1
EXHIBIT 10.13
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CREDIT AGREEMENT
among
TUFCO, L.P.
as Borrower,
TUFCO TECHNOLOGIES, INC.,
as the Parent
FIRST UNION NATIONAL BANK,
as Agent,
and
the banks named herein
August 28, 1998
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TABLE OF CONTENTS
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ARTICLE 1- Definitions.............................................................................................1
Section 1.1 Definitions.............................................................................1
Section 1.2 Other Definitional Provisions..........................................................13
Section 1.3 Accounting Terms and Determinations....................................................13
Section 1.4 Time of Day............................................................................13
ARTICLE 2 - Revolving Credit Facility.............................................................................14
Section 2.1 Revolving Commitments..................................................................14
Section 2.2 Notes..................................................................................14
Section 2.3 Repayment of Revolving Loans...........................................................14
Section 2.4 Use of Proceeds........................................................................14
Section 2.5 Revolving Commitment Fee...............................................................14
Section 2.6 Reduction or Termination of Revolving Commitments; Extension of
Revolving Commitments..................................................................14
ARTICLE 3 - Term Loans............................................................................................15
Section 3.1 Term Commitments.......................................................................15
Section 3.2 Notes..................................................................................15
Section 3.3 Repayment of Term Loans................................................................15
Section 3.4 Use of Proceeds........................................................................15
ARTICLE 4 - Letters of Credit.....................................................................................16
Section 4.1 Commitment to Issue Commercial L/Cs....................................................16
Section 4.2 Commitment to Issue Bond L/C...........................................................16
Section 4.3 Participation By Banks.................................................................16
Section 4.4 Request Procedure......................................................................16
Section 4.5 Letter of Credit Fees..................................................................17
Section 4.6 Funding of Drawings....................................................................17
Section 4.7 Reimbursements.........................................................................17
Section 4.8 Reimbursement Obligations Absolute.....................................................18
Section 4.9 Issuer Responsibility..................................................................18
ARTICLE 5 - Interest and Fees.....................................................................................19
Section 5.1 Interest Rate..........................................................................19
Section 5.2 Determinations of Margins and Fees.....................................................19
(a) "Base Margin..................................................................19
(b) "Commitment Fee Rate..........................................................19
(c) "Eurodollar Rate Margin.......................................................20
Section 5.3 Payment Dates..........................................................................20
Section 5.4 Default Interest.......................................................................21
Section 5.5 Conversions and Continuations of Accounts..............................................21
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Section 5.6 Computations...........................................................................21
ARTICLE 6 - Administrative Matters................................................................................21
Section 6.1 Borrowing Procedure....................................................................21
Section 6.2 Minimum Amounts........................................................................22
Section 6.3 Certain Notices........................................................................22
Section 6.4 Prepayments............................................................................23
(a) Mandatory.....................................................................23
(i) Prepayments from Asset Dispositions...................................23
(ii) Prepayment from Securities Offerings..................................23
(b) Optional......................................................................24
(c) Interest Rate Protection Agreements...........................................24
Section 6.5 Method of Payment......................................................................24
Section 6.6 Pro Rata Treatment.....................................................................25
Section 6.7 Sharing of Payments....................................................................25
Section 6.8 Non-Receipt of Funds by the Agent......................................................26
Section 6.9 Withholding Taxes......................................................................26
Section 6.10 Withholding Tax Exemption..............................................................26
Section 6.11 Participation Obligations Absolute; Failure to Fund Participation......................27
ARTICLE 7 - Yield Protection and Illegality.......................................................................27
Section 7.1 Additional Costs.......................................................................27
Section 7.2 Limitation on Eurodollar Accounts......................................................29
Section 7.3 Illegality.............................................................................29
Section 7.4 Treatment of Affected Loans............................................................30
Section 7.5 Compensation...........................................................................30
Section 7.6 Capital Adequacy.......................................................................31
ARTICLE 8 - Conditions Precedent..................................................................................31
Section 8.1 Initial Loan...........................................................................31
(a) Resolutions...................................................................31
(b) Incumbency Certificate........................................................32
(c) Articles of Incorporation; Certificate of Limited Partnership.................32
(d) Bylaws; Partnership Agreement.................................................32
(e) Governmental Certificates.....................................................32
(f) Notes.........................................................................32
(g) Collateral Documents and Collateral...........................................32
(h) Bond Documents................................................................33
(i) Termination or Assignment of Prior Liens......................................33
(j) Insurance Policies............................................................33
(k) Opinion of Counsel............................................................33
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(l) Appraisals; Title Reports; Environmental Reports; Surveys.....................33
(m) Attorneys' Fees and Expenses..................................................33
Section 8.2 All Loans..............................................................................33
(a) No Default....................................................................33
(b) Representations and Warranties................................................33
(c) Additional Documentation......................................................33
ARTICLE 9 - Representations and Warranties........................................................................34
Section 9.1 Corporate Existence....................................................................34
Section 9.2 Financial Statements...................................................................34
Section 9.3 Corporate Action; No Breach............................................................34
Section 9.4 Operation of Business..................................................................35
Section 9.5 Litigation and Judgments...............................................................35
Section 9.6 Rights in Properties; Liens............................................................35
Section 9.7 Enforceability.........................................................................35
Section 9.8 Approvals..............................................................................35
Section 9.9 Debt...................................................................................35
Section 9.10 Taxes..................................................................................35
Section 9.11 Margin Securities......................................................................36
Section 9.12 ERISA..................................................................................36
Section 9.13 Disclosure.............................................................................36
Section 9.14 Subsidiaries...........................................................................36
Section 9.15 Agreements.............................................................................37
Section 9.16 Compliance with Laws...................................................................37
Section 9.17 Investment Company Act.................................................................37
Section 9.18 Public Utility Holding Company Act.....................................................37
Section 9.19 Environmental Matters..................................................................37
Section 9.20 Solvency...............................................................................38
Section 9.21 Benefit Received.......................................................................38
Section 9.22 Bond Documents.........................................................................38
Section 9.23 Year 2000..............................................................................38
ARTICLE 10 - Positive Covenants...................................................................................39
Section 10.1 Reporting Requirements.................................................................39
(a) Annual Financial Statements...................................................39
(b) Quarterly Financial Statements................................................39
(c) Compliance Certificate........................................................39
(d) Annual Projections............................................................40
(e) Management Letters............................................................40
(f) Notice of Litigation..........................................................40
(g) Notice of Default.............................................................40
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(h) ERISA Reports.................................................................40
(i) Reports to Other Creditors....................................................40
(j) Notice of Material Adverse Effect.............................................40
(k) Proxy Statements, Etc.........................................................41
(l) General Information...........................................................41
Section 10.2 Maintenance of Existence; Conduct of Business..........................................41
Section 10.3 Maintenance of Properties..............................................................41
Section 10.4 Taxes and Claims.......................................................................41
Section 10.5 Insurance..............................................................................41
Section 10.6 Inspection Rights......................................................................42
Section 10.7 Keeping Books and Records..............................................................42
Section 10.8 Compliance with Laws...................................................................42
Section 10.9 Compliance with Agreements.............................................................42
Section 10.10 Further Assurances and Collateral Matters..............................................42
(a) Further Assurance.............................................................42
(b) Subsidiary Pledge.............................................................43
(c) Borrower Pledge of Subsidiary Stock...........................................43
Section 10.11 ERISA..................................................................................43
Section 10.12 Interest Rate Protection Agreements....................................................43
ARTICLE 11 - Negative Covenants...................................................................................44
Section 11.1 Debt...................................................................................44
Section 11.2 Limitation on Liens....................................................................45
Section 11.3 Mergers, Etc...........................................................................46
Section 11.4 Restrictions on Dividends and other Distributions......................................46
Section 11.5 Investments............................................................................47
Section 11.6 Limitation on Issuance of Capital Stock................................................48
Section 11.7 Transactions With Affiliates...........................................................48
Section 11.8 Disposition of Assets..................................................................48
Section 11.9 Lines of Business......................................................................49
Section 11.10 Sale and Leaseback.....................................................................49
Section 11.11 Prepayment of Debt.....................................................................49
Section 11.12 Modifications of Bond Documents or Agreements..........................................49
Section 11.13 Tax Exempt Status of Bonds.............................................................49
Section 11.14 Limitation on Bond Transactions........................................................49
ARTICLE 12 - Financial Covenants..................................................................................49
Section 12.1 Consolidated Tangible Net Worth........................................................49
Section 12.2 Fixed Charge Coverage..................................................................50
Section 12.3 Indebtedness to EBITDA.................................................................52
Section 12.4 Capital Expenditures...................................................................53
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ARTICLE 13 - Default..............................................................................................53
Section 13.1 Events of Default......................................................................53
Section 13.2 Remedies...............................................................................56
(a) Acceleration..................................................................56
(b) Termination of Commitments....................................................56
(c) Judgment......................................................................56
(d) Foreclosure...................................................................56
(e) Rights........................................................................56
Section 13.3 Performance by the Agent...............................................................56
Section 13.4 Setoff.................................................................................57
Section 13.5 Continuance of Default.................................................................57
Section 13.6 Cash Collateral........................................................................57
ARTICLE 14 - The Agent............................................................................................57
Section 14.1 Appointment, Powers and Immunities.....................................................57
Section 14.2 Rights of Agent as a Bank..............................................................58
Section 14.3 Defaults...............................................................................58
Section 14.4 Indemnification........................................................................59
Section 14.5 Independent Credit Decisions...........................................................59
Section 14.6 Several Commitments....................................................................60
Section 14.7 Successor Agent........................................................................60
Section 14.8 Agent Fee. ...........................................................................60
ARTICLE 15 - Miscellaneous........................................................................................60
Section 15.1 Expenses...............................................................................60
Section 15.2 Indemnification........................................................................61
Section 15.3 Limitation of Liability................................................................62
Section 15.4 No Duty................................................................................62
Section 15.5 No Fiduciary Relationship..............................................................62
Section 15.6 Equitable Relief.......................................................................62
Section 15.7 No Waiver; Cumulative Remedies.........................................................62
Section 15.8 Successors and Assigns.................................................................62
(a) Binding Effect................................................................62
(b) Participations................................................................63
(c) Assignments...................................................................63
(d) Information...................................................................64
(e) Pledge to Federal Reserve.....................................................64
Section 15.9 Survival...............................................................................65
Section 15.10 Entire Agreement.......................................................................65
Section 15.11 Amendments.............................................................................65
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Section 15.12 Maximum Interest Rate..................................................................66
Section 15.13 Notices................................................................................66
Section 15.14 Governing Law; Venue of Service of Process.............................................67
Section 15.15 Counterparts...........................................................................67
Section 15.16 Severability...........................................................................67
Section 15.17 Headings...............................................................................67
Section 15.18 Non-Application of Chapter 346 of The Finance Code of Texas............................67
Section 15.19 Construction...........................................................................67
Section 15.20 Independence of Covenants..............................................................68
Section 15.21 Waiver of Jury Trial...................................................................68
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
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"A" Revolving Note
"B" Term Note
"C" Master Guaranty
"D" Borrower Security Agreement
"E" Guarantor Security Agreement
"F" Joinder Agreement
"G" Assignment and Acceptance
"H" Compliance Certificate
"I" Notice of Borrowing, Conversion,
Continuation or Prepayment
INDEX TO SCHEDULES
Schedule Description of Schedule
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1.1(a) Previous Senior Debt
8.1(g) Real Property
9.14 List of Subsidiaries
11.1 Debt
11.2 Existing Liens
11.5 Existing Investments
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of August 28, 1998,
is among TUFCO, L.P., a limited partnership duly organized and validly existing
under the laws of the State of Delaware (the "Borrower"), TUFCO TECHNOLOGIES,
INC., a corporation duly organized under the laws of the State of Delaware
("Parent"), each of the banks or other lending institutions which is or which
may from time to time become a signatory hereto or any successor or assignee
thereof (individually, a "Bank" and, collectively, the "Banks") and FIRST UNION
NATIONAL BANK, individually as a Bank and as agent for itself and the other
Banks (in its capacity as agent, together with its successors in such capacity,
the "Agent").
R E C I T A L S:
The Borrower has requested that the Banks extend credit to the Borrower
in the form of a revolving credit facility and a term loan facility. Borrower
has also requested that First Union National Bank issue a letter of credit to
provide credit enhancement for an industrial development bond financing. The
Banks are willing to extend such credit to the Borrower upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"Account" means either a Base Rate Account or a Eurodollar Account.
"Additional Costs" has the meaning specified in Section 7.1.
"Adjusted Eurodollar Rate" means, for any Eurodollar Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Agent to be equal to the Eurodollar
Rate for such Eurodollar Account for such Interest Period divided by 1 minus the
Reserve Requirement for such Eurodollar Account for such Interest Period.
"Adjustment Date" has the meaning specified in Section 5.2.
"Affiliate" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, such
CREDIT AGREEMENT - PAGE 1
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Person; (b) that directly or indirectly beneficially owns or holds ten percent
(10%) or more of any class of voting stock of such Person; or (c) ten percent
(10%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Person in question. The term "control" means
the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise; provided, however, in
no event shall the Agent or any Bank be deemed an Affiliate of the Borrower or
any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of this
Agreement.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Applicable Lending Office" means for each Bank and each Type of
Account, the lending office of such Bank (or of an Affiliate of such Bank)
designated for such Account below its name on the signature pages hereof or such
other office of such Bank (or of an Affiliate of such Bank) as such Bank may
from time to time specify to the Borrower and the Agent as the office by which
its Loans subject to Accounts of such Type are to be made and maintained.
"Applicable Rate" has the meaning set forth in Section 5.1.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its assignee and accepted by the Agent pursuant to Section
15.8, in substantially the form of Exhibit "G".
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Margin" has the meaning specified in Section 5.2.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in
effect on such day. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum then most recently publicly announced from time to time by
First Union as its prime rate in effect at its Principal Office; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as effective. "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
released on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so released for any day which is a Business Day,
the arithmetic average (rounded upwards to the next 1/100th of 1%), as
determined by the Agent, of the quotations for the day of such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of the Agent to obtain sufficient quotations in accordance with the
terms thereof, the Base Rate shall be determined without regard to clause (a) of
the first sentence of this definition until the
CREDIT AGREEMENT - PAGE 2
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circumstances giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively. The Base Rate may not be any Bank's
best or favored rate and the Banks may make other Loans to other Persons at
rates lower than the Base Rate.
"Base Rate Account" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"Bond Documents" means the trust indenture, loan agreement, remarking
agreement, offering memorandum, placement agent agreement, tender agent
agreement, security agreement, deed of trust, and indemnity agreement executed
and delivered to evidence and govern the Bonds and all other documentation
executed and delivered pursuant to or in connection therewith as such indenture,
memorandum, agreements and other documentation may be amended, supplemented, or
otherwise modified from time to time with the consent of the Lender.
"Bond L/C" means that certain letter of credit issued pursuant to
Section 4.2.
"Bond L/C Liabilities" means, at any time, the aggregate amount
available for drawing under the Bond L/C and all unreimbursed drawings under the
Bond L/C.
"Bonds" means the Adjustable Rate Industrial Development Revenue Bonds,
Series 1992 (Tufco Project), issued on May 1, 1992 in the aggregate amount of
$2,500,000.
"Borrower" has the meaning set forth in the introductory paragraph of
this Agreement.
