shall have received all
information and copies of all documents, including records of requisite
corporate action and proceedings which Agent may have requested in connection
therewith, such documents where requested by Agent or its counsel to be
certified by appropriate corporate officers or Governmental Authority (and
including a copy of the certificate of incorporation of Borrower certified by
the Secretary of State (or equivalent Governmental Authority) which shall set
forth the same complete corporate name of Borrower as is set forth herein and
such document as shall set forth the organizational identification number of
Borrower, if one is issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the assets or
business of Borrower since the date of Agent's latest field examination (not
including for this purpose the field review referred to in clause (d) below) and
no material change or event shall have occurred which would impair the ability
of Borrower or any Obligor to perform its obligations hereunder or under any of
the other Financing Agreements to which it is a party or of Agent or any Lender
to enforce the Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records and
such other information with respect to the Collateral as Agent may in good faith
require to determine the amount of Loans available to Borrower (including,
without limitation, current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing and test counts of the
Inventory in a manner satisfactory to Agent, together with such supporting
documentation as may be necessary or appropriate, and other documents and
information that will enable Agent to accurately identify and verify the
Collateral), the results of which each case shall be satisfactory in good faith
to Agent, not more than three (3) Business Days prior to the date hereof;
(e) Agent shall have received, in form and substance satisfactory
to Agent in good faith, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrower and by
processors and warehouses at which Collateral is located;
(f) the Excess Availability as determined by Agent, as of the date
hereof, shall be not less than $20,000,000 after giving effect to the initial
Loans made or to be made and Letter of Credit Accommodations issued or to be
issued in connection with the initial transactions hereunder;
41
(g) Agent shall have received, in form and substance satisfactory
to Agent, Deposit Account Control Agreements by and among Agent, Borrower and
each bank where Borrower has a deposit account (other than accounts used
exclusively for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower's salaried employees or as Agent may
otherwise agree) with deposits therein at any time in excess of $10,000 in any
one case, in each case, duly authorized, executed and delivered by such bank and
Borrower, as the case may be (or Agent shall be the bank's customer with respect
to such deposit account as Agent may specify, PROVIDED, THAT, there are not more
than six (6) accounts with less than $10,000 in deposits as specified in the
Information Certificate);
(h) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral (except as to the priority of the security
interest of Agent, as may be otherwise permitted under Section 9.8 hereof);
(i) Agent shall have received and reviewed lien and judgement
search results for the jurisdiction of incorporation of Borrower, the
jurisdiction of the chief executive office of Borrower and all jurisdictions in
which assets of Borrower are located, which search results shall be in form and
substance satisfactory to Agent;
(j) Agent shall have received originals of the shares of the stock
certificates representing (i) one hundred percent (100%) of the issued and
outstanding shares of the Capital Stock of the direct and indirect Subsidiaries
of Borrower which are not Foreign Subsidiaries (in each case together with stock
powers duly executed in blank with respect thereto) and (ii) sixty-six (66%)
percent of the issued and outstanding shares of Capital Stock of the direct
Subsidiaries of Borrower which are Foreign Subsidiaries (other than such
Subsidiaries which are organized under the laws of France, Belgium, Netherlands
and New Zealand, since under such laws no certificates are issued and other than
such other Subsidiaries as Agent may specify), EXCEPT with respect to the shares
of Capital Stock of AEP Industries Packaging Espana S.A., Agent shall have
received evidence satisfactory to it that such shares shall have been delivered
to a "licensed broker" under Spanish law acting as agent solely on behalf of and
in accordance with the instructions of Agent with respect to such shares;
(k) Agent shall have received evidence, in form and substance
satisfactory to Agent, of the notation or registration of the pledge to Agent of
the shares of Capital Stock of the direct Subsidiaries of Borrower which are
organized under the laws of France, Belgium, Netherlands and New Zealand in the
appropriate records of such Person;
(l) Agent shall have received, in form and substance satisfactory
to Agent, projected consolidated and consolidating financial statements of
Borrower and its Subsidiaries for the fiscal year ending October 31, 2002
(including forecasted income statements, cash flow statements and balance
sheets, but as to the cash flow statements on a consolidated basis only), all in
reasonable detail, and in a format consistent with the projections delivered by
Borrower to Agent prior to the date hereof, together with such supporting
information as Agent may reasonably request, which projections shall be prepared
on a quarterly basis and shall represent
42
Borrower's reasonable best estimate of the future financial performance of
Borrower for the periods set forth therein and shall have been prepared on the
basis of the assumptions set forth therein which Borrower believes are fair and
reasonable in light of current and reasonably foreseeable business conditions;
(m) Agent shall have received, in form and substance satisfactory
to Agent, a valid and effective title insurance policy issued by a company and
agent acceptable to Agent: (i) insuring the priority, amount and sufficiency of
the Mortgages, (ii) insuring against matters that would be disclosed by surveys
and (iii) containing any legally available endorsements, assurances or
affirmative coverage requested by Agent for protection of its interests;
(n) AGENT SHALL HAVE RECEIVED ENVIRONMENTAL AUDITS (OR UPDATES OF
EXISTING AUDITS) OF BORROWER'S PLANTS AND REAL PROPERTY LISTED IN PART I OF
SCHEDULE 9.7(b) HERETO CONDUCTED BY AN INDEPENDENT ENVIRONMENTAL ENGINEERING
FIRM ACCEPTABLE TO AGENT, AND IN FORM, SCOPE AND METHODOLOGY SATISFACTORY TO
AGENT, CONFIRMING (i) BORROWER IS IN COMPLIANCE WITH ALL MATERIAL APPLICABLE
ENVIRONMENTAL LAWS AND (ii) THE ABSENCE OF ANY MATERIAL ENVIRONMENTAL PROBLEMS;
(o) AGENT SHALL HAVE RECEIVED A WRITTEN APPRAISAL (OR UPDATES OF
EXISTING APPRAISALS) AS TO THE OWNED REAL PROPERTY LISTED IN PART I OF SCHEDULE
9.7(b) HERETO at the expense of Borrower, by an appraiser acceptable to Agent,
addressed to Agent and on which Agent is expressly permitted to rely, in form,
scope and methodology satisfactory to Agent; and
(p) Agent shall have received, in form and substance satisfactory
to Agent, such opinion letters of counsel to Borrower with respect to the
Financing Agreements and such other matters as Agent may in good faith request;
and
(q) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is an additional condition precedent to
the Loans and/or providing Letter of Credit Accommodations to Borrower,
including the initial Loans and Letter of Credit Accommodations and any future
Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date);
43
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or to the best of the knowledge of
Borrower or to the actual knowledge of Agent, threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred and
be continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 GRANT OF SECURITY INTEREST. To secure payment and performance of
all Obligations, Borrower hereby grants to Agent, for itself and the ratable
benefit of Lenders, a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Agent, for itself and the ratable
benefit of Lenders, as security, all personal and real property and fixtures,
and interests in property and fixtures of Borrower, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Agent or any Lender, collectively, the "Collateral"):
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods, including, without limitation, Inventory and
Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper, including, without limitation, all tangible
and electronic chattel paper;
(f) all instruments, including, without limitation, all promissory
notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral,
44
including (i) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, (ii) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (iii) goods described in invoices, documents, contracts or instruments
with respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (iv)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(k) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of Borrower now or hereafter held or received by or
in transit to Agent, any Lender or its Affiliates or at any other depository or
other institution from or for the account of Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation,
those identified in the Information Certificate;
(m) to the extent not otherwise described above, all
Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
5.2 EXCLUDED PROPERTY. Notwithstanding anything to the contrary set
forth in Section 5.1 above, the types or items of Collateral described in such
Section shall not include:
(a) any rights or interests in any contract, lease, permit,
license, charter or license agreement covering real or personal property, as
such, if under the terms of such contract, lease, permit, license, charter or
license agreement, or applicable law with respect thereto, the valid grant of a
security interest or lien therein to Agent is prohibited and such prohibition
has not been or is not waived or the consent of the other party to such
contract, lease, permit, license, charter or license agreement has not been or
is not otherwise obtained or under applicable law such prohibition cannot be
waived; PROVIDED, THAT, the foregoing exclusion shall in no way be construed (i)
to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or
9-408 of the UCC or other applicable law or (ii) so as to limit, impair or
otherwise affect Agent's unconditional continuing security interests in and
liens upon any rights or interests of Borrower in or to monies due or to become
due under any such contract, lease, permit, license, charter or license
agreement (including any Receivables);
(b) any Equipment acquired after the date hereof which is
subject to a purchase money lien or purchase money security interest (including
Capital Leases) permitted under Section 9.8 hereof if: (i) the valid grant of a
security interest or lien to Agent in such item of Equipment is prohibited by
the terms of the agreement between Borrower and the holder of such
45
purchase money lien or security interest or under applicable law and such
prohibition has not been or is not waived, or the consent of the holder of the
purchase money mortgage or other purchase money lien or security interest has
not been or is not otherwise obtained, or under applicable law such prohibition
cannot be waived and (ii) the purchase money lien or security interest on such
item of Equipment is or shall become valid and perfected;
(c) the Capital Stock of the Foreign Subsidiaries in excess of
sixty-six (66%) percent of all of the issued and outstanding shares of Capital
Stock of such Subsidiary, provided, that, for purposes of the laws of Australia
and any State thereof, Section 5.1 shall not be deemed to grant a security
interest in any of the shares of Capital Stock of AEP Industries (Australia) Pty
Ltd. to the extent such shares are subject to the pledge and security interest
of Agent pursuant to the Pledge and Security Agreement by Borrower in favor of
Agent with respect thereto (and if for any reason this Agreement were deemed to
create a security interest in any of such shares of AEP Industries (Australia)
Pty Ltd. as result of such shares not being subject to the Pledge and Security
Agreement, then the amount of the Obligations secured by the shares will be
limited to the Limitation Amount, as such term is defined in the Pledge and
Security Agreement by Borrower with respect thereto).
(d) the Wrightsville Fixed Assets.
5.3 RELEASE OF CAPITAL STOCK OF FOREIGN SUBSIDIARIES.
(a) At any time after the satisfaction of each of the
conditions set forth in Section 5.3(b) below with respect to a Foreign
Subsidiary (other than any Subsidiary organized or incorporated under the laws
of Canada, France or Spain or any jurisdiction therein or which has
substantially all of its assets in Canada, France or Spain), Agent shall upon
the written request of Borrower received within ten (10) Business Days' of the
satisfaction of all of such conditions, at the expense of Borrower, execute and
deliver to Borrower, in form and substance satisfactory to Agent and Borrower, a
written release of the security interest of Agent in the Capital Stock of such
Subsidiary, such release to only be effective upon the satisfaction of each of
the conditions in Section 5.3(b) with respect thereto.
(b) Agent shall only be required to so execute and deliver
such written release with respect to its security interest in the Capital Stock
of a Foreign Subsidiary (other than any Subsidiary organized or incorporated
under the laws of Canada, France or Spain or any jurisdiction therein or which
has substantially all of its assets in Canada, France or Spain) if each of the
following conditions with respect to such Foreign Subsidiary is satisfied as
determined by Agent: (i) such Subsidiary shall have received not less than the
US Dollar Equivalent of $2,000,000 in immediately available funds from a
financial institution that is not an Affiliate of Borrower as proceeds of a loan
or loans (net of any repayments thereof), the proceeds of which are to be used
for the general corporate purposes of such Subsidiary and are made pursuant to a
credit facility entered into by such Subsidiary after the date hereof where the
financial institution has committed to make loans to such Subsidiary, subject to
the terms and conditions set forth in the applicable documentation with respect
to such credit facility, (ii) the Indebtedness of such Subsidiary arising
pursuant to such loan or loans shall be permitted under Section 9.9(g) hereof,
46
(iii) Agent shall have received not less than ten (10) Business Days' prior
written notice of the intention of such Subsidiary to obtain such loan or loans,
which notice shall reasonably specify the Subsidiary which is obtaining such
loan or loans, the financial institution which is to provide such loan or loans,
the interest rate, the fees, the term, the amortization of the Indebtedness
pursuant thereto (if any), and such other terms and conditions with respect
thereto as Agent may reasonably specify, (iv) Borrower shall have delivered, or
caused to be delivered, to Agent written evidence from the financial institution
providing such loan or loans that the conditions to such financial institution
providing such loan or loans include the requirement that Agent release its
security interest in any Capital Stock of such Subsidiary, and (v) no Event of
Default shall exist or have occurred and is continuing.
5.4 PERFECTION OF SECURITY INTERESTS.
(a) Borrower irrevocably and unconditionally authorizes Agent
(or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and Borrower as debtor, as Agent may require, and including any
other information with respect to Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may
determine in good faith, together with any amendment and continuations with
respect thereto, which authorization shall apply to all financing statements
filed on, prior to or after the date hereof. Borrower hereby ratifies and
approves all financing statements naming Agent or its designee as secured party
and Borrower, as debtor with respect to the Collateral (and any amendments with
respect to such financing statements) filed by or on behalf of Agent prior to
the date hereof and ratifies and confirms the authorization of Agent to file
such financing statements (and amendments, if any). Borrower hereby authorizes
Agent to adopt on behalf of Borrower any symbol required for authenticating any
electronic filing. In the event that the description of the collateral in any
financing statement naming Agent or its designee as the secured party and
Borrower as debtor includes assets and properties of Borrower that do not at any
time constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower or to the extent of the Collateral
included in such description and it shall not render the financing statement
ineffective as to any of the Collateral or otherwise affect the financing
statement as it applies to any of the Collateral, PROVIDED, THAT, in such event,
upon Borrower's written request and at Borrower's expense, Agent shall file such
amendments to its financing statements to change the assets described therein so
as to constitute the Collateral. In no event shall Borrower at any time file, or
permit or cause to be filed, any correction statement or termination statement
with respect to any financing statement (or amendment or continuation with
respect thereto) naming Agent or its designee as secured party and Borrower as
debtor so long as this Agreement has not been terminated or all of the
Obligations have not been paid and satisfied in full in immediately available
funds.
(b) Borrower does not have any chattel paper (whether tangible
or electronic) or instruments as of the date hereof in each case evidencing a
monetary obligation in excess of $100,000 in any one case or in the aggregate in
excess of $250,000, except as set forth in the Information Certificate. In the
event that Borrower shall be entitled to or shall receive any chattel
47
paper or instrument after the date hereof, Borrower shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by or on behalf of
Borrower (including by any agent or representative), Borrower shall deliver, or
cause to be delivered to Agent, all tangible chattel paper and instruments that
Borrower has or may at any time acquire, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may from time to time
specify, in each case except as Agent may otherwise agree, PROVIDED, THAT,
unless and until a Default or Event of Default shall exist or have occurred and
for so long as the same is continuing, Borrower shall not be required to deliver
to Agent any tangible chattel paper or instruments until the aggregate amount of
the monetary obligations evidenced thereby exceed $250,000. At Agent's option,
Borrower shall, or Agent may at any time on behalf of Borrower, cause the
original of any such instrument or chattel paper to be conspicuously marked in a
form and manner acceptable to Agent with the following legend referring to
chattel paper or instruments as applicable: "This [chattel paper][instrument] is
subject to the security interest of Congress Financial Corporation and any sale,
transfer, assignment or encumbrance of this [chattel paper][instrument] violates
the rights of such secured party."
(c) In the event that Borrower shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrower shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrower shall take, or cause to be taken, such actions as Agent may request to
give Agent control of such electronic chattel paper under Section 9-105 of the
UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Borrower does not have any deposit accounts as of the date
hereof, except as set forth in the Information Certificate. Borrower shall not,
directly or indirectly, after the date hereof open, establish or maintain any
deposit account unless each of the following conditions is satisfied: (i) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the bank at which
such account is to be opened or established, the individual at such bank with
whom Borrower is dealing and the purpose of the account, (ii) the bank where
such account is opened or maintained shall be acceptable to Agent, and (iii) on
or before the opening of such deposit account, Borrower shall as Agent may
specify either (A) deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by
Borrower and the bank at which such deposit account is opened and maintained or
(B) arrange for Agent to become the customer of the bank with respect to the
deposit account on terms and conditions acceptable to Agent, EXCEPT, THAT,
Borrower shall not be required to comply with clauses (i), (ii) or (iii) of this
subsection (d) as to any deposit account which at all times has less than
$25,000 so long as the aggregate amount of all deposits in all such accounts is
less than $70,000 and no Default or Event of Default shall exist or have
occurred and be continuing. The terms of this subsection (d) shall not apply to
deposit accounts
48
specifically and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower's salaried
employees.
(e) Borrower does not own or hold, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) Subject to Section 5.2(c) hereof, in the event that
Borrower shall be entitled to or shall at any time after the date hereof hold or
acquire any certificated securities, upon Agent's request, Borrower shall
promptly endorse, assign and deliver the same to Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may from
time to time specify. Subject to Section 5.2(c) hereof, any securities, now or
hereafter acquired by Borrower are uncertificated and are issued to Borrower or
its nominee directly by the issuer thereof, Borrower shall immediately notify
Agent thereof and shall as Agent may specify, either (A) cause the issuer to
agree to comply with instructions from Agent as to such securities, without
further consent of Borrower or such nominee, or (B) arrange for Agent to become
the registered owner of the securities.
(ii) Borrower shall not, directly or indirectly, after
the date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not less
than five (5) Business Days prior written notice of the intention of Borrower to
open or establish such account which notice shall specify in reasonable detail
and specificity acceptable to Agent the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be acceptable to
Agent, and (C) on or before the opening of such investment account, securities
account or other similar account with a securities intermediary or commodity
intermediary, Borrower shall as Agent may specify either (1) execute and
deliver, and cause to be executed and delivered to Agent, an Investment Property
Control Agreement with respect thereto duly authorized, executed and delivered
by Borrower and such securities intermediary or commodity intermediary or (2)
arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrower is not the beneficiary or otherwise entitled to
any right to payment under any letter of credit, banker's acceptance or similar
instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower shall be entitled to or shall receive
any right to payment under any letter of credit, banker's acceptance or any
similar instrument having a face amount in excess of $10,000 in any one case or
$25,000 in the aggregate, whether as beneficiary thereof or otherwise after the
date hereof, Borrower shall
49
promptly notify Agent thereof in writing. Upon Agent's request, Borrower shall
immediately, as Agent may specify, either (i) deliver, or cause to be delivered
to Agent, with respect to any such letter of credit, banker's acceptance or
similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent by
Borrower and agreeing to make all payments thereon directly to Agent or as Agent
may otherwise direct or (ii) cause Agent to become, at Borrower's expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be) to the extent permitted under the letter of
credit, banker's acceptance or similar instrument, PROVIDED, THAT, upon Agent's
request, Borrower shall use its best efforts (but without having to pay more
than the customary fees of the applicable bank) to have such letter of credit,
banker's acceptance or similar instrument be transferable
(g) Borrower does not have any commercial tort claims as of
the date hereof, except as set forth in the Information Certificate. In the
event that Borrower shall at any time after the date hereof have any commercial
tort claims, Borrower shall promptly notify Agent thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by Borrower to Agent of
a security interest in such commercial tort claim (and the proceeds thereof). In
the event that such notice does not include such grant of a security interest,
the sending thereof by Borrower to Agent shall be deemed to constitute such
grant to Agent. Upon the sending of such notice, any commercial tort claim
described therein shall constitute part of the Collateral and shall be deemed
included therein. Without limiting the authorization of Agent provided in
Section 5.4(a) hereof or otherwise arising by the execution by Borrower of this
Agreement or any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements
naming Agent or its designee as secured party and Borrower as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, Borrower shall promptly upon Agent's request,
execute and deliver, or cause to be executed and delivered, to Agent such other
agreements, documents and instruments as Agent may require in connection with
such commercial tort claim.
(h) Borrower does not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, EXCEPT (i) as set forth in the Information Certificate, (ii)
for goods located in the United States of America in transit to a location of
Borrower permitted herein in the ordinary course of business of Borrower in the
possession of the carrier transporting such goods or (iii) as otherwise
permitted pursuant to Section 9.2 hereof.. In the event that any goods,
documents of title or other Collateral are at any time after the date hereof in
the custody, control or possession of any other person not referred to in the
Information Certificate or such carriers, Borrower shall promptly notify Agent
thereof in writing. Promptly upon Agent's request, Borrower shall deliver to
Agent a Collateral Access Agreement duly authorized, executed and delivered by
such person and Borrower, PROVIDED, THAT, Borrower shall not be required to
deliver a Collateral Access Agreement from public warehouses that may from time
to time be in possession of Inventory so long as (A) no Default or Event of
50
Default shall exist or have occurred and be continuing, and (B) the aggregate
value of all Inventory at such warehouses is less than $250,000.
(i) Borrower shall take any other actions reasonably requested
by Agent in good faith from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower's signature thereon is required therefor, (ii)
causing Agent's name to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States of America as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral,
(iv) obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.
5.5 DUTCH COLLATERAL. As to any of the Financing Agreements that are
governed by the laws of the Netherlands, and to the extent that Agent is granted
a security interest in any shares of Capital Stock of the Subsidiary of Borrower
organized under the laws of the Netherlands, such Financing Agreements and the
grant of such security interest, shall be deemed in favor of Agent acting in its
own name and on behalf of itself and not as an agent or representative of any
Lender (the Agent acting in its individual capacity for this purpose, being
referred to herein as the "Security Trustee"). Borrower and each other Obligor
hereby covenants and agrees that for the purpose of Dutch law security rights,
the Obligations are an obligation and liability of Borrower to the Security
Trustee separate and independent from, and without prejudice to, the
Obligations. The Financing Agreements that are governed by Dutch law or any of
the Collateral governed by Dutch law shall be entered into by the Security
Trustee to secure this separate obligation. In the event of foreclosure of the
Dutch security rights, the Security Trustee shall apply the proceeds of such
foreclosure, after deduction of all reasonable costs related to such
foreclosure, as if these proceeds were received by the Security Trustee in its
capacity as Agent. The Obligations shall be reduced by any of the proceeds of
such foreclosure which are so applied.
SECTION 6. COLLECTION AND ADMINISTRATION
-----------------------------
6.1 BORROWER'S LOAN ACCOUNTS. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
51
6.2 STATEMENTS. Agent shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s) maintained by Agent
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered presumptively correct and deemed accepted by Borrower and binding
upon Borrower as an account stated except to the extent that Agent receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within forty-five (45) days after the date such statement has been received by
Borrower. Until such time as Agent shall have rendered to Borrower a written
statement as provided above, the balance in Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrower.
52
6.3 COLLECTION OF ACCOUNTS.
(a) Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Agent may specify, with such banks as are selected by
Borrower and reasonably acceptable to Agent into which Borrower shall promptly
deposit and direct all account debtors to directly remit all payments on
Receivables and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. Borrower shall deliver, or cause to be delivered to
Agent a Depository Account Control Agreement duly authorized, executed and
delivered by each bank where a Blocked Account is maintained as provided in
Section 5.2 hereof or at any time and from time to time Agent may become the
bank's customer with respect to any of the Blocked Accounts and promptly upon
Agent's request, Borrower shall execute and deliver such agreements and
documents as Agent may require in connection therewith. Agent shall instruct the
depository banks at which the Blocked Accounts are maintained to transfer the
funds on deposit in the Blocked Accounts to such operating bank account of
Borrower as Borrower may specify in writing to Agent until such time as Agent
shall notify the depository bank otherwise. Without limiting any other rights or
remedies of Agent or Lenders, Agent may, at its option, instruct the depository
banks at which the Blocked Accounts are maintained to transfer all available
funds received or deposited into the Blocked Accounts to the Agent Payment
Account at any time that either: (i) an Event of Default shall exist or have
occurred and be continuing, or (ii) Excess Availability is less than
$20,000,000. AGENT SHALL SEND TO BORROWER A COPY OF ANY SUCH WRITTEN INSTRUCTION
SENT BY AGENT TO THE DEPOSITORY BANK PROMPTLY THEREAFTER. IN THE EVENT THAT AT
ANY TIME AFTER AGENT HAS INSTRUCTED SUCH DEPOSITORY BANKS TO TRANSFER SUCH FUNDS
TO THE PAYMENT ACCOUNT, EACH OF THE CONDITIONS SET FORTH IN CLAUSES (i) AND (ii)
ABOVE DO NOT EXIST OR HAVE NOT OCCURRED AND ARE NOT CONTINUING FOR A PERIOD OF
THIRTY (30) CONSECUTIVE DAYS, UPON BORROWER'S WRITTEN REQUEST RECEIVED BY AGENT
WITHIN FIVE (5) BUSINESS DAYS AFTER THE END OF SUCH THIRTY (30) DAY PERIOD,
AGENT SHALL INSTRUCT SUCH DEPOSITORY BANKS TO TRANSFER THE FUNDS ON DEPOSIT IN
SUCH ACCOUNTS TO SUCH OPERATING DEPOSIT ACCOUNT OF BORROWER AS BORROWER MAY
SPECIFY IN WRITING TO AGENT UNTIL SUCH TIME AS AGENT IS ENTITLED TO NOTIFY AND
SHALL NOTIFY THE DEPOSITORY BANK OTHERWISE AS PROVIDED ABOVE. Borrower agrees
that all payments made to such Blocked Accounts or other funds received and
collected by Agent or any Lender, whether in respect of the Receivables, as
proceeds of Inventory or other Collateral or otherwise shall be treated as
payments to Agent and Lenders in respect of the Obligations and therefore shall
constitute the property of Agent and Lenders to the extent of the then
outstanding Obligations.