"Borrower Security Agreement" means the security agreement between the
Borrower and Agent for the benefit of itself and the Banks, in substantially the
form of Exhibit "D", as the same may be amended or otherwise modified.
"Business Day" means (a) any day excluding Saturday, Sunday, and any
day which either is a legal holiday under the laws of the State of Texas or the
State of New York or is a day on which banking institutions located in the State
of Texas or the State of New York are closed, and (b), with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and notices
in connection with Loans subject to Eurodollar Accounts, any day which is a
Business Day described in clause (a) above and which is also a day on which
dealings in Dollar deposits are carried out in the European interbank market.
"Calculation Period" has the meaning specified in Section 5.2.
"Capital Expenditures" means, for any period, all expenditures of
Parent and the Subsidiaries which are classified as capital expenditures in
accordance with GAAP including all such expenditures associated with Capital
Lease Obligations.
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"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Closing Date" means August 28, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means the property in which Liens have been granted
pursuant to the Borrower Security Agreement, the Guarantor Security Agreement
and the Deeds of Trust whether such Liens are now existing or hereafter arise.
"Commercial L/C" has the meaning specified in Section 4.1.
"Commercial L/C Liabilities" means, at any time, the aggregate amount
available for drawing under all outstanding Commercial L/Cs and all unreimbursed
drawings under Commercial L/Cs.
"Commitment Fee Rate" means the per annum rate determined in accordance
with Section 5.2.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of the Commitments
of such Bank and the denominator of which is the aggregate amount of the
Commitments of all of the Banks. If all Commitments have terminated, the
"Commitment Percentage" of each Bank is the percentage equivalent of a fraction,
the numerator of which is the outstanding principal amount of the Loans of such
Bank and the denominator of which is the aggregate of the outstanding principal
amount of all Loans.
"Commitments" means, as to each Bank, such Bank's Revolving Commitment
and Term Commitment.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit "H" properly completed and executed by the chief financial officer of
Parent.
"Consolidated Net Income" has the meaning specified in Section 12.2.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 5.5 of a Eurodollar Account as a Eurodollar
Account from one Interest Period to the next Interest Period.
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"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 5.5 or Article 7 of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days or that
are past due by more than ninety (90) days but are being contested in good faith
by appropriate proceedings diligently pursued; (d) all Capital Lease Obligations
of such Person; (e) all Debt or other obligations of others Guaranteed by such
Person; (f) all obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been assumed by such
Person or are non-recourse to the credit of such Person; (g) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds, and similar
instruments; (h) all liabilities of such Person in respect of all unfunded
vested benefits under any Plan; (i) all obligations of such Person in respect of
mandatory redemption or mandatory dividend rights on capital stock (or other
equity); (j) all obligations of such Person, contingent or otherwise, for the
payment of money under any noncompete, consulting, performance based or similar
agreement or any other similar arrangements providing for the deferred payment
of the purchase price for an asset or assets; (k) all obligations of such Person
under any interest rate or currency swap, cap, collar or similar hedge
agreement; and (l) all other amounts which are required to be reflected as a
liability on the balance sheet of a Person in accordance with GAAP, excluding
trade accounts payable excluded from Debt pursuant to clause (c) of this
definition, accruals, deferred credits and loss contingencies.
"Deeds of Trust" has the meaning specified in subsection 8.1(g).
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, or any
other amount payable by the Borrower under any Loan Document which is not paid
when due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of two percent (2%) plus the Applicable Rate for Base Rate
Accounts as in effect from time to time (provided, that if such amount in
default is principal of a Loan subject to a Eurodollar Account and the due date
is a day other than the last day of an Interest Period therefor, the "Default
Rate" for such principal shall be, for the period from and including the due
date and to but excluding the last day of the Interest Period therefor, two
percent (2%) plus the interest rate for such Loan for such Interest Period as
provided in Section 5.1 hereof, and, thereafter, the rate provided for above in
this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" has the meaning specified in Section 12.2.
CREDIT AGREEMENT - PAGE 5
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"Eligible Assignee" means one or more commercial bank, savings and loan
association, savings bank, finance company, insurance company, pension fund,
mutual fund, or other financial institution (whether a corporation, partnership,
or other entity) which is qualified to make Loans hereunder and has a combined
capital and surplus of at least One Hundred Million Dollars ($100,000,000).
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses, (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order, or agreement with any Governmental Authority
or other Person, arising from environmental, health, or safety conditions or the
Release or threatened Release of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Eurodollar Account" means a portion of a Loan that bears interest at a
rate based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Account for any Interest
Period therefor, the rate per annum reported on Telerate page 3750 at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) two
Business Days prior to the first day of such Interest Period (or if not so
reported, then as determined by the Agent from another recognized source or
interbank quotation) for Dollar deposits in immediately available funds having a
term comparable to such Interest Period. Such rate shall be rounded to the next
higher 1/100th of 1%, or if Borrower has hedged its Eurodollar Rate Loans with
an interest rate swap with Agent, such rate shall be rounded five decimal places
as set forth in the 1991 ISDA Definitions published by the International Swaps
and Derivatives Association, Inc.
"Eurodollar Rate Margin" has the meaning specified in Section 5.2.
"Event of Default" has the meaning specified in Section 13.1.
CREDIT AGREEMENT - PAGE 6
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"Federal Funds Effective Rate" has the meaning specified in the
definition of Base Rate.
"First Union" means First Union National Bank in its individual
capacity and not as Agent.
"Fiscal Quarters" means the four (4) periods falling in each Fiscal
Year, each such period three calendar months in duration with the first such
period in any Fiscal Year beginning on the first day of October and the last
such period in any Fiscal Year ending on the last day of September.
"Fiscal Year" means twelve (12) month period beginning on the first day
of October and ending on the last day of September of the following year.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning. The amount of any Guarantee shall be equal to
the amount of the obligations so guaranteed or otherwise supported or, if not a
fixed and determined amount, the maximum amount so guaranteed.
"Guarantor Security Agreement" means the security agreement among the
Guarantors and the Agent for the benefit of itself and the Banks, in
substantially the form of Exhibit "E", as the same may be amended or otherwise
modified.
"Guarantors" means Tufco Technologies, Inc. and any Subsidiary of Tufco
Technologies, Inc. other than the Borrower including, without limitation, Tufco
Tech, Inc., Technologies I, Inc., TUFCO, Inc., TFCO, Inc. and Foremost
Manufacturing Company, Inc.
CREDIT AGREEMENT - PAGE 7
16
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"Indebtedness" has the meaning specified in Section 12.3.
"Indebtedness to EBITDA Ratio" means the ratio of Indebtedness to
EBITDA as determined and calculated in accordance with Section 12.3.
"Interest Period" means with respect to any Eurodollar Accounts, each
period commencing on the date such Account is established or Converted from a
Base Rate Account or the last day of the next preceding Interest Period with
respect to such Eurodollar Account, and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as the
Borrower may select as provided in Sections 5.5 or 6.1, except that each such
Interest Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or if such succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day); (b) any Interest Period in existence under a Loan which would otherwise
extend beyond the Termination Date applicable to such Loan shall end on the
Termination Date applicable to such Loan; (c) no more than six (6) Interest
Periods shall be in effect at the same time; (d) no Interest Period for any
Eurodollar Account shall have a duration of less than one (1) month and, if the
Interest Period would otherwise be a shorter period, the related Eurodollar
Account shall not be available hereunder; and (e) no Interest Period in respect
of Term Loans may extend beyond a principal repayment date thereof unless, after
giving effect thereto, the aggregate principal amount of the Term Loans, subject
to Eurodollar Accounts having Interest Periods that end after such principal
payment date shall be equal to or less than such Loans to be outstanding
hereunder after such principal payment date.
"Joinder Agreement" means an agreement which has been or will be
executed by a Subsidiary as required hereby adding it as a party to the Master
Guaranty and the Guarantor Security Agreement, in substantially the form of
Exhibit "F".
"Letters of Credit" means the Commercial L/Cs and the Bond L/C.
"Letter of Credit Liabilities" means the Commercial L/C Liabilities and
the Bond L/C Liabilities.
"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law, or otherwise.
CREDIT AGREEMENT - PAGE 8
17
"Loan Documents" means this Agreement, the Notes, the Borrower Security
Agreement, the Master Guaranty, the Guarantor Security Agreement, the Deeds of
Trust, the documents executed under the Bond Documents in connection with the
Bond L/C and all other promissory notes, security agreements, deeds of trust,
assignments, guaranties, letters of credit, interest rate protection agreements
and other instruments, agreements, and other documentation executed and
delivered pursuant to or in connection with this Agreement, as such instruments,
agreements, and other documentation may be amended or otherwise modified.
"Loans" means Revolving Loans and Term Loans.
"Master Guaranty" means the guaranty of the Guarantors in favor of the
Agent and the Banks, in substantially the form of Exhibit "C", as the same may
be amended or otherwise modified from time to time.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower and the Subsidiaries taken as a whole or (b) a
material adverse effect on the validity, perfection, priority, or ability of the
Agent to enforce the Agent's Lien on the Collateral or of the ability of the
Agent or any Bank to enforce a material provision of the Loan Documents. In
determining whether any individual event could reasonably be expected to result
in a Material Adverse Effect, notwithstanding that such event does not itself
have such effect, a Material Adverse Effect shall be deemed to have occurred if
the cumulative effect of such event and all other then existing events could
reasonably be expected to result in a Material Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the
maximum rate of nonusurious interest under applicable law that such Bank may
charge the Borrower. The Maximum Rate shall be calculated in a manner that takes
into account any and all fees, payments, and other charges contracted for,
charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to the Borrower at the time of such change in
the Maximum Rate. For purposes of determining the Maximum Rate under Texas law,
the applicable rate ceiling shall be the weekly ceiling described in, and
computed in accordance with, Article 5069, Vernon's Texas Civil Statutes, as
such statute may be amended from time to time.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"Notes" means the Revolving Notes and the Term Notes.
"Obligated Party" means the Guarantors or any other Person (exclusive
of the Borrower) who is or becomes party to any agreement that guarantees or
secures payment and performance of the Obligations or any part thereof.
CREDIT AGREEMENT - PAGE 9
18
"Obligation" means all obligations, indebtedness, and liabilities of
the Borrower to the Agent and the Banks, or any of them, arising pursuant to any
of the Loan Documents, or pursuant to any interest rate swap, interest rate
caps, interest rate collars, or other similar agreements entered into by Agent
or any Bank with the Borrower or any Guarantor enabling Borrower or a Guarantor
to fix or limit its interest expense, whether now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligation of the Borrower to repay the Loans, interest on the
Loans and all fees, costs, and expenses (including attorneys' fees and expenses)
provided for in the Loan Documents or such agreements enabling the Borrower to
fix or limit its interest expense.
"Outstanding Revolving Credit" means, at any time of determination, the
sum of (a) the aggregate amount of Revolving Loans then outstanding; plus (b)
the aggregate amount of Commercial L/C Liabilities (or when calculated with
respect to a Bank, including the Agent as a Bank, such Bank's participation or
other interest in such Commercial L/C Liabilities).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Parent" means Tufco Technologies, Inc.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit plan established or maintained by the
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Previous Senior Debt" means all the obligations, indebtedness and
liability of the Borrower and the Guarantors arising under or pursuant to Debt
described in Schedule 1.1(a).
"Principal Office" means the principal office of the Agent, located at
000 Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxxxx 00000.
"Prohibited Transaction" means any transaction set forth in Section 406
or 407 of ERISA or Section 4975(c)(1) of the Code for which there does not exist
a statutory or administrative exemption.
"Quarterly Payment Date" means the last day of February, May, August
and November of each year, the first of which shall be the first such day after
the date of this Agreement.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D)
CREDIT AGREEMENT - PAGE 10
19
or the adoption or making after such date of any interpretations, directives, or
requests applying to a class of banks including such Bank of or under any United
States federal or state, or any foreign, laws or regulations (whether or not
having the force of law) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof.
"Reimbursement Obligations" means the obligation of the Borrower to
reimburse the Agent for any demand for payment or drawing under a Letter of
Credit.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Required Banks" means any combination of Banks having, in the
aggregate, (a) sixty-six and two-thirds percent (66 2/3%) or more of the
Commitments, or (b) if the Term Commitments have terminated or have otherwise
been fulfilled, sixty-six and two-thirds percent (66 2/3%) or more of the
Revolving Commitments and the aggregate outstanding principal amount of the Term
Loan or (c) if all Commitments have terminated, sixty-six and two-thirds percent
(66 2/3%) or more of the outstanding principal amount of the Loans.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Reserve Requirement" means, for any Eurodollar Account for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against any category of liabilities which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined or any
category of extensions of credit or other assets which include Eurodollar
Accounts.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Bank on the signature pages hereto under the heading "Revolving Commitment"
or in the most recent Assignment and Acceptance executed by such Bank, as the
same may be reduced or terminated pursuant to Section 2.6 or 13.2. The
CREDIT AGREEMENT - PAGE 11
20
aggregate amount of the Revolving Commitments of all Banks equals Nine Million
Dollars ($9,000,000).
"Revolving Loans" means, as to any Bank, the advances made by such Bank
pursuant to Section 2.1.
"Revolving Notes" means the promissory notes provided for by Section
2.2 and all amendments or other modifications thereof.
"Revolving Termination Date" means June 1, 2001, such earlier date on
which the Revolving Commitments terminate as provided in this Agreement.
"Securities" has the meaning specified in Section 6.4(a)(iii).
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the
Parent or one or more of the Subsidiaries or by the Parent and one or more of
the Subsidiaries.
"Term Commitment" means, as to each Bank and as of any date of
determination, the obligation of such Bank to make advances of funds under
Section 3.1 in an aggregate principal amount up to but not exceeding the amount
set forth opposite the name of such Bank on the signature pages hereto under the
heading "Term Commitment" or in the most recent Assignment and Acceptance
executed by such Bank, as the same may be terminated pursuant to Section 13.2.
The aggregate amount of the Term Commitments of all Banks on the Closing Date
equals Ten Million Six Hundred Fifty Thousand Dollars ($10,650,000).
"Term Loan" means, as to any Bank, the advance made by such Bank
pursuant to Section 3.1.
"Term Loan Maturity Date" means August 1, 2005, or such earlier date on
which the Term Loan is due in its entirety as provided in this Agreement.
"Term Notes" means the promissory notes provided for by Section 3.2 and
all amendments and other modifications thereto.
"Termination Date" means, either the Term Loan Maturity Date or the
Revolving Termination Date.
CREDIT AGREEMENT - PAGE 12
21
"Type" means either type of Account (i.e., either a Base Rate Account
or Eurodollar Account).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 9.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in Section 9.2 hereof. To enable the ready and consistent
determination of compliance by the Parent with its obligations under this
Agreement, the Parent will not change the manner in which either the last day of
its Fiscal Year or the last days of the first three Fiscal Quarters of its
Fiscal Year is calculated. In the event any changes in accounting principles
required by GAAP or recommended by the Parent's certified public accountants and
implemented by the Parent occur and such changes result in a change in the
method of the calculation of financial covenants, standards, or terms under this
Agreement, then the Parent, the Agent, and the Banks agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such changes with the desired result that the criteria for
evaluating such covenants, standards, or terms shall be the same after such
changes as if such changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Agent, the Parent, and
the Banks, all financial covenants, standards, and terms in this Agreement shall
continue to be calculated or construed as if such changes had not occurred.