(b) For purposes of calculating the amount of the Loans
available to Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower's loan account on such day, and if not, then on the next Business Day.
53
(c) Borrower and its shareholders, directors, employees,
agents, Subsidiaries or other Affiliates shall, acting as trustee for Agent,
receive, as the property of Agent, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Accounts or other Collateral which
come into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to Agent.
In no event shall the same be commingled with Borrower's own funds. Borrower
agrees to reimburse Agent on demand for any amounts owed or paid to any bank at
which a Blocked Account or any other deposit account is established or any other
bank or person involved in the transfer of funds to or from the Blocked Accounts
arising out of Agent's payments to or indemnification of such bank or person.
The obligations of Borrower to reimburse Agent for such amounts pursuant to this
Section 6.3 shall survive the termination of this Agreement.
6.4 PAYMENTS.
(a) All Obligations shall be payable to the Agent Payment
Account as provided in Section 6.3 or such other place as Agent may designate
from time to time. Agent shall apply payments received or collected from
Borrower or for the account of Borrower (including the monetary proceeds of
collections or of realization upon any Collateral) as follows: FIRST, to pay any
fees, indemnities or expense reimbursements then due to Agent and Lenders from
Borrower; SECOND, to pay interest due in respect of any Loans; THIRD, to pay
principal due in respect of the Loans; FOURTH, to pay or prepay any other
Obligations whether or not then due, in such order and manner as Agent
determines, PROVIDED, THAT, (i) ALL SUCH PAYMENTS SHALL BE APPLIED TO PRIME RATE
LOANS BEFORE BEING APPLIED TO EURODOLLAR RATE LOANS AND (ii) UNLESS SO REQUESTED
BY BORROWER, OR UNLESS AN EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND BE
CONTINUING, AGENT AND LENDERS SHALL NOT APPLY ANY PAYMENTS WHICH IT RECEIVES TO
ANY EURODOLLAR RATE LOANS, OTHER THAN ON THE EXPIRATION DATE OF THE INTEREST
PERIOD APPLICABLE TO ANY SUCH EURODOLLAR RATE LOANS. NOTWITHSTANDING ANYTHING TO
THE CONTRARY CONTAINED HEREIN, TO THE EXTENT THAT THERE MAY BE ANY LIMITS ON THE
AMOUNT OF THE OBLIGATIONS SECURED BY ANY SPECIFIC COLLATERAL, ALL PAYMENTS IN
RESPECT OF THE OBLIGATIONS SHALL BE DEEMED APPLIED FIRST TO THE PORTION OF THE
OBLIGATIONS IN EXCESS OF THE SUCH LIMITS. ANY PAYMENTS RECEIVED BY AGENT WHICH
ARE NOT APPLIED TO THE OBLIGATIONS SHALL BE HELD AS CASH COLLATERAL FOR THE
OBLIGATIONS. SUCH CASH COLLATERAL SHALL CONSTITUTE PART OF THE COLLATERAL. SUCH
CASH COLLATERAL SHALL BE HELD BY AGENT IN AN ACCOUNT DESIGNATED BY AGENT FOR
SUCH PURPOSES IN ITS BOOKS AND RECORDS AND MAY BE COMMINGLED WITH AGENT'S OWN
FUNDS. BORROWER SHALL RECEIVE A CREDIT ON A MONTHLY BASIS TO ITS LOAN ACCOUNT
MAINTAINED BY AGENT ON THE FUNDS SO HELD BY AGENT AT A RATE EQUAL TO THREE AND
ONE-HALF (3 1/2%) PERCENT PER ANNUM LESS THAN THE PRIME RATE (ADJUSTED EFFECTIVE
ON THE FIRST DAY OF THE MONTH AFTER ANY CHANGE IN SUCH PRIME RATE IS ANNOUNCED
BASED ON THE PRIME RATE IN EFFECT ON THE LAST DAY OF THE MONTH IN WHICH ANY SUCH
CHANGE OCCURS) AS CALCULATED BY AGENT. SO LONG AS NO DEFAULT OR EVENT OF DEFAULT
SHALL EXIST OR HAVE OCCURRED AND BE CONTINUING AND THERE IS EXCESS AVAILABILITY,
AMOUNTS RECEIVED BY AGENT FROM BORROWER PURSUANT TO
54
THE FOREGOING WHICH ARE NOT APPLIED TO THE OBLIGATIONS OR ARE NOT HELD AS CASH
COLLATERAL PURSUANT TO THE TERMS HEREOF SHALL, UPON THE REQUEST OF BORROWER
RECEIVED BY AGENT ON OR BEFORE 12:00 NOON
NEW YORK CITY TIME ON ANY BUSINESS
DAY, BE REMITTED TO BORROWER. To the extent Borrower uses any proceeds of the
Loans or Letter of Credit Accommodations to acquire rights in or the use of any
Collateral or to repay any Indebtedness used to acquire rights in or the use of
any Collateral, payments in respect of the Obligations shall be deemed applied
first to the Obligations arising from Loans and Letter of Credit Accommodations
that were not used for such purposes and second to the Obligations arising from
Loans and Letter of Credit Accommodations the proceeds of which were used to
acquire rights in or the use of any Collateral in the chronological order in
which Borrower acquired such rights in or the use of such Collateral.
(b) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower. Borrower
shall make all payments to Agent and Lenders on the Obligations free and clear
of, and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Agent or any Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Agent or such Lender. Borrower shall be liable to pay
to Agent, and does hereby indemnify and hold Agent and Lenders harmless for the
amount of any payments or proceeds surrendered or returned. This Section 6.4(b)
shall remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4
shall survive the payment of the Obligations and the termination of this
Agreement.
6.5 TAXES.
(a) ANY AND ALL PAYMENTS BY OR ON BEHALF OF BORROWER HEREUNDER
AND UNDER ANY OTHER FINANCING AGREEMENT SHALL BE MADE, IN ACCORDANCE WITH
SECTION 6.4, FREE AND CLEAR OF AND WITHOUT DEDUCTION FOR ANY AND ALL TAXES,
EXCLUDING (i) INCOME TAXES IMPOSED ON THE NET INCOME OF ANY LENDER (OR ANY
TRANSFEREE OR ASSIGNEE OF SUCH LENDER, INCLUDING ANY PARTICIPANT, ANY SUCH
TRANSFEREE OR ASSIGNEE BEING REFERRED TO AS A "TRANSFEREE") AND (ii) FRANCHISE
OR SIMILAR TAXES IMPOSED ON OR DETERMINED BY REFERENCE TO THE NET INCOME OF ANY
LENDER (OR TRANSFEREE), IN EACH CASE BY THE UNITED STATES OF AMERICA OR BY THE
JURISDICTION UNDER THE LAWS OF WHICH SUCH LENDER (OR TRANSFEREE) (a) IS
ORGANIZED OR ANY POLITICAL SUBDIVISION THEREOF OR (b) HAS ITS APPLICABLE LENDING
OFFICE LOCATED. IN ADDITION, BORROWER AGREES TO PAY TO THE RELEVANT GOVERNMENTAL
AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW ANY OTHER TAXES.
55
(b) IF BORROWER SHALL BE REQUIRED BY LAW TO DEDUCT OR WITHHOLD
IN RESPECT OF ANY TAXES OR OTHER TAXES FROM OR IN RESPECT OF ANY SUM PAYABLE
HEREUNDER TO AGENT OR ANY LENDER, THEN:
(i) THE SUM PAYABLE SHALL BE INCREASED AS NECESSARY
SO THAT AFTER MAKING ALL REQUIRED DEDUCTIONS AND WITHHOLDINGS (INCLUDING
DEDUCTIONS AND WITHHOLDINGS APPLICABLE TO ADDITIONAL SUMS PAYABLE UNDER THIS
SECTION) SUCH LENDER (OR AGENT ON BEHALF OF SUCH LENDER OR ITSELF, AS THE CASE
MAY BE) RECEIVES AN AMOUNT EQUAL TO THE SUM IT WOULD HAVE RECEIVED HAD NO SUCH
DEDUCTIONS OR WITHHOLDINGS BEEN MADE;
(ii) BORROWER SHALL MAKE SUCH DEDUCTIONS AND
WITHHOLDINGS;
(iii) BORROWER SHALL PAY THE FULL AMOUNT DEDUCTED OR
WITHHELD TO THE RELEVANT TAXING AUTHORITY OR OTHER AUTHORITY IN ACCORDANCE WITH
APPLICABLE LAW; AND
(iv) TO THE EXTENT NOT PAID TO AGENT AND LENDERS
PURSUANT TO CLAUSE (I) ABOVE, BORROWER SHALL ALSO PAY TO AGENT OR ANY LENDER, AT
THE TIME INTEREST IS PAID, ALL ADDITIONAL AMOUNTS WHICH AGENT OR ANY LENDER
SPECIFIES AS NECESSARY TO PRESERVE THE AFTER-TAX YIELD SUCH LENDER WOULD HAVE
RECEIVED IF SUCH TAXES OR OTHER TAXES HAD NOT BEEN IMPOSED.
(c) WITHIN THIRTY (30) DAYS AFTER THE DATE OF ANY PAYMENT BY
BORROWER OF TAXES OR OTHER TAXES, UPON AGENT'S REQUEST, BORROWER SHALL FURNISH
TO AGENT THE ORIGINAL OR A CERTIFIED COPY OF A RECEIPT EVIDENCING PAYMENT
THEREOF, OR OTHER EVIDENCE OF PAYMENT REASONABLY SATISFACTORY TO AGENT.
(d) BORROWER WILL INDEMNIFY AGENT AND EACH LENDER (OR
TRANSFEREE) FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES PAID BY AGENT OR SUCH
LENDER (OR TRANSFEREE, AS THE CASE MAY BE). IF AGENT OR SUCH LENDER (OR
TRANSFEREE) RECEIVES A REFUND IN RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH
LENDER (OR TRANSFEREE) HAS RECEIVED PAYMENT FROM BORROWER HEREUNDER, SO LONG AS
NO EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND BE CONTINUING, AGENT OR
SUCH LENDER (AS THE CASE MAY BE) SHALL CREDIT TO THE LOAN ACCOUNT OF BORROWER
THE AMOUNT OF SUCH REFUND PLUS ANY INTEREST RECEIVED (BUT ONLY TO THE EXTENT OF
INDEMNITY PAYMENTS MADE, OR ADDITIONAL AMOUNTS PAID, BY BORROWER UNDER THIS
SECTION 6.5 WITH RESPECT TO THE TAXES OR OTHER TAXES GIVING RISE TO SUCH
REFUND). IF A LENDER (OR ANY TRANSFEREE) CLAIMS A TAX CREDIT IN RESPECT OF ANY
TAXES FOR WHICH IT HAS BEEN INDEMNIFIED BY BORROWER PURSUANT TO THIS SECTION
6.5, SUCH LENDER WILL APPLY THE AMOUNT OF THE ACTUAL DOLLAR BENEFIT RECEIVED BY
SUCH LENDER AS A RESULT THEREOF, AS
56
REASONABLY CALCULATED BY SUCH LENDER AND NET OF ALL EXPENSES RELATED THERETO, TO
THE LOANS MADE BY SUCH LENDER. IF TAXES OR OTHER TAXES WERE NOT CORRECTLY OR
LEGALLY ASSERTED, AGENT OR SUCH LENDER SHALL, UPON BORROWER'S REQUEST AND AT
BORROWER'S EXPENSE, PROVIDE SUCH DOCUMENTS TO BORROWER IN FORM AND SUBSTANCE
SATISFACTORY TO AGENT, AS BORROWER MAY REASONABLY REQUEST, TO ENABLE BORROWER TO
CONTEST SUCH TAXES OR OTHER TAXES PURSUANT TO APPROPRIATE PROCEEDINGS THEN
AVAILABLE TO BORROWER (SO LONG AS PROVIDING SUCH DOCUMENTS SHALL NOT, IN THE
GOOD FAITH DETERMINATION OF AGENT OR THE LENDER, HAVE A REASONABLE LIKELIHOOD OF
RESULTING IN ANY LIABILITY OF AGENT OR SUCH LENDER).
(e) IN THE EVENT ANY TRANSFEREE IS ORGANIZED UNDER THE LAWS OF
A JURISDICTION OTHER THAN THE UNITED STATES, ANY STATE THEREOF OR THE DISTRICT
OF COLUMBIA (A "NON-U.S. LENDER") SUCH NON-U.S. LENDER SHALL DELIVER TO BORROWER
TWO (2) COPIES OF EITHER UNITED STATES INTERNAL REVENUE SERVICE FORM 1001 OR
FORM 4224, OR, IN THE CASE OF A NON-U.S. LENDER CLAIMING EXEMPTION FROM U.S.
FEDERAL WITHHOLDING TAX UNDER SECTION 871(h) OR 881(c) OF THE CODE WITH RESPECT
TO PAYMENTS OF "PORTFOLIO INTEREST", A FORM W-8, OR ANY SUBSEQUENT VERSIONS
THEREOF OR SUCCESSORS THERETO (AND, IF SUCH NON-U.S. LENDER DELIVERS A FORM W-8,
A CERTIFICATE REPRESENTING THAT SUCH NON-U.S. LENDER IS NOT A BANK FOR PURPOSES
OF SECTION 881(c) OF THE CODE, IS NOT A TEN (10%) PERCENT SHAREHOLDER (WITHIN
THE MEANING OF SECTION 871(H)(3)(B) OF THE CODE) OF BORROWER AND IS NOT A
CONTROLLED FOREIGN CORPORATION RELATED TO BORROWER (WITHIN THE MEANING OF
SECTION 864(d)(4) OF THE CODE)), PROPERLY COMPLETED AND DULY EXECUTED BY SUCH
NON-U.S. LENDER CLAIMING COMPLETE EXEMPTION FROM U.S. FEDERAL WITHHOLDING TAX ON
PAYMENTS BY BORROWER UNDER THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS.
SUCH FORMS SHALL BE DELIVERED BY ANY TRANSFEREE THAT IS A NON-U.S. LENDER ON OR
BEFORE THE DATE IT BECOMES A PARTY TO THIS AGREEMENT (OR, IN THE CASE OF A
TRANSFEREE THAT IS A PARTICIPANT, ON OR BEFORE THE DATE SUCH PARTICIPANT BECOMES
A TRANSFEREE HEREUNDER) AND ON OR BEFORE THE DATE, IF ANY, SUCH NON-U.S. LENDER
CHANGES ITS APPLICABLE LENDING OFFICE BY DESIGNATING A DIFFERENT LENDING OFFICE
(A "NEW LENDING OFFICE"). IN ADDITION, A NON-U.S. LENDER SHALL UPON WRITTEN
NOTICE FROM BORROWER PROMPTLY DELIVER SUCH NEW FORMS AS ARE REQUIRED BY THE CODE
OR THE REGULATIONS ISSUED THEREUNDER TO CLAIM EXEMPTION FROM, OR REDUCTION IN
THE RATE OF, U.S. FEDERAL WITHHOLDING TAX UPON THE OBSOLESCENCE OR INVALIDITY OF
ANY FORM PREVIOUSLY DELIVERED BY SUCH NON-U.S. LENDER. NOTWITHSTANDING ANY OTHER
PROVISION OF THIS SECTION 6.5(e), A NON-U.S. LENDER SHALL NOT BE REQUIRED TO
DELIVER ANY FORM PURSUANT TO THIS SECTION 6.5(e) THAT SUCH NON-U.S. LENDER IS
NOT LEGALLY ABLE TO DELIVER.
(f) BORROWER SHALL NOT BE REQUIRED TO INDEMNIFY ANY NON-U.S.
LENDER OR TO PAY ANY ADDITIONAL AMOUNTS TO ANY NON-U.S. LENDER IN RESPECT OF
UNITED STATES FEDERAL WITHHOLDING TAX PURSUANT TO SUBSECTIONS (a) OR (d)
57
ABOVE TO THE EXTENT THAT THE (i) THE OBLIGATION TO WITHHOLD AMOUNTS WITH RESPECT
TO UNITED STATES FEDERAL WITHHOLDING TAX WAS APPLICABLE ON THE DATE SUCH
NON-U.S. LENDER BECAME A PARTY TO THIS AGREEMENT (OR, IN THE CASE OF A
TRANSFEREE THAT IS A PARTICIPANT, ON THE DATE SUCH PARTICIPANT BECAME A
TRANSFEREE HEREUNDER) OR, WITH RESPECT TO PAYMENTS TO A NEW LENDING OFFICE, THE
DATE SUCH NON-U.S. LENDER DESIGNATED SUCH NEW LENDING OFFICE WITH RESPECT TO A
LOAN; PROVIDED, THAT, THIS SUBSECTION (f) SHALL NOT APPLY (A) TO ANY TRANSFEREE
OR NEW LENDING OFFICE THAT BECOMES A TRANSFEREE OR NEW LENDING OFFICE AS A
RESULT OF AN ASSIGNMENT, PARTICIPATION, TRANSFER OR DESIGNATION MADE AT THE
REQUEST OR WITH THE APPROVAL OF BORROWER AND (B) TO THE EXTENT THE INDEMNITY
PAYMENT OR ADDITIONAL AMOUNTS ANY TRANSFEREE, ACTING THROUGH A NEW LENDING
OFFICE, WOULD BE ENTITLED TO RECEIVE (WITHOUT REGARD TO THIS SUBSECTION (f)) DO
NOT EXCEED THE INDEMNITY PAYMENT OR ADDITIONAL AMOUNTS THAT THE PERSON MAKING
THE ASSIGNMENT, PARTICIPATION OR TRANSFER TO SUCH TRANSFEREE MAKING THE
DESIGNATION OF SUCH NEW LENDING OFFICE, WOULD HAVE BEEN ENTITLED TO RECEIVE IN
THE ABSENCE OF SUCH ASSIGNMENT, PARTICIPATION, TRANSFER OR DESIGNATION OR (ii)
THE OBLIGATION TO PAY SUCH ADDITIONAL AMOUNTS WOULD NOT HAVE ARISEN BUT FOR A
FAILURE BY SUCH NON-U.S. LENDER TO COMPLY WITH THE PROVISIONS OF SUBSECTION (e)
ABOVE.
6.6 AUTHORIZATION TO MAKE LOANS. Agent and Lenders are authorized to
make the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be a person
set forth on Schedule 6.6 hereto (or any other person specified in writing by
anyone set forth on Schedule 6.6 hereto) or, at the discretion of Agent, if such
Loans are necessary to satisfy any Obligations. All requests for Loans or Letter
of Credit Accommodations hereunder shall specify the date on which the requested
advance is to be made or Letter of Credit Accommodations established (which day
shall be a Business Day) and the amount of the requested Loan. Subject to the
terms and conditions contained herein, including the conditions precedent set
forth in Section 4.1 and 4.2 hereof, and the limitations set forth in Section
2.1 hereof, Prime Rate Loans will be made in accordance with the terms hereof on
the same day Agent receives the request therefor, if such request is received by
Agent prior to 12:00 noon New York City time on a Business Day. Requests
received after 12:00 noon New York City time on any day shall be deemed to have
been made as of the opening of business on the immediately following Business
Day. All Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, Borrower when deposited to the credit of Borrower or otherwise
disbursed or established in accordance with the instructions of Borrower in
accordance with the terms and conditions of this Agreement.
6.7 USE OF PROCEEDS. Borrower shall use the initial proceeds of the
Loans provided by Agent to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower to
Agent on or about the date hereof and (b) costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements. All other Loans made or Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to the
provisions hereof
58
shall be used by Borrower only for general operating, working capital and other
proper corporate purposes of Borrower not otherwise prohibited by the terms
hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
6.8 PRO RATA TREATMENT. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.
6.9 SHARING OF PAYMENTS, ETC.
(a) Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrower at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to Borrower), in which case it shall promptly notify Borrower and
Agent thereof; PROVIDED, THAT, such Lender's failure to give such notice shall
not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any of the other Financing Agreements
through the exercise of any right of setoff, banker's lien or counterclaim or
similar right or otherwise (other than from Agent as provided herein), and, as a
result of such payment, such Lender shall have received more than its Pro Rata
Share of the principal of the Loans or more than its share of such other amounts
then due hereunder or thereunder by Borrower to such Lender than the percentage
thereof received by any other Lender, it shall promptly pay to Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from
such other Lenders a participation in the Loans or such other amounts,
respectively, owing to such other Lenders (or such interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all Lenders shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) in accordance with their respective
Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall
make appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be restored.
59
(c) Borrower agrees that any Lender purchasing a participation
(or direct interest) as provided in this Section may exercise, in a manner
consistent with this Section, all rights of setoff, banker's lien, counterclaim
or similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any right of setoff, banker's lien, counterclaims or similar rights or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of Borrower. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 SETTLEMENT PROCEDURES.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Lenders, the full amount of the Loans requested or charged to
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to
the terms hereof, without requirement of prior notice to Lenders of the proposed
Loans.
(b) With respect to all Loans made by Agent on behalf of
Lenders as provided in this Section, the amount of each Lender's Pro Rata Share
of the outstanding Loans shall be computed weekly, and shall be adjusted upward
or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
New York time on the Business Day immediately preceding the date of each
settlement computation; PROVIDED, THAT, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. New York
time, then such Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. New York City time on the same Business Day
and if received by a Lender after 12:00 p.m. New York City time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. New York
City time on the next Business Day following the date of receipt. If, as of the
end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata
60
Share of the outstanding Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Agent and each
Lender agrees to xxxx its books and records at the end of each Settlement Period
to show at all times the dollar amount of its Pro Rata Share of the outstanding
Loans and Letter of Credit Accommodations. Each Lender shall only be entitled to
receive interest on its Pro Rata Share of the Loans to the extent such Loans
have been funded by such Lender. Because the Agent on behalf of Lenders may be
advancing and/or may be repaid Loans prior to the time when Lenders will
actually advance and/or be repaid such Loans, interest with respect to Loans
shall be allocated by Agent in accordance with the amount of Loans actually
advanced by and repaid to each Lender and the Agent and shall accrue from and
including the date such Loans are so advanced to but excluding the date such
Loans are either repaid by Borrower or actually settled with the applicable
Lender as described in this Section.
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrower, Agent may apply such amounts repaid directly
to any amounts made available by Agent pursuant to this Section. In lieu of
weekly or more frequent settlements, Agent may, at its option, at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent's disbursement of
such Loan to Borrower. In such event, all Loans under this Agreement shall be
made by the Lenders simultaneously and proportionately to their Pro Rata Shares.
No Lender shall be responsible for any default by any other Lender in the other
Lender's obligation to make a Loan requested hereunder nor shall the Commitment
of any Lender be increased or decreased as a result of the default by any other
Lender in the other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to Borrower
pursuant to this Section on any day, Agent may assume that each Lender will make
available to Agent such Lender's Pro Rata Share of the Loan requested or
otherwise made on such day and Agent may, in its discretion, but shall not
obligated to, cause a corresponding amount to be made available to or for the
benefit of Borrower on such day. If Agent makes such corresponding amount
available to Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Loans. During the period in which such Lender
has not paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own
61
account. Upon any such failure by a Lender to pay Agent, Agent shall promptly
thereafter notify Borrower of such failure and Borrower shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Borrower's receipt of such notice. A Lender who fails to pay Agent its Pro
Rata Share of any Loans made available by the Agent on such Lender's behalf, or
any Lender who fails to pay any other amount owing by it to Agent, is a
"Defaulting Lender". Agent shall not be obligated to transfer to a Defaulting
Lender any payments received by Agent for the Defaulting Lender's benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, relend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be
zero (0). This Section shall remain effective with respect to a Defaulting
Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by Borrower or any Obligor of their duties and
obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or
the other Financing Agreements shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to fulfill
its Commitment hereunder or to prejudice any rights that Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.11 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
----------------------------------
7.1 COLLATERAL REPORTING.
(a) Borrower shall provide Agent with the following documents
in a form satisfactory to Agent:
(i) on a weekly basis or more frequently as Agent may
request, schedules of sales made, credits issued and cash received;
62
(ii) as soon as possible after the end of each month
(but in any event within fifteen (15) Business Days after the end thereof),
reports as of the end of such month, or more frequently as Agent may request, as
follows: (A) perpetual inventory reports, (B) inventory reports by location and
category (and including the amounts of Inventory and the value thereof at any
leased locations and at premises of warehouses, processors or other third
parties), (C) monthly resin price report, (D) slow moving inventory report
identifying Inventory one year or older and an inventory turnover report by
category, (E) agings of accounts receivable (together with a reconciliation to
the previous month's aging and general ledger) and (F) agings of accounts
payable (and including information indicating the amounts owing to owners and
lessors of leased premises, warehouses, processors and other third parties from
time to time in possession of any Collateral);
(iii) upon Agent's reasonable request, (A) copies of
customer statements and credit memos, remittance advices and reports, and copies
of deposit slips and bank statements, (B) copies of shipping and delivery
documents, and (C) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower;
(iv) such other reports as to the Collateral as Agent
shall request in good faith from time to time.