Section 1.4 Time of Day. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to Dallas, Texas time.
ARTICLE 2
Revolving Credit Facility
Section 2.1 Revolving Commitments. Subject to the terms and conditions
of this Agreement, each Bank severally agrees to make one or more advances to
the Borrower from time to time from and including the Closing Date to but
excluding the Revolving Termination Date in an
CREDIT AGREEMENT - PAGE 13
22
aggregate principal amount at any time outstanding up to but not exceeding the
amount of such Bank's Revolving Commitment as then in effect; provided, however,
that the Outstanding Revolving Credit applicable to a Bank shall not at any time
exceed such Bank's Revolving Commitment. Subject to the foregoing limitations,
and the other terms and provisions of this Agreement, the Borrower may borrow,
prepay, and reborrow hereunder the amount of the Revolving Commitments and may
establish Base Rate Accounts and Eurodollar Accounts thereunder and, until the
Revolving Termination Date, the Borrower may Continue Eurodollar Accounts
established under the Revolving Loans or Convert Accounts established under the
Revolving Loans of one Type into Accounts of the other Type. Accounts of each
Type under the Revolving Loan made by each Bank shall be established and
maintained at such Bank's Applicable Lending Office for Revolving Loans of such
Type.
Section 2.2 Notes. The Revolving Loans made by a Bank shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit "A" hereto, payable to the order of such Bank in a principal amount
equal to its Revolving Commitment and otherwise duly completed.
Section 2.3 Repayment of Revolving Loans. The Borrower shall pay to the
Agent for the account of the Banks the outstanding principal amount of all of
the Revolving Loans on the Revolving Termination Date.
Section 2.4 Use of Proceeds. The proceeds of the Revolving Loans shall
be used by the Borrower for general corporate purposes, including, without
limitation, to refinance Debt.
Section 2.5 Revolving Commitment Fee. The Borrower agrees to pay to the
Agent for the account of each Bank a commitment fee on the daily average unused
amount of such Bank's Revolving Commitment for the period from and including the
Closing Date to and including the Revolving Termination Date, at a rate equal to
the Commitment Fee Rate as determined in accordance with subsection 5.2(b). For
the purpose of calculating the commitment fee hereunder, the Revolving
Commitments shall be deemed utilized by all Outstanding Revolving Credit.
Accrued commitment fees under this Section 2.5 shall be payable in arrears on
each Quarterly Payment Date and on the Revolving Termination Date.
Section 2.6 Reduction or Termination of Revolving Commitments;
Extension of Revolving Commitments. The Borrower shall have the right to
terminate or reduce in part the unused portion of the Revolving Commitments at
any time and from time to time, provided that: (a) the Borrower shall give
notice of each such termination or reduction as provided in Section 6.3; and (b)
each partial reduction shall be in an aggregate amount at least equal to Two
Hundred Fifty Thousand ($250,000). The Revolving Commitments may not be
reinstated after they have been terminated or reduced. The Banks shall have no
obligation or commitment to extend the Revolving Termination Date, but during
January of each year that the Revolving Commitments are outstanding, at the
request of Borrower, the Banks will conduct a review of Parent and the
Subsidiaries to determine whether to extend the Revolving Termination Date to a
date one year from the then current Revolving Termination Date. The Banks'
determination as to the extension of the Revolving
CREDIT AGREEMENT - PAGE 14
23
Termination Date shall be made by all the Banks in their sole, independent
discretion and shall be effective only after an amendment to the definition of
Revolving Termination Date is executed by Borrower, Agent and all the Banks.
ARTICLE 3
Term Loans
Section 3.1 Term Commitments. Subject to the terms and conditions of
this Agreement, each Bank severally agrees to make one advance to Borrower on
the Closing Date in an aggregate principal amount not to exceed the amount of
such Bank's Term Commitment as then in effect. Subject to the foregoing
limitations and the other terms of this Agreement, the Borrower may establish
Base Rate Accounts or Eurodollar Accounts under the Term Loans and, until the
Term Loan Maturity Date, the Borrower may Continue Eurodollar Accounts
established under the Term Loans or Convert Accounts established under the Term
Loans of one Type into Accounts of another Type. Accounts of each Type
established under the Term Loan made by each Bank shall be made and maintained
at such Bank's Applicable Lending Office for Accounts of such Type.
Section 3.2 Notes. The Term Loan made by a Bank shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit "B",
payable to the order of such Bank in a principal amount equal to its Term
Commitment and otherwise duly completed.
Section 3.3 Repayment of Term Loans. The Borrower shall pay to the
Agent for the account of the Banks the Term Loans in twenty-eight (28)
installments as follows: (a) Twenty-Seven (27) installments in the principal
amount equal to Three Hundred Eighty Thousand Three Hundred Fifty-Eight Dollars
($380,358), each due and payable on each Quarterly Payment Date, beginning
November 30, 1998; and thereafter (b) one final installment in the aggregate
amount of all unpaid principal of the Term Loans, which installment is due and
payable on the Term Loan Maturity Date.
Section 3.4 Use of Proceeds. The proceeds of Term Loans shall be used
by the Borrower to repay the Previous Senior Debt and for other general
corporate purposes.
ARTICLE 4
Letters of Credit
Section 4.1 Commitment to Issue Commercial L/Cs. The Borrower may
utilize the Revolving Commitments by requesting that the Agent issue, and the
Agent, subject to the terms and conditions of this Agreement, shall issue,
letters of credit for Borrower's or one of the Subsidiaries' account (such
letters of credit being hereinafter referred to as the "Commercial L/Cs");
provided, however, (i) the aggregate amount of outstanding Commercial L/C
Liabilities shall not at any time
CREDIT AGREEMENT - PAGE 15
24
exceed Seven Hundred Fifty Thousand Dollars ($750,000) and (ii) the Outstanding
Revolving Credit applicable to a Bank shall not at any time exceed such Bank's
Commitment.
Section 4.2 Commitment to Issue Bond L/C. In addition to the Commercial
L/Cs that may be issued from time to time under Section 4.1, and subject to the
terms and conditions of this Agreement, the Agent agrees to issue, subject to
and upon such date of the receipt of all necessary consents and approvals from
parties other than the Borrower or the Banks and, in any event, no later than
December 31, 1998, and for the Borrower's account, a letter of credit in form
and substance satisfactory to the Agent and the Borrower for the benefit of
Norwest Bank Wisconsin, National Association in the face amount of One Million
Seven Hundred Fifty Thousand Dollars ($1,750,000).
Section 4.3 Participation By Banks. Upon the date of issue of a
Commercial L/C, the Agent shall be deemed, without further action by any party
hereto, to have sold to each other Bank, and each other Bank shall be deemed,
without further action by any party hereto, to have purchased from the Agent a
participation to the extent of such Bank's Commitment Percentage in such
Commercial L/C and the related Commercial L/C Liabilities. The Banks other than
Agent shall not participate in the Bond L/C.
Section 4.4 Request Procedure. The Borrower shall give the Agent at
least three (3) Business Days irrevocable prior notice (effective upon receipt)
specifying the date of each Commercial L/C and the nature of the transactions to
be supported thereby. The Agent shall notify each other Bank of the contents of
the Commercial L/C and of such Bank's Commitment Percentage of the amount of the
proposed Commercial L/C in accordance with Section 6.6. Each Commercial L/C
shall have an expiration date that does not extend beyond the earlier of (i) one
(1) year from the date of its issuance, provided that any Commercial L/C may
provide for the renewal of the expiration date thereof for additional one-year
periods (which shall in no event extend the expiration date thereof beyond the
date provided for in the next clause (ii)) or (ii) a date which is thirty (30)
days prior to the Revolving Termination Date. Each Commercial L/C shall be
payable in Dollars, must support a transaction entered into in the ordinary
course of the Borrower's business, must be satisfactory in form and substance to
the Agent, and shall be issued pursuant to such documentation as the Agent may
require, including, without limitation, the Agent's standard form letter of
credit request and reimbursement agreement; provided, that, in the event of any
conflict between the terms of such agreement and the other Loan Documents, the
terms of the other Loan Documents shall control.
Section 4.5 Letter of Credit Fees.
(a) The Borrower will pay to the Agent for its own account a
letter of credit fee on the amount available for drawings under the
Bond L/C, such letter of credit fee (i) to be paid in arrears on each
Quarterly Payment Date following the date the Bond L/C is issued until
the date of expiration or termination thereof (each such date herein a
"Payment Date") and (ii) to be calculated for the period from and
including one Payment Date (or with respect to the first such payment,
from and including the date of issuance of the Bond L/C) to and
CREDIT AGREEMENT - PAGE 16
25
excluding the earlier of the next Payment Date or the date of
expiration or termination of the Bond L/C at a rate equal to one
percent (1%) per annum.
(b) The Borrower will pay to the Agent for the account of each
Bank a Commercial L/C issuance fee (i) to be paid concurrently with the
issuance of each Commercial L/C, and (ii) to be in an amount equal to
the greater of (A) three-eighths of one percent (0.375%) of such Bank's
Commitment Percentage of the amount available for drawings under such
Commercial L/C or (B) such Bank's Commitment Percentage of Five Hundred
Dollars ($500).
(c) The Borrower will pay to the Agent for the account of each
Bank a Commercial L/C negotiation fee (i) to be paid within one
Business Day after any amount is paid by the Agent under any Commercial
L/C, and (ii) to be in an amount equal to one-fourth of one percent
(0.25%) of such Bank's Commitment Percentage of the amount paid by the
Agent under such Commercial L/C.
(d) After receiving any payment of any fees under this Section
4.5 attributable to any Commercial L/C, the Agent will promptly pay to
each Bank such fees then due such Bank.
Section 4.6 Funding of Drawings. Upon receipt from the beneficiary of
any Letter of Credit of any demand for payment or other drawing under such
Letter of Credit, the Agent shall promptly notify the Borrower and, if the
Letter of Credit being drawn on is a Commercial L/C, each Bank as to the amount
to be paid as a result of such demand or drawing and the respective payment
date. Not later than 12:30 p.m. on the applicable payment date, each Bank will
make available to the Agent, at the Principal Office, in immediately available
funds, an amount equal to such Bank's Commitment Percentage of the amount to be
paid as a result of a demand or drawing under a Commercial L/C even if the
conditions to a Loan under Article 8 hereof have not been satisfied.
Section 4.7 Reimbursements. The Borrower shall be irrevocably and
unconditionally obligated to immediately reimburse the Agent for any amounts
paid by the Agent upon any demand for payment or drawing under any Letter of
Credit, without (except as specifically set forth in this Section 4.7)
presentment, demand, protest, or other formalities of any kind. All payments on
the Reimbursement Obligations shall be made: (i) if no Default has occurred or
the Agent otherwise elects, and only to the extent the Outstanding Revolving
Credit is less than the Revolving Commitments, by Revolving Loans made
automatically as Base Rate Accounts in the amount equal to the lesser of such
Reimbursement Obligations or the difference of the Revolving Commitments minus
the Outstanding Revolving Credit or (ii) if a Default has occurred and the Agent
has not made the election under clause (i), by Borrower to the Agent at the
Principal Office for the account of the Agent in Dollars and in immediately
available funds, without setoff, deduction or counterclaim not later than 3:00
pm. on the date of the corresponding payment under such Letter of Credit;
provided, that in the case of this clause (ii) only, Agent has provided notice
to Borrower prior to 12:00 noon on such day that such payment is due. In the
event such notice is received after 12:00 noon on a
CREDIT AGREEMENT - PAGE 17
26
Business Day, such payment shall be due not later than 3:00 p.m. on the next
succeeding Business Day. The Agent will pay to each Bank such Bank's Commitment
Percentage of all amounts received from the Borrower for application in payment,
in whole or in part, to the Reimbursement Obligation in respect of any
Commercial L/C, but only to the extent such Bank has made payment to the Agent
in respect of such Commercial L/C pursuant to Section 4.6. All amounts received
from the Borrower for the application in payment, in whole or in part, to the
Reimbursement Obligation in respect of the Bond L/C shall be retained by Agent
for its own account.
Section 4.8 Reimbursement Obligations Absolute. The Reimbursement
Obligations of the Borrower under this Agreement shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance
with the terms of the Loan Documents under all circumstances whatsoever and the
Borrower hereby waives any defense to the payment of the Reimbursement
Obligations based on any circumstance whatsoever, including without limitation,
in either case, the following circumstances: (i) any lack of validity or
enforceability of any Letter of Credit or any other Loan Document; (ii) any
amendment or waiver of or any consent to or departure from any Loan Document;
(iii) the existence of any claim, set-off, counterclaim, defense or other rights
which the Borrower, any Obligated Party, or any other Person may have at any
time against any beneficiary of any Letter of Credit, the Agent, any Bank, or
any other Person, whether in connection with any Loan Document or any unrelated
transaction; (iv) any statement, draft, or other documentation presented under
any Letter of Credit proving to be forged, fraudulent, invalid, or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever; or (v) any other circumstance whatsoever, whether or not
similar to any of the foregoing; provided that Reimbursement Obligations with
respect to a Letter of Credit may be subject to avoidance by the Borrower if the
Borrower proves in a final nonappealable judgment that it was damaged and that
such damage arose directly from the Agent's willful misconduct or gross
negligence in determining whether the documentation presented under the Letter
of Credit in question complied with the terms thereof.
Section 4.9 Issuer Responsibility. The Borrower assumes all risks of
the acts or omissions of any beneficiary of any Letter of Credit with respect to
its use of such Letter of Credit. Neither the Agent, any Bank nor any of their
respective officers or directors shall have any responsibility or liability to
the Borrower or any other Person for: (a) the failure of any draft to bear any
reference or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents apart from
drafts as required by the terms of any Letter of Credit, or the failure of any
Person to note the amount of any instrument on any Letter of Credit, each of
which requirements, if contained in any Letter of Credit itself, it is agreed
may be waived by the Agent; (b) errors, omissions, interruptions, or delays in
transmission or delivery of any messages; (c) the validity, sufficiency, or
genuineness of any draft or other document, or any endorsement(s) thereon, even
if any such draft, document or endorsement should in fact prove to be in any and
all respects invalid, insufficient, fraudulent, or forged or any statement
therein is untrue or inaccurate in any respect; or (d) any other circumstance
whatsoever in making or failing to make any payment under a Letter of Credit.
Notwithstanding the forgoing, the Borrower shall have a claim against the Agent,
and the Agent shall be liable to the Borrower, to the extent of any direct, but
not indirect,
CREDIT AGREEMENT - PAGE 18
27
consequential or punitive, damages suffered by the Borrower which the Borrower
proves in a final nonappealable judgment were caused by (i) the Agent's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit complied with the terms thereof or (ii) the Agent's willful
failure to pay under any Letter of Credit after presentation to it of
documentation strictly complying with the terms and conditions of such Letter of
Credit. The Agent may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
ARTICLE 5
Interest and Fees
Section 5.1 Interest Rate. Subject to Section 15.12, the Borrower shall
pay to the Agent for the account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank for the period commencing on the date of
such Loan to but excluding the date such Loan is due, at a fluctuating rate per
annum equal to the Applicable Rate. The term "Applicable Rate" means (i) during
the period that such Loans or portions thereof are subject to a Base Rate
Account, the Base Rate minus the Base Margin and (ii) during the period that
such Loans or portions thereof are subject to a Eurodollar Account, the Adjusted
Eurodollar Rate plus the Eurodollar Rate Margin.