(b) If Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower hereby irrevocably authorizes such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Agent and to
follow Agent's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrower shall notify Agent promptly of: (i) any material
delay in Borrower's performance of any of its material obligations to any
material account debtor or the assertion of any material claims, offsets,
defenses or counterclaims by any material account debtor, or any material
disputes with account debtors, or any settlement, adjustment or compromise
thereof, (ii) all material adverse information known to Borrower relating to the
financial condition of any material account debtor and (iii) any event or
circumstance which, to the best of Borrower's knowledge, would cause Agent to
consider any then existing Accounts as no longer constituting Eligible Accounts.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor without Agent's consent, except
in the ordinary course of a Borrower's business in accordance with practices and
policies previously disclosed in writing to Agent and except as set forth in the
schedules delivered to Agent pursuant to Section 7.1(a) above. So long as no
Event of Default exists or has occurred and is continuing, Borrower shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
63
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Agent or schedule thereof delivered to Agent shall be true
and complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent to the extent required under the terms of this Agreement,
(iii) no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Agent in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of Borrower's business in
accordance with practices and policies previously disclosed to Agent, (iv) there
shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to Agent in
accordance with the terms of this Agreement, (v) none of the transactions giving
rise thereto will violate any applicable foreign, Federal, State or local laws
or regulations, all documentation relating thereto will be legally sufficient
under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms.
(c) Agent shall have the right at any time or times, in
Agent's name, in the name of a nominee of Agent or in the name of Borrower
pursuant to the exercise by Agent of its rights under Section 7.5 hereof at any
time on or after any Event of Default and for so long as the same is continuing
or in the name of a nominee of Agent or in the name of Borrower pursuant to the
exercise by Agent of its rights under Section 7.5 hereof at any time prior
thereto, to verify the validity, amount or any other matter relating to any
Receivables or other Collateral, by mail, telephone, facsimile transmission or
otherwise.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Agent,
keeping correct and accurate records itemizing and describing the kind, type and
quantity of Inventory, Borrower's cost therefor and daily withdrawals therefrom
and additions thereto; (b) Borrower shall conduct a physical count of the
Inventory at least once each year but at any time or times as Agent may request
on or after an Event of Default and for so long as the same is continuing, and
promptly following such physical inventory shall supply Agent with a report in
the form and with such specificity as may in good faith be satisfactory to Agent
concerning such physical count; (c) Borrower shall not remove any Inventory from
the locations set forth or permitted herein, without the prior written consent
of Agent, EXCEPT (i) for sales of Inventory in the ordinary course of its
business, (ii) to move Inventory directly from one location set forth or
permitted herein to another such location, and (iii) Inventory shipped from the
manufacturer thereof to Borrower which is in transit to the locations set forth
or permitted herein; (d) upon Agent's request, Borrower shall, at its expense,
no more than once in any twelve (12) month period, but at any time or times as
Agent may request on or after an Event of Default and for so long as the same is
continuing, deliver or cause to be delivered to Agent written appraisals as to
the Inventory in form, scope and methodology reasonably acceptable to Agent and
by an appraiser acceptable to Agent, addressed to Agent and Lenders and upon
which Agent and Lenders are expressly permitted to rely; (e) Borrower shall
produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (f) Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (g)
64
Borrower shall not sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate Borrower to
repurchase such Inventory (except for the right of customers to return defective
or non-conforming goods in the ordinary course of business consistent with the
current practices of Borrower as of the date hereof); (h) Borrower shall keep
the Inventory in good and marketable condition; and (i) Borrower shall not,
without prior written notice to Agent or the specific identification of such
Inventory in a report with respect thereto provided by Borrower to Agent
pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on
consignment or approval.
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS. With respect to the
Equipment and Real Property (but as to the Real Property only to the extent at
any time subject to a Mortgage): (a) upon Agent's request, Borrower shall, at
its expense, no more than once in any twelve (12) month period, but at any time
or times as Agent may request on or after an Event of Default and for so long as
the same is continuing, deliver or cause to be delivered to Agent written
appraisals as to the Equipment and/or the Real Property (but in case of the Real
Property only as to the Real Property subject to a Mortgage) in form, scope and
methodology reasonably acceptable to Agent and by an appraiser acceptable to
Agent, addressed to Agent and upon which Agent is expressly permitted to rely;
(b) Borrower shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted and except as to obsolete
or worn-out Equipment or Equipment no longer used in the business that is not
Eligible Equipment or Eligible New Equipment); (c) Borrower shall use the
Equipment and the Real Property with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with all
applicable laws in all material respects; (d) the Equipment is and shall be used
in the business of Borrower and not for personal, family, household or farming
use; (e) Borrower shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of its business or to move Equipment
directly from one location set forth or permitted herein to another such
location and except for the movement of motor vehicles used by or for the
benefit of Borrower in the ordinary course of business; (f) the Equipment is now
and shall remain personal property and Borrower shall not permit any of the
Equipment to be or become a part of or affixed to real property; and (g)
Borrower assumes all responsibility and liability arising from the use of the
Equipment and the Real Property.
7.5 POWER OF ATTORNEY. Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent in good faith) as Borrower's
true and lawful attorney-in-fact, and authorizes Agent, in Borrower's or Agent's
name, to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of
Borrower's rights and remedies to collect any Receivable or other Collateral,
(iv) sell or assign any Receivable upon such terms, for such amount and at such
time or times as the Agent deems advisable, (v) settle, adjust, compromise,
extend or renew an Account, (vi) discharge and release any Receivable, (vii)
prepare, file and sign Borrower's name on any proof of claim in bankruptcy or
other similar document against an account debtor or other obligor in respect of
any Receivables or other Collateral, (viii) notify the post office authorities
to change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other
65
proceeds of Collateral to an address designated by Agent, and open and dispose
of all mail addressed to Borrower and handle and store all mail relating to the
Collateral; (ix) clear Inventory the purchase of which was financed with Letter
of Credit Accommodations through U.S. Customs or foreign export control
authorities in Borrower's name, Agent's name or the name of Agent's designee,
and to sign and deliver to customs officials powers of attorney in Borrower's
name for such purpose, and to complete in Borrower's or Agent's name, any order,
sale or transaction, obtain the necessary documents in connection therewith and
collect the proceeds thereof, (x) endorse Borrower's name upon any document or
agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral and (xi) do all acts and things which are necessary, in Agent's
good faith determination, to fulfill Borrower's obligations under this Agreement
and the other Financing Agreements; (b) at any time that Agent may have the
right to instruct the depository banks at which the Blocked Accounts are
maintained to transfer funds to the Agent Payment Account, to (i) take control
in any manner of any item of payment in respect of Receivables or constituting
Collateral or that are received in, or for deposit in, the Blocked Accounts or
otherwise received by Agent or any Lender and (ii) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received; and
(c) at any time to (i) sign Borrower's name on any verification of Receivables
and notices thereof to account debtors or any secondary obligors or other
obligors in respect thereof, (ii) endorse Borrower's name upon any items of
payment in respect of Receivables or constituting Collateral that is received by
Agent and any Lender and deposit the same in Agent's account for application to
the Obligations, and (iii) endorse Borrower's name upon any chattel paper,
document or instrument relating to any Receivable or any goods pertaining
thereto, including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents. Borrower hereby releases Agent and
Lenders and their respective officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Agent's or any Lender's own gross negligence or wilful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.6 RIGHT TO CURE. Agent may, at its option, upon not less than three
(3) Business Days' prior notice to Borrower, (a) cure any default by any
Borrower under any material agreement with a third party that affects Collateral
having a value in excess of $50,000, its value or the ability of Agent to
collect, sell or otherwise dispose of Collateral or the rights and remedies of
Agent or any Lender therein or the ability of Borrower to perform its
obligations hereunder or under any of the other Financing Agreements, (b) pay or
bond on appeal any judgment entered against Borrower, (c) discharge taxes,
liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral, except as to taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower and with respect to which adequate reserves
have been set aside on its books, so long as all rights or remedies of the
taxing authority with respect thereto are at all times effectively stayed, and
(d) pay any amount, incur any expense or perform any act which, in Agent's good
faith judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agent and Lenders with respect
thereto. Agent may add any amounts so expended to the Obligations and charge
Borrower's account therefor, such amounts to be
66
repayable by Borrower on demand. Agent and Lenders shall be under no obligation
to effect such cure, payment or bonding and shall not, by doing so, be deemed to
have assumed any obligation or liability of Borrower. Any payment made or other
action taken by Agent or any Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.7 ACCESS TO PREMISES. From time to time as requested by Agent, at the
cost and expense of Borrower, (a) Agent or its designee shall have complete
access to all of Borrower's premises during normal business hours and after not
less than three (3) Business Days' prior notice to Borrower, or at any time and
without notice to Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrower's books and records, including the Records,
PROVIDED, THAT, SO LONG AS NO DEFAULT OR EVENT OF DEFAULT SHALL EXIST OR HAVE
OCCURRED, AGENT SHALL NOT CONDUCT MORE THAN FOUR (4) FIELD EXAMINATIONS WITH
RESPECT TO THE COLLATERAL IN ANY TWELVE (12) MONTH PERIOD (AND ANY FIELD
EXAMINATIONS CONDUCTED WHILE A DEFAULT OR AN EVENT OF DEFAULT EXISTS SHALL NOT
BE INCLUDED IN THE DETERMINATION OF THE NUMBER OF FIELD EXAMINATIONS CONDUCTED
DURING ANY SUCH PERIOD) and (b) Borrower shall promptly furnish to Agent such
copies of such books and records or extracts therefrom as Agent may request, and
(c) Agent or any Lender or Agent's designee may use during normal business hours
such of personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing PROVIDED, THAT, BORROWERS SHALL MAKE SUCH PERSONNEL,
EQUIPMENT, SUPPLIES AND PREMISES AVAILABLE TO AGENT, ANY LENDER OR ITS DESIGNEE
IN SUCH MANNER SO AS TO MINIMIZE ANY INTERFERENCE WITH THE OPERATIONS OF
BORROWER AND SO AS TO ENABLE AGENT, SUCH LENDER OR DESIGNEE TO COMPLY WITH
APPLICABLE HEALTH AND SAFETY PROCEDURES AND REGULATIONS) and if an Event of
Default exists or has occurred and is continuing for the collection of
Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations to Borrower:
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY. Borrower is a corporation
duly organized and in good standing under the laws of its state of incorporation
and is duly qualified as a foreign corporation and in good standing in all
states or other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary,
except for those jurisdictions in which the failure to so qualify would not have
a Material Adverse Effect. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder (a) are all within Borrower's corporate powers, (b)
have been duly authorized, (c) are not in contravention of law or the terms of
Borrower's certificate of incorporation, by-laws, or other organizational
67
documentation, or any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower or its property are bound and (d) will not result in
the creation or imposition of, or require or give rise to any obligation to
grant, any lien, security interest, charge or other encumbrance upon any
property of Borrower. This Agreement and the other Financing Agreements to which
Borrower is a party constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms.
8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE;
COLLATERAL LOCATIONS.
(a) The exact legal name of Borrower is as set forth on the
signature page of this Agreement and in the Information Certificate. Borrower
has not, during the past five years, been known by or used any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate.
(b) Borrower is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower or accurately states that Borrower has none and accurately sets forth
the federal employer identification number of Borrower .
(c) The chief executive office and mailing address of Borrower
and Borrower's Records concerning Accounts are located only at the address
identified as such in Schedule 8.2 to the Information Certificate and its only
other places of business and the only other locations of Collateral (other than
locations which in the aggregate as to all such locations have tangible
Collateral with a value of less than $50,000), if any, are the addresses set
forth in Schedule 8.2 to the Information Certificate, subject to the rights of
Borrower to establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations which are not
owned by Borrower and sets forth the owners and/or operators thereof.
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent and Lenders have been prepared in accordance with GAAP (except
as to any interim financial statements, to the extent such statements are
subject to normal year-end adjustments and do not include any notes) and fairly
present in all material respects the financial condition and the results of
operation of Borrower as at the dates and for the periods set forth therein.
Except as disclosed in any interim financial statements furnished by Borrower to
Agent prior to the date of this Agreement, there has been no act, condition or
event which has had or is reasonably likely to have a Material Adverse Effect
since the date of the most recent audited financial statements of Borrower
furnished by Borrower to Agent prior to the date of this Agreement.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under
68
Section 9.8 hereof. Borrower has good and marketable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 TAX RETURNS. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it. All information in such tax returns, reports and declarations is complete
and accurate in all material respects. Borrower has paid or caused to be paid
all taxes due and payable or claimed due and payable in any assessment received
by it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and payable
and whether or not disputed.
8.6 LITIGATION. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of Borrower's knowledge threatened, against or affecting
Borrower, its assets or business which has or could reasonably be expected to
have a Material Adverse Effect and (b) there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, in each case, which if adversely
determined against Borrower has or could reasonably be expected to have a
Material Adverse Effect.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
(a) Borrower is not in default in any respect under, or in
violation in any respect of the terms of, any agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its
assets are bound which default or violation has or could reasonably be expected
to have a Material Adverse Effect. Borrower is in compliance with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority relating to its business, including, without limitation,
those set forth in or promulgated pursuant to the Occupational Safety and Health
Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended,
ERISA, the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws, where the failure to so comply has or could reasonably be
expected to have a Material Adverse Effect.
(b) Borrower has obtained all permits, licenses, approvals,
consents, certificates, orders or authorizations of any Governmental Authority
required for the lawful conduct of its business (the "Permits") where the
failure to do so has or could reasonably be expected to have a Material Adverse
Effect. All of the Permits are valid and subsisting and in full force and effect
where the failure to do so has or could reasonably be expected to have a
Material Adverse Effect. There are no actions, claims or proceedings pending or
to the best of Borrower's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the
69
Permits where such revocation, cancellation, suspension or modification has or
could reasonably be expected to have a Material Adverse Effect.
8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any applicable Environmental Law or Permit, and
the operations of Borrower complies in all material respects with all
Environmental Laws and all Permits.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
Borrower's knowledge threatened, with respect to any non-compliance with or
violation of the requirements of any Environmental Law by Borrower or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which adversely affects or could reasonably be expected
to adversely affect in any material respect Borrower or its business, operations
or assets or any properties at which Borrower has transported, stored or
disposed of any Hazardous Materials.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrower has no material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Borrower has all Permits required to be obtained or filed
in connection with the operations of Borrower under any Environmental Law and
all of such licenses, certificates, approvals or similar authorizations and
other Permits are valid and in full force and effect where the failure to do so
has or could reasonably be expected to have a Material Adverse Effect.
8.9 EMPLOYEE BENEFITS.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other Federal or State law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of Borrower's knowledge, nothing has occurred which would cause the
loss of such qualification. Borrower and its ERISA Affiliates have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
70
(b) There are no pending, or to the best of Borrower's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan that
may result in liability of Borrower in excess of $250,000.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) Borrower and its ERISA Affiliates, have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA in excess of $250,000); (iv) Borrower and its ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) Borrower and its ERISA Affiliates have not engaged
in a transaction that would be subject to Section 4069 or 4212(c) of ERISA that
may result in liability of Borrower in excess of $250,000.
8.10 BANK ACCOUNTS. All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrower maintained at any bank or
other financial institution are set forth on Schedule 8.10 to the Information
Certificate, subject to the right of Borrower to establish new accounts in
accordance with Section 5.4 hereof.
8.11 INTELLECTUAL PROPERTY. Borrower owns or licenses or otherwise has
the right to use all Intellectual Property necessary for the operation of its
business as presently conducted or proposed to be conducted. As of the date
hereof, Borrower does not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 to the Information Certificate and has not granted any licenses
with respect thereto other than as set forth in Schedule 8.11 to the Information
Certificate. No event has occurred which permits or would permit after notice or
passage of time or both, the revocation, suspension or termination of such
rights. To the best of Borrower's knowledge, no slogan or other advertising
device, product, process, method, substance or other Intellectual Property or
goods bearing or using any Intellectual Property presently contemplated to be
sold by or employed by Borrower infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other
Person presently and no claim or litigation is pending or threatened against or
affecting Borrower contesting its right to sell or use any such Intellectual
Property. Schedule 8.11 to the Information Certificate sets forth all of the
agreements or other arrangements of Borrower pursuant to which Borrower has a
license or other right to use any trademarks, logos, designs, representations or
other Intellectual Property owned by another person as in effect on the date
hereof and the dates of the expiration of such agreements or other arrangements
of Borrower as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by Borrower after the
date hereof, collectively, the "License Agreements" and individually, a "License
Agreement"). No trademark, servicemark, copyright or other
71
Intellectual Property at any time used by Borrower which is owned by another
person, or owned by Borrower subject to any security interest, lien, collateral
assignment, pledge or other encumbrance in favor of any person other than Agent,
is affixed to any Eligible Inventory, except (a) to the extent permitted under
the term of the license agreements listed on Schedule 8.11 to the Information
Certificate and (b) to the extent the sale of Inventory to which such
Intellectual Property is affixed is permitted to be sold by Borrower under
applicable law (including the United States Copyright Act of 1976).
8.12 SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY.
(a) Borrower does not have any direct or indirect Subsidiaries
or Affiliates and is not engaged in any joint venture or partnership except as
set forth in Schedule 8.12 to the Information Certificate and except as to
Subsidiaries formed or acquired or other equity interests acquired after the
date hereof to the extent permitted under Section 9.10 hereof.
(b) Borrower is the record and beneficial owner of all of the
issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by
Borrower and there are no proxies, irrevocable or otherwise, with respect to
such shares and no equity securities of any of the Subsidiaries are or may
become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.
(c) As of October 31, 2001, based solely on the applicable
forms filed with the Securities and Exchange Commission and the records of
Borrower, the owners and holders of more than ten (10%) percent of the issued
and outstanding shares of Capital Stock of Borrower are indicated in the
Information Certificate, and in each case all of such shares have been duly
authorized and are fully paid and non-assessable.
(d) Borrower is Solvent and will continue to be Solvent after
the creation of the Obligations, the security interests of Agent and the other
transaction contemplated hereunder.
8.13 LABOR DISPUTES.
(a) Set forth on Schedule 8.13 to the Information Certificate
is a list (including dates of termination) of all collective bargaining or
similar agreements between or applicable to Borrower and any union, labor
organization or other bargaining agent in respect of the employees of Borrower
on the date hereof.
(b) There is (i) no unfair labor practice complaint pending
against Borrower or, to the best of any Borrower's knowledge, threatened against
it, before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against Borrower or, to best of Borrower's knowledge,
threatened against it which if adversely determined to it would have or could
72
reasonably be expected to have a Material Adverse Effect, and (ii) no strike,
labor dispute, slowdown or stoppage is pending against Borrower or, to the best
of Borrower's knowledge, threatened against Borrower where such strike, labor
dispute, slowdown or stoppage has or could reasonably be expected to have a
Material Adverse Effect.
8.14 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained in
this Agreement or restrictions permitted under Section 9.16 hereof, there are no
contractual or consensual restrictions on Borrower or any of its Subsidiaries
which prohibit or otherwise restrict (a) the transfer of cash or other assets
(i) between Borrower and any of its Subsidiaries or (ii) between any
Subsidiaries of Borrower or (b) the ability of Borrower or any of its
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral.
8.15 MATERIAL CONTRACTS. Schedule 8.15 to the Information Certificate
sets forth all Material Contracts to which Borrower is a party or is bound as of
the date hereof. Borrower has delivered true, correct and complete copies of
such Material Contracts to Agent on or before the date hereof. Borrower is not
in breach or in default in any material respect of or under any Material
Contract and have not received any notice of the intention of any other party
thereto to terminate any Material Contract.
8.16 PAYABLE PRACTICES. Borrower has not made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.
8.17 ACCURACY AND COMPLETENESS OF INFORMATION. All information
furnished by or on behalf of Borrower in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.
8.18 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
9.1 MAINTENANCE OF EXISTENCE.
73
(a) Borrower shall at all times (i) preserve, renew and keep
in full force and effect its corporate existence and rights and franchises with
respect thereto and (ii) maintain in full force and effect all licenses,
approvals, authorizations, leases, contracts and Permits where the failure to do
so has or could reasonably be expected to have a Material Adverse Effect.
(b) Borrower shall not change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Borrower of such proposed change in
its corporate name, which notice shall accurately set forth the new name; and
(ii) Agent shall have received a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of
Borrower as soon as it is available.
(c) Borrower shall not change its chief executive office or
its mailing address or organizational identification number (or if it does not
have one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days' prior written notice from Borrower of such proposed change,
which notice shall set forth such information with respect thereto as Agent may
reasonably require and Agent shall have received such agreements as Agent may
reasonably require in connection therewith. Borrower shall not change its type
of organization or jurisdiction of organization.
9.2 NEW LOCATIONS. Borrower may only open any new location within the
continental United States provided Borrower (a) gives Agent thirty (30) days
prior written notice of the intended opening of any such new location and (b)
executes and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent may deem reasonably necessary or
desirable to protect its interests in the Collateral at such location, EXCEPT
THAT, (i) Borrower shall only be required to notify Agent of any new public
warehouses used by Borrower and not otherwise listed on the Information
Certificate once each month so long as (A) no Event of Default shall exist or
have occurred and be continuing and (B) the aggregate amount of all Inventory or
other Collateral at such warehouses shall not exceed $250,000 and (ii) Borrower
shall only be required to deliver a Collateral Access Agreement with respect to
a public warehouse to the extent required under Section 5.4(h) hereof.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Borrower shall, and shall cause any Domestic Subsidiary
to, at all times, comply in all respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority,
including ERISA, the Code, the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, and all statutes,
rules, regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws where the failure to so comply has or could reasonably be expected to have
a Material Adverse Effect.
74
(b) Borrower shall give written notice to Agent immediately
upon Borrower's receipt of any notice of, or Borrower's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or (B) the release, spill or discharge, threatened
or actual, of any Hazardous Material other than in the ordinary course of
business and other than as permitted under any applicable Environmental Law.
Copies of all material environmental surveys, audits, assessments, feasibility
studies and results of remedial investigations prepared after the date hereof
shall be promptly furnished, or caused to be furnished, by Borrower to Agent.
Borrower shall take prompt action to respond to any non-compliance with any of
the Environmental Laws where the value of any Real Property or Equipment is or
would be adversely affected by more than $250,000 or the costs to remediate or
to be in compliance with such Environmental Laws would exceed or are estimated
by Agent to exceed $250,000 or such non-compliance would adversely affect the
ability of Agent to exercise its rights and remedies with respect to such Real
Property or Equipment or increase the risk of any liability to Agent or any
Lender in connection with the exercise by Agent of such rights and remedies, in
the good faith determination of Agent. Borrower shall regularly report to Agent
on such response.
(c) Without limiting the generality of the foregoing, whenever
Agent reasonably determines that there is material non-compliance, or any
condition which requires any action by or on behalf of Borrower in order to
avoid any material non-compliance, with any Environmental Law, Borrower shall,
at Agent's request and Borrower's expense: (i) cause an independent
environmental engineer reasonably acceptable to Agent to conduct such tests of
the site where non-compliance or alleged non-compliance with such Environmental
Laws has occurred as to such non-compliance and prepare and deliver to Agent a
report as to such material non-compliance setting forth the results of such
tests, a proposed plan for responding to any environmental problems described
therein, and an estimate of the costs thereof, including whether the costs to
remediate or to otherwise be in compliance with such Environmental Laws would
exceed $250,000 or would adversely affect the ability of Agent to exercise its
rights and remedies with respect to such Real Property or Equipment or increase
the risk of any liability to Agent or any Lender in connection with the exercise
by Agent of such rights and remedies and (ii) provide to Agent a supplemental
report of such engineer whenever the scope of such non-compliance, or Borrower's
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Borrower shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Borrower and the
preparation and implementation of any closure, remedial or other required plans.