Section 5.2 Determinations of Margins and Fees. The margins identified
in Section 5.1 and the fees payable under Section 2.5 shall be defined and
determined as follows:
(a) "Base Margin" shall mean (i) during the period commencing
on the Closing Date and ending on but not including the first
Adjustment Date (as defined below), three-fourths of one percent
(0.75%) per annum and (ii) during each period, from and including one
Adjustment Date to but excluding the next Adjustment Date (herein a
"Calculation Period"), the percent per annum set forth in the table
below in this Section 5.2 under the heading "Base Margin" opposite the
Indebtedness to EBITDA Ratio which corresponds to the Indebtedness to
EBITDA Ratio set forth in, and as calculated in accordance with, the
applicable Compliance Certificate.
(b) "Commitment Fee Rate" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date, one fifth of one percent (0.20%) per annum and
(ii) during each Calculation Period, the percent per annum set forth in
the table below under the heading "Commitment Fee" opposite the
Indebtedness to EBITDA Ratio which corresponds to the Indebtedness to
EBITDA Ratio set forth in, and as calculated in accordance with, the
applicable Compliance Certificate.
(c) "Eurodollar Rate Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date, one percent (1.00%) per annum and (ii) during
each Calculation Period, the percent per annum set forth in the table
below under the heading Eurodollar Margin opposite the Indebtedness to
EBITDA
CREDIT AGREEMENT - PAGE 19
28
Ratio which corresponds to the Indebtedness to EBITDA Ratio set forth
in, and as calculated in accordance with, the applicable Compliance
Certificate.
=========================================================================================================
Indebtedness to EBITDA Base Margin Commitment Fee Eurodollar Margin
---------------------------------------------------------------------------------------------------------
Greater than or equal to 2.50 0.25% 0.25% 1.50%
---------------------------------------------------------------------------------------------------------
Greater than or equal to 1.50 but less than 2.50 0.50% 0.25% 1.25%
---------------------------------------------------------------------------------------------------------
Less than 1.50 0.75% 0.20% 1.00%
---------------------------------------------------------------------------------------------------------
Upon delivery of the Compliance Certificate pursuant to subsection 10.1(c) in
connection with the financial statements of Parent required to be delivered
pursuant to Section 10.1(b) at the end of each Fiscal Quarter commencing with
such Compliance Certificate delivered with respect to the Fiscal Quarter ending
on December 31, 1998, the Base Margin, the Eurodollar Rate Margin (for Interest
Periods commencing after the applicable Adjustment Date) and, the Commitment Fee
Rate shall automatically be adjusted in accordance with the Indebtedness to
EBITDA Ratio set forth therein and the table set forth above, such automatic
adjustment to take effect as of the first Business Day after the receipt by the
Agent of the related Compliance Certificate pursuant to Section 10.1(c) (each
such Business Day when such margins or fees change pursuant to this sentence or
the next following sentence, herein an "Adjustment Date"). If the Borrower fails
to deliver such Compliance Certificate which so sets forth the Indebtedness to
EBITDA Ratio within the period of time required by subsection 10.1(c): (i) the
Base Margin shall automatically be adjusted to one-quarter of one percent
(0.25%) per annum; (ii) the Eurodollar Rate Margin (for Interest Periods
commencing after the applicable Adjustment Date) shall automatically be adjusted
to one and one-half percent (1.50%) per annum; and (iii) the Commitment Fee Rate
shall automatically be adjusted to one-quarter of one percent (0.25%), such
automatic adjustments to take effect as of the first Business Day after the last
day on which the Borrower was required to deliver the applicable Compliance
Certificate in accordance with Section 10.1(c) and to remain in effect until
subsequently adjusted in accordance herewith upon the delivery of a Compliance
Certificate.
Section 5.3 Payment Dates. Accrued interest on the Loans shall be due
and payable as follows: (i) in the case of Loans subject to Base Rate Accounts,
on each Quarterly Payment Date, beginning November 30, 1998, and on the
applicable Termination Date; and (ii) in the case of Loans subject to Eurodollar
Accounts and with respect to each such Account, on the last day of such Interest
Period, the applicable Termination Date and, if such Interest Period is six (6)
months long, on the date ninety (90) days from the start of such Interest
Period.
Section 5.4 Default Interest. Notwithstanding the foregoing, the
Borrower will pay to the Agent for the account of each Bank interest at the
applicable Default Rate on any principal of any Loan made by such Bank, and (to
the fullest extent permitted by law) any other amount payable by the Borrower
under any Loan Document to or for the account of the Agent or such Bank, that is
not paid in full within 5 days of the date due (whether at stated maturity, by
acceleration, or otherwise), for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
CREDIT AGREEMENT - PAGE 20
29
Section 5.5 Conversions and Continuations of Accounts. Subject to
Section 6.2, the Borrower shall have the right from time to time to Convert all
or part of any Base Rate Account in existence under a Loan into a Eurodollar
Account under the same Loan or to Continue Eurodollar Accounts in existence
under a Loan as Eurodollar Accounts under the same Loan, provided that: (a) the
Borrower shall give the Agent notice of each such Conversion or Continuation as
provided in Section 6.3; (b) a Eurodollar Account may only be Converted on the
last day of the Interest Period therefor; and (c) except for Conversions into
Base Rate Accounts, no Conversions or Continuations shall be made while a
Default has occurred and is continuing.
Section 5.6 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Eurodollar Accounts on the basis of a year of 360 days and the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which payable unless such calculation would
result in a usurious rate, in which case interest shall be calculated on the
basis of a year of 365 or 366 days, as the case may be; (ii) with respect to
Base Rate Accounts (A) if based on the Prime Rate, on the basis of a year of 365
or 366 days, as the case may be and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable or (B) if based on the Federal Funds Effective Rate on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable unless in
the case of clauses (i) or (ii) (B) such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
ARTICLE 6
Administrative Matters
Section 6.1 Borrowing Procedure. The Borrower shall give the Agent, and
the Agent will give the Banks, notice of each borrowing under any Commitment in
accordance with Section 6.3. Not later than 2:00 p.m. on the date specified for
each borrowing under the applicable Commitment each Bank will make available to
the Agent the amount of the Loan to be made by it on such date, at the Principal
Office, in immediately available funds, for the account of the Borrower. The
amount so received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by (a) depositing the same, in
immediately available funds, in an account of the Borrower (designated by the
Borrower) maintained with the Agent at the Principal Office or (b) wire
transferring such funds to a Person or Persons designated by the Borrower in
writing.
Section 6.2 Minimum Amounts. Except for prepayments pursuant to Article
7, each borrowing under the Revolving Commitment and each prepayment of
principal of a Loan shall be in an amount at least equal to Two Hundred Fifty
Thousand Dollars ($250,000) or, in each case, any larger amounts in increments
of Fifty Thousand Dollars ($50,000). Except for Conversions pursuant to Article
7, each Eurodollar Account applicable to a Loan shall be in a minimum principal
CREDIT AGREEMENT - PAGE 21
30
amount of Two Hundred Fifty Thousand Dollars ($250,000) or any larger amounts in
increments of Fifty Thousand Dollars ($50,000).
Section 6.3 Certain Notices. Notices by the Borrower to the Agent of
terminations or reductions of Revolving Commitments, of borrowings and
prepayments of Loans, and of Conversions and Continuations of Accounts shall be
irrevocable and shall be effective only if received by the Agent not later than
12:30 p.m. (a) on the Business Day of the borrowing, prepayment or repayment of
Loans subject to Base Rate Accounts or of the Conversion into Base Rate Accounts
and (b) with respect to any other repayments, terminations, reductions,
borrowings, Conversions, Continuations, or prepayments, on the Business Day
which is the number of Business Days prior to the day of the relevant action
specified below:
===================================================================================================================
Action Number of Business Days Prior
to Action
===================================================================================================================
Termination or reduction of Commitments, prepayment of Loans 5
-------------------------------------------------------------------------------------------------------------------
Borrowing of Loans subject to Eurodollar Accounts, Conversions into or
Continuations as Eurodollar Accounts 3
===================================================================================================================
Any notices of the type described in this Section 6.3 which are received by the
Agent after 12:30 p.m. on a Business Day shall be deemed to be received and
shall be effective on the next Business Day. Each such notice of termination or
reduction of the Revolving Commitments shall specify the amount of the Revolving
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation, or prepayment shall: (a) specify the Loans to be
borrowed or prepaid or the Accounts to be Converted or Continued; (b) the amount
(subject to Section 6.2 hereof) to be borrowed, Converted, Continued, or
prepaid; (c) in the case of a Conversion, the Type of Account to result from
such Conversion; (d) in the case of a borrowing the Type of Account or Accounts
to be applicable to such borrowing and the amounts thereof; (e) in the event a
Eurodollar Account is selected, the duration of the Interest Period therefor;
and (f) the date of borrowing, Conversion, Continuation, or prepayment (which
shall be a Business Day). Each notice of borrowing, Conversion, continuation, or
prepayment shall be substantially in the form of Exhibit "I" hereto. The Agent
shall notify the Banks of the contents of each such notice on the date of the
Agent's receipt of the same or, if received on or after 12:30 p.m. on a Business
Day, on the next Business Day. In the event the Borrower fails to select the
Type of Account applicable to a Loan, or the duration of any Interest Period for
any Eurodollar Account, within the time period and otherwise as provided in this
Section 6.3, such Account (if outstanding as a Eurodollar Account) will be
automatically Converted into a Base Rate Account on the last day of the
preceding Interest Period for such Account or (if outstanding as a Base Rate
Account) will remain as, or (if not then outstanding) will be made as, a Base
Rate Account. The Borrower may not borrow any Loans subject to a Eurodollar
Account, Convert any Base Rate Accounts into Eurodollar Accounts, or Continue
any Eurodollar Account as a Eurodollar Account if the Applicable Rate for such
Eurodollar Accounts would exceed the Maximum Rate or if a Default exists.
CREDIT AGREEMENT - PAGE 22
31
Section 6.4 Prepayments.
(a) Mandatory.
(i) Prepayments from Asset Dispositions. Borrower
shall, within five (5) days of receipt of Net Proceeds related
to an Asset Disposition prepay the Term Loans as of such date
in an amount equal to the Net Proceeds of such Asset
Disposition. Notwithstanding the foregoing, Borrower or its
Subsidiary, as applicable, may retain proceeds otherwise
required to be delivered in accordance with the foregoing from
an Asset Disposition if no Default exists and if the Person
disposing of the asset in question reasonably expects the
proceeds of such Asset Disposition to be reinvested in
productive assets then used or useable in its business or, in
case of proceeds received due to loss, damage, destruction or
condemnation, to be used for rebuilding, repairing or
replacing assets, in each case within ninety (90) days after
receipt of such proceeds. For purposes of this subsection 6.4
(a)(ii) the following terms shall have the following meanings:
"Asset Disposition" means the disposition
whether by sale, lease, transfer, loss, damage,
destruction, condemnation or otherwise of any assets
of Parent or any of the Subsidiaries other than (i)
sales of inventory in the ordinary course of business
and (ii) sales of assets permitted under either
clause (b) or (c) of Section 11.8.
"Net Proceeds" means cash proceeds
(including casualty insurance proceeds paid with
respect to damage to property) received by Parent or
any of the Subsidiaries from any Asset Disposition
(including payments under notes or other debt
securities received in connection with any Asset
Disposition and insurance proceeds and awards of
condemnation), net of (a) the costs of such sale,
lease, transfer or other disposition (including
professional fees and expenses and taxes attributable
to such sale, lease or transfer which are actually
expected to be paid) and (b) amounts applied to
repayment of Debt (other than the Obligations)
secured by a Lien on the asset disposed.
(ii) Prepayment from Securities Offerings. In the
event that Parent or any Subsidiary issues any Securities (as
defined below), no later than the third (3rd) Business Day
following the date of receipt of the proceeds from any such
issuance, Borrower shall prepay the Term Loans in an amount
equal to fifty percent (50%) of the proceeds of such issuance,
net of underwriting discounts and commissions and other
reasonable costs associated therewith. "Securities" means any
stock, shares, options, warrants, voting trust certificates,
or other instruments evidencing an ownership interest or a
right to acquire an ownership interest in a Person or any
bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured.
CREDIT AGREEMENT - PAGE 23
32
This clause (ii) shall not apply where an issuance of
Securities is permitted under either (i) or (ii) of Section
11.6.
Each prepayment under subsections 6.4(a)(i) and (ii) shall be
accompanied with accrued and unpaid interest on the amount prepaid to
the date of prepayment and any amounts payable under Section 7.5 and
shall be applied to the installments of principal due under the Term
Loans in the inverse order of maturity.
(b) Optional. Subject to Section 6.2 and the provisions of
this clause (b), the Borrower may, at any time and from time to time
without premium or penalty upon prior notice to the Agent as specified
in Section 6.3, prepay or repay any Loan in full or in part. Any
optional prepayment of the Term Loans shall be accompanied with accrued
interest on the amount prepaid to the date of prepayment and any
partial prepayments thereof shall be applied to the principal
installments due in the inverse order of maturity. Loans subject to a
Eurodollar Account may be prepaid or repaid only on the last day of the
Interest Period applicable thereto unless (i) the Borrower pays to the
Agent for the account of the applicable Banks any amounts due under
Section 7.5 as a result of such prepayment or repayment or (ii) after
giving effect to such prepayment or repayment the aggregate principal
amount of the Eurodollar Accounts applicable to the Loan being prepaid
or repaid having Interest Periods that end after such payment date
shall be equal to or less than the principal amount of such Loan after
such prepayment or repayment.
(c) Interest Rate Protection Agreements. Any prepayment of the
Loans shall not affect Borrower's obligations under the interest rate
protection agreements entered into with Agent or any Bank, if any,
pursuant to Section 10.12.
Section 6.5 Method of Payment. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by the
Borrower or any Obligated Party under the Loan Documents shall be made to the
Agent at the Principal Office for the account of each Bank's Applicable Lending
Office in Dollars and in immediately available funds, without setoff, deduction,
or counterclaim, not later than 1:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower and
each Obligated Party shall, at the time of making each such payment, specify to
the Agent the sums payable under the Loan Documents to which such payment is to
be applied (and in the event that the Borrower fails to so specify, or if an
Event of Default has occurred and is continuing, the Agent may apply such
payment and any proceeds of any Collateral to the Obligations in such order and
manner as the Required Banks may elect in their sole discretion, subject to
Section 6.6 hereof). Each payment received by the Agent under any Loan Document
for the account of a Bank shall be paid to such Bank by 3:00 p.m. on the date
the payment is deemed made to the Agent in immediately available funds, for the
account of such Bank's Applicable Lending Office. Whenever any payment under any
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of the payment of
interest and commitment fee, as the case may be.
CREDIT AGREEMENT - PAGE 24
33
Section 6.6 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each Loan shall be made by the Banks, each payment of commitment
fees under Section 2.5 shall be made for the account of the Banks, and each
termination or reduction of the Revolving Commitments shall be applied to the
Revolving Commitments of the Banks, pro rata according to their respective
Commitment Percentages; (b) the making, Conversion, and Continuation of Accounts
of a particular Type (other than Conversions provided for by Section 7.4) shall
be made pro rata among the Banks holding Accounts of such Type according to
their respective Commitment Percentages; (c) each payment and prepayment of
principal of or interest on Loans by the Borrower shall be made to the Agent for
the account of the Agent or the Banks holding such Loans pro rata in accordance
with the respective unpaid principal amounts of such Loans or participation
interests held by the Agent or such Banks; (d) proceeds of Collateral shall be
shared by each of the Agent and the Banks pro rata in accordance with the
respective unpaid principal amounts of and interest on the Obligations then due
the Agent and each such Bank and the respective aggregate amount available for
drawing under all outstanding Letters of Credit which such Bank is obligated to
fund; and (e) the Banks (other than the Agent) shall purchase from the Agent
participations in the Commercial L/Cs to the extent of their respective
Commitment Percentages. If at any time payment, in whole or in part, of any
amount distributed by the Agent hereunder is rescinded or must otherwise be
restored or returned by Agent as a preference, fraudulent conveyance, or
otherwise under any bankruptcy, insolvency, or similar law, then each Person
receiving any portion of such amount agrees, upon demand, to return the portion
of such amount it has received to the Agent.
Section 6.7 Sharing of Payments. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through the Agent) through the exercise of any right of
set-off, banker's lien, counterclaim, or similar right, or otherwise, it shall
promptly purchase from the other Banks participations in the Obligations held by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment pro rata in accordance with the unpaid principal of and interest
on the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any Bank so
purchasing a participation in the Obligations held by the other Banks may
exercise all rights of set-off, banker's lien, counterclaim, or similar rights
with respect to such participation as fully as if such Bank were a direct holder
of Obligations in the amount of such participation. Nothing contained herein
shall require any Bank to exercise any such right or shall affect the right of
any Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower.
Section 6.8 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (the "Payor") prior to the date on
which such Bank is to make payment to the Agent hereunder or the Borrower is to
make a payment to the Agent for the account of one or more of the Banks, as the
case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made
CREDIT AGREEMENT - PAGE 25
34
and may, in reliance upon such assumption (but shall not be required to), make
the amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Agent, (a) the recipient
of such payment shall, on demand, pay to the Agent the amount made available to
it together with interest thereon in respect of the period commencing on the
date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Federal Funds Effective
Rate for such period and (b) the Agent shall be entitled to offset against any
and all sums to be paid to such recipient, the amount calculated in accordance
with the foregoing clause (a).
Section 6.9 Withholding Taxes. All payments by the Borrower of amounts
payable under any Loan Document shall be payable without deduction for or on
account of any present or future taxes, duties, or other charges levied or
imposed by the United States of America or by the government of any jurisdiction
outside the United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction with
respect to any such payments (but excluding any tax imposed on or measured by
the net income or profit of a Bank pursuant to the laws of the jurisdiction in
which it is organized or in which the principal office or Applicable Lending
Office of such Bank is located or any subdivision thereof or therein). If any
such taxes, duties, or other charges are so levied or imposed, the Borrower will
make additional payments in such amounts so that every net payment of amounts
payable by it under any Loan Document, after withholding or deduction for or on
account of any such present or future taxes, duties, or other charges, will not
be less than the amount provided for herein or therein, provided that the
Borrower may withhold to the extent required by law and shall have no obligation
to pay such additional amounts to any Bank to the extent that such taxes,
duties, or other charges are levied or imposed by reason of the failure or
inability of such Bank to comply with the provisions of Section 6.10. The
Borrower shall furnish promptly to the Agent for distribution to each affected
Bank, as the case may be, official receipts evidencing any such withholding or
reduction.
Section 6.10 Withholding Tax Exemption. Each Bank that is not organized
under the laws of the United States of America or a state thereof agrees that it
will deliver to the Borrower and the Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224 (or a successor form),
certifying in either case that such Bank is entitled to receive payments from
the Borrower under any Loan Document without deduction or withholding of any
United States federal income taxes. Each Bank which so delivers a Form 1001 or
4224 further undertakes to deliver to the Borrower and the Agent two (2)
additional copies of such form (or a successor form) on or before the date such
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Agent, in each case certifying that such Bank is entitled to receive
payments from the Borrower under any Loan Document without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law, or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form
CREDIT AGREEMENT - PAGE 26
35
with respect to it and such Bank advises the Borrower and the Agent that it is
not capable of receiving such payments without any deduction or withholding of
United States federal income tax.
Section 6.11 Participation Obligations Absolute; Failure to Fund
Participation. The obligations of a Bank to fund its participation in the
Commercial L/Cs in accordance with the terms hereof shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of the Loan Documents under all circumstances whatsoever, including
without limitation, the following circumstances: (a) any lack of validity of any
Loan Document; (b) the occurrence of any Default; (c) the existence of any
claim, set-off, counterclaim, defenses or other rights which such Bank, the
Borrower, any Obligated Party, or any other Person may have; (d) the occurrence
of any event that has or could reasonably be expected to have a Material Adverse
Effect; (e) the failure of any condition to a Loan or the issuance of a Letter
of Credit under Article 8 hereof to be satisfied; or (f) any other circumstance
whatsoever, whether or not similar to any of the foregoing; provided that, the
obligations of a Bank to fund its participation in a Commercial L/C may be
subject to avoidance by a Bank if such Bank proves in a final nonappealable
judgment that it was damaged and that such damage arose directly from the
Agent's willful misconduct or gross negligence in determining whether (i) the
conditions set forth in Article 8 hereof to the issuance of the Commercial L/C
or the making of the Loan in question were satisfied at the time of such
issuance or Loan or (ii) with respect to a Commercial L/C, the documentation
presented under the Commercial L/C in question complied with the terms thereof.
If a Bank fails to fund its participation in a Commercial L/C as required
hereby, such Bank shall, subject to the foregoing proviso, remain obligated to
pay to the Agent the amount it failed to fund on demand together with interest
thereon in respect of the period commencing on the date such amount should have
been funded until the date the amount was actually funded to the Agent at a rate
per annum equal to the Federal Funds Effective Rate for such period and the
Agent shall be entitled to offset against any and all sums to be paid to such
Bank hereunder the amount due the Agent under this sentence.
ARTICLE 7
Yield Protection and Illegality
Section 7.1 Additional Costs.
(a) The Borrower shall pay directly to each Bank from time to
time such amounts as such Bank may determine to be necessary to
compensate it for any reasonable costs incurred by such Bank which such
Bank determines are directly attributable to its making or maintaining
of any Loans subject to Eurodollar Accounts hereunder or its obligation
to make any of such Loans hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any such Loans or such
obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Notes in
respect of any of such Loans (other than franchise taxes and
taxes imposed on the overall net income of such Bank or its
CREDIT AGREEMENT - PAGE 27
36
Applicable Lending Office for any of such Loans by the United
States of America or the jurisdiction in which such Bank has
its Principal Office or such Applicable Lending Office);
(ii) imposes or modifies any reserve (other than the
Reserve Requirement), special deposit, minimum capital,
capital ratio, or similar requirement relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Bank (including
any of such Loans or any deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof); or
(iii) imposes any other condition affecting this
Agreement or the Notes or any of such extensions of credit or
liabilities or commitments and which results in additional
cost or expense to the Bank.
Each Bank will notify the Borrower (with a copy to the Agent) of any
event occurring after the date of this Agreement which will entitle
such Bank to compensation pursuant to this subsection 7.1(a) as
promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and will designate a different
Applicable Lending Office for the Loans affected by such event if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Bank, violate
any law, rule, or regulation or be in any way disadvantageous to such
Bank. Each Bank will furnish the Borrower with a certificate setting
forth the basis and the amount of each request of such Bank for
compensation under this subsection 7.1(a). If any Bank requests
compensation from the Borrower under this subsection 7.1(a), the
Borrower may, by notice to such Bank (with a copy to the Agent) suspend
the obligation of such Bank to make Loans subject to Eurodollar
Accounts or Continue Eurodollar Accounts as Eurodollar Accounts or
Convert Base Rate Accounts into Eurodollar Accounts until the
Regulatory Change giving rise to such request ceases to be in effect
(in which case the provisions of Section 7.4 hereof shall be applicable
with respect to such Eurodollar Accounts).
(b) Without limiting the effect of the foregoing provisions of
this Section 7.1, in the event that, by reason of any Regulatory
Change, any Bank either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of such Bank which includes
deposits by reference to which the interest rate on the Loans subject
to Eurodollar Accounts is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Bank which
includes Loans subject to Eurodollar Accounts or (ii) becomes subject
to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if such Bank so elects by notice to the
Borrower (with a copy to the Agent), the obligation of such Bank to
make Loans subject to Eurodollar Accounts or Continue Eurodollar
Accounts as Eurodollar Accounts or Convert Base Rate Accounts into
Eurodollar Accounts hereunder shall be suspended until the Regulatory
Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 7.4 hereof shall be applicable).
CREDIT AGREEMENT - PAGE 28
37
(c) Determinations and allocations by any Bank for purposes of
this Section 7.1 of the effect of any Regulatory Change on its costs of
maintaining its obligation to make Loans or of making or maintaining
Loans or on amounts receivable by it in respect of the Loans, and of
the additional amounts required to compensate such Bank in respect of
any Additional Costs, shall, absent manifest error, be conclusive,
provided that such determinations and allocations are made on a
reasonable basis.
Section 7.2 Limitation on Eurodollar Accounts. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Accounts under a
Loan for any Interest Period therefor:
(a) The Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1
hereof are not being provided in the relative amounts or for the
relative maturities for purposes of determining the rate of interest
for the Loans subject to such Eurodollar Accounts as provided in this
Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest
referred to in the definition of "Adjusted Eurodollar Rate" in Section
1.1 hereof on the basis of which the rate of interest for such Loans
for such Interest Period is to be determined do not accurately reflect
the cost to the Banks of making or maintaining such Loans for such
Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Eurodollar Account and the relevant amounts or periods, and so long as
such condition remains in effect, the Banks shall be under no obligation to make
additional Loans subject to a Eurodollar Account or to Convert Base Rate
Accounts into Eurodollar Accounts and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Accounts,
either prepay the Loans subject to such Eurodollar Accounts or Convert such
Eurodollar Accounts into Base Rate Accounts in accordance with the terms of this
Agreement. Determinations made under this Section 7.2 shall be made on a
reasonable basis.
Section 7.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Loans subject to a Eurodollar
Account hereunder or (b) maintain Loans subject to a Eurodollar Account
hereunder, then such Bank shall promptly notify the Borrower (with a copy to the
Agent) thereof and such Bank's obligation to make or maintain Loans subject to a
Eurodollar Account and to Convert Base Rate Accounts into Eurodollar Accounts
hereunder shall be suspended until such time as such Bank may again make and
maintain Loans subject to a Eurodollar Account (in which case the provisions of
Section 7.4 hereof shall be applicable).
Section 7.4 Treatment of Affected Loans. If the Accounts applicable to
a Loan of any Bank (hereinafter called "Affected Accounts") are to be Converted
pursuant to Section 7.1 or 7.3 hereof, the Bank's Affected Accounts shall be
automatically Converted into Base Rate Accounts on
CREDIT AGREEMENT - PAGE 29
38
the last day(s) of the then current Interest Period(s) (or, in the case of a
Conversion required by subsection 7.1(b) or Section 7.3 hereof, on such earlier
date as such Bank may specify to the Borrower with a copy to the Agent) and,
unless and until such Bank gives notice as provided below that the circumstances
specified in Section 7.1 or 7.3 hereof which gave rise to such Conversion no
longer exist: (a) to the extent that such Bank's Affected Accounts have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Accounts shall be applied instead to its Base
Rate Accounts; and (b) all Accounts which would otherwise be established or
Continued by such Bank as Eurodollar Accounts shall be made as or Converted into
Base Rate Accounts and all Accounts of such Bank which would otherwise be
Converted into Eurodollar Accounts shall be Converted instead into (or shall
remain as) Base Rate Accounts. If such Bank gives notice to the Borrower (with a
copy to the Agent) that the circumstances specified in Section 7.1 or 7.3 hereof
which gave rise to the Conversion of such Bank's Affected Accounts pursuant to
this Section 7.4 no longer exist (which such Bank agrees to do promptly upon
such circumstances ceasing to exist) at a time when Eurodollar Accounts are
outstanding, such Bank's Base Rate Accounts shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Accounts to the extent necessary so that, after giving effect
thereto, all Accounts held by the Banks holding Eurodollar Accounts and by such
Bank are held pro rata (as to principal amounts, Types, and Interest Periods) in
accordance with their respective Commitment Percentages.
Section 7.5 Compensation. The Borrower shall pay to the Agent for the
account of each Bank, upon the request of such Bank, such amount or amounts as
shall be sufficient (in the reasonable opinion of such Bank) to compensate it
for any loss, cost, or expense incurred by it as a result of:
(a) Any payment or prepayment of a Loan subject to a
Eurodollar Account or Conversion of a Eurodollar Account for any reason
(including, without limitation, the acceleration of the outstanding
Loans pursuant to subsection 13.2(a)) on a date other than the last day
of an Interest Period for the applicable Eurodollar Account; or
(b) Any failure by the Borrower for any reason (including,
without limitation, the failure of any conditions precedent specified
in Article 8 to be satisfied) to borrow or prepay a Loan subject to a
Eurodollar Account, or Convert a Base Rate Account to a Eurodollar
Account on the date for such borrowing, Conversion, or prepayment
specified in the relevant notice of borrowing, prepayment, or
Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Account (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Account which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Account
provided for herein over (ii) the interest component of the amount such Bank
would have bid in the European interbank market for Dollar deposits of leading
CREDIT AGREEMENT - PAGE 30
39
banks and amounts comparable to such principal amount and with maturities
comparable to such period.
Section 7.6 Capital Adequacy. If after the date hereof, any Bank shall
have determined that any Regulatory Change has or would have the effect of
reducing the rate of return on such Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated hereby
to a level below that which such Bank (or its parent) could have achieved but
for such adoption, implementation, change, or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within ten
(10) Business Days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its parent) for such reduction. A certificate of such
Bank claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive, provided that
the determination thereof is made on a reasonable basis. In determining such
amount or amounts, such Bank may use any reasonable averaging and attribution
methods. With respect to each demand by a Bank under this Section 7.6, no Bank
shall have the right to demand compensation for amounts attributable to any
reduction in such Bank's rate of return occurring at any time before the date
which is six (6) months prior to the date the Bank gives such demand for
compensation to Borrower.
ARTICLE 8
Conditions Precedent
Section 8.1 Initial Loan. The obligation of each Bank to make its
initial Loan or to issue the Bond L/C or the initial Commercial L/C is subject
to the condition precedent that the Agent shall have received on or before the
day of any such Loan or Letter of Credit all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance satisfactory
to the Agent:
(a) Resolutions. Resolutions of the Board of Directors of each
Guarantor certified by its Secretary or an Assistant Secretary, which
authorize its execution, delivery, and performance of the Loan
Documents to which it is or is to be a party. Resolutions of the Board
of Directors of Tufco Tech, Inc., as managing general partner of the
Borrower, certified by its Secretary or an Assistant Secretary, which
authorize its execution, delivery and performance, on behalf of the
Borrower, of the Loan Documents to which the Borrower is, or is to be,
a party.
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of each Guarantor
certifying the name of each of such Guarantor's officers (i) who are
authorized to sign the Loan Documents on behalf of such party
(including the certificates contemplated herein) together with specimen
signatures of each such officers and (ii) who will, until replaced by
other officers duly authorized for that
CREDIT AGREEMENT - PAGE 31
40
purpose, act as its representative for the purposes of signing
documentation and giving notices and other communications in connection
with the Loan Documents.