75
All representations, warranties, covenants and indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination of this
Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Borrower shall, and shall cause any
Subsidiary to, duly pay and discharge all taxes, assessments, contributions and
governmental charges in excess of $100,000 upon or against it or its properties
or assets, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower or
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books.
9.5 INSURANCE.
(a) Borrower shall, and shall cause any Subsidiary to, at all
times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be reasonably satisfactory
to Agent as to form, amount and insurer. Borrower shall furnish certificates,
policies or endorsements to Agent as Agent shall reasonably require as proof of
such insurance, and, if Borrower fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
(other than policies as to Foreign Subsidiaries) shall provide for at least
thirty (30) days' prior written notice to Agent of any cancellation of coverage
and that Agent may act as attorney for Borrower in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrower shall cause Agent to be named as
a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies (other than policies as to Foreign
Subsidiaries) and Borrower shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance satisfactory to
Agent. Such lender's loss payable endorsements shall specify that the proceeds
of such insurance shall be payable to Agent as its interests may appear and
further specify that Agent and Lenders shall be paid regardless of any act or
omission by Borrower or any of its Affiliates.
(b) At its option, Agent may apply any insurance proceeds
received by Agent at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Agent may determine or hold such proceeds as cash
collateral for the Obligations, EXCEPT, THAT, NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, IF ANY OF THE EQUIPMENT OR ANY PORTION OF ANY
BUILDING, STRUCTURE OR OTHER IMPROVEMENT ON ANY REAL PROPERTY IS LOST,
PHYSICALLY DAMAGED OR DESTROYED, UPON THE WRITTEN REQUEST OF BORROWER,
(i) IF THE VALUE OF THE EQUIPMENT OR BUILDING,
STRUCTURE OR OTHER IMPROVEMENT IS LESS THAN $100,000, AGENT SHALL RELEASE THE
NET CASH PROCEEDS FROM INSURANCE RECEIVED BY AGENT PURSUANT TO THIS SECTION 9.5
BASED ON A CLAIM BY BORROWER AS A RESULT OF SUCH LOSS, DAMAGE OR DESTRUCTION,
76
PROVIDED, THAT, NO EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND BE
CONTINUING, AND
(ii) IF THE VALUE OF THE EQUIPMENT OR BUILDING,
STRUCTURE OR OTHER IMPROVEMENT IS GREATER THAN $100,000, AGENT SHALL RELEASE THE
NET CASH PROCEEDS FROM INSURANCE RECEIVED BY AGENT PURSUANT TO THIS SECTION 9.5
BASED ON A CLAIM BY BORROWER AS A RESULT OF SUCH LOSS, DAMAGE OR DESTRUCTION TO
THE EXTENT NECESSARY FOR THE REPAIR, REFURBISHING OR REPLACEMENT OF SUCH
EQUIPMENT OR BUILDING, STRUCTURE OR IMPROVEMENT, PROVIDED, THAT, ALL OF THE
FOLLOWING CONDITIONS ARE SATISFIED: (A) NO EVENT OF DEFAULT SHALL EXIST OR HAVE
OCCURRED AND BE CONTINUING, (B) THE AMOUNT OF THE INSURANCE PROCEEDS (TOGETHER
WITH ANY DEDUCTIBLE TO BE SATISFIED BY BORROWER) ARE SUFFICIENT, IN AGENT'S GOOD
FAITH DETERMINATION, TO EFFECT SUCH REPAIR, REFURBISHING OR REPLACEMENT IN A
SATISFACTORY MANNER, (C) SUCH PROCEEDS SHALL BE USED FIRST TO REPAIR, REFURBISH
OR REPLACE THE COLLATERAL SO LOST, DAMAGED OR DESTROYED (FREE AND CLEAR OF ANY
SECURITY INTERESTS, LIENS, CLAIMS OR ENCUMBRANCES), (D) THE INSURANCE CARRIER
SHALL HAVE WAIVED ANY RIGHT OF SUBROGATION AGAINST BORROWER UNDER ITS POLICY,
(E) THE CASUALTY RESULTED IN A PAYMENT OF $4,000,000 IN INSURANCE PROCEEDS OR
LESS, (F) SUCH REPAIR, REFURBISHING OR REPLACEMENT SHALL BE COMMENCED AS SOON AS
REASONABLY PRACTICABLE AND SHALL BE DILIGENTLY PURSUED TO SATISFACTORY
COMPLETION, (G) THE INSURANCE PROCEEDS SHALL BE RELEASED BY AGENT TO BORROWER
FROM TIME TO TIME AS NEEDED AND/OR AT AGENT'S OPTION, RELEASED BY AGENT DIRECTLY
TO THE CONTRACTOR, SUBCONTRACTOR, MATERIALMEN, LABORERS, ENGINEERS, ARCHITECTS
AND OTHER PERSONS RENDERING SERVICES OR MATERIALS TO REPAIR, REFURBISH OR
REPLACE SUCH EQUIPMENT, BUILDING, STRUCTURE OR IMPROVEMENTS, (H) THE REPAIR,
REFURBISHING OR REPLACEMENT TO WHICH THE PROCEEDS ARE APPLIED SHALL CAUSE THE
EQUIPMENT, BUILDING, STRUCTURE OR IMPROVEMENT SO LOST, DAMAGED, DESTROYED TO BE
OF AT LEAST EQUAL VALUE AND SUBSTANTIALLY THE SAME CHARACTER AS PRIOR TO SUCH
LOSS, DAMAGE OR DESTRUCTION AND (I) TO THE EXTENT EQUIPMENT IS LOST, DAMAGED OR
DESTROYED, THE EQUIPMENT AVAILABILITY SHALL BE REDUCED, AT AGENT'S OPTION, BY
THE VALUE OF SUCH EQUIPMENT AND TO THE EXTENT THAT IMPROVEMENTS ON ANY REAL
PROPERTY AT THE LOCATIONS SET FORTH IN PART I OF SCHEDULE 9.7(b) ARE LOST,
DAMAGED OR DESTROYED, THE REAL PROPERTY AVAILABILITY SHALL BE REDUCED, AT
AGENT'S OPTION, TO REFLECT THE VALUE OF SUCH REAL PROPERTY AS REDUCED AS A
RESULT OF THE LOSS, DAMAGE OR DESTRUCTION OF SUCH IMPROVEMENTS AS DETERMINED IN
GOOD FAITH BY AGENT AND TO THE EXTENT THAT IMPROVEMENTS ON ANY REAL PROPERTY AT
THE LOCATIONS SET FORTH IN PART II OF SCHEDULE 9.7(b) ARE LOST, DAMAGED OR
DESTROYED, AT AGENT'S OPTION, A RESERVE MAY BE ESTABLISHED TO REFLECT THE VALUE
OF SUCH REAL PROPERTY AS REDUCED AS A RESULT OF THE LOSS, DAMAGE OR DESTRUCTION
OF SUCH IMPROVEMENTS AS DETERMINED IN GOOD FAITH BY AGENT. IF AFTER THE
EQUIPMENT OR BUILDING, STRUCTURE OR THE IMPROVEMENT IS REPAIRED, REFURBISHED OR
REPLACED IN A MANNER SATISFACTORY TO AGENT, TO THE EXTENT THAT THE REAL PROPERTY
AVAILABILITY MAY HAVE BEEN REDUCED OR A RESERVE
77
ESTABLISHED, AS THE CASE MAY BE, PURSUANT TO THE TERMS OF THIS SECTION 9.5,
AGENT SHALL THEREAFTER, UPON THE WRITTEN REQUEST OF BORROWER, INCREASE THE REAL
PROPERTY AVAILABILITY OR REDUCE SUCH RESERVE TO REFLECT THE EFFECT OF THE
REPAIR, REFURBISHMENT OR REPLACEMENT ON THE VALUE OF THE REAL PROPERTY IN SUCH
AMOUNTS AS AGENT SHALL DETERMINE IN GOOD FAITH (WHICH MAY, AT AGENT'S OPTION, BE
BASED ON AN APPRAISAL THEREOF, AT BORROWER'S EXPENSE, BY AN APPRAISER ACCEPTABLE
TO AGENT AND IN FORM, SCOPE AND METHODOLOGY ACCEPTABLE TO AGENT AND UPON WHICH
AGENT IS EXPRESSLY PERMITTED TO RELY, WHICH APPRAISAL SHALL BE IN ADDITION TO
ANY APPRAISAL OBTAINED PURSUANT TO SECTION 7.4 HEREOF) SO LONG AS: NO DEFAULT OR
EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND BE CONTINUING AND NOT LESS
THAN ONE HUNDRED TWENTY (120) DAYS PRIOR TO THE END OF THE THEN CURRENT TERM OF
THIS AGREEMENT, BOTH THE REPAIR, REFURBISHMENT OR REPLACEMENT IS COMPLETED IN A
MANNER SATISFACTORY TO AGENT AND AGENT SHALL HAVE RECEIVED THE REQUEST FROM
BORROWER FOR SUCH INCREASE IN THE REAL PROPERTY AVAILABILITY OR REDUCTION IN THE
RESERVE, AS THE CASE MAY BE.
(C) AT ANY TIME AN EVENT OF DEFAULT EXISTS OR HAS OCCURRED AND
IS CONTINUING, AT ITS OPTION, AGENT MAY APPLY SUCH INSURANCE PROCEEDS TO THE
COST OF REPAIRS OR REPLACEMENT OF COLLATERAL AND/OR TO PAYMENT OF THE
OBLIGATIONS, WHETHER OR NOT THEN DUE, IN ANY ORDER AND IN SUCH MANNER AS AGENT
MAY DETERMINE OR HOLD SUCH PROCEEDS AS CASH COLLATERAL FOR THE OBLIGATIONS.
78
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrower shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Borrower and its Subsidiaries in accordance with GAAP, PROVIDED, THAT, the books
and records of Foreign Subsidiaries shall be maintained in accordance with
accounting procedures and practices that are equivalent to GAAP in effect in its
jurisdiction of organization. Borrower shall promptly furnish to Agent and
Lenders all such financial and other information as Agent shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrower, and to notify the auditors and accountants of Borrower that Agent is
authorized to obtain such information directly from them. Without limiting the
foregoing, Borrower shall furnish or cause to be furnished to Agent, the
following: (i) within thirty (30) days after the end of each fiscal month other
than as to any fiscal month that is also the end of a fiscal quarter, and within
forty-five (45) days after the end of each fiscal month that is also the end of
a fiscal quarter, a monthly unaudited consolidated income statement and balance
sheet for Borrower and a monthly unaudited income statement and balance sheet
for each Foreign Subsidiary, all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Borrower and its Subsidiaries as of the end of and through such fiscal month,
certified to be correct in all material respects by the chief financial officer
of Borrower in such capacity, subject to normal year-end adjustments and no
footnotes and accompanied by a compliance certificate substantially in the form
of Exhibit C hereto, along with a schedule in a form satisfactory to Agent of
the calculations used in determining, as of the end of such month, whether
Borrower is in compliance with the covenant set forth in Section 9.17 of this
Agreement for such month and (ii) within ninety (90) days after the end of each
fiscal year, audited consolidated financial statements and unaudited
consolidating financial statements of Borrower and its Subsidiaries (including
in each case balance sheets and statements of income and loss, and only as to
the consolidated financial statements, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Borrower and its Subsidiaries as of the end of
and for such fiscal year, together with the unqualified opinion of independent
certified public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Agent, that such audited consolidated
financial statements have been prepared in accordance with GAAP, and present
fairly in all material respects the results of operations and financial
condition of Borrower and its Subsidiaries as of the end of and for the fiscal
year then ended.
(b) Borrower shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $2,500,000 or which if
adversely determined would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise,
(ii) any Material Contract being terminated or amended or any new Material
Contract entered into (in which event Borrower shall provide Agent with a copy
of such Material Contract), (iii) any order, judgment or decree in excess of
$2,500,000 shall have been entered against Borrower any of its properties or
assets, (iv) any notification of a material violation of laws or
79
regulations received by Borrower, (v) any ERISA Event, and (vi) the occurrence
of any Default or Event of Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other Governmental Authority or to any Lender or
Participant or prospective Lender or Participant, subject to Section 13.5
hereof. Borrower hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Agent, at Borrower's expense, copies of the financial
statements of Borrower and any reports or management letters prepared by such
accountants or auditors on behalf of Borrower and to disclose to Agent and
Lenders such information as they may have regarding the business of Borrower .
Any documents, schedules, invoices or other papers delivered to Agent or any
Lender may be destroyed or otherwise disposed of by Agent or such Lender one (1)
year after the same are delivered to Agent or such Lender, except as otherwise
designated by party to Agent or such Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly,
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, EXCEPT
(i) ANY DOMESTIC SUBSIDIARY MAY MERGE WITH AND INTO OR
CONSOLIDATE WITH BORROWER, PROVIDED, THAT, EACH OF THE FOLLOWING CONDITIONS IS
SATISFIED AS DETERMINED BY LENDER IN GOOD FAITH: (A) AGENT SHALL HAVE RECEIVED
NOT LESS THAN TEN (10) BUSINESS DAYS' PRIOR WRITTEN NOTICE OF THE INTENTION OF
BORROWER TO SO MERGE OR CONSOLIDATE, WHICH NOTICE SHALL SET FORTH IN REASONABLE
DETAIL SATISFACTORY TO AGENT, THE DOMESTIC SUBSIDIARY THAT IS MERGING OR
CONSOLIDATING WITH BORROWER, THE LOCATIONS OF THE ASSETS OF THE DOMESTIC
SUBSIDIARY THAT IS MERGING OR CONSOLIDATING WITH BORROWER, AND THE MATERIAL
AGREEMENTS AND DOCUMENTS RELATING TO SUCH MERGER OR CONSOLIDATION, (B) BORROWER
SHALL BE THE SURVIVING ENTITY OF SUCH MERGER OR CONSOLIDATION, (C) AGENT SHALL
HAVE RECEIVED SUCH OTHER INFORMATION WITH RESPECT TO SUCH MERGER OR
CONSOLIDATION AS AGENT MAY REASONABLY REQUEST WITHIN A REASONABLE TIME OF SUCH
REQUESTS, (D) AS OF THE EFFECTIVE DATE OF THE MERGER OR CONSOLIDATION AND AFTER
GIVING EFFECT THERETO, NO DEFAULT OR EVENT OF DEFAULT SHALL EXIST OR HAVE
OCCURRED AND BE CONTINUING, (E) AGENT SHALL HAVE RECEIVED, TRUE, CORRECT AND
COMPLETE COPIES OF ALL AGREEMENTS,
80
DOCUMENTS AND INSTRUMENTS RELATING TO SUCH MERGER, INCLUDING, BUT NOT LIMITED
TO, THE CERTIFICATE OR CERTIFICATES OF MERGER TO BE FILED WITH EACH APPROPRIATE
SECRETARY OF STATE (WITH A COPY AS FILED PROMPTLY AFTER SUCH FILING), (F)
BORROWER AS THE SURVIVING CORPORATION SHALL EXPRESSLY CONFIRM, RATIFY AND ASSUME
THE OBLIGATIONS AND THE FINANCING AGREEMENTS TO WHICH IT IS A PARTY IN WRITING,
IN FORM AND SUBSTANCE SATISFACTORY TO AGENT AND EXECUTE AND DELIVER SUCH OTHER
AGREEMENTS, DOCUMENTS AND INSTRUMENTS AS AGENT MAY REASONABLY REQUEST IN
CONNECTION THEREWITH, AND (G) EACH OBLIGOR SHALL RATIFY AND CONFIRM THAT ITS
GUARANTEES OF THE OBLIGATIONS SHALL APPLY TO THE OBLIGATIONS AS ASSUMED BY SUCH
SURVIVING ENTITY;
(ii) ANY FOREIGN SUBSIDIARY MAY MERGE OR CONSOLIDATE WITH
AND INTO ANY OTHER FOREIGN SUBSIDIARY OR ANY OTHER PERSON, PROVIDED, THAT, (A)
AGENT SHALL HAVE RECEIVED NOT LESS THAN TEN (10) BUSINESS DAYS' PRIOR WRITTEN
NOTICE OF THE INTENTION OF SUCH FOREIGN SUBSIDIARY TO SO MERGE OR CONSOLIDATE,
WHICH NOTICE SHALL SET FORTH IN REASONABLE DETAIL SATISFACTORY TO AGENT, THE
FOREIGN SUBSIDIARY THAT IS MERGING OR CONSOLIDATING, THE PERSON WITH WHOM SUCH
FOREIGN SUBSIDIARY IS MERGING OR CONSOLIDATING AND THE MATERIAL AGREEMENTS AND
DOCUMENTS RELATING TO SUCH MERGER OR CONSOLIDATION, (B) A FOREIGN SUBSIDIARY
SHALL BE THE SURVIVING ENTITY OF SUCH MERGER OR CONSOLIDATION, EXCEPT THAT A
FOREIGN SUBSIDIARY MAY NOT BE THE SURVIVING ENTITY OF SUCH MERGER OR
CONSOLIDATION SO LONG AS THE TERMS AND CONDITIONS OF SECTION 9.7(b)(vi) BELOW
ARE SATISFIED WITH RESPECT TO SUCH MERGER OR CONSOLIDATION, (C) AGENT SHALL HAVE
RECEIVED SUCH OTHER INFORMATION WITH RESPECT TO SUCH MERGER OR CONSOLIDATION AS
AGENT MAY REASONABLY REQUEST WITHIN A REASONABLE TIME OF SUCH REQUESTS, (D) AS
OF THE EFFECTIVE DATE OF THE MERGER OR CONSOLIDATION AND AFTER GIVING EFFECT
THERETO, NO EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND BE CONTINUING, AND
(E) IN NO EVENT SHALL BORROWER MAKE, OR BE REQUIRED TO MAKE, ANY PAYMENT OR
INCUR ANY OBLIGATION OR LIABILITY IN CONNECTION WITH SUCH MERGER OR
CONSOLIDATION OR TAKE ANY OTHER ACTION WHICH IS OTHERWISE PROHIBITED HEREUNDER
(EXCEPT TO THE EXTENT THAT IT MAY OTHERWISE BE PERMITTED TO DO SO IN THIS
AGREEMENT); OR
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person, EXCEPT:
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment (including
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of Borrower ) so long as such sales or other dispositions do not
involve Equipment having an aggregate fair market value in excess of $250,000
for all such Equipment disposed of in any fiscal year of Borrower or as Agent
may otherwise agree,
81
(iii) the issuance and sale by Borrower of Capital Stock of
Borrower (whether common or preferred) after the date hereof; PROVIDED, THAT,
(A) Agent shall have received not less than ten (10) Business Days' prior
written notice of such issuance and sale by Borrower, which notice shall specify
the parties to whom such shares are to be sold, the terms of such sale, the
total amount which it is anticipated will be realized from the issuance and sale
of such stock and the net cash proceeds which it is anticipated will be received
by Borrower from such sale, (B) Borrower shall not be required to pay any cash
dividends or repurchase or redeem such Capital Stock or make any other payments
in respect thereof, except as otherwise permitted in Section 9.11 hereof, (C)
the terms of such Capital Stock, and the terms and conditions of the purchase
and sale thereof, shall not include any terms that include any limitation on the
right of Borrower to request or receive Loans or Letter of Credit Accommodations
or the right of Borrower to amend or modify any of the terms and conditions of
this Agreement or any of the other Financing Agreements or otherwise in any way
relate to or affect the arrangements of Borrower with Agent and Lenders or are
more restrictive or burdensome to Borrower than the terms of any Capital Stock
in effect on the date hereof, (D) except as Agent may otherwise agree in
writing, all of the proceeds of the sale and issuance of such Capital Stock
shall be applied to the Obligations in such order and manner as Agent may
determine (without permanent reduction in the Maximum Credit) and (E) as of the
date of such issuance and sale and after giving effect thereto, no Event of
Default shall exist or have occurred and be continuing,
(iv) the issuance of Capital Stock of Borrower consisting of
common stock pursuant to an employee stock option or grant or similar equity
plan or 401(k) plans of Borrower for the benefit of its employees, directors and
consultants, PROVIDED, THAT, in no event shall Borrower be required to issue, or
shall Borrower issue, Capital Stock pursuant to such stock plans or 401(k) plans
which would result in a Change of Control or other Event of Default,
(v) the sale by any Foreign Subsidiary of its assets in the
ordinary course of its business consistent with its prior practices,
(vi) the sale by any Foreign Subsidiary of all or any
substantial portion of its assets or the sale by any Foreign Subsidiary of any
of the Capital Stock of another Foreign Subsidiary owned by such Foreign
Subsidiary or the sale by Borrower of any of the Capital Stock of any Foreign
Subsidiary or the merger or consolidation of any Foreign Subsidiary with any
other Person (other than another Foreign Subsidiary), PROVIDED, THAT, as to any
such sale, merger or consolidation, each of the following conditions is
satisfied:
(A) Agent shall have received not less than ten (10)
Business Days' prior written notice of such sale, merger or consolidation, which
notice shall set forth in reasonable detail satisfactory to Agent, the parties
to such sale or other disposition (or merger or consolidation as the case may
be), the assets to be sold or otherwise disposed of, the purchase price (or
merger consideration) and the manner of payment thereof and such other
information with respect thereto as Agent may request,
82
(B) as of the date of such sale or other disposition
(or merger or consolidation as the case may be) and after giving effect thereto,
no Event of Default shall exist or have occurred and be continuing,
(C) such sale (or merger or consolidation as the case
may be) shall be on commercially reasonable prices and terms in a BONA FIDE
arm's length transaction with a person that is not an Affiliate,
(D) any and all Net Proceeds payable to Borrower in
respect of such sale (or merger or consolidation as the case may be) shall be
paid (or in the case of any consideration other than in the form of cash or
other immediately available funds to be received by Borrower, delivered), or
caused to be paid or delivered, to Agent for application to the Obligations in
such order and manner as Agent may determine without permanent reduction in the
Maximum Credit (or in the case of any consideration other than in the form of
cash or other immediately available funds to be received by Borrower to be held
by Agent as part of the Collateral), and
(E) as to any such merger or consolidation, all of the
conditions of Section 9.7(a)(ii) shall be satisfied (other than the condition
that a Foreign Subsidiary be the surviving entity of such merger of
consolidation),
(vii) THE SALE BY BORROWER OF ANY OF THE REAL PROPERTY
LISTED ON SCHEDULE 9.7(b) HERETO, PROVIDED, THAT, (A) AS TO SUCH SALE EACH OF
THE FOLLOWING CONDITIONS IS SATISFIED AS DETERMINED BY AGENT: (1) AGENT SHALL
HAVE RECEIVED NOT LESS THAN TEN (10) BUSINESS DAYS' PRIOR WRITTEN NOTICE OF THE
PROPOSED SALE BY BORROWER OF SUCH REAL PROPERTY, WHICH NOTICE SHALL SPECIFY THE
PARTIES TO SUCH SALE, THE PURCHASE PRICE AND MANNER OF PAYMENT THEREOF, THE
ADDRESS AND LEGAL DESCRIPTION OF THE REAL PROPERTY TO BE SOLD, AND SUCH OTHER
INFORMATION WITH RESPECT THERETO AS AGENT MAY REQUEST, (2) NOT LESS THAN EIGHTY
(80%) PERCENT OF THE TOTAL AMOUNT OF THE NET PROCEEDS TO BE RECEIVED BY BORROWER
IN RESPECT OF SUCH SALE SHALL BE IN THE FORM OF IMMEDIATELY AVAILABLE FUNDS
RECEIVED BY BORROWER ON THE EFFECTIVE DATE OF THE TRANSFER OF THE TITLE TO SUCH
REAL PROPERTY, (3) THE TOTAL AMOUNT OF THE NET PROCEEDS PAYABLE TO BORROWER IN
CASH OR OTHER IMMEDIATELY AVAILABLE FUNDS IN CONSIDERATION OF SUCH SALE AT THE
TIME OF THE TRANSFER OF TITLE OF SUCH REAL PROPERTY SHALL BE IN AN AMOUNT NOT
LESS THAN THE AMOUNT FOR SUCH REAL PROPERTY SET FORTH ON SCHEDULE 9.7(b) HERETO,
(4) ALL NET PROCEEDS FROM SUCH SALE SHALL BE PAID DIRECTLY BY THE PURCHASER TO
AGENT FOR APPLICATION TO THE OBLIGATIONS IN SUCH ORDER AND MANNER AS AGENT MAY
DETERMINE AND IF THERE ARE NO LOANS OUTSTANDING, TO BE HELD BY AGENT AS CASH
COLLATERAL FOR THE OBLIGATIONS, (5) IF THE REAL PROPERTY SOLD IS AT ANY OF THE
LOCATIONS LISTED IN PART I OF SCHEDULE 9.7(b), THE REAL PROPERTY AVAILABILITY
SHALL BE REDUCED BY THE AMOUNT FOR SUCH REAL PROPERTY SET FORTH IN PART I OF
SCHEDULE 9.7(b) HEREOF AND THE AMOUNT OF EACH MONTHLY REDUCTION IN THE REAL
PROPERTY AVAILABILITY PROVIDED FOR IN THE DEFINITION OF SUCH TERM SHALL BE
ADJUSTED TO AN
83
AMOUNT EQUAL TO THE REAL PROPERTY AVAILABILITY AS SO REDUCED DIVIDED BY THE
AMOUNT EQUAL TO SIXTY (60) MINUS THE NUMBER OF MONTHS ELAPSED SINCE THE DATE
HEREOF (COMMENCING WITH AND INCLUDING DECEMBER 2001 AND INCLUDING THE MONTH IN
WHICH SUCH REDUCTION OCCURS), (6) IF THE REAL PROPERTY SOLD IS AT ANY OF THE
LOCATIONS LISTED IN PART II OF SCHEDULE 9.7(b) AT AGENT'S OPTION, A RESERVE
SHALL BE ESTABLISHED IN THE AMOUNT SET FORTH ON SCHEDULE 9.7(b) FOR SUCH REAL
PROPERTY, (7) SUCH SALE SHALL BE ON COMMERCIALLY REASONABLE TERMS IN A BONA FIDE
ARMS' LENGTH TRANSACTION WITH A PERSON THAT IS NOT AN AFFILIATE, (8) AS OF THE
DATE OF SUCH SALE AND AFTER GIVING EFFECT THERETO, NO EVENT OF DEFAULT SHALL
EXIST OR HAVE OCCURRED AND BE CONTINUING AND (B) SO LONG AS EACH OF THE
CONDITIONS SET FORTH IN CLAUSE (A) ARE SATISFIED AS DETERMINED BY AGENT IN GOOD
FAITH, AGENT SHALL, UPON BORROWER'S REQUEST AND AT BORROWER'S EXPENSE, EXECUTE
AND DELIVER TO BORROWER A DISCHARGE AND SATISFACTION OF THE MORTGAGE WITH
RESPECT TO SUCH REAL PROPERTY, IN FORM AND SUBSTANCE SATISFACTORY TO AGENT, SUCH
DISCHARGE AND SATISFACTION TO BE EFFECTIVE ONLY UPON THE CONSUMMATION OF SUCH
SALE AND THE SATISFACTION OF EACH OF THE CONDITIONS SET FORTH IN CLAUSE (A)
ABOVE
(viii) THE SUBLEASE BY BORROWER TO A THIRD PARTY OF
CERTAIN OFFICE SPACE LOCATED AT 00000 XXXXXX XXXXXX, XXXXX, XXXXXXXXXX AS
DESCRIBED IN THE INFORMATION CERTIFICATE; OR
(c) wind up, liquidate or dissolve, EXCEPT THAT any Subsidiary
of Borrower may wind up, liquidate and dissolve, PROVIDED, THAT, each of the
following conditions is satisfied, (i) the winding up, liquidation and
dissolution of shall not violate any law or any order or decree of any court or
other Governmental Authority in any material respect and shall not conflict with
or result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, or any other agreement or instrument to which Borrower
or such Subsidiary is a party or may be bound, (ii) such winding up, liquidation
or dissolution shall be done in accordance with the requirements of all
applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such Subsidiary
shall be duly and validly transferred and assigned to the shareholders of such
Subsidiary and in the case of any transfer to Borrower or any Domestic
Subsidiary, free and clear of any liens, restrictions or encumbrances other than
the security interests and liens of Agent with respect thereto, if any (and
Agent shall have received such evidence thereof as Agent may require) and Agent
shall have received such deeds, assignments or other agreements as Agent may
request to evidence and confirm the transfer of such assets of such Subsidiary,
(iv) Agent shall have received all documents and agreements that Borrower or
such Subsidiary has filed with any Governmental Authority or as are otherwise
required to effectuate such winding up, liquidation or dissolution, (v) Borrower
shall not assume any Indebtedness, obligations or liabilities as a result of
such winding up, liquidation or dissolution, or otherwise become liable in
respect of any obligations or liabilities of the entity that is winding up,
liquidating or dissolving, unless such Indebtedness is otherwise expressly
permitted hereunder, (vi) Agent shall have received not less than ten (10)
Business Days' prior written notice of the intention of such Subsidiary to wind
up, liquidate or
84
dissolve, and (vii) as of the date of such winding up, liquidation or
dissolution and after giving effect thereto, no Event of Default shall exist or
have occurred and be continuing; or
(d) agree to do any of the foregoing.
9.8 ENCUMBRANCES. Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, EXCEPT:
(a) the security interests and liens of Agent to secure the
Obligations;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower or such Subsidiary, as the case may be and with
respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing
the payment of taxes) arising in the ordinary course of Borrower's or such
Subsidiary's business to the extent: (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower or such
Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books;
(d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of Real Property which do not interfere in
any material respect with the use of such Real Property or ordinary conduct of
the business of Borrower or such Subsidiary as presently conducted thereon or
materially impair the value of the Real Property which may be subject thereto;
(e) purchase money security interests in Equipment and Real
Property (including Capital Leases) to secure Indebtedness permitted under
Section 9.9(b) hereof;
(f) pledges and deposits of cash by Borrower after the date
hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Borrower as of the date hereof;
(g) pledges and deposits of cash by Borrower after the date
hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of Borrower as of the date hereof; PROVIDED, THAT, in
connection with any performance bonds issued by a surety or other person, the
85
issuer of such bond shall have waived in writing any rights in or to, or other
interest in, any of the Collateral in an agreement, in form and substance
satisfactory to Agent;
(h) liens arising from (i) operating leases and the
precautionary UCC financing statement filings in respect thereof and (ii)
equipment or other materials which are not owned by Borrower located on the
premises of Borrower (but not in connection with, or as part of, the financing
thereof) from time to time in the ordinary course of business and consistent
with current practices of Borrower and the precautionary UCC financing statement
filings in respect thereof;
(i) judgments and other similar liens arising in connection
with court proceedings that do not constitute an Event of Default, PROVIDED,
THAT, (i) such liens are being contested in good faith and by appropriate
proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been made therefor, (iii) a stay
of enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto; and
(j) the security interests and liens on assets of any Foreign
Subsidiary to secure Indebtedness of such Foreign Subsidiary permitted under
Section 9.9 hereof;
(k) the security interests and liens securing Refinancing
Indebtedness to the extent permitted hereunder;
(l) the security interests and liens on the Wrightsville Fixed
Assets to secure Indebtedness of Borrower permitted under Sections 9.9(e) or
9.9(k) hereof;
(m) pledges and deposits of cash by Borrower to secure
Indebtedness of Borrower permitted under Section 9.9(i) hereof arising pursuant
to hedging contracts entered into by Borrower to protect against fluctuations in
currency exchange rates with respect to: (i) specific loans by Borrower to its
Foreign Subsidiaries (and not in connection with any foreign exchange facility
provided to Borrower generally) or (ii) purchases of goods and services or
royalty payments, PROVIDED, THAT, (A) the aggregate amount of all cash so
pledged or deposited, together with the amount of all Letter of Credit
Accommodations issued in connection with any hedging contracts, shall not in the
aggregate exceed $8,000,000, (B) the aggregate amount of all cash so pledged or
deposited in connection with the purchase of goods or services or royalty
payments, together with the amount of all Letter of Credit Accommodations issued
in connection with such purchases or royalty payments, shall not in the
aggregate exceed $1,000,000, (C) if as of the date of the pledge or deposit of
any such cash and after giving effect thereto, the total amount of all cash so
pledged or deposited and such Letter of Credit Accommodations is equal to or
greater than $2,000,000, then as of the date thereof and after giving effect
thereto, Excess Availability shall be not less $5,000,000, if such pledge or
deposit is at any time prior to March 31, 2002 or $10,000,000 at any time
thereafter, (D) such pledge or deposit shall be required by the other party to
the hedging contract as a condition to it entering into such contract with
Borrower, and Agent shall have received evidence thereof, in form and substance
satisfactory to Agent, (E) Agent shall receive a report each month describing
all hedging contracts entered into by Borrower, the loan
86
by Borrower to which such contract (or purchases, services or royalty payments)
relates, the amount of the Collateral related thereto, and such other
information with respect thereto as Agent may from time to time request, and
(iii) as of the date of the pledge or deposit of any such cash and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing;
(n) the security interests and liens set forth on Schedule 8.4
to the Information Certificate.
9.9 INDEBTEDNESS. Borrower shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, EXCEPT:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases)
arising after the date hereof to the extent secured by purchase money security
interests in Equipment (including Capital Leases) or purchase money mortgages on
Real Property not to exceed $8,000,000 in the aggregate in any fiscal year or
$20,000,000 in the aggregate so long as such security interests or mortgages do
not apply to any property of Borrower other than the Equipment or Real Property
so acquired, and the Indebtedness secured thereby does not exceed the cost of
the Equipment or Real Property so acquired;
(c) guarantees by any Subsidiary of Borrower of the
Obligations;
(d) unsecured Indebtedness of Borrower for borrowed money
arising after the date hereof to any third person, PROVIDED, THAT, each of the
following conditions is satisfied as determined by Agent: (i) such Indebtedness
shall be on terms and conditions acceptable to Agent and either (A) shall be
subject and subordinate in right of payment to the right of Agent and Lenders to
receive the prior indefeasible payment and satisfaction in full payment of all
of the Obligations pursuant to the terms of an intercreditor agreement between
Agent and such third party, in form and substance satisfactory to Agent or (B)
shall not require any payments of principal in respect thereof prior to the date
one hundred eighty (180) days after the end of the then current term of this
Agreement, PROVIDED, THAT, if the conditions of clause (i)(A) of this subsection
(d) are not satisfied, in no event shall the aggregate amount of all of such
Indebtedness exceed $20,000,000 at any time outstanding, (ii) Agent shall have
received not less than ten (10) Business Days' prior written notice of the
intention of Borrower to incur such Indebtedness, which notice shall set forth
in reasonable detail satisfactory to Agent the amount of such Indebtedness, the
person or persons to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such other
information as Agent may request with respect thereto, (iii) Agent shall have
received true, correct and complete copies of all agreements, documents and
instruments evidencing or otherwise related to such Indebtedness, (iv) except as
Agent may otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to Agent for
application to the Obligations in such order and manner as Agent may
87
determine or at Agent's option, to be held as cash collateral for the
Obligations, (v) as of the date of incurring such Indebtedness and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing, (vi) Borrower shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, EXCEPT, THAT, Borrower may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness (except pursuant to regularly scheduled payments
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and (vii) Borrower shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by Borrower or on its behalf
promptly after the receipt thereof, or sent by Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
(e) Indebtedness of Borrower evidenced by or arising under the
Wrightsville Loan Agreements as in effect on the date hereof; PROVIDED, THAT:
(i) the principal amount of such Indebtedness shall not
exceed $4,000,000, less the aggregate amount of all repayments, repurchases or
redemptions, whether optional or mandatory in respect thereof, plus interest
thereon at the rate provided for in the Wrightsville Notes as in effect on the
date hereof,
(ii) such Indebtedness is and shall be secured only by
the Wrightsville Fixed Assets;
(iii) Borrower shall not, directly or indirectly, make
any payments in respect of such Indebtedness, EXCEPT, THAT, Borrower may make
(A) regularly scheduled payments of principal or interest when due in accordance
with the terms of the Wrightsville Loan Agreements as in effect on the date
hereof, (B) payments of principal in respect of such Indebtedness to the extent
permitted under Section 9.9(e)(v) below and (C) payments of principal and
interest with proceeds of Refinancing Indebtedness with respect thereto
permitted under Section 9.9(l) hereof, EXCEPT, THAT, notwithstanding anything to
the contrary contained in Section 9.9(l) hereof, the amount of the Refinancing
Indebtedness shall not be limited to the amount of the Indebtedness then
outstanding under the Wrightsville Loan Agreements, but may be such greater
amount as Borrower may elect, PROVIDED, THAT, any amounts of such Refinancing
Indebtedness in excess of the amounts outstanding and required to be repaid
under the Wrightsville Loan Agreements shall be paid to Agent for application to
the Obligations in such order and manner as Agent may determine (but without
permanent reduction in the Maximum Credit),
(iv) Borrower shall not, directly or indirectly, amend,
modify, alter or change any terms of such Indebtedness or any of the
Wrightsville Loan Agreements, EXCEPT THAT Borrower may, after prior written
notice to Agent, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof or defer the timing of any payments in respect
88
thereof, or to forgive or cancel any portion of such Indebtedness other than
pursuant to payments thereof, or to reduce the interest rate or any fees in
connection therewith,
(v) Borrower shall not, directly or indirectly, redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, except THAT Borrower
may redeem, retire, defease, purchase or otherwise acquire such Indebtedness
either (A) with proceeds of Refinancing Indebtedness with respect thereto to the
extent permitted under Section 9.9(l) hereof, EXCEPT, THAT, the amount of the
Refinancing Indebtedness shall not be limited to the amount of the Indebtedness
then outstanding under the Wrightsville Loan Agreements, but may be such greater
amount as Borrower may elect, PROVIDED, THAT, any amounts of such Refinancing
Indebtedness in excess of the amounts outstanding and required to be repaid
under the Wrightsville Loan Agreements shall be paid to Agent for application to
the Obligations in such order and manner as Agent may determine (but without
permanent reduction in the Maximum Credit), or (B) otherwise with funds of
Borrower, PROVIDED, THAT, as of the date of any redemption, retirement,
defeasance, purchase or other acquisition in respect thereof (other than
pursuant to Refinancing Indebtedness), and after giving effect thereto, if there
are any Loans or Letter of Credit Accommodations outstanding as of such date
after giving effect to any such payment, (1) as of the date of any such payment
and after giving effect thereto, Excess Availability shall be not less than
$20,000,000, (2) as of the date of any such payment and after giving effect
thereto, the aggregate amount of all payments in respect of Permitted
Transactions shall not exceed $25,000,000 in any fiscal year and (3) as of the
date of any such payment and after giving effect thereto, no Default or Event of
Default shall exist or have occurred and be continuing, and
(vi) Borrower shall furnish to Agent all written
notices or demands in connection with such Indebtedness either received by
Borrower or on its behalf, promptly after the receipt thereof, or sent by
Borrower or on its behalf, concurrently with the sending thereof, as the case
may be;
(f) Indebtedness of Borrower evidenced by or arising under the
Senior Subordinated Notes as in effect on the date hereof, PROVIDED, THAT:
(i) the aggregate amount of such Indebtedness shall not
exceed $200,000,000 less the aggregate amount of all repayments, repurchases or
redemptions, whether optional or mandatory, in respect thereof, plus interest
thereon at the rate provided for in the Senior Subordinated Notes as in effect
on the date hereof,
(ii) the Obligations are and shall at all times
continue to be the "Senior Credit Facility" and the "Designated Senior Debt" as
each of such terms is defined in the Senior Subordinated Indenture as in effect
on the date hereof and there is not, and shall not be, any other Designated
Senior Debt except with the prior written consent of Agent,
(iii) Borrower shall not, directly or indirectly, make
any payments in respect of such Indebtedness, EXCEPT THAT Borrower may make (A)
regularly scheduled payments of interest and fees, if any, in respect of such
Indebtedness when due in accordance with the
89
terms of the Senior Subordinated Notes as in effect on the date hereof, and (B)
payments of principal in respect of such Indebtedness to the extent permitted
under Section 9.9(f)(v) below and (C) payments of principal and interest with
proceeds of Refinancing Indebtedness with respect thereto permitted under
Section 9.9(l) hereof,
(iv) Borrower shall not, directly or indirectly, amend,
modify, alter or change in any material respect any terms of such Indebtedness
or any of the Senior Subordinated Notes or the Senior Subordinated Indenture or
any related agreements, documents and instruments, EXCEPT THAT Borrower may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith,
(v) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, EXCEPT THAT Borrower may redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, either (A) with proceeds of Refinancing
Indebtedness with respect thereto to the extent permitted under Section 9.9(l)
hereof, or (B) otherwise with funds of Borrower, PROVIDED, THAT, as of the date
of any such redemption, retirement, defeasance, purchase or other acquisition or
any payment in respect thereof (other than pursuant to Refinancing Indebtedness)
and after giving effect thereto, if there are any Loans or Letter of Credit
Accommodations outstanding as of such date after giving effect to any such
payment, (1) as of the date of any such payment and after giving effect thereto,
Excess Availability shall be not less than $20,000,000, (2) as of the date of
any such payment and after giving effect thereto, the aggregate amount of all
payments in respect of Permitted Transactions shall not exceed $25,000,000 in
any fiscal year and (3) as of the date of any such payment and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing, and
(vi) Borrower shall furnish to Agent all written
notices or demands in connection with such Indebtedness either received by
Borrower or on its behalf, promptly after the receipt thereof, or sent by
Borrower or on its behalf, concurrently with the sending thereof, as the case
may be;
(g) Indebtedness of any Foreign Subsidiary of Borrower, other
than any Obligor, PROVIDED, that, the occurrence of a default with respect
thereto shall not result in, or permit any holder of any Indebtedness of
Borrower or any Obligor to declare a default on Indebtedness of Borrower or any
Obligor (other than the Indebtedness of Borrower or such Obligor arising
pursuant to a guarantee by Borrower or such Obligor of such Indebtedness of the
Foreign Subsidiary to the extent such guarantee is permitted hereunder) or cause
the payment thereof to be accelerated or payable prior to its stated maturity,
(h) Indebtedness of Borrower arising after the date hereof
pursuant to the guarantee by Borrower of the Indebtedness of any Foreign
Subsidiary permitted under Section 9.9(g) above entered into by Borrower after
the date hereof, PROVIDED, THAT, (i) the maximum aggregate amount of the
liability of Borrower (whether contingent or otherwise) pursuant to each
90
of such guarantees shall be set forth in the express written terms of such
guarantees, (ii) the sum of the maximum aggregate amount of the liability of
Borrower (whether contingent or otherwise) pursuant to all of such guarantees
arising after the date hereof, plus the maximum aggregate amount of the
liability of Borrower pursuant to all of the existing guarantees by Borrower of
Indebtedness of Foreign Subsidiaries set forth on Schedule 9.9 to the
Information Certificate, shall not, at any time, exceed $50,000,000; PROVIDED,
THAT, in the event that the existing guarantees by Borrower of the Indebtedness
of AEP Belgium SA, Italia SpA or AEP Industries (Nederland) BV or any of their
respective Subsidiaries are terminated or the liability of Borrower under any of
such guarantees is otherwise reduced, released or waived, the limit set forth
above shall be reduced by the amount of the liability of Borrower under the
guarantee that has been terminated or released (or in the case of any reduction
of Borrower's liability, shall be reduced by the amount of such reduction),
EXCEPT THAT if contemporaneously with the termination or release (or reduction,
as of the case may be) of any of such existing guarantees of Indebtedness of any
such Foreign Subsidiary, Borrower is required to enter into a new guarantee of
Indebtedness of such Foreign Subsidiary that arose pursuant to loans the
proceeds of which in whole or in part were used to repay all of the Indebtedness
of such Foreign Subsidiary that was the subject of the guarantee so terminated,
released or reduced, the limit set forth above shall not be so reduced, (iii)
such Indebtedness of Borrower shall be unsecured, (iv) prior to entering into
any such guarantee, Borrower shall notify Agent in writing of its intention to
do so, which notice shall set forth the maximum amount of the liability of
Borrower pursuant to such guarantee, the person receiving the benefit of the
guarantee, the Foreign Subsidiary whose Indebtedness is being guaranteed, the
amount of such Indebtedness, whether it is secured or unsecured by any assets of
any Foreign Subsidiary and if secured, the assets constituting collateral
therefor, and such other information with respect thereto as Agent may request
and (v) promptly after the execution thereof, Agent shall receive true, correct
and complete copies of such guarantee and such other agreements related thereto
as Agent may request;
(i) Indebtedness of Borrower or any of its Subsidiaries under
swap agreements, cap agreements, collar agreements, foreign exchange agreements,
options, futures or forward hedging contracts, derivative instruments or similar
contractual arrangements intended to protect a Person against fluctuations in
interest rates, currency exchange rates or the price of raw materials and other
products used or produced in the business of Borrower or such Subsidiary;
PROVIDED, THAT, (i) such arrangements are with banks or other financial
institutions that have combined capital and surplus and undivided profits of not
less than $250,000,000, (ii) such arrangements are not for speculative purposes
and (iii) such Indebtedness shall be unsecured, except to the extent such
Indebtedness may constitute Obligations secured hereby or to the extent secured
by pledges or deposits of cash permitted under Section 9.8(m) hereof;
(j) INDEBTEDNESS OF BORROWER TO ANY SUBSIDIARY OF BORROWER
PURSUANT TO LOANS PERMITTED UNDER SECTION 9.10(J) HEREOF;
(k) on and after the date of the payment in full of all
Indebtedness under the Wrightsville Loan Agreements, Indebtedness arising after
the date hereof in connection with loans by a financial institution to Borrower
based on the value of the Wrightsville Fixed Assets, PROVIDED, THAT:
91
(i) Agent shall have received not less than ten (10)
Business Days' prior written notice of the intention to incur such Indebtedness,
which notice shall set forth in reasonable detail satisfactory to Agent, the
amount of such Indebtedness, the person to whom such Indebtedness will be owed,
the interest rate, the schedule of repayments and maturity date with respect
thereto and such other information with respect thereto as Agent may request,
(ii) Agent shall have received true, correct and
complete copies of all agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, as duly authorized, executed and
delivered by the parties thereto,
(iii) Agent shall have received an agreement from the
person to whom such Indebtedness is owed, in form and substance satisfactory to
Agent, which shall include, INTER ALIA, the waiver by such person of any
security interest, lien or other claims by such person in or to the Collateral
and the agreement of such person to permit Agent access to, and the right to
remain on, the Real Property and Equipment which is collateral for such
Indebtedness to exercise the rights and remedies of Agent and otherwise deal
with the Collateral,
(iv) such Indebtedness shall be incurred by Borrower
at commercially reasonable rates and terms in a BONA FIDE arm's length
transaction with a financial institution,
(v) such Indebtedness shall not at any time include
terms and conditions which in any manner adversely affect Agent or Lenders or
any rights of Agent or Lenders as determined in good faith by Agent and
confirmed by Agent to Borrower in writing or which are more restrictive or
burdensome than the terms or conditions of any other Indebtedness of Borrower as
in effect on the date hereof,
(vi) Borrower shall cause the person to whom such
Indebtedness is owed to remit all of the proceeds of the loans giving rise to
such Indebtedness directly to Agent for application to the Obligations in such
order and manner as Agent shall determine (without permanent reduction in the
Maximum Credit),
(vii) such Indebtedness shall only be secured by the
Wrightsville Fixed Assets,
(viii) as of the date of incurring such Indebtedness
and after giving effect thereto, no Event of Default shall exist or have
occurred and be continuing,
(ix) Borrower may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness,
(x) Borrower shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of the agreements with respect to such
Indebtedness, EXCEPT, THAT, Borrower may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
92
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, and
(xi) Borrower shall furnish to Agent all notices or
demands in connection with such Indebtedness either received by Borrower or on
its behalf promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be; and
(l) INDEBTEDNESS OF BORROWER ARISING AFTER THE DATE HEREOF
ISSUED IN EXCHANGE FOR, OR THE PROCEEDS OF WHICH ARE USED TO EXTEND, REFINANCE,
REPLACE OR SUBSTITUTE FOR INDEBTEDNESS PERMITTED UNDER SECTION 9.9(b), SECTION
9.9(d), SECTION 9.9(e), SECTION 9.9(f) AND SECTION 9.9(n) HEREOF (THE
"REFINANCING INDEBTEDNESS"); PROVIDED, THAT, AS TO ANY SUCH REFINANCING
INDEBTEDNESS, EACH OF THE FOLLOWING CONDITIONS IS SATISFIED: (i) AGENT SHALL
HAVE RECEIVED NOT LESS THAN TEN (10) BUSINESS DAYS' PRIOR WRITTEN NOTICE OF THE
INTENTION TO INCUR SUCH INDEBTEDNESS, WHICH NOTICE SHALL SET FORTH IN REASONABLE
DETAIL SATISFACTORY TO AGENT, THE AMOUNT OF SUCH INDEBTEDNESS, THE SCHEDULE OF
REPAYMENTS AND MATURITY DATE WITH RESPECT THERETO AND SUCH OTHER INFORMATION
WITH RESPECT THERETO AS AGENT MAY REASONABLY REQUEST, (ii) PROMPTLY UPON AGENT'S
REQUEST, AGENT SHALL HAVE RECEIVED TRUE, CORRECT AND COMPLETE COPIES OF ALL
AGREEMENTS, DOCUMENTS AND INSTRUMENTS EVIDENCING OR OTHERWISE RELATED TO SUCH
INDEBTEDNESS, AS DULY AUTHORIZED, EXECUTED AND DELIVERED BY THE PARTIES THERETO,
(iii) THE REFINANCING INDEBTEDNESS SHALL HAVE A WEIGHTED AVERAGE LIFE TO
MATURITY AND A FINAL MATURITY EQUAL TO OR GREATER THAN THE WEIGHTED AVERAGE LIFE
TO MATURITY AND THE FINAL MATURITY, RESPECTIVELY, OF THE INDEBTEDNESS BEING
EXTENDED, REFINANCED, REPLACED, OR SUBSTITUTED FOR, (iv) THE REFINANCING
INDEBTEDNESS SHALL RANK IN RIGHT OF PAYMENT NO MORE SENIOR THAN, AND BE AT LEAST
SUBORDINATED (IF SUBORDINATED) TO, THE OBLIGATIONS AS THE INDEBTEDNESS BEING
EXTENDED, REFINANCED, REPLACED OR SUBSTITUTED FOR, (v) THE REFINANCING
INDEBTEDNESS SHALL NOT INCLUDE TERMS AND CONDITIONS WITH RESPECT TO BORROWER
WHICH ARE MORE BURDENSOME OR RESTRICTIVE IN ANY MATERIAL RESPECT THAN THOSE
INCLUDED IN THE INDEBTEDNESS SO EXTENDED, REFINANCED, REPLACED OR SUBSTITUTED
FOR, (vi) SUCH INDEBTEDNESS INCURRED BY BORROWER SHALL BE AT RATES AND WITH FEES
OR OTHER CHARGES THAT ARE COMMERCIALLY REASONABLE, (vii) THE INCURRING OF SUCH
INDEBTEDNESS SHALL NOT RESULT IN AN EVENT OF DEFAULT, (viii) THE PRINCIPAL
AMOUNT OF SUCH REFINANCING INDEBTEDNESS SHALL NOT EXCEED THE PRINCIPAL AMOUNT OF
THE INDEBTEDNESS SO EXTENDED, REFINANCED, REPLACED OR SUBSTITUTED FOR (PLUS THE
AMOUNT OF REFINANCING FEES AND EXPENSES INCURRED IN CONNECTION THEREWITH
OUTSTANDING ON THE DATE OF SUCH EVENT), (ix) THE REFINANCING INDEBTEDNESS SHALL
BE SECURED BY SUBSTANTIALLY THE SAME ASSETS (OR LESS OF SUCH ASSETS) THAT SECURE
THE INDEBTEDNESS SO EXTENDED, REFINANCED, REPLACED OR SUBSTITUTED FOR,
93
PROVIDED, THAT, SUCH SECURITY INTERESTS WITH RESPECT TO THE REFINANCING
INDEBTEDNESS SHALL HAVE A PRIORITY NO MORE SENIOR THAN, AND BE AT LEAST AS
SUBORDINATED, IF SUBORDINATED (ON TERMS AND CONDITIONS SUBSTANTIALLY SIMILAR TO
THE SUBORDINATION PROVISIONS APPLICABLE TO THE INDEBTEDNESS SO EXTENDED,
REFINANCED, REPLACED OR SUBSTITUTED FOR OR AS IS OTHERWISE ACCEPTABLE TO AGENT)
AS THE SECURITY INTEREST WITH RESPECT TO THE INDEBTEDNESS SO EXTENDED,
REFINANCED, REPLACED OR SUBSTITUTED FOR, (x) BORROWER MAY ONLY MAKE PAYMENTS OF
PRINCIPAL, INTEREST AND FEES, IF ANY, IN RESPECT OF SUCH INDEBTEDNESS TO THE
EXTENT SUCH PAYMENTS WOULD HAVE BEEN PERMITTED HEREUNDER IN RESPECT OF THE
INDEBTEDNESS SO EXTENDED, REFINANCED, REPLACED OR SUBSTITUTED FOR (AND EXCEPT AS
OTHERWISE PERMITTED BELOW), (xi) BORROWER SHALL NOT, DIRECTLY OR INDIRECTLY, (A)
AMEND, MODIFY, ALTER OR CHANGE ANY TERMS OF THE AGREEMENTS WITH RESPECT TO SUCH
REFINANCING INDEBTEDNESS, EXCEPT THAT BORROWER MAY, AFTER PRIOR WRITTEN NOTICE
TO AGENT, AMEND, MODIFY, ALTER OR CHANGE THE TERMS THEREOF TO THE EXTENT
PERMITTED WITH RESPECT TO THE INDEBTEDNESS SO EXTENDED, REFINANCED, REPLACED OR
SUBSTITUTED FOR, OR (B) REDEEM, RETIRE, DEFEASE, PURCHASE OR OTHERWISE ACQUIRED
SUCH INDEBTEDNESS, OR SET ASIDE OR OTHERWISE DEPOSIT OR INVEST ANY SUMS FOR SUCH
PURPOSE (OTHER THAN WITH REFINANCING INDEBTEDNESS TO THE EXTENT PERMITTED HEREIN
AND TO THE EXTENT PERMITTED WITH RESPECT TO THE INDEBTEDNESS SO EXTENDED,
REFINANCED, REPLACED OR SUBSTITUTED FOR), AND (xii) BORROWER SHALL FURNISH TO
AGENT COPIES OF ALL NOTICES OR DEMANDS IN CONNECTION WITH INDEBTEDNESS RECEIVED
BY BORROWER OR ON ITS BEHALF PROMPTLY AFTER THE RECEIPT THEREOF OR SENT BY ANY
BORROWER OR ON ITS BEHALF CONCURRENTLY WITH THE SENDING THEREOF, AS THE CASE MAY
BE;
(m) Indebtedness created, incurred, assumed or guaranteed by
Borrower in the ordinary course of the business of Borrower in connection with
obtaining goods, materials or services that is overdue by more than ninety (90)
days, PROVIDED, THAT, the aggregate amount thereof at any time outstanding shall
not exceed $100,000;
(n) the Indebtedness set forth on Schedule 9.9 to the
Information Certificate; PROVIDED, THAT, (i) as to Indebtedness for borrowed
money set forth on such Schedule 9.9, Borrower may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof or repay such Indebtedness with
Refinancing Indebtedness to the extent permitted under Section 9.9(l) with
respect thereto, (ii) Borrower shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto as in effect on the date hereof in any
material respect, EXCEPT, THAT, Borrower may, after prior written notice to
Agent, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii)
94
Borrower shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by Borrower or on its behalf, promptly after the
receipt thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be.