(c) Articles of Incorporation; Certificate of Limited
Partnership. The articles of incorporation of each Guarantor certified
by the Secretary of State of the state of its incorporation (or the
other appropriate governmental officials of its jurisdiction of
organization) and dated a current date. The Certificate of Limited
Partnership of the Borrower certified by the Secretary of State of
Nevada and dated a current date.
(d) Bylaws; Partnership Agreement. The bylaws of each
Guarantor certified by its Secretary or an Assistant Secretary. All
partnership agreements of the Borrower certified by Tufco Tech, Inc.,
as the managing general partner of the Borrower.
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation or organization of
the Borrower and each Guarantor as to its existence and good standing
and certificates of the appropriate government officials of each
jurisdiction in which the Borrower and each Guarantor is required to
qualify to do business and where failure to so qualify could reasonably
be expected to have a Material Adverse Effect, as to the Borrower's and
each Guarantor's qualification to do business and good standing in such
jurisdiction, all dated a current date.
(f) Notes. The Notes executed by the Borrower.
(g) Collateral Documents and Collateral. The Borrower Security
Agreement executed by the Borrower, the Guarantor Security Agreement
and the Master Guaranty executed by each of the Guarantors, an
assignment of the existing deeds of trust or mortgages (collectively,
the "Deeds of Trust") covering the real property identified on Schedule
8.1(g), in form and substance satisfactory to the Agent, and such
modifications to such deeds of trust and mortgages as may be required
by the Agent to ensure that the Obligations are secured thereby on
terms acceptable to the Agent; certificates representing the capital
stock of the Subsidiaries pledged pursuant to the Guarantor Security
Agreement and the Borrower Security Agreement together with undated
stock powers duly executed in blank; UCC, tax and judgment Lien search
reports listing all documentation on file against the Borrower and each
Guarantor in each jurisdiction in which the Borrower, any such
Guarantor or any Collateral is located or registered; a lien
subordination agreement from the landlord of the leased properties of
Borrower and the Obligated Parties containing such access agreements
and subordinations as the Agent may require; and such other executed
documentation as the Agent may deem necessary to perfect or protect its
Liens, including, without limitation, financing statements under the
UCC and other applicable documentation under the laws of any
jurisdiction with respect to the perfection of Liens.
(h) Bond Documents. Duly executed copies of the Bond
Documents.
CREDIT AGREEMENT - PAGE 32
41
(i) Termination or Assignment of Prior Liens. Duly executed
UCC-3 assignments or termination statements, mortgage releases, and
such other documentation as shall be necessary to terminate, release or
assign to the Agent all Liens other than those permitted by Section
11.2.
(j) Insurance Policies. Certificates of insurance summarizing
the insurance policies of Parent and the Subsidiaries required by this
Agreement and reflecting the Agent as additional insured under such
policies and as loss payee with respect to all policies covering
Collateral.
(k) Opinion of Counsel. Favorable opinions of legal counsel to
the Parent and the Subsidiaries, as to such matters as the Agent may
request.
(l) Appraisals; Title Reports; Environmental Reports; Surveys.
Copies of the most recent appraisals, title insurance policies,
environmental reports and surveys (if any) that Borrower has received
relating to the real property identified on Schedule 8.1(g);
(m) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including attorneys' fees) referred to in Section 15.1, to
the extent incurred, shall have been paid in full by the Borrower.
Section 8.2 All Loans. The obligation of each Bank to make any Loan
(including the initial Loan) or issue any Letter of Credit is subject to the
following additional conditions precedent:
(a) No Default. No Default shall have occurred and be
continuing, or would result from such Loan;
(b) Representations and Warranties. All of the representations
and warranties contained in Article 9 hereof and in the other Loan
Documents shall be true and correct on and as of the date of such Loan
with the same force and effect as if such representations and
warranties had been made on and as of such date except to the extent
that such representations and warranties relate specifically to another
date; and
(c) Additional Documentation. The Agent shall have received
such additional approvals, opinions, or documents as the Agent may
reasonably request.
Each notice of borrowing by the Borrower hereunder, shall constitute a
representation and warranty by the Borrower that the conditions precedent set
forth in subsections 7.2(a) and (b) have been satisfied (both as of the date of
such notice and, unless the Borrower otherwise notifies the Agent prior to the
date of such borrowing, as of the date of such borrowing).
CREDIT AGREEMENT - PAGE 33
42
ARTICLE 9
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
Section 9.1 Corporate Existence. The Borrower and each Obligated Party
(a) is a corporation or other entity (as reflected on Schedule 9.14) duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority to own its assets and carry on its business as now being or as
proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. The Borrower and each Obligated Party has the
corporate power and authority to execute, deliver, and perform their respective
obligations under the Loan Documents to which it is or may become a party.
Section 9.2 Financial Statements. Parent has delivered to the Agent and
the Banks audited consolidated financial statements of Parent and the
Subsidiaries as at and for the Fiscal Year ended September 30, 1997 and an
unaudited consolidated financial statement of Parent and the Subsidiaries for
the Fiscal Quarter ending June 30, 1998. Such financial statements, have been
prepared in accordance with GAAP and present fairly, in all material respects,
on a consolidated basis, the financial condition of Parent and the Subsidiaries
as of the respective dates indicated therein and the results of operations for
the respective periods indicated therein. Neither the Borrower nor any of the
Obligated Parties has any material contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, or unrealized or anticipated
losses from any unfavorable commitments except as referred to or reflected in
such financial statements. There has been no material adverse change in the
business, condition (financial or otherwise), operations, prospects, or
properties of Parent and the Subsidiaries taken as a whole since the effective
date of the most recent financial statements referred to in this Section.
Section 9.3 Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower and each Obligated Party of the Loan Documents to
which each is or may become a party and compliance with the terms and provisions
hereof and thereof have been duly authorized by all requisite action on the part
of the Borrower and each Obligated Party and do not and will not (a) violate or
conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation, bylaws or other governing documents of the Borrower
or any of the Obligated Parties, (ii) any applicable law, rule, or regulation or
any order, writ, injunction, or decree of any Governmental Authority or
arbitrator or (iii) any material agreement or instrument to which the Borrower
or any Obligated Party is a party or by which any of them or any of their
property is bound or subject, or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
(except as provided herein) upon any of the revenues or assets of the Borrower
or any Obligated Party.
CREDIT AGREEMENT - PAGE 34
43
Section 9.4 Operation of Business. The Borrower and each of the
Obligated Parties possess all licenses, permits, franchises, patents,
copyrights, trademarks, and tradenames, or rights thereto, necessary to conduct
their respective businesses substantially as now conducted except those that the
failure to so possess could not reasonably be expected to have a Material
Adverse Effect, and the Borrower and each of the Obligated Parties are not in
violation of any valid rights of others with respect to any of the foregoing
except violations that could not reasonably be expected to have a Material
Adverse Effect.
Section 9.5 Litigation and Judgments. As of the Closing Date, there is
no action, suit, investigation, or proceeding before or by any Governmental
Authority or arbitrator pending, or to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Obligated Party, that would, if
adversely determined, have a Material Adverse Effect. There are no outstanding
final judgments against the Borrower or any Obligated Party for the payment of
money in excess of $100,000 for which a stay of execution has not been procured
and is continuing in effect.
Section 9.6 Rights in Properties; Liens. The Borrower and each
Obligated Party have good title to or valid leasehold interests in their
respective properties and assets, real and personal, including the properties,
assets, and leasehold interests reflected in the financial statements described
in Section 9.2, and none of the properties, assets, or leasehold interests of
the Borrower or any Obligated Party is subject to any Lien, except as permitted
by Section 11.2.
Section 9.7 Enforceability. The Loan Documents to which the Borrower or
any Obligated Party is a party, when delivered, shall constitute the legal,
valid, and binding obligations of the Borrower or the Obligated Party, as
applicable, enforceable against the Borrower or the applicable Obligated Party
in accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
Section 9.8 Approvals. All authorizations, approvals, and consents of,
and all filings or registrations with, any Governmental Authority or third party
necessary for the execution, delivery, or performance by the Borrower or any
Obligated Party of the Loan Documents to which each is or may become a party or
for the validity or enforceability thereof have been obtained or made.
Section 9.9 Debt. The Borrower and the Obligated Parties have no Debt,
except as permitted by Section 11.1.
Section 9.10 Taxes. The Borrower and each Obligated Party have filed
all material tax returns (federal, state, and local) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable other than those
being contested in good faith by appropriate proceedings diligently pursued for
which adequate reserves have been established. The Borrower knows of no pending
investigation of the Borrower or any Obligated Party by any taxing authority or
of any pending but unassessed tax liability of the Borrower or any Obligated
Party.
CREDIT AGREEMENT - PAGE 35
44
Section 9.11 Margin Securities. Neither the Borrower nor any Obligated
Party is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U, or X of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Loan will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock.
Section 9.12 ERISA. The Borrower and each Obligated Party are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. No notice of intent to terminate a Plan has
been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan. The Borrower and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans. The present value of all vested benefits under each Plan
do not exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with ERISA, by an amount that will exceed One Hundred Thousand
Dollars ($100,000). Neither the Borrower nor any ERISA Affiliate has incurred
any liability to the PBGC under ERISA.
Section 9.13 Disclosure. All factual information furnished by or on
behalf of the Borrower in writing to the Agent or any Bank (including, without
limitation, all information contained in the Loan Documents) for purposes of or
in connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agent or any Bank,
will be true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information not misleading in any material respect
at such time in light of the circumstances under which such information was
provided.
Section 9.14 Subsidiaries. As of the Closing Date, Parent has no
Subsidiaries other than those listed on Schedule 9.14 hereto. Schedule 9.14 sets
forth the organizational type of each Subsidiary listed thereon, the
jurisdiction of incorporation or organization of each such Subsidiary, the
percentage of Parent's or a Subsidiary's ownership of the outstanding voting
stock (or other ownership interests) of each such Subsidiary and, the
authorized, issued, and outstanding capital stock (or other equity interests) of
each such Subsidiary. All of the outstanding capital stock (or other equity
interests) of each Subsidiary listed on Schedule 9.14 has been validly issued,
is fully paid, and is nonassessable. There are no outstanding subscriptions,
options, warrants, calls, or rights (including preemptive rights) to acquire,
and no outstanding securities or instruments convertible into, capital stock of
any of Parent's Subsidiaries except as disclosed on Schedule 9.14.
Section 9.15 Agreements. Neither the Borrower nor any Obligated Party
is a party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction that
could reasonably be expected to have a Material Adverse
CREDIT AGREEMENT - PAGE 36
45
Effect. Neither the Borrower nor any Obligated Party is in default in any
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
to which it is a party other than defaults which will not have a Material
Adverse Effect.
Section 9.16 Compliance with Laws. Neither the Borrower nor any
Obligated Party is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.
Section 9.17 Investment Company Act. Neither the Borrower nor any
Obligated Party is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 9.18 Public Utility Holding Company Act. Neither the Borrower
nor any Obligated Party is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 9.19 Environmental Matters.
(a) The Borrower, each Obligated Party, and all of their
respective properties, assets, and operations are in full compliance
with all applicable Environmental Laws. The Borrower is not aware of,
nor has the Borrower received written notice of, any past, present, or
future conditions, events, activities, practices, or incidents which
may interfere with or prevent the compliance or continued compliance of
the Borrower and the Obligated Parties with all Environmental Laws;
(b) The Borrower and each Obligated Party have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in good
standing and the Borrower and the Obligated Parties are in compliance
with all of the terms and conditions of such permits;
(c) No Hazardous Materials have been used, generated, stored,
transported, disposed of on, or Released from any of the properties or
assets of the Borrower or any Obligated Party, and to the knowledge of
Borrower, no Hazardous Materials are present at such properties, except
in compliance with Environmental Laws. The use which the Borrower and
the Obligated Parties make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any Hazardous
Material on, in, or from any of their properties or assets except in
compliance with Environmental Laws;
(d) Neither the Borrower nor any of the Obligated Parties nor
any of their respective currently or previously owned or leased
properties or operations is subject to any outstanding or, to the best
of its knowledge, threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or
administrative
CREDIT AGREEMENT - PAGE 37
46
proceeding with respect to (i) failure to comply with Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities
arising from a Release or threatened Release;
(e) Neither the Borrower nor any of the Obligated Parties is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
regulations thereunder or any comparable provision of state law. The
Borrower and the Obligated Parties are in compliance with all
applicable financial responsibility requirements of all Environmental
Laws;
(f) Neither the Borrower nor any of the Obligated Parties has
filed or failed to file any notice required under applicable
Environmental Law reporting a Release; and
(g) No Lien arising under any Environmental Law has attached
to any property or revenues of the Borrower or the Obligated Parties.
Section 9.20 Solvency. The Borrower and each Obligated Party, both
individually and on a consolidated basis: (a) owns and will own assets the fair
saleable value of which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will be
required to pay probable liabilities of then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to it; (b) has capital that is not unreasonably small
in relation to its business as presently conducted; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
Section 9.21 Benefit Received. Borrower and the Obligated Parties will
receive reasonably equivalent value in exchange for the obligations incurred
under the Loan Documents to which each is a party.
Section 9.22 Bond Documents. The representations, warranties and
certifications in the Bond Documents, to the extent made, are true and correct
in all material respects and Borrower has provided Agent with true and correct
copies of all Bond Documents.
Section 9.23 Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Parent's and the
Subsidiaries' computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Parent's and
the Subsidiaries' interface) and the testing of all such systems and equipment,
as so reprogrammed, will be completed by April 1, 1999. The cost to the Parent
and the Subsidiaries of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to Parent and the Subsidiaries (including,
without limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect.