9.10 LOANS, INVESTMENTS, ETC. Borrower shall not, and shall not permit
any Subsidiary to, directly or indirectly, make any loans or advance money or
property to any person, or invest in (by capital contribution, dividend or
otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or
a substantial part of the assets or property of any person, or form or acquire
any Subsidiaries, or agree to do any of the foregoing, EXCEPT:
(a) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(b) investments in cash or Cash Equivalents, PROVIDED, THAT,
(i) at any time that Agent may have the right to instruct the depository banks
at which the Blocked Accounts are maintained to transfer funds to the Agent
Payment Account, only if no Loans are then outstanding, EXCEPT THAT,
NOTWITHSTANDING THAT ANY LOANS ARE OUTSTANDING, BORROWER MAY FROM TIME TO TIME
IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH THE CURRENT PRACTICES OF
BORROWER AS OF THE DATE HEREOF MAKE DEPOSITS OF CASH OR OTHER IMMEDIATELY
AVAILABLE FUNDS IN OPERATING DEMAND DEPOSIT ACCOUNTS USED FOR DISBURSEMENTS TO
THE EXTENT REQUIRED TO PROVIDE FUNDS FOR AMOUNTS DRAWN OR ANTICIPATED TO BE
DRAWN SHORTLY ON SUCH ACCOUNTS AND SUCH FUNDS MAY BE HELD IN CASH EQUIVALENTS
CONSISTING OF OVERNIGHT INVESTMENTS UNTIL SO DRAWN (SO LONG AS SUCH FUNDS AND
CASH EQUIVALENTS ARE NOT HELD MORE THAN FIVE (5) BUSINESS DAYS FROM THE DATE OF
THE INITIAL DEPOSIT THEREOF AND DO NOT EXCEED $3,000,000 AT ANY TIME) and (ii)
the terms and conditions of Section 5.4 hereof shall have been satisfied with
respect to the deposit account, investment account or other account in which
such cash or Cash Equivalents are held, EXCEPT that Borrower shall not be
required to deliver an Deposit Account Control Agreement or Investment Property
Control Agreement as to any specific deposit account, investment account or
other account which at all times has less than $10,000 in it so long as the
aggregate amount of all deposits or other funds or investments in all of such
accounts is less than $25,000 and no Default or Event of Default shall exist or
have occurred and be continuing (PROVIDED, THAT, at any time either such amounts
as to any account are exceeded or all of such accounts are exceeded or a Default
or Event of Default shall exist or have occurred and be continuing, Borrower
shall, promptly upon Agent's request, deliver, and cause to be promptly
delivered, to Agent such Deposit Account Control Agreements or Investment
Property Control Agreements as Agent may specify).
(c) the equity investments of Borrower in its Subsidiaries,
PROVIDED, THAT, Borrower shall not make, and shall not have any obligation to
make or liability for, any further capital contributions or other additional
investments or other payments to or in or for the benefit of any of such
Subsidiaries, except to the extent such capital contribution or other additional
investment may be permitted under Section 9.10(h) below;
95
(d) loans and advances by Borrower to employees of Borrower
not to exceed the principal amount of $200,000 in the aggregate at any time
outstanding for: (i) reasonably and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for Borrower and (ii) reasonable and necessary relocation expenses of
such employees (including home mortgage financing for relocated employees);
(e) stock or obligations issued to Borrower by any Person (or
the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower or in connection with the insolvency, bankruptcy, receivership
or reorganization of such Person or a composition or readjustment of the debts
of such Person; PROVIDED, THAT, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by Borrower
as Agent may request;
(f) obligations of account debtors to Borrower arising from
Accounts which are past due evidenced by a promissory note made by such account
debtor payable to Borrower; PROVIDED, THAT, promptly upon the receipt of the
original of any such promissory note by Borrower, such promissory note shall be
endorsed to the order of Agent by Borrower and promptly delivered to Agent as so
endorsed;
(g) loans of money or property (other than Collateral) by
Borrower to any Person (other than any Subsidiary of Borrower existing as of the
date hereof) after the date hereof or investment by Borrower by capital
contribution in any Person (other than any Subsidiary of Borrower existing as of
the date hereof) after the date hereof, or THE FORMATION OR ACQUISITION BY
BORROWER OF ANY DIRECT SUBSIDIARY OF BORROWER AFTER THE DATE HEREOF; PROVIDED,
THAT, as to any such loans or investments, or the formation or acquisition of
any such Subsidiary, each of the following conditions is satisfied as determined
by Agent in:
(i) the Person receiving such loan or investment or
the Subsidiary formed or acquired, as the case may be, shall be engaged in a
business related, ancillary or complimentary to the business of Borrower
permitted in this Agreement,
(ii) as of the date of any such loan or investment,
or the formation or acquisition of such Subsidiary or any payments in connection
with the formation or acquisition of such Subsidiary, and in each case after
giving effect thereto, no Default or Event of Default shall exist or have
occurred,
(iii) as of the date of any such loan or investment,
or the formation or acquisition of such Subsidiary or any payments in connection
with the formation or acquisition of such Subsidiary, and in each case after
giving effect thereto, if there are any Loans or Letter of Credit Accommodations
outstanding as of such date after giving effect to any such payment, (A) as of
the date of any such loan or investment or formation or acquisition or any
payment in connection therewith, and after giving effect thereto, Excess
Availability shall be not less than $20,000,000 and (B) as of the date of any
such loan or investment or payments in connection
96
with the formation or acquisition of such Subsidiary and after giving effect
thereto, the aggregate amount of all payments in respect of Permitted
Transactions shall not exceed $25,000,000 in any fiscal year of Borrower,
(iv) in the case of an investment by capital
contribution, at Agent's option, the original stock certificate or other
instrument evidencing such capital contribution (or such other evidence as may
be issued in the case of a limited liability company) shall be promptly
delivered to Agent, together with such stock power, assignment or endorsement as
Agent may request, and promptly upon Agent's request, Borrower shall execute and
deliver to Agent a pledge and security agreement, in form and substance
satisfactory to Agent, granting to Agent a first priority pledge of, security
interest in and lien upon all of the issued and outstanding shares of such stock
or other instrument or interest (and in the case of a limited liability company
take such other actions as Agent shall require with respect to Agent's security
interests therein),
(v) in the case of loans of money or property, the
original of any promissory note or other instrument evidencing the Indebtedness
arising pursuant to such loans shall be delivered, or caused to be delivered, to
Agent, at Agent's option, together with an appropriate endorsement, in form and
substance satisfactory to Agent,
(vi) in the case of the formation or acquisition of
any Domestic Subsidiary, as to any such Domestic Subsidiary, (A) Borrower shall
cause any such Subsidiary to execute and deliver to Agent, the following (each
in form and substance satisfactory to Agent), (1) an absolute and unconditional
guarantee of payment of the Obligations, (2) a security agreement granting to
Agent a first security interest and lien (except as otherwise consented to in
writing by Agent) upon all of the assets of any such Subsidiary, (3) related UCC
financing statements, and (4) such other agreements, documents and instruments
as Agent may require, including, but not limited to, supplements and amendments
hereto and other loan agreements or instruments evidencing Indebtedness of such
new Subsidiaries to Agent and Lenders and (B) Borrower shall (1) execute and
deliver to Agent, a pledge and security agreement, in form and substance
satisfactory to Agent, granting to Agent a first pledge of and lien on all of
the issued and outstanding shares of Capital Stock of any such Subsidiary, and
(C) deliver the original stock certificates evidencing such shares of Capital
Stock (or such other evidence as may be issued in the case of a limited
liability company), together with stock powers with respect thereto duly
executed in blank (or the equivalent thereof in the case of a limited liability
company in which such interests are certificated, or otherwise take such actions
as Agent shall require with respect to Agent's security interests therein),
(vii) in the case of the formation or acquisition of
any direct Foreign Subsidiary, as to any such direct Foreign Subsidiary,
Borrower shall (A) execute and deliver to Agent, a pledge and security
agreement, in form and substance satisfactory to Agent, granting to Agent a
first pledge of and lien on sixty-six (66%) percent of all of the issued and
outstanding shares of Capital Stock of any such Subsidiary, and (B) deliver the
original stock certificates evidencing such shares of Capital Stock (or such
other evidence as may be issued in the case of a limited liability company),
together with stock powers with respect thereto duly executed in blank (or the
equivalent thereof in the case of a limited liability company in which such
interests
97
are certificated, or if no such certificates or stock exists, otherwise take
such actions as Agent shall require with respect to Agent's security interests
therein),
(viii) Agent shall have received (A) not less than
ten (10) Business Days' prior written notice thereof setting forth in reasonable
detail the nature and terms thereof, (B) true, correct and complete copies of
all agreements, documents and instruments relating thereto and (C) such other
information with respect thereto as Agent may request;
(h) loans of money or property (other than Collateral) after
the date hereof by Borrower to any Subsidiary of Borrower existing as of the
date hereof or investment after the date hereof by Borrower in any Subsidiary of
Borrower existing as of the date hereof (including pursuant to the forgiveness
or cancellation of existing Indebtedness of such Subsidiary to Borrower);
PROVIDED, THAT, as to any such loans or investments, each of the following
conditions is satisfied as determined by Agent:
(i) as of the date of such loan or investment and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing,
(ii) as of the date of any such loan or investment
and after giving effect thereto, Excess Availability shall be not less than
$5,000,000 if such loan or investment is made prior to March 31, 2002 and not
less than $10,000,000 if such loan or investment is made at any time thereafter
(except that the terms of this clause (ii) shall not apply to the forgiveness or
cancellation of Indebtedness of such Subsidiary to Borrower),
(iii) as of the date hereof, the aggregate amount of
the Indebtedness of all Foreign Subsidiaries to Borrower on account of loans is
$105,447,182,
(iv) in no event shall the aggregate amount of all
such loans and investments outstanding at any time in the fiscal year of
Borrower ending October 31, 2002 exceed $120,447,182, or outstanding at any time
in the fiscal year of Borrower ending October 31, 2003, exceed $130,447,182, or
outstanding at any time in any fiscal year of Borrower thereafter exceed
$135,447,182 (except that in the case of such investments by Borrower pursuant
to the forgiveness or cancellation of Indebtedness of such Subsidiary to
Borrower, (A) in no event shall the aggregate amount of all of such Indebtedness
forgiven or cancelled exceed the US Dollar Equivalent of $50,000,000, (B)
Borrower shall give Agent prior written notice of the intention of Borrower to
forgive or cancel such Indebtedness, together with such information with respect
thereto as Agent may require and (C) the limits set forth in this clause (iv)
with respect to the other loans or investments shall be reduced by the amount of
such Indebtedness forgiven or cancelled effective as of the date of such
forgiveness or cancellation,
(v) in the case of an investment by capital
contribution, at Agent's option, the original stock certificate or other
instrument evidencing such capital contribution (or such other evidence as may
be issued in the case of a limited liability company) shall be promptly
delivered to Agent, together with such stock power, assignment or endorsement as
Agent may request, and promptly upon Agent's request, Borrower shall execute and
deliver to Agent a
98
pledge and security agreement, in form and substance satisfactory to Agent,
granting to Agent a first priority pledge of, security interest in and lien upon
all of the issued and outstanding shares of such stock or other instrument or
interest (and in the case of a limited liability company take such other actions
as Agent shall require with respect to Agent's security interests therein),
(vi) in the case of loans of money or property, the
original of any promissory note or other instrument evidencing the Indebtedness
arising pursuant to such loans shall be delivered, or caused to be delivered, to
Agent, at Agent's option, together with an appropriate endorsement, in form and
substance satisfactory to Agent,
(vii) Agent shall have received (A) not less than ten
(10) Business Days' prior written notice thereof setting forth in reasonable
detail the nature and terms thereof, (B) true, correct and complete copies of
all agreements, documents and instruments relating thereto and (C) such other
information with respect thereto as Agent may request, and
(viii) WITHIN FORTY-FIVE (45) DAYS AFTER THE END OF
EACH FISCAL MONTH, BORROWER SHALL PROVIDE TO AGENT A REPORT IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO AGENT OF THE OUTSTANDING AMOUNT OF SUCH
LOANS AND INVESTMENTS (TOGETHER WITH LOANS BY ANY SUBSIDIARY OF BORROWER TO
BORROWER AND ANY REPAYMENTS IN RESPECT THEREOF) AS OF THE LAST DAY OF THE
IMMEDIATELY PRECEDING MONTH AND INDICATING ANY LOANS OR INVESTMENTS MADE AND
PAYMENTS RECEIVED DURING THE IMMEDIATELY PRECEDING MONTH;
(i) THE PURCHASE BY BORROWER OF ALL OR A SUBSTANTIAL PART OF
THE ASSETS OR PROPERTY OF ANY PERSON LOCATED IN THE UNITED STATES (OTHER THAN
CAPITAL STOCK), PROVIDED, THAT, EACH OF THE FOLLOWING CONDITIONS IS SATISFIED AS
DETERMINED BY AGENT IN GOOD FAITH;
(i) AGENT SHALL HAVE RECEIVED NOT LESS THAN TEN (10)
BUSINESS DAYS' PRIOR WRITTEN NOTICE OF THE PROPOSED ACQUISITION AND SUCH
INFORMATION WITH RESPECT THERETO AS AGENT MAY REQUEST, INCLUDING (A) THE
PROPOSED DATE AND AMOUNT OF THE ACQUISITION, (B) A LIST AND DESCRIPTION OF THE
ASSETS TO BE ACQUIRED, AND (C) THE TOTAL PURCHASE PRICE FOR THE ASSETS TO BE
PURCHASED (AND THE TERMS OF PAYMENT OF SUCH PURCHASE PRICE),
(ii) AS OF THE DATE OF SUCH PURCHASE AND AFTER GIVING
EFFECT THERETO, NO DEFAULT OR EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND
BE CONTINUING,
(iii) PROMPTLY UPON AGENT'S REQUEST, BORROWER SHALL
DELIVER, OR CAUSE TO BE DELIVERED TO AGENT, TRUE, CORRECT AND COMPLETE COPIES OF
ALL AGREEMENTS, DOCUMENTS AND INSTRUMENTS RELATING TO SUCH ACQUISITION,
99
(iv) THE ASSETS AND PROPERTIES BEING ACQUIRED BY
BORROWER SHALL BE SUBSTANTIALLY CONSISTENT WITH, AND RELATED TO, THE BUSINESS OF
BORROWER PERMITTED IN THIS AGREEMENT,
(v) THE ASSETS ACQUIRED BY BORROWER SHALL BE FREE AND
CLEAR OF ANY SECURITY INTEREST, MORTGAGE, PLEDGE, LIEN, CHARGE OR OTHER
ENCUMBRANCE (OTHER THAN THOSE PERMITTED IN THIS AGREEMENT) AND AGENT SHALL HAVE
RECEIVED EVIDENCE SATISFACTORY TO IT OF THE SAME,
(vi) THE ACQUISITION BY BORROWER OF SUCH ASSETS SHALL
NOT VIOLATE ANY LAW OR REGULATION OR ANY ORDER OR DECREE OF ANY COURT OR
GOVERNMENTAL AUTHORITY IN ANY MATERIAL RESPECT AND SHALL NOT AND WILL NOT
CONFLICT WITH OR RESULT IN THE BREACH OF, OR CONSTITUTE A DEFAULT IN ANY RESPECT
UNDER, ANY MATERIAL AGREEMENT, DOCUMENT OR INSTRUMENT TO WHICH BORROWER OR ANY
AFFILIATE IS A PARTY OR MAY BE BOUND, OR RESULT IN THE CREATION OR IMPOSITION
OF, OR THE OBLIGATION TO GRANT, ANY LIEN, CHARGE OR ENCUMBRANCE UPON ANY OF THE
PROPERTY OF BORROWER OR ANY AFFILIATE OR VIOLATE ANY PROVISION OF THE
CERTIFICATE OF INCORPORATION OR BY-LAWS OF BORROWER,
(vii) SUCH PURCHASE SHALL BE ON COMMERCIALLY
REASONABLE PRICES AND TERMS AND IN A BONA FIDE ARMS' LENGTH TRANSACTION WITH A
PERSON THAT IS NOT AN AFFILIATE OF BORROWER,
(viii) BORROWER SHALL NOT BECOME OBLIGATED WITH
RESPECT TO ANY INDEBTEDNESS, NOR ANY OF ITS PROPERTY BECOME SUBJECT TO ANY
SECURITY INTEREST OR LIEN, PURSUANT TO SUCH ACQUISITION UNLESS BORROWER COULD
INCUR SUCH INDEBTEDNESS OR CREATE SUCH SECURITY INTEREST OR LIEN HEREUNDER OR
UNDER THE OTHER FINANCING AGREEMENTS,
(ix) AGENT SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE
SATISFACTORY TO AGENT, (A) EVIDENCE THAT AGENT HAS VALID AND PERFECTED SECURITY
INTERESTS IN AND LIENS UPON THE ASSETS PURCHASED, (B) UCC FINANCING STATEMENTS,
(C) ALL COLLATERAL ACCESS AGREEMENTS AND OTHER CONSENTS, WAIVERS,
ACKNOWLEDGMENTS AND OTHER AGREEMENTS FROM THIRD PERSONS WHICH AGENT MAY
REASONABLY DEEM NECESSARY OR DESIRABLE IN ORDER TO PERMIT, PROTECT AND PERFECT
ITS SECURITY INTERESTS IN AND LIENS UPON THE ASSETS PURCHASED, (D) THE AGREEMENT
OF THE SELLER CONSENTING TO THE COLLATERAL ASSIGNMENT BY BORROWER OF ALL RIGHTS
AND REMEDIES AND CLAIMS FOR DAMAGES OF BORROWER RELATING TO THE COLLATERAL
(INCLUDING, WITHOUT LIMITATION, ANY BULK SALES INDEMNIFICATION) UNDER THE
AGREEMENTS, DOCUMENTS AND INSTRUMENTS RELATING TO SUCH ACQUISITION AND (E) SUCH
OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS AS AGENT MAY REQUEST IN CONNECTION
THEREWITH,
(x) IN NO EVENT SHALL ANY ACCOUNTS OR INVENTORY SO
ACQUIRED BY BORROWER PURSUANT TO SUCH ACQUISITION BE DEEMED ELIGIBLE ACCOUNTS OR
100
ELIGIBLE INVENTORY UNLESS AND UNTIL AGENT SHALL HAVE CONDUCTED A FIELD
EXAMINATION WITH RESPECT THERETO (AND AT AGENT'S OPTION, AT BORROWER'S EXPENSE,
OBTAINED AN APPRAISAL OF SUCH INVENTORY BY AN APPRAISER ACCEPTABLE TO AGENT AND
IN FORM, SCOPE AND METHODOLOGY TO AGENT AND ADDRESSED TO AGENT AND UPON WHICH
AGENT IS EXPRESSLY PERMITTED TO RELY, WHICH APPRAISAL SHALL BE IN ADDITION TO
ANY APPRAISALS WHICH AGENT MAY OBTAIN PURSUANT TO ITS RIGHTS UNDER SECTION 7.3
HEREOF) AND THEN ONLY TO THE EXTENT THE CRITERIA FOR ELIGIBLE ACCOUNTS AND
ELIGIBLE INVENTORY SET FORTH HEREIN ARE SATISFIED WITH RESPECT THERETO IN
ACCORDANCE WITH THIS AGREEMENT (OR SUCH OTHER OR ADDITIONAL CRITERIA AS AGENT
MAY, AT ITS OPTION, ESTABLISH WITH RESPECT THERETO IN ACCORDANCE WITH THIS
AGREEMENT AND SUBJECT TO SUCH RESERVES AS AGENT MAY ESTABLISH IN ACCORDANCE WITH
THIS AGREEMENT), AND UPON THE REQUEST OF AGENT, THE ACCOUNTS AND INVENTORY
ACQUIRED BY BORROWER PURSUANT TO SUCH ACQUISITION SHALL AT ALL TIMES AFTER SUCH
ACQUISITION BE SEPARATELY IDENTIFIED AND REPORTED TO AGENT IN A MANNER
SATISFACTORY TO AGENT,
(xi) THE AGGREGATE AMOUNT OF ALL PAYMENTS BY BORROWER
IN CONNECTION WITH ALL OF SUCH ACQUISITIONS SHALL NOT EXCEED $1,000,000 IN ANY
FISCAL YEAR;
(j) any Foreign Subsidiary (that is not an Obligor) may make
any loans or advance money or property to any person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or Indebtedness or all or a substantial part of the assets or property of any
person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, but in each case subject to the following terms and conditions as
applicable set forth below:
(i) SUCH FOREIGN SUBSIDIARY MAY FORM OR ACQUIRE
ANOTHER FOREIGN SUBSIDIARY AFTER THE DATE HEREOF; PROVIDED, THAT, (A) AS OF THE
DATE OF THE FORMATION OR ACQUISITION OF ANY SUCH SUBSIDIARY AND AFTER GIVING
EFFECT THERETO, NO DEFAULT OR EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND
BE CONTINUING AND (B) IN NO EVENT SHALL BORROWER OR ANY OBLIGOR MAKE, OR BE
REQUIRED TO MAKE, ANY PAYMENT OR INCUR ANY OBLIGATION OR LIABILITY IN CONNECTION
WITH THE FORMATION OR ACQUISITION OF SUCH SUBSIDIARY OR TAKE ANY OTHER ACTION
OTHERWISE PROHIBITED HEREUNDER (EXCEPT TO THE EXTENT IT MAY OTHERWISE EXPRESSLY
BE PERMITTED TO DO SO IN THIS AGREEMENT),
(ii) SUCH FOREIGN SUBSIDIARY MAY PURCHASE ALL OR A
SUBSTANTIAL PART OF THE ASSETS OR PROPERTY OF ANY PERSON (OTHER THAN CAPITAL
STOCK); PROVIDED, THAT, (A) AS OF THE DATE OF ANY SUCH PURCHASE AND AFTER GIVING
EFFECT THERETO, NO EVENT OF DEFAULT SHALL EXIST OR HAVE OCCURRED AND BE
CONTINUING AND (B) IN NO EVENT SHALL BORROWER OR ANY OBLIGOR MAKE OR BE REQUIRED
TO MAKE ANY PAYMENT OR INCUR ANY OBLIGATION OR LIABILITY IN CONNECTION WITH SUCH
PURCHASE OR TAKE ANY OTHER ACTION OTHERWISE PROHIBITED
101
HEREUNDER (EXCEPT TO THE EXTENT IT MAY OTHERWISE EXPRESSLY BE PERMITTED TO DO SO
IN THIS AGREEMENT),
(iii) such Foreign Subsidiary may make loans to
Borrower or any Obligor, PROVIDED, that, (A) the Indebtedness arising pursuant
to such loans shall be subject to, and subordinate in right of payment to, the
right of Agent and Lenders to receive the prior final payment and satisfaction
in full of all of the Obligations on terms and condition acceptable to Agent,
(B) promptly upon Agent's request, Agent shall have received a subordination
agreement, in form and substance satisfactory to Agent, providing for the terms
of the terms of the subordination in right of payment of such Indebtedness of
Borrower or such Obligor to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by such
Subsidiary and Borrower (or such Obligor), and (C) Borrower or such Obligor
shall not, directly or indirectly make, or be required to make, any payments in
respect of such Indebtedness, EXCEPT THAT Borrower may make payments in respect
of such Indebtedness owing to AEP Canada Inc. so long as to any such payment,
each of the following conditions is satisfied: (1) such payments are made within
sixty (60) days of the date that such Indebtedness is incurred by Borrower, (2)
as of the date of such payment and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (3) as of the
date of any such payment and after giving effect thereto, Excess Availability
shall be not less than $5,000,000 if such payment is made prior to March 31,
2002 and not less than $10,000,000 if such payment is made at any time
thereafter and (4) Agent shall have received prior written notice of the
intention of Borrower to make such payment;
(k) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; PROVIDED, THAT, as to such loans and advances, (i)
Borrower shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and (ii) Borrower shall furnish to Agent all written notices or
demands in connection with such loans and advances either received by Borrower
or on its behalf, promptly after the receipt thereof, or sent by Borrower or on
its behalf, concurrently with the sending thereof, as the case may be.