CREDIT AGREEMENT - PAGE 38
47
ARTICLE 10
Positive Covenants
Parent and the Borrower covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Commitment
hereunder, they will perform and observe the following positive covenants:
Section 10.1 Reporting Requirements. The Borrower will furnish to the
Agent and each Bank:
(a) Annual Financial Statements. As soon as available, and in
any event within ninety (90) days after the end of each Fiscal Year,
beginning with the Fiscal Year ending on September 30, 1998, a copy of
the following financial statements of Parent and the Subsidiaries on an
audited, consolidated basis, and on an unaudited, consolidating basis:
balance sheets and statements of income, retained earnings, and cash
flow as at the end of such Fiscal Year and for the Fiscal Year then
ended, in each case setting forth in comparative form the figures for
the preceding Fiscal Year, all in reasonable detail. Each of the
audited financial statements shall be certified on an unqualified basis
by independent certified public accountants of recognized standing
acceptable to the Agent, to the effect that such report has been
prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as available, and
in any event within forty-five (45) days after the end of each of the
first three (3) Fiscal Quarter of each Fiscal Year and within ninety
(90) days after the last Fiscal Quarter of each Fiscal Year, a copy of
an unaudited financial report of Parent and the Subsidiaries as of the
end of such period and for the Fiscal Quarter then ended containing, on
a consolidated and consolidating basis, a balance sheet and statements
of income, retained earnings, and cash flow, in each case setting forth
in comparative form the figures for the corresponding Fiscal Quarter of
the preceding Fiscal Year, all in reasonable detail certified by the
chief financial officer of Parent to have been prepared in accordance
with GAAP and to fairly present (subject to year-end audit adjustments)
the financial condition and results of operations of Parent and the
Subsidiaries, on a consolidated basis, at the date and for the periods
indicated therein;
(c) Compliance Certificate. Within forty-five (45) days after
the end of each Fiscal Quarter, or with respect to the last Fiscal
Quarter of each Fiscal Year, within ninety (90) days of the end of such
Fiscal Quarter, a Compliance Certificate;
(d) Annual Projections. As soon as available and in any event
within forty-five (45) days after the beginning of each Fiscal Year,
Parent will deliver its consolidated forecasted profit and loss
statement for the current Fiscal Year set forth on a Fiscal Quarter by
Fiscal Quarter basis consistent with Parent's historical financial
statements, together with appropriate supporting details, a statement
of underlying assumption and a proforma
CREDIT AGREEMENT - PAGE 39
48
projection of Parent's compliance with the financial covenants in this
Agreement for the same period;
(e) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to Parent or any
of the Subsidiaries by independent certified public accountants with
respect to the business, condition (financial or otherwise),
operations, prospects, or properties of Parent or any of the
Subsidiaries;
(f) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting the Borrower or any
Obligated Party which, if determined adversely to the Borrower or such
Obligated Party, could reasonably be expected to have a Material
Adverse Effect;
(g) Notice of Default. As soon as possible and in any event
within five (5) Business Days after an officer of the Borrower or any
Obligated Party has knowledge of the occurrence of each Default, a
written notice setting forth the details of such Default and the action
that the Borrower has taken and proposes to take with respect thereto;
(h) ERISA Reports. If requested by the Agent, promptly after
the filing or receipt thereof, copies of all reports, including annual
reports, and notices which the Borrower or any Obligated Party files
with or receives from the PBGC or the U.S. Department of Labor under
ERISA; and as soon as possible and in any event within five (5)
Business Days after the Borrower or any Obligated Party knows or has
reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or
any Obligated Party has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, a certificate of the chief
financial officer of the Borrower setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the
action that the Borrower proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party
pursuant to the terms of any indenture, loan, or credit or similar
agreement and not otherwise required to be furnished to the Agent and
the Banks pursuant to any other clause of this Section;
(j) Notice of Material Adverse Effect. As soon as possible and
in any event within five (5) Business Days after an officer of the
Borrower or any Obligated Party has knowledge of the occurrence
thereof, written notice of any matter that could reasonably be expected
to have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by the
Borrower or any Obligated Party to its stockholders generally and one
copy of each regular, periodic, or special report, registration
statement, or prospectus filed by the Borrower or any Obligated Party
with any securities exchange or the Securities and Exchange Commission
or any successor agency; and
CREDIT AGREEMENT - PAGE 40
49
(l) General Information. Promptly, such other information
concerning the Borrower or any Obligated Party as the Agent or any Bank
may from time to time reasonably request.
Section 10.2 Maintenance of Existence; Conduct of Business. Parent
will, and will cause each of the Subsidiaries to, preserve and maintain (i) its
existence (except as permitted by Section 11.3) and (ii) all of its privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. Parent will, and will cause
each of the Subsidiaries to, conduct its business in an orderly and efficient
manner in accordance with good business practices.
Section 10.3 Maintenance of Properties. Parent will, and will cause
each of the Subsidiaries to, maintain, keep, and preserve all of its material
properties necessary in the conduct of its business in good working order and
condition (exclusive of ordinary wear, tear and casualty).
Section 10.4 Taxes and Claims. Parent will, and will cause each of the
Subsidiaries to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all valid and
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither Parent nor any
of the Subsidiaries shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves have
been established.
Section 10.5 Insurance. Parent will, and will cause each of the
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as are usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which each operates, provided that in
any event Parent and the Borrower will maintain and cause each of the
Subsidiaries to maintain worker's compensation insurance (or alternate
comparable coverage as required by law), property insurance, comprehensive
general liability insurance and professional liability insurance reasonably
satisfactory to the Agent. Each general liability insurance policy shall name
the Agent as additional insured, each insurance policy covering Collateral shall
name the Agent as loss payee and shall provide that such policy will not be
canceled or materially changed without fifteen (15) days prior written notice to
the Agent.
Section 10.6 Inspection Rights. Upon prior notice and from time to time
during normal business hours, Parent will, and will cause each of the
Subsidiaries to, permit representatives of the Agent to examine, copy, and make
extracts from its books and records, to visit and inspect its properties, and to
discuss its business, operations, and financial condition with its officers,
employees, and independent certified public accountants. When a Default exists,
the prior notice described in the first sentence of this Section 10.6 shall not
be required. The representatives of any Bank may accompany the Agent during any
examination, visit, inspection or discussions under this Section 10.6.
CREDIT AGREEMENT - PAGE 41
50
Section 10.7 Keeping Books and Records. Parent will, and will cause
each of the Subsidiaries to, maintain proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 10.8 Compliance with Laws. Parent will, and will cause each of
the Subsidiaries to, comply in all material respects with all applicable laws
(including, without limitation, all Environmental Laws and ERISA), rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator.
Section 10.9 Compliance with Agreements. Parent will, and will cause
each of the Subsidiaries to, comply in all material respects with all
agreements, contracts, and instruments binding on it or affecting its properties
or business.
Section 10.10 Further Assurances and Collateral Matters.
(a) Further Assurance. Parent will, and will cause each of the
Subsidiaries to, execute and deliver such further documentation and
take such further action as may be requested by the Agent to carry out
the provisions and purposes of the Loan Documents and to create,
preserve, and perfect the Liens of the Agent for the benefit of itself
and the Banks in the Collateral; provided that prior to the occurrence
of a Default, neither Parent nor any Subsidiary shall be required to:
(i) obtain any Lien acknowledgments, control or
agency agreements from any institution holding a bank account
identified pursuant to the Borrower Security Agreement or the
Guarantor Security Agreement;
(ii) cause the Agent's Lien to be noted on any
certificate of title evidencing any equipment if, at the time
of such notation or at the time of acquisition, (i) such
equipment is subject to a lease or (ii) such equipment, in the
aggregate, has a book value of less than One Hundred Thousand
Dollars ($100,000) (Parent represents to the Agent and the
Banks that to its knowledge and as of the Closing Date the
aggregate book value of such equipment is less than One
Hundred Thousand Dollars ($100,000));
(iii) obtain control over any security or commodity
account now or hereafter identified in or pursuant to the
Borrower Security Agreement or the Guarantor Security
Agreement;
(iv) obtain waivers, subordinations or
acknowledgments from any third party who, individually, has
possession or control of Collateral if the aggregate book
value of the Collateral in such third party's possession or
control is less than or equal to Thirty-Five Thousand Dollars
($35,000) (Parent represents to Agent and the Banks that, as
of the Closing Date, no third party, individually, has
possession or control
CREDIT AGREEMENT - PAGE 42
51
of Collateral having an aggregate book value greater than
Thirty-Five Thousand Dollars ($35,000); or
(v) obtain waivers, subordinations or acknowledgments
from third parties who have possession or control of
Collateral if the aggregate book value of such Collateral is
less than or equal to One Hundred Thousand Dollars ($100,000)
(Parent represents to Agent and the Banks that, as of the
Closing Date, the aggregate book value of the Collateral in
possession or control of third parties is less than One
Hundred Thousand Dollars ($100,000).
If a Default occurs and the Agent requests, then Parent shall
take such action as the Agent may reasonably request to perfect and
protect the Liens of the Agent in any of the foregoing Collateral
described in this clause (a).
(b) Subsidiary Pledge. Upon the creation or acquisition of any
Subsidiary to Parent other than Borrower, Parent shall cause such
Subsidiary to execute and deliver a Joinder Agreement and such other
documentation as the Agent may request to cause such Subsidiary to
evidence, perfect, or otherwise implement the guaranty and security for
repayment of the Obligations contemplated by the Master Guaranty and
the Guarantor Security Agreement.
(c) Borrower Pledge of Subsidiary Stock. If any Subsidiary to
Parent is created or acquired after the Closing Date, Parent or the
applicable Subsidiary shall execute and deliver to the Agent an
amendment to the Guarantor Security Agreement, describing as collateral
thereunder the stock of or other ownership interests in the new
Subsidiary as collateral for the payment of the Obligations, and Parent
or the applicable Subsidiary shall deliver the certificates
representing such stock or other interests to the Agent together with
undated stock or other powers duly executed in blank.
Section 10.11 ERISA. Parent will, and will cause each of the
Subsidiaries to, comply with all minimum funding requirements and all other
requirements of ERISA, if applicable, so as not to give rise to any liability
which will have a Material Adverse Effect.
Section 10.12 Interest Rate Protection Agreements. On or before the
Closing Date, the Borrower will enter into and thereafter maintain interest rate
protection agreements with respect to at least fifty percent (50%) of the Term
Loans outstanding from time to time and otherwise on market terms satisfactory
to the Agent to protect against increases in the interest rates.
CREDIT AGREEMENT - PAGE 43
52
ARTICLE 11
Negative Covenants
Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, they will
perform and observe the following negative covenants:
Section 11.1 Debt. Parent will not, and will not permit any Subsidiary
to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Agent and Banks pursuant to the Loan Documents
and existing Debt described on Schedule 11.1 (but, after the Closing
Date, excluding the Previous Senior Debt);
(b) Intercompany Debt owed by any Subsidiary to Parent or any
other Subsidiary; provided that (i) the obligations of each obligor of
such Debt must be subordinated in right of payment to any liability
such obligor may have for the Obligations from and after such time as
any portion of the Obligations shall become due and payable (whether at
stated maturity, by acceleration or otherwise, (ii) such Debt must be
incurred in the ordinary course of business and on terms customary for
intercompany borrowings or must be made on such other terms and
provisions as the Agent may reasonably require, and (iii) Parent or its
applicable Subsidiary shall have granted the Agent a Lien on its right,
title and interest in and to such Debt and all Liens securing the
payment thereof);
(c) Debt not to exceed One Hundred Thousand Dollars ($100,000)
in the aggregate at any time outstanding secured by purchase money
Liens permitted by Section 11.2;
(d) Obligations to reimburse worker's compensation insurance
companies for claims paid by such companies on Parent's or one of the
Subsidiaries' behalf in accordance with the policies issued to Parent
and the Subsidiaries;
(e) Guaranties incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and
return-of-money bonds, and other similar obligations not exceeding at
any time outstanding One Hundred Thousand Dollars ($100,000) in
aggregate liability;
(f) Debt arising in connection with the interest rate swap,
cap, collar or similar agreements entered into in compliance with the
covenant in Section 10.12;
(g) Debt arising under the terms of the Bond Documents; and
CREDIT AGREEMENT - PAGE 44
53
(h) Debts, other than the Debts specifically described in
clauses (a) through (g) of this Section 11.1, which in the aggregate do
not exceed Fifty Thousand Dollars ($50,000) at any time outstanding.
Section 11.2 Limitation on Liens. Parent will not, and will not permit
any of the Subsidiaries to, incur, create, assume, or permit to exist any Lien
upon any of its property, assets, or revenues, whether now owned or hereafter
acquired, except the following, none of which shall encumber the Collateral
other than those Liens described in clauses (a), (b), (c), (d), (e), (g) and
(h):
(a) Existing Liens disclosed on Schedule 11.2 hereto;
provided, any Liens securing the Previous Senior Debt will not be
permitted after the Closing Date unless they have been assigned to the
Agent;
(b) Liens in favor of the Agent for the benefit of itself and
the Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of
the assets encumbered thereby or materially impair the ability of
Parent or the Subsidiaries to use such assets in their respective
businesses, and none of which is violated in any material respect by
existing or proposed structures or land use;
(d) Liens (other than Liens relating to Environmental
Liabilities or ERISA) for taxes, assessments, or other governmental
charges that are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords, or other similar statutory Liens securing obligations that
are not yet due and are incurred in the ordinary course of business or
which are being contested in good faith and for which adequate reserves
have been established;
(f) Liens resulting from good faith deposits to secure
payments of worker's compensation or other social security programs or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, and contracts (other than for payment of Debt);
(g) Liens for purchase money obligations and Capital Lease
Obligations; provided that: (i) the Debt secured by any such Lien is
permitted under Section 11.1; and (ii) any such Lien encumbers only the
asset so purchased;
(h) Liens related to any attachment or judgment not
constituting an Event of Default;
CREDIT AGREEMENT - PAGE 45
54
(i) Liens arising from filing UCC financing statements
regarding leases permitted by this Agreement; and
(j) Liens in favor of Norwest Bank Wisconsin, National
Association and the Village of Ashwaubenon, Wisconsin arising under the
Bond Documents.
Neither Parent nor any of the Subsidiaries shall enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or hereafter
acquired; provided that, in connection with the creation of purchase money
Liens, Parent or any such Subsidiary may agree that it will not permit any other
Liens to encumber the asset subject to such purchase money Lien. Except as
provided herein, neither Parent nor the Borrower will, and each will not permit
any of the Subsidiaries directly or indirectly to create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such companies to: (1) pay dividends or make any
other distribution on any of such company's capital stock (or other equity
interests) owned by Parent or any of the Subsidiaries; (2) subject to
subordination provisions, pay any Debt owed to Parent or any of the
Subsidiaries; (3) make loans or advances to Parent or any of the Subsidiaries;
or (4) transfer any of its property or assets to Parent or any of the
Subsidiaries.
Section 11.3 Mergers, Etc. Parent will not, and will not permit any of
the Subsidiaries to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the business or assets of any
Person or any shares or other evidence of beneficial ownership of any Person, or
wind-up, dissolve, or liquidate itself; provided that, (i) Parent and the
Subsidiaries may acquire assets or shares or other evidence of beneficial
ownership of a Person in accordance with the restrictions set forth in Section
11.5; (ii) if no Default exists or would result, any Subsidiary (other than
Borrower) may merge into or consolidate with Borrower, Parent or any other
Subsidiary if the surviving Person is or becomes a wholly owned Subsidiary
directly owned by Parent, assumes the obligations of the applicable Subsidiary
under the Loan Documents and is solvent as contemplated under Section 9.20
hereunder after giving effect to such merger or consolidation, and (iii) Parent
or any wholly owned Subsidiary directly owned by Parent (the "Acquiring
Company") may acquire all or substantially all of the assets of any other
Subsidiary (a "Transferring Subsidiary"), other than the Borrower, if the
Acquiring Company assumes all the Transferring Subsidiary's liabilities
(including without limitation, all liabilities of the Transferring Subsidiary
under the Loan Documents to which it is a party) and, following such assignment
and assumption, such Transferring Subsidiary may wind up, dissolve and
liquidate.