9.11 DIVIDENDS AND REDEMPTIONS. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of any class
of any Capital Stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, EXCEPT THAT:
(a) Borrower may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall exist or occur);
102
(b) any Subsidiary of Borrower may make payments to Borrower in
respect of dividends or the redemption or repurchase any of its Capital Stock;
(c) Borrower may pay dividends or may redeem or repurchase any of
its Capital Stock, PROVIDED, THAT, as to any payment of such dividend or for
such redemption or repurchase each of the following conditions is satisfied:
(i) such payment shall be made with funds legally
available therefor,
(ii) such dividend or redemption or repurchase shall
not violate any law or regulation or the terms of any indenture, agreement or
undertaking to which Borrower is a party or by which Borrower or its properties
are bound,
(iii) as of the date of the payment of such dividend
or redemption or repurchase and after giving effect thereto, no Default or Event
of Default shall exist or have occurred,
(iv) as of the date of any payment in respect of such
dividend or redemption or repurchase and after giving effect thereto, if there
are any Loans or Letter of Credit Accommodations outstanding as of such date
after giving effect to any such payment, (A) as of the date of any such payment
and after giving effect thereto, Excess Availability shall be not less than
$20,000,000 and (B) as of the date of any such payment and after giving effect
thereto, the aggregate amount of all payments in respect of Permitted
Transactions shall not exceed $25,000,000 in any fiscal year of Borrower;
(d) Borrower may repurchase Capital Stock consisting of common
stock held by employees pursuant to any employee stock ownership plan thereof
upon the termination, retirement or death of any such employee in accordance
with the provisions of such plan, PROVIDED, THAT, as to any such repurchase,
each of the following conditions is satisfied: (i) as of the date of the payment
for such repurchase and after giving effect thereto, no Event of Default shall
exist or have occurred and be continuing, (ii) such repurchase shall be paid
with funds legally available therefor, (iii) such repurchase shall not violate
any law or regulation or the terms of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower or its property are bound, and
(iv) the aggregate amount of all payments for such repurchases in any calendar
year shall not exceed $500,000.
9.12 TRANSACTIONS WITH AFFILIATES. Borrower shall not, directly or
indirectly:
(a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director or other Affiliate of
Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business (as the case may be) and upon fair and
reasonable terms no less favorable to Borrower than Borrower would obtain in a
comparable arm's length transaction with an unaffiliated person; or
103
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of Borrower, EXCEPT (i) reasonable compensation to officers,
employees and directors for services rendered to Borrower in the ordinary course
of business and (ii) repayments in respect of Indebtedness of Borrower to its
Subsidiaries to the extent permitted under Section 9.10(j) hereof.
9.13 COMPLIANCE WITH ERISA. Borrower shall, and shall cause each of its
ERISA Affiliates, to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any material liability to the Pension Benefit Guaranty Corporation; (d)
not allow or suffer to exist any prohibited transaction involving any of such
Plans or any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a material tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA; (e) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Plan; or (g) allow or suffer to exist any occurrence of
a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such Plan
that is a single employer plan, which termination could result in any material
liability to the Pension Benefit Guaranty Corporation.
9.14 END OF FISCAL YEARS; FISCAL QUARTERS. Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on October 31 of each year and (b) fiscal quarters to end on
January 31, April 30, July 31, and October 31 of each year.
9.15 CHANGE IN BUSINESS. Borrower shall not engage in any business
other than the business of Borrower on the date hereof and any business
reasonably related, ancillary or complimentary to the business in which Borrower
is engaged on the date hereof.
9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES. Borrower shall
not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, or (c) transfer any of
its properties or assets to Borrower or any Subsidiary of Borrower; other than
encumbrances and restrictions arising under (i) any agreement in effect on the
date hereof as any such agreement is in effect on such date, (ii) applicable law
or any order or ruling by a Governmental Authority, (iii) this Agreement, (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of Borrower or any Subsidiary of Borrower, (v) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of Borrower or any Subsidiary of Borrower, (vi) any
agreement relating to the Capital Stock of, or any permitted Indebtedness
incurred by, a Subsidiary of Borrower prior to the date on which such Subsidiary
was acquired by Borrower and outstanding on such acquisition date, (vii)
customary provisions in joint venture agreements entered into in the ordinary
course of business, (viii) any agreement
104
for Refinancing Indebtedness, PROVIDED, THAT, the provisions contained in such
agreement is no more restrictive in any material respect than the provisions
contained in the agreement that is the subject thereof in the reasonable
judgment of the Board of Directors of Borrower; (ix) purchase money Indebtedness
that imposes restrictions of the type referred to in clause (c) of this
covenant; (x) restrictions of the type referred to in clause (c) of this
covenant contained in security agreements securing Indebtedness of a Subsidiary
to the extent that such liens were otherwise incurred in accordance with the
terms hereof and restrict the transfer of property subject to such agreements,
and (xi) the extension or continuation of contractual obligations in existence
on the date hereof; PROVIDED, THAT, any such encumbrances or restrictions
contained in such extension or continuation are no less favorable to Agent and
Lenders than those encumbrances and restrictions under or pursuant to the
contractual obligations so extended or continued.
9.17 MINIMUM EBITDA. At any time that Excess Availability is less than
$20,000,000, (a) the EBITDA of Borrower (on a stand-alone basis) for the
immediately preceding twelve (12) consecutive months (treated as a single
accounting period) shall be not less than $30,000,000 and (b) the EBITDA of
Borrower and its Subsidiaries, on a consolidated basis, for the immediately
preceding twelve (12) consecutive month period (treated as a single accounting
period) shall be not less than $43,000,000.
9.18 LICENSE AGREEMENTS.
(a) Borrower shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of the
material License Agreements to which it is a party to be observed and performed
by it, at the times set forth therein, if any, (ii) not do, permit, suffer or
refrain from doing anything that could reasonably be expected to result in a
default under or breach of any of the terms of any material License Agreement,
(iii) not cancel, surrender, modify, amend, waive or release any material
License Agreement in any material respect or any term, provision or right of the
licensee thereunder in any material respect, or consent to or permit to occur
any of the foregoing; EXCEPT, THAT, subject to Section 9.18(b) below, Borrower
may cancel, surrender or release any material License Agreement in the ordinary
course of the business of Borrower; PROVIDED, THAT, Borrower shall give Agent
not less than thirty (30) days prior written notice of its intention to so
cancel, surrender and release any such material License Agreement, (iv) give
Agent prompt written notice of any material License Agreement entered into by
Borrower after the date hereof, together with a true, correct and complete copy
thereof and such other information with respect thereto as Agent may request,
(v) give Agent prompt written notice of any material breach of any obligation,
or any default, by any party under any material License Agreement, and deliver
to Agent (promptly upon the receipt thereof by Borrower in the case of a notice
to Borrower and concurrently with the sending thereof in the case of a notice
from Borrower) a copy of each notice of default and every other notice and other
communication received or delivered by Borrower in connection with any material
License Agreement which relates to the right of Borrower to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may reasonably
require from time to time concerning the
105
observance, performance and compliance by Borrower or the other party or parties
thereto with the material terms, covenants or provisions of any material License
Agreement.
(b) Borrower will either exercise any option to renew or extend
the term of each material License Agreement to which it is a party in such
manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
Borrower does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not less
than sixty (60) days prior to the date of any such non-renewal or expiration. In
the event of the failure of Borrower to extend or renew any material License
Agreement to which it is a party, Agent shall have, and is hereby granted, the
irrevocable right and authority, at its option, to renew or extend the term of
such material License Agreement, whether in its own name and behalf, or in the
name and behalf of a designee or nominee of Agent or in the name and behalf of
Borrower, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of Borrower under any of the License
Agreements, including, but not limited to, the payment of any or all sums due
from Borrower thereunder. Any sums so paid by Agent shall constitute part of the
Obligations.
9.19 COSTS AND EXPENSES. Borrower shall pay to Agent and Lenders on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, appraisal fees and
search fees, costs and expenses of remitting loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Agent's customary charges and fees with respect thereto;
(c) charges, fees or expenses charged by any bank or issuer in connection with
the Letter of Credit Accommodations; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Agent, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent or any
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Agent and Lenders during the course of periodic field examinations
of the Collateral and Borrower's operations, plus a per diem charge at the rate
of $750 per person per day for Agent's examiners in the field and office; and
(g) the reasonable fees and disbursements of counsel (including legal
assistants) to Agent and Lenders in connection with any of the foregoing.
106
9.20 FURTHER ASSURANCES. At the request of Agent at any time and from
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Agent may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Agent, Agent and Lenders may, at Agent's option, cease
to make any further Loans or provide any further Letter of Credit Accommodations
until Agent has received such certificate and, in addition, Agent has determined
that such conditions are satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay any of the Obligations when due or
(ii) Borrower fails to perform any of the covenants contained in Sections 9.2,
9.3, 9.4, 9.13, 9.14, 9.15, 9.16, 9.18, 9.19 and 9.20 of this Agreement and such
failure shall continue for thirty (30) days; PROVIDED, THAT, such thirty (30)
day period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such thirty (30)
day period or which has been the subject of a prior failure within a six (6)
month period or (B) an intentional breach by Borrower of any such covenant or
(iii) Borrower or any Obligor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements to which it is a party other than those described in
Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by
Borrower to Agent or Lenders in this Agreement, the other Financing Agreements
or any other written agreement, schedule, confirmatory assignment or otherwise
shall when made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Agent or any Lender related to the
Obligations or this Agreement;
(d) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $2,000,000 in any one case or in excess of
$4,000,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the
107
payment of money, or injunction, attachment, garnishment or execution is
rendered against Borrower or any Obligor or any of the Collateral having a value
in excess of $1,000,000;
(e) any Obligor (being a natural person or a general partner of
an Obligor which is a partnership) dies or any Obligor, which is a partnership,
limited liability company, limited liability partnership or a corporation,
dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor makes an assignment for the benefit
of creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United
States now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower or any Obligor or all or any part of its properties and
such petition or application is not dismissed within forty-five (45) days after
the date of its filing or Borrower or any Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by Borrower or any Obligor or for all or any part of its property;
(i) any default in respect of any Indebtedness of Borrower or any
Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $2,500,000, which default continues for more than
the applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto, or any default by Borrower or any Obligor
under any Material Contract, which default continues for more than the
applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto;
(j) any bank (other than a bank which may be the sole shareholder
of Agent at such time) at which any deposit account of Borrower or any Obligor
is maintained shall fail to comply with any of the terms of any Deposit Account
Control Agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of Borrower or any Obligor
shall fail to comply with any of the terms of any Investment Property Control
Agreement to which such person is a party;
(k) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent or any
Lender) in accordance with its terms, or any such party shall challenge the
enforceability hereof or thereof, or shall assert in writing, or take any action
or fail
108
to take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);
(l) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of Borrower in an aggregate amount
in excess of $2,500,000;
(m) any Change of Control;
(n) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of Borrower or any Obligor of which Borrower, such
Obligor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against Borrower or any
Obligor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $2,500,000 or (ii) any other property of Borrower which is
necessary or material to the conduct of its business;
(o) there shall be a material adverse change in the business,
assets or prospects of Borrower (taken as a whole) or any Obligor after the date
hereof as determined by Agent or the Required Lenders in good faith; or
(p) there shall be an event of default under any of the other
Financing Agreements beyond the expiration of any grace or cure period contained
therein.
109
10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower or any Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral. Notwithstanding anything
to the contrary contained herein, as to any rights or remedies of Agent with
respect to Collateral subject to Spanish law, in the event that such laws
require procedures different from those provided herein, the applicable
provisions of Spanish law shall control.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its discretion,
and upon the direction of the Required Lenders, shall (i) accelerate the payment
of all Obligations and demand immediate payment thereof to Agent for itself and
the ratable benefit of Lenders, (PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower or any Obligor, at Borrower's
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iv) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (v) remove
any or all of the Collateral from any premises on or in which the same may be
located for the purpose of effecting the sale, foreclosure or other disposition
thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
Borrower or any Obligor, which right or equity of redemption is hereby expressly
waived and released by Borrower and Obligors and/or (vii) terminate this
Agreement. If any of the Collateral is sold or leased by Agent upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Agent. If notice of disposition
of Collateral is required by law, ten (10) Business Days' prior notice by Agent
to Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrower and Obligors
waive
110
any other notice. In the event Agent institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
Borrower and each Obligor waives the posting of any bond which might otherwise
be required. At any time an Event of Default exists or has occurred and is
continuing, upon Agent's request, Borrower will either, as Agent shall specify,
furnish cash collateral to the issuer to be used to secure and fund Agent's
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent for the Letter of Credit
Accommodations. Such cash collateral shall be in the amount equal to one hundred
ten (110%) percent of the amount of the Letter of Credit Accommodations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of such Letter of Credit Accommodations.
(c) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, and upon the direction
of Required Lenders, Agent shall, enforce the rights of Borrower or any Obligor
against any account debtor, secondary obligor or other obligor in respect of any
of the Accounts or other Receivables. Without limiting the generality of the
foregoing, at any time or times that an Event of Default exists or has occurred
and is continuing, Agent may, in its discretion, and upon the direction of
Required Lenders, Agent shall, at such time or times (i) notify any or all
account debtors, secondary obligors or other obligors in respect thereof that
the Receivables have been assigned to Agent and that Agent has a security
interest therein and Agent may direct any or all account debtors, secondary
obligors and other obligors to make payment of Receivables directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor or any secondary obligors or
other obligors in respect thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Agent and Lenders shall not be
liable to Borrower or any Obligor (or any Affiliate of Borrower or any Obligor)
for any failure to collect or enforce the payment thereof nor for the negligence
of its agents or attorneys with respect thereto and (iv) take whatever other
action Agent may deem necessary or desirable for the protection of its interests
or the interests of Lenders. At any time that an Event of Default exists or has
occurred and is continuing, at Agent's request, all invoices and statements sent
to any account debtor shall state that the Accounts and such other obligations
have been assigned to Agent and are payable directly and only to Agent and
Borrower and Obligors shall deliver to Agent such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Agent may require. In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrower shall, upon Agent's request, hold the returned Inventory in
trust for Agent, segregate all returned Inventory from all of its other
property, dispose of the returned Inventory solely according to Agent's
instructions, and not issue any credits, discounts or allowances with respect
thereto without Agent's prior written consent.
(d) To the extent that applicable law imposes duties on Agent or
any Lender to exercise remedies in a commercially reasonable manner (which
duties cannot be waived under such law), Borrower acknowledges and agrees that
it is not commercially unreasonable for Agent
111
or any Lender (i) to fail to incur expenses reasonably deemed significant by
Agent or any Lender to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished
products for disposition, (ii) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain consents of any Governmental Authority or other third party
for the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against account debtors, secondary
obligors or other persons obligated on Collateral or to remove liens or
encumbrances on or any adverse claims against Collateral, (iv) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other persons, whether or not in the
same business as Borrower, for expressions of interest in acquiring all or any
portion of the Collateral, (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or
credit enhancements to insure Agent or Lenders against risks of loss, collection
or disposition of Collateral or to provide to Agent or Lenders a guaranteed
return from the collection or disposition of Collateral, or (xii) to the extent
deemed appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Borrower acknowledges that the purpose
of this Section is to provide non-exhaustive indications of what actions or
omissions by Agent or any Lender would not be commercially unreasonable in the
exercise by Agent or any Lender of remedies against the Collateral and that
other actions or omissions by Agent or any Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section. Without limitation of the foregoing, nothing contained in this Section
shall be construed to grant any rights to Borrower or to impose any duties on
Agent or Lenders that would not have been granted or imposed by this Agreement
or by applicable law in the absence of this Section.
(e) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, Borrower and any Obligor hereby grants to Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable at any
time an Event of Default shall exist or have occurred and for so long as the
same is continuing) without payment of royalty or other compensation to Borrower
or any Obligor, to use, assign, license or sublicense any of the trademarks,
service-marks, trade names, business names, trade styles, designs, logos and
other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by Borrower or any Obligor, wherever
the same maybe located, including in such license reasonable access to all media
in which any of the licensed items may be recorded or stored and to all computer
programs used for the compilation or printout thereof, PROVIDED, THAT, the
license provided for herein shall terminate on the date all of the Obligations
have been paid and satisfied in full in immediately available funds and this
Agreement has been terminated.
112
(f) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, whether or not then due. Borrower shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including reasonable attorneys' fees and expenses.
(g) Without limiting the foregoing, upon the occurrence of a
Default or an Event of Default, Agent and Lenders may, at Agent's option, and
upon the direction of the Required Lenders, Agent and Lenders shall, without
notice, (i) cease making Loans or arranging for Letter of Credit Accommodations
or reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrower and/or (ii) terminate any provision of this
Agreement providing for any future Loans or Letter of Credit Accommodations to
be made by Agent and Lenders to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
--------------------------------
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent provided therein) and any dispute arising out of the relationship between
the parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New York but excluding any
principles of conflicts of law or other rule of law that would result in the
application of the law of any jurisdiction other than the laws of the State of
New York.
(b) Borrower, Agent and Lenders irrevocably consent and submit to
the non-exclusive jurisdiction of the Supreme Court of the State of New York and
the United States District Court for the Southern District of New York,
whichever Agent may elect, and waive any objection based on venue or FORUM NON
CONVENIENS with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Agent and Lenders shall have the right to bring any
action or proceeding against Borrower or its property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Borrower or its
property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five
113
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Agent's option, by service upon Borrower in any other manner provided under the
rules of any such courts.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT BORROWER, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
in connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Agent and such Lender, that
the losses were the result of acts or omissions constituting gross negligence or
willful misconduct. In any such litigation, Agent and Lenders shall be entitled
to the benefit of the rebuttable presumption that it acted in good faith and
with the exercise of ordinary care in the performance by it of the terms of this
Agreement. Borrower: (i) certifies that neither Agent, any Lender nor any
representative, agent or attorney acting for or on behalf of Agent or any Lender
has represented, expressly or otherwise, that Agent and Lenders would not, in
the event of litigation, seek to enforce any of the waivers provided for in this
Agreement or any of the other Financing Agreements and (ii) acknowledges that in
entering into this Agreement and the other Financing Agreements, Agent and
Lenders are relying upon, among other things, the waivers and certifications set
forth in this Section 11.1 and elsewhere herein and therein.
11.2 WAIVER OF NOTICES. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Agent or any Lender may elect to give shall
entitle Borrower to any other or further notice or demand in the same, similar
or other circumstances.
11.3 AMENDMENTS AND WAIVERS.
114
(a) Neither this Agreement nor any other Financing Agreement nor
any terms hereof or thereof may be amended, waived, discharged or terminated
unless such amendment, waiver, discharge or termination is in writing signed by
Agent and the Required Lenders or at Agent's option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), or any waiver or discharge of Agent or any Lender of any obligations to
Borrower, by Borrower; EXCEPT, THAT, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or extend
the time of payment of interest or any fees or reduce the principal amount of
any Loan or Letter of Credit Accommodations, in each case without the consent of
each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the
amount thereof then in effect or provided hereunder, in each case without the
consent of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof), without the consent
of Agent and all of Lenders,
(iv) reduce any percentage specified in the
definition of Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by Borrower
of any of their rights and obligations under this Agreement, without the consent
of Agent and all of Lenders,
(vi) amend, modify or waiver any terms of this
Section 11.3 or Section 12.8 hereof, without the consent of Agent and all of
Lenders, or
(vii) increase the advance rates constituting part of
the Borrowing Base, without the consent of Agent and all of Lenders.
(b) No party shall by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed as provided herein.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by any party hereto of any right, power and/or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which such party would otherwise have on any future
occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in the event that Borrower requests that this Agreement or any
other Financing Agreements be amended or otherwise modified in a manner which
would require the unanimous consent of all of the Lenders and such amendment or
other modification is agreed to by the Required Lenders, then, with the consent
of Borrower, Agent and the
115
Required Lenders, Borrower, Agent and the Required Lenders may amend this
Agreement without the consent of the Lenders that did not agree to such
amendment or other modification (collectively, the "Minority Lenders") to
provide for (i) the termination of the Commitment of each of the Minority
Lenders, (ii) the addition to this Agreement of one or more other Lenders, or an
increase in the Commitment of one or more of the Required Lenders, so that the
Commitments, after giving effect to such amendment, shall be in the same
aggregate amount as the Commitments immediately before giving effect to such
amendment, (iii) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new Lenders or Required Lenders, as the
case may be, as may be necessary to repay in full the outstanding Loans of the
Minority Lenders immediately before giving effect to such amendment and (iv) the
payment of all interest, fees and other Obligations payable or accrued in favor
of the Minority Lenders and such other modifications to this Agreement as
Borrower and the Required Lenders may determine to be appropriate.
(d) The consent of Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Agent hereunder or under any
of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section.
11.4 WAIVER OF COUNTERCLAIMS. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto. Nothing contained in this Section 11.4 shall limit
the right of Borrower to bring a claim in a separate action or proceeding
11.5 INDEMNIFICATION. Borrower shall indemnify and hold Agent and each
Lender, and its officers, directors, agents, employees, advisors and counsel and
their respective Affiliates (each such person being an "Indemnitee"), harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses (including reasonable attorneys' fees and expenses) imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the reasonable fees and
expenses of counsel except that Borrower shall not have any obligation under
this Section 11.5 to indemnify an Indemnitee with respect to a matter covered
hereby resulting from the gross negligence or wilful misconduct of such
Indemnitee as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction (but without limiting the obligations of Borrower as to
any other Indemnitee). To the extent that the undertaking to indemnify, pay and
hold harmless set forth in this Section may be unenforceable because it violates
any law or public policy, Borrower shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, no Borrower shall assert, and Borrower hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any of the other Financing
Agreements or any undertaking or transaction
116
contemplated hereby. All amounts due under this Section shall be payable upon
demand. The foregoing indemnity shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
---------
12.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Agent; (b) shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other
Financing Agreements, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
12.2 RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 EVENTS OF DEFAULT.
117
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to
the Loans and Letter of Credit Accommodations hereunder, unless and until Agent
has received written notice from a Lender, or a Borrower specifying such Event
of Default or any unfulfilled condition precedent, and stating that such notice
is a "Notice of Default or Failure of Condition". In the event that Agent
receives such a Notice of Default or Failure of Condition, Agent shall give
prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take
such action with respect to any such Event of Default or failure of condition
precedent as shall be directed by the Required Lenders; PROVIDED, THAT, unless
and until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting the
foregoing, and notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the conditions precedent
set forth in Section 4 of this Agreement to the contrary, Agent may, but shall
have no obligation to, continue to make Loans and issue or cause to be issued
Letter of Credit Accommodations for the ratable account and risk of Lenders from
time to time if Agent believes making such Loans or issuing or causing to be
issued such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower or any
Obligor or any of the Collateral or other property of Borrower or any Obligor.
12.4 CONGRESS IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrower(and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from
Borrower and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
12.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower hereunder and without limiting any obligations of
Borrower hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the
118
terms hereof or thereof or of any such other documents, PROVIDED, THAT, no
Lender shall be liable for any of the foregoing to the extent it arises from the
gross negligence or willful misconduct of the party to be indemnified as
determined by a final non-appealable judgment of a court of competent
jurisdiction. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
12.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and any Obligors and has made its own decision to
enter into this Agreement and that it will, independently and without reliance
upon Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by Borrower or any Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of Borrower or any Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from Borrower
or any Obligor which is required to be provided to Lenders hereunder and with a
copy of any Notice of Default or Failure of Condition received by Agent from
Borrower or any Lender; PROVIDED, THAT, Agent shall not be liable to any Lender
for any failure to do so, except to the extent that such failure is attributable
to Agent's own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Except for
notices, reports and other documents expressly required to be furnished to
Lenders by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of Borrower or any Obligor that may
come into the possession of Agent.
12.7 FAILURE TO ACT. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 ADDITIONAL LOANS. Agent shall not make any Loans or provide any
Letter of Credit Accommodations to Borrower on behalf of Lenders intentionally
and with actual knowledge that such Loans or Letter of Credit Accommodations
would cause the aggregate amount of the total outstanding Loans and Letter of
Credit Accommodations to Borrower to exceed the Borrowing Base, without the
prior consent of all Lenders, EXCEPT, THAT, Agent may make such additional Loans
or provide such additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations will cause the total outstanding Loans and Letter of Credit
Accommodations to Borrower to exceed the Borrowing Base, as Agent may deem
necessary or advisable in its discretion, PROVIDED, THAT: (a) the total
principal amount of the additional Loans or additional Letter of
119
Credit Accommodations to Borrower which Agent may make or provide after
obtaining such actual knowledge that the aggregate principal amount of the Loans
equal or exceed the Borrowing Base, together with the then outstanding principal
amount of the Special Agent Advances, shall not at any time exceed in the
aggregate $15,000,000 outstanding at any time and shall not cause the total
principal amount of the Loans and Letter of Credit Accommodations to exceed the
Maximum Credit and (b) no such additional Loans or Letter of Credit
Accommodations shall be outstanding more than ninety (90) days after the date
such additional Loan or Letter of Credit Accommodation is made or issued (as the
case may be), except as the Required Lenders may otherwise agree. Each Lender
shall be obligated to pay Agent the amount of its Pro Rata Share of any such
additional Loans or Letter of Credit Accommodations provided that Agent is
acting in accordance with the terms of this Section 12.8.
12.9 CONCERNING THE COLLATERAL AND THE RELATED FINANCING AGREEMENTS.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 FIELD AUDIT, EXAMINATION REPORTS AND OTHER INFORMATION;
DISCLAIMER BY LENDERS. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and a weekly report with respect to the Borrowing Base prepared by Agent
(each field audit or examination report and monthly report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports");
(b) expressly agrees and acknowledges that Agent (A) does not
make any representation or warranty as to the accuracy of any Report, or (B)
shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrower and will rely significantly upon Borrower's books and records, as well
as on representations of Borrower's personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 COLLATERAL MATTERS.
(a) Agent may, at its option, from time to time, at any time on
or after an Event of Default and for so long as the same is continuing or upon
any other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such
120
disbursements and advances ("Special Agent Advances") which Agent, in its sole
discretion, deems necessary or desirable either (i) to preserve or protect the
Collateral or any portion thereof or (ii) to enhance the likelihood or maximize
the amount of repayment by Borrower of the Loans and other Obligations,
provided, that, the aggregate principal amount of Special Agent Advances,
together with the then outstanding principal amount of the additional Loans and
Letter of Credit Accommodations that equal or exceed the Borrowing Base provided
for under Section 12.8 hereof, shall not exceed in the aggregate $15,000,000
outstanding at any time or (iii) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement or any of the other Financing Agreements
consisting of costs, fees and expenses and payments to any issuer of Letter of
Credit Accommodations. Special Agent Advances shall be repayable on demand and
be secured by the Collateral. Special Agent Advances shall not constitute Loans
but shall otherwise constitute Obligations hereunder. Agent shall notify each
Lender and Borrower in writing of each such Special Agent Advance, which notice
shall include a description of the purpose of such Special Agent Advance.
Without limitation of its obligations pursuant to Section 6.9, each Lender
agrees that it shall make available to Agent, upon Agent's demand, in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
each such Special Agent Advance. If such funds are not made available to Agent
by such Lender, Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and
in its discretion to release any security interest in, mortgage or lien upon,
any of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Borrower certifies to Agent that the sale or disposition
is made in compliance with Section 9.7 hereof (and Agent may rely conclusively
on any such certificate, without further inquiry), or (iii) constituting
property in which Borrower did not own an interest at the time the security
interest, mortgage or lien was granted or at any time thereafter, or (iv) having
a value in the aggregate in any twelve (12) month period of less than $3,000,000
or (v) if approved, authorized or ratified in writing by all of Lenders. Except
as provided above, Agent will not release any security interest in, mortgage or
lien upon, any of the Collateral without the prior written authorization of all
of Lenders (and any Lender may require that the proceeds from any sale or other
disposition of the Collateral to be so released be applied to the Obligations in
a manner satisfactory to such Lender). Upon request by Agent at any time,
Lenders will promptly confirm in writing Agent's authority to release particular
types or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act without
any specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in
121
writing, upon request by Agent, the authority to release Collateral conferred
upon Agent under this Section. Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence the
release of the security interest, mortgage or liens granted to Agent upon any
Collateral to the extent set forth above; provided, THAT, (i) Agent shall not be
required to execute any such document on terms which, in Agent's opinion, would
expose Agent to liability or create any obligations or entail any consequence
other than the release of such security interest, mortgage or liens without
recourse or warranty and (ii) such release shall not in any manner discharge,
affect or impair the Obligations or any security interest, mortgage or lien upon
(or obligations of Borrower in respect of) the Collateral retained by Borrower.
(d) Agent shall have no obligation whatsoever to any Lender or
any other Person to investigate, confirm or assure that the Collateral exists or
is owned by Borrower or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
12.12 AGENCY FOR PERFECTION. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 SUCCESSOR AGENT. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Borrower. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Borrower, a successor agent from among Lenders. Upon the acceptance by the
Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term "Agent" as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12 shall
122
inure to its benefit as to any actions taken or omitted by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is thirty (30) days after the date of a retiring Agent's notice
of resignation, the retiring Agent's resignation shall nonetheless thereupon
become effective and Lenders shall perform all of the duties of Agent hereunder
until such time, if any, as the Required Lenders appoint a successor agent as
provided for above.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
13.1 TERM.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), PROVIDED, THAT, Borrower may, at its
option, after prior notice to Agent as set forth below (which notice shall be
irrevocable) extend the term of this Agreement for up to two (2) additional one
(1) year periods, PROVIDED, THAT, as to each such extension, each of the
following conditions is satisfied as determined by Agent in good faith: (i)
Agent shall have received prior written notice of the intention of Borrower to
so extend the term of this Agreement not less than ninety (90) days prior to the
Renewal Date (or the first anniversary thereof, in the case of an extension for
the second one (1) year period), (ii) no Default or Event of Default shall exist
or have occurred and be continuing on the Renewal Date (or the first anniversary
thereof in the case of an extension for the second one (1) year period), and
(iii) Borrower shall pay to Agent for the account of Lenders on the Renewal Date
(or the first anniversary thereof, in the case of an extension for the second
one (1) year period), an extension fee equal to one-quarter (1/4%) percent of
the Maximum Credit for each one (1) year extension.
(b) Agent may, at its option (or shall at the direction of any
Lender in writing received by Agent at least ninety (90) days prior to the
Renewal Date or the anniversary of any Renewal Date, as the case may be),
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
Borrower at least sixty (60) days prior written notice, except that Agent and
Lenders may not exercise such right to terminate this Agreement and the other
Financing Agreements effective on the Renewal Date or any anniversary thereof to
the extent Borrower has exercised its right to extend the term of this Agreement
in accordance with the terms set forth above and the conditions to such
extension have been satisfied. In addition, Agent may, at its option (and Agent
shall at the direction of Required Lenders), terminate this Agreement at any
time on or after an Event of Default and for so long as the same is continuing.
(c) Borrower may terminate this Agreement and the other Financing
Agreements at any time upon ten (10) Business Days' prior written notice to
Agent (which notice shall be irrevocable).
(d) Upon the Renewal Date or any other effective date of
termination of the Financing Agreements, Borrower shall pay to Agent all
outstanding and unpaid Obligations and
123
shall furnish cash collateral to Agent (or at Agent's option, a letter of credit
issued for the account of Borrower and at Borrower's expense, in form and
substance satisfactory to Agent, by an issuer acceptable to Agent and payable to
Agent as beneficiary) in such amounts as Agent determines are reasonably
necessary to secure Agent and Lenders from loss, cost, damage or expense,
including reasonable attorneys' fees and expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred ten (110%) percent of the amount of the
Letter of Credit Accommodations plus the amount of any fees and expenses payable
in connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such purpose. Interest shall be
due until and including the next Business Day, if the amounts so paid by
Borrower to the Agent Payment Account or other bank account designated by Agent
are received in such bank account later than 12:00 noon, New York City time.
(e) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Agent's continuing security interest in the Collateral and the rights and
remedies of Agent and Lenders hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, Borrower waives any rights
it may have under the UCC to demand the filing of termination statements with
respect to the Collateral and Agent shall not be required to send such
termination statements to Borrower or to file them with any filing office,
unless and until this Agreement shall have been terminated in accordance with
its terms and all Obligations paid and satisfied in full in immediately
available funds.
(f) If for any reason this Agreement is terminated prior to the
second anniversary of the date hereof, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Agent's and each Lender's lost profits as a
result thereof, Borrower agree to pay to Agent for itself and the ratable
benefit of Lenders, upon the effective date of such termination, an early
termination fee in the amount equal to one-half (1/2%) percent of the Maximum
Credit. Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrower agree that it is reasonable under the circumstances currently existing.
In addition, Agent and Lenders shall be entitled to such early termination fee
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h) hereof, even if Agent and Lenders do not exercise the right to terminate
this Agreement, but elect, at their option, to provide financing to Borrower or
permit the use of cash collateral under the United States Bankruptcy Code. The
early termination fee provided for in this Section 13.1 shall be deemed included
in the Obligations.
124
13.2 INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1, Article
8 or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to Borrower, Agent and Lenders pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured, if such Event of Default is capable of being cured as determined by
Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned and acting in accordance with reasonable commercial
standards of fair dealing as an asset-based lender dealing with a borrower
similarly situated in an arrangement of a similar nature under the circumstances
as understood by Agent or such Lender at such time based on its actual
knowledge, without any duty of inquiry or investigation. Borrower shall have the
burden of proving any lack of good faith on the part of Agent or any Lender
alleged by Borrower at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Agent prior to the date hereof.
(i) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including", the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including".
125
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Agent and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Agent or
Lenders merely because of Agent's or any Lender's involvement in their
preparation.
13.3 NOTICES. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to Borrower:
AEP Industries Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Vice-President and Chief Financial Officer
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to: Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxxxxx & Kuh LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telephone No: 000-000-0000
Telecopy No.: 000-000-0000
126
If to Agent: Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxxx X. Xxxxx
Telephone No.:000-000-0000
Telecopy No.: 000-000-0000
13.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 CONFIDENTIALITY.
(a) Agent and each Lender shall use all reasonable efforts to
keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement, PROVIDED,
THAT, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, (iii) in connection with any litigation to which Agent or such
Lender is a party relating to this Agreement, (iv) to any Lender or Participant
(or prospective Lender or Participant) or any Affiliate of any Lender so long as
such Lender or Participant (or prospective Lender or Participant) or Affiliate
shall have been instructed to treat such information as confidential in
accordance with this Section 13.5 (and shall have accepted such instructions),
or (v) to counsel for Agent or any Participant or Lender (or prospective
Participant or Lender so long as clause (iv) of this Section is satisfied as to
such person). Agent shall also instruct any agent or designee of Agent to treat
such information as confidential in accordance with and subject to the terms of
this Section 13.5 as if such agent or designee were Agent (and such agent or
designee shall accept such instructions)
(b) In the event that Agent or any Lender receives a request or
demand to disclose any confidential information pursuant to any subpoena or
court order, Agent or such Lender, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, statute, rule or
regulation to the extent Agent determines in good faith that it will not create
any risk of liability to Agent or such Lender, that Agent or such Lender will
promptly notify Borrower of such request so that Borrower may seek a protective
order or other appropriate relief or remedy and (ii) if disclosure of such
information is required, disclose such information and, subject to reimbursement
by Borrower of Agent's or such Lender's reasonable expenses, cooperate with
Borrower in the reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such portion of the
disclosed information which Borrower so designates, to the extent permitted by
applicable law or if permitted by applicable law, to the extent Agent or such
Lender determines in good faith that it will not create any risk of liability to
Agent or such Lender.
127
(c) In no event shall this Section 13.5 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower or any
third party without breach of this Section 13.5 or otherwise become generally
available to the public, other than as a result of a disclosure in violation
hereof or in violation of any other confidentiality agreement in favor of
Borrower to the extent Agent or the Lender involved has actual knowledge of such
agreement and the violation thereof at the time it receives such information,
(ii) to apply to or restrict disclosure of information that was or becomes
available to Agent on a non-confidential basis from a person other than Borrower
other than in violation of a confidentiality agreement in favor of Borrower by
such person to the extent Agent or the Lender involved has actual knowledge of
such agreement and the violation thereof at the time it receives such
information, (iii) require Agent or any Lender to return any materials furnished
by Borrower to Agent or (iv) prevent Agent from responding to routine
informational requests in accordance with the CODE OF ETHICS FOR THE EXCHANGE OF
CREDIT INFORMATION promulgated by The Xxxxxx Xxxxxx Associates or other
applicable industry standards relating to the exchange of credit information.
The obligations of Agent and Lenders under this Section 13.5 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality letter
signed prior to the date hereof.
13.6 SUCCESSORS. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Borrower and its respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Agent and Lenders. Any
such purported assignment without such express prior written consent shall be
void. No Lender may assign its rights and obligations under this Agreement
without the prior written consent of Agent, except as provided in Section 13.7
below. The terms and provisions of this Agreement and the other Financing
Agreements are for the purpose of defining the relative rights and obligations
of Borrower, Agent and Lenders with respect to the transactions contemplated
hereby and there shall be no third party beneficiaries of any of the terms and
provisions of this Agreement or any of the other Financing Agreements.
13.7 ASSIGNMENTS; PARTICIPATIONS.
(a) Each Lender may assign all or, if less than all, a portion
equal to at least $5,000,000 in the aggregate for the assigning Lender, of such
rights and obligations under this Agreement to one or more Eligible Transferees
(but not including for this purpose any assignments in the form of a
participation), each of which assignees shall become a party to this Agreement
as a Lender by execution of an Assignment and Acceptance; PROVIDED, THAT, (A) if
such Eligible Transferee is not a bank, Agent shall receive a representation in
writing by such Eligible Transferee that either (1) no part of its acquisition
of its Loans is made out of assets of any employee benefit plan, or (2) after
consultation, in good faith, with Borrower and provision by Borrower of such
information as may be reasonably requested by such Eligible Transferee, the
acquisition and holding of such Commitments and Loans does not constitute a
non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of
the Code, or (3) such assignment is an "insurance company general account," as
such term is defined in the Department
128
of Labor Prohibited Transaction Class Exemption 95.60 (issued July 12, 1995)
("PTCE 95-60), and, as of the date of the assignment, there is no "employee
benefit plan" with respect to which the aggregate amount of such general
account's reserves and liabilities for the contracts held by or on behalf of
such "employee benefit plan" and all other "employee benefit plans" maintained
by the same employer (and affiliates thereof as defined in Section V(a)(1) of
PTCE 95-60) or by the same employee organization (in each case determined in
accordance with the provisions of PTCE 95-60) exceeds ten (10%) percent of the
total reserves and liabilities of such general account (as determined under PTCE
95-60) (exclusive of separate account liabilities) plus surplus as set forth in
the National Association of Insurance Commissioners Annual Statement filed with
the state of domicile of such Eligible Transferee and (B) such transfer or
assignment will not be effective until recorded by the Agent on the Register. As
used in this Section, the term "employee benefit plan" shall have the meaning
assigned to it in Title I of ERISA and shall also include a "plan" as defined in
Section 4975(e)(1) of the Code.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and Borrower, Obligors,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and any Lender at any reasonable time and
from time to time upon reasonable prior notice. Upon receipt of any fully
executed Assignment and Acceptance, Agent shall provide a copy thereof to
Borrower.
(c) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, (i)
the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, any Obligor or any of their
Subsidiaries or the performance or observance by Borrower or any Obligor of any
of the Obligations; (iii) such
129
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender or Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender.
Subject to Section 13.5 hereof, Agent and Lenders may furnish any information
concerning Borrower or any Obligor in the possession of Agent or any Lender from
time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); PROVIDED, THAT, (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrower, and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Financing Agreements, (iii) the Participant shall
not have any rights under this Agreement or any of the other Financing
Agreements (the Participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender in
favor of the Participant relating thereto) and all amounts payable by Borrower
or any Obligor hereunder shall be determined as if such Lender had not sold such
participation, and (iv) if such Participant is not a bank, represent that either
(A) no part of its acquisition of its participation is made out of assets of any
employee benefit plan, or (B) after consultation, in good faith, with Borrower
and provision by Borrower of such information as may be reasonably requested by
the Participant, the acquisition and holding of such participation does not
constitute a non-exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code, or (C) such participation is an "insurance company
general account, " as such term is defined in the "PTCE 95-60", and, as of the
date of the transfer there is no "employee benefit plan" with respect to which
the aggregate amount of such general account's reserves and liabilities for the
contracts held by or on behalf of such "employee benefit plan" and all other
"employee benefit plans" maintained by the same employer (and affiliates thereof
as defined in Section V(a)(1) of PTCE 95-60) or by the same employee
organization (in each case determined in accordance with the provisions of PTCE
95-60) exceeds ten (10%) percent of the total reserves and liabilities of such
general account (as determined under PTCE 95-60) (exclusive of separate account
liabilities) plus surplus as set forth in the National Association of Insurance
Commissioners Annual Statement filed with the state of domicile of the
Participant. As used in
130
this Section, the term "employee benefit plan" shall have the meaning assigned
to it in Title I of ERISA and shall also include a "plan" as defined in Section
4975(e)(1) of the Code.
(f) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
(g) Borrower shall assist Agent or any Lender permitted to sell
assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments contemplated by
this Agreement or any of the other Financing Agreements as shall be requested
and the delivery of informational materials, appraisals or other documents for,
and the participation of relevant management in meetings and conference calls
with, potential Lenders or Participants, subject to Section 13.5 hereof.
Borrower shall certify the correctness, completeness and accuracy, in all
material respects, of all descriptions of Borrower and their affairs provided,
prepared or reviewed by Borrower that are contained in any selling materials and
all other information provided by it and included in such materials.
13.8 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 COUNTERPARTS, ETC. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
131
IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused these
presents to be duly executed as of the day and year first above written.
AGENT BORROWER
----- --------
CONGRESS FINANCIAL CORPORATION,
AEP INDUSTRIES INC.
as Agent
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------ ---------------------
Title: Executive Vice President Title: Vice President and Treasurer
LENDER
------
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxxx
-----------------
Title: Executive Vice President
Commitment: $85,000,000
132
SCHEDULE 9.7(b)
TO
LOAN AND SECURITY AGREEMENT
PART I
1. Matthews, North Carolina $3,700,000
2. Chino, California $2,900,000
3. Alsip, Illinois $2,800,000
4. Waxahachie, Texas $1,600,000
PART II
1. Griffin, Georgia $2,400,000
2. Gainesville, Texas $2,600,000
133