Section 11.4 Restrictions on Dividends and other Distributions. Parent
will not, and will not permit any Subsidiary to, directly or indirectly declare,
order, pay, make or set apart any sum for (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
(or other equity interest) of the Parent or any Subsidiary now or hereafter
outstanding; (b) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock (or other equity interest) of the Parent or
any Subsidiary now or hereafter outstanding; or (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options, or other
rights to acquire
CREDIT AGREEMENT - PAGE 46
55
shares of any class of stock (or other equity interest) of the Parent or any
Subsidiary now or hereafter outstanding; except that if no Default exists or
would result therefrom: (A) Subsidiaries may make, declare and pay dividends and
make other distributions with respect to their capital stock (or other equity
interest) for the sole purpose of enabling Parent to (i) repurchase shares of
its stock in accordance with clause (B) below and (ii) to pay the actual cash
taxes of the Parent attributable to the earnings of the Subsidiaries, and (B)
Parent may repurchase its capital stock during the period from the Closing Date
to the third anniversary of the Closing Date, provided that the aggregate amount
so purchased during any Loan Year during such period shall not exceed the sum of
(i) Five Hundred Thousand Dollars ($500,000) (the "Yearly Limit") plus (ii) with
respect to the second and third Loan Years only, that portion of the Yearly
Limit which was not utilized to make repurchases in prior Loan Years. The term
"Loan Year" means each period of twelve (12) consecutive months commencing on
the Closing Date and on each anniversary thereof.
Section 11.5 Investments. Parent will not, and will not permit any of
the Subsidiaries to, make or permit to remain outstanding any advance, loan,
other extension of credit, or capital contribution to or investment in any
Person, or purchase or own any stock, bonds, notes, debentures, or other
securities of any Person, or be or become a joint venturer with or partner of
any Person, except:
(a) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of one year or less
from the date of acquisition;
(b) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial
bank operating in the United States of America having capital and
surplus in excess of $250,000,000;
(c) commercial paper or bonds of a domestic issuer if at the
time of purchase such paper or bonds are rated in one of the two
highest rating categories of Standard and Poor's Corporation or Xxxxx'x
Investors Service, Inc.;
(d) current trade and customer accounts receivable for
services rendered in the ordinary course of business;
(e) shares of any mutual fund registered under the Investment
Company Act of 1940, as amended, which invests solely in investment of
the type described in clauses (a) through (c) of this Section 11.5;
(f) advances to employees for business expenses incurred in
the ordinary course of business including, without limitation, loans in
connection with employee relocations;
(g) existing investments described on Schedule 11.5 hereto;
(h) loans, advances and other extensions of credit to
Subsidiaries made in accordance with the restrictions set forth in
subsection 11.1 (b); provided that, at the time
CREDIT AGREEMENT - PAGE 47
56
any such loan, advance or other extension of credit is made, no Default
exists or would result therefrom;
(i) Guarantees permitted by Section 11.1; and
(j) Loans to employees for the purpose of financing the
purchase of stock of Parent provided that the aggregate amount thereof
does not exceed Five Hundred Thousand Dollars ($500,000) in the
aggregate outstanding at any time.
Section 11.6 Limitation on Issuance of Capital Stock. Parent will not
permit any Subsidiary to, at any time issue, sell, assign, or otherwise dispose
of (a) any of its capital stock (or other equity interests), (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock (or other equity interests), or (c) any option, warrant, or
other right to acquire any of its capital stock (or other equity interests);
provided, however, that Parent or any Subsidiary may issue Securities in
connection with (i) any existing employee or director stock options or existing
employee or director stock option plans or (ii) any business acquisition that is
consented to by the Required Banks.
Section 11.7 Transactions With Affiliates. Parent will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of Parent or such Subsidiary, except (a) in the
ordinary course of and pursuant to the reasonable requirements of Parent's or
such Subsidiaries' business and upon fair and reasonable terms no less favorable
to Parent or such Subsidiary than would be obtained in a comparable arms-length
transaction with a Person not an Affiliate of Parent or such Subsidiary; (b)
management fees paid under the terms of that certain Amended and Restated
Consulting Agreement dated as of January 28, 1994, among Tufco Technologies,
Inc., Tufco Industries, Inc., Executive Converting Corporation, Bradford
Investment Partners, L.P. and Bradford Ventures Ltd., as the same may be amended
by Parent's board of directors; and (c) fees and expenses paid to members of the
Parent's Board of Directors for their services as directors of the Parent in the
ordinary course of business.
Section 11.8 Disposition of Assets. Parent will not, and will not
permit any of the Subsidiaries to, sell, lease, assign, transfer, or otherwise
dispose of any of its assets, except (a) dispositions of inventory in the
ordinary course of business; (b) dispositions of unnecessary, obsolete or worn
out equipment, or other equipment that is replaced by equipment of equal or
greater value; (c) the sale, discount or transfer of delinquent notes or
accounts receivable in the ordinary course of business for purposes of
collection in accordance with past practices; and (d) if no Default exists or
would result therefrom, other dispositions of assets if the aggregate book value
of the assets disposed of does not exceed One Hundred Thousand Dollars
($100,000) in the aggregate during any twelve (12) month period and the
obligations under subsection 6.4(a)(ii) are fulfilled.
Section 11.9 Lines of Business. Parent will not, and will not permit
any of the Subsidiaries to, engage in any line or lines of business activity
other than the businesses in which they are
CREDIT AGREEMENT - PAGE 48
57
engaged on the date hereof and any businesses which are similar or related to
those currently engaged in by such company.
Section 11.10 Sale and Leaseback. Parent will not, and will not permit
any of the Subsidiaries to, enter into any arrangement with any Person pursuant
to which it leases from such Person real or personal property that has been or
is to be sold or transferred, directly or indirectly, by it to such Person.
Section 11.11 Prepayment of Debt. Parent will not, and will not permit
any of the Subsidiaries to, prepay or optionally redeem any Debt other than the
Obligations.
Section 11.12 Modifications of Bond Documents or Agreements. Parent
will not, and will not permit any of the Subsidiaries to, amend, revise, restate
or otherwise modify any Bond Document.
Section 11.13 Tax Exempt Status of Bonds. Parent will not, and will not
permit the Subsidiaries to, take any action or omit to take any action with
respect to the proceeds of the sale of the Bonds, any earnings and profits from
the investment thereof, or any amounts expected to be used to pay (or pledged as
security for) principal thereof or interest thereon which if taken or omitted,
respectively, would result in constituting any Bond an "arbitrage bond" within
the meaning of Section 148 of the Code or otherwise adversely affect any
exemption from federal income tax of interest on any Bond under the Code.
Section 11.14 Limitation on Bond Transactions. Parent will not, and
will not permit the Subsidiaries to, exercise its rights to change the interest
period utilized to calculate the interest accrued under the Bonds.
ARTICLE 12
Financial Covenants
Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, Parent
will perform and observe the following financial covenants:
Section 12.1 Consolidated Tangible Net Worth. Parent will at all times
maintain a Consolidated Tangible Net Worth in an amount not less than the sum of
(a) Thirteen Million Five Hundred Thousand Dollars ($13,500,000); plus (b) fifty
percent (50%) of Parent's net income determined on a consolidated basis in
accordance with GAAP for each Fiscal Quarter to have completely elapsed since
September 30, 1997; plus (c) one hundred percent (100%) of the net cash proceeds
of any sale of securities or other cash contributions to the capital of the
Parent received by Parent since September 30, 1997, calculated without
duplication. If Parent's consolidated net income for a Fiscal Quarter is zero or
less, no adjustment to the requisite level of Consolidated
CREDIT AGREEMENT - PAGE 49
58
Tangible Net Worth shall be made. "Consolidated Tangible Net Worth" means, at
any particular time, the sum of (a) all amounts which, in conformity with GAAP,
would be included as stockholders' equity on a consolidated balance sheet of
Parent and the Subsidiaries; minus (b) the amount by which stockholders' equity
has been increased by the write-up of any asset of the Parent and the
Subsidiaries after September 30, 1997; minus (c) the amount of intangible assets
carried on the balance sheet of the Parent and the Subsidiaries at such date
determined in accordance with GAAP on a consolidated basis, including goodwill,
patents, trademarks, trade names, organizational expense, deferred financing
charges, debt acquisition cost, computer software development costs, start-up
costs, pre-opening costs, prepaid pension costs, or any other deferred charges;
minus (d) the amount of deferred income tax assets (less adjustments included in
Consolidated Net Income after September 30, 1997); minus (e) any capital stock
or debt security which is not readily marketable; minus (f) any cash held in a
sinking fund or other analogous fund established for the purpose of redemption,
retirement or prepayment of capital stock or Debt; minus (g) the cumulative
translation adjustments (less adjustments included in Consolidated Net Income
after September 30, 1997); minus (h) the amount at which shares of capital stock
of the Parent is contained among the assets on the balance sheet of the Parent
and the Subsidiaries; minus (i) to the extent included in clause (a) the amount
properly attributable to the minority interests, if any, of other Persons in the
stock, additional paid-in capital, and retained earnings of Subsidiaries.
Section 12.2 Fixed Charge Coverage. As of the end of each Fiscal
Quarter set forth in the table below, Parent shall not permit the ratio of Cash
Flow for the four (4) Fiscal Quarters then ending to Fixed Charges for such
period to be less than the amount set forth opposite the applicable Fiscal
Quarter end in the table below:
================================================================================
FISCAL QUARTERS ENDING FROM RATIO
--------------------------------------------------------------------------------
Closing Date through 9/30/99 1.10 to 1.00
--------------------------------------------------------------------------------
10/1/99 through 9/30/2000 1.15 to 1.00
--------------------------------------------------------------------------------
10/1/2000 and thereafter 1.20 to 1.00
================================================================================
For purposes of this Section 12.2 the following terms shall have the following
meanings:
"Cash Flow" means, for any period, the total of the following
for Parent and the Subsidiaries calculated on a consolidated basis
without duplication for such period: (A) EBITDA; minus (B) any
deduction for (or plus any gain from) cash income or franchise taxes
actually paid during such period.
"Consolidated Net Income" means, for any period, Parent's
consolidated net income (or loss) determined in conformity with GAAP
(with inventory being valued at the lower of (i) its fair market value
or (ii) its historical cost measured on a first-in, first-out basis),
but excluding:
(a) any extraordinary gains or losses or
nonrecurring revenue or expense;
CREDIT AGREEMENT - PAGE 50
59
(b) any gains or losses realized upon the sale or
other disposition of any capital stock or debt security of
Parent or any Subsidiary;
(c) any gains or losses in respect of the write-up
of any asset at greater than original cost or write-down at
less than original cost;
(d) any gains or losses realized upon the sale or
other disposition of property, plant, equipment or intangible
assets of Parent or any Subsidiary which is not sold or
otherwise disposed of in the ordinary course of business;
(e) any gains or losses from the disposal of a
discontinued business;
(f) any net gains or losses arising from the
extinguishment of any debt of the Parent or any Subsidiary;
(g) any restoration to income of any contingency
reserve relating to any long term assets or long term
liability, except to the extent that provision for such
reserve was made out of income accrued during such period;
(h) the cumulative effect of any change in an
accounting principle on income of prior periods;
(i) any deferred credit representing the excess of
equity in any acquired company or assets at the date of
acquisition over the cost of the investment in such company or
asset;
(j) the income from any sale of assets in which the
book value of such assets prior to their sale had been the
book value inherited by the Parent or Subsidiary from a
transfer of such assets;
(k) the income (or loss) of any Person (other than a
Subsidiary) in which the Parent or a Subsidiary has an
ownership interest; provided, however, that (i) Consolidated
Net Income shall include amounts in respect of the income of
such Person when actually received in cash by the Parent or
Subsidiary in the form of dividends or similar distributions
and (ii) Consolidated Net Income shall be reduced by the
aggregate amount of all investments, regardless of the form
thereof, made by the Parent or Subsidiary in such Person for
the purpose of funding any deficit or loss of such Person;
(l) any reduction in or addition to income tax
expense resulting from an increase or decrease in a deferred
income tax asset due to the anticipation of future income tax
benefits;
CREDIT AGREEMENT - PAGE 51
60
(m) any reduction in or addition to income tax
expense due to the change in a statutory tax rate resulting in
an increase or decrease in a deferred income tax asset or in a
deferred income tax liability;
(n) any gains or losses attributable to returned
surplus assets of any pension-benefit plan or any pension
credit attributable to the excess of (i) the return on
pension-plan assets over (ii) the pension obligation's service
cost and interest cost;
(o) the income or loss of any Person acquired by the
Parent or a Subsidiary for any period prior to the date of
such acquisition; and
(p) the income from any sale of assets in which the
accounting basis of such assets had been the book value of any
Person acquired by the Parent or a Subsidiary prior to the
date such Person became a subsidiary or was merged into or
consolidated with such Parent or Subsidiary.
"EBITDA" means, for any period, the total of the following
calculated for Parent and the Subsidiaries without duplication on a
consolidated basis for such period: (a) Consolidated Net Income; plus
(b) any deduction for (or less any gain from) income or franchise taxes
included in determining Consolidated Net Income; plus (c) interest
expense (including the interest portion of Capital Lease Obligations)
deducted in determining Consolidated Net Income; plus (d) amortization
and depreciation expense deducted in determining Consolidated Net
Income plus (e) operating lease expenses deducted in determining
Consolidated Net Income and attributable to the lease of the facility
located in Xxxxxxx, South Carolina.
"Fixed Charges" means, for any period, the total of the
following for Parent and the Subsidiaries calculated on a consolidated
basis without duplication: (a) cash interest expense (including the
interest portion of Capital Lease Obligations); plus (b) scheduled
principal payments on Debt; plus (c) Capital Expenditures; plus (d) 50%
of amounts paid by Parent to repurchase its Securities; minus (e) for
the measurement periods ending June 30, 1998, and September 30, 1998,
$1,800,000, and for the measurement period ending December 31, 1998,
$700,000; plus (f) operating lease expenses deducted in determining
Consolidated Net Income and attributable to the lease of the facility
located in Xxxxxxx, South Carolina.
Section 12.3 Indebtedness to EBITDA. As of the last day of each Fiscal
Quarter, Parent shall not permit the ratio of Indebtedness outstanding as of
such day to the EBITDA for the four (4) Fiscal Quarters then ended to exceed
3.00 to 1.00. As used in this Section 12.3, "Indebtedness" means, at the time of
determination, the sum of the following determined for Parent and the
Subsidiaries on a consolidated basis (without duplication): (a) all obligations
for borrowed money; (b) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments; (c) all Capital Lease
Obligations; (d) all unpaid and liquidated reimbursement
CREDIT AGREEMENT - PAGE 52
61
obligations with respect to letters of credit and the face amount of all
undrawn, outstanding letters of credit (including without limitation, the
Letters of Credit, unless the Debt secured by any such Letter of Credit is
included in either clause (a) or (b) above); and (e) any portion of the Debt
secured by a Lien on the facility of Borrower which is leased by Borrower and
located in Xxxxxxx, South Carolina, to the extent Borrower is or may become
obligated to pay such Debt.
Section 12.4 Capital Expenditures. Parent shall not permit the
aggregate Capital Expenditures to exceed in the aggregate (i) Three Million
Dollars ($3,000,000) in any Fiscal Year and (ii) Five Million Dollars
($5,000,000) in any two consecutive Fiscal Years.
ARTICLE 13
Default
Section 13.1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) The Borrower shall fail to pay when due any principal,
interest, fees or other Obligations payable under any Loan Document or
any part thereof.
(b) Any representation, warranty, or certification made or
deemed made by the Borrower or any Obligated Party (or any of their
respective officers) in any Loan Document or in any certificate,
report, notice, or financial statement furnished at any time in
connection with any Loan Document shall be false, misleading, or
erroneous in any material respect when made or deemed to have been
made; provided that if (a) at the time such representation, warranty or
certification was made, each of Borrower and each Obligated Party
reasonably believed its accuracy and (b) the circumstances which
resulted in the inaccurate or misleading representation, warranty or
certification are capable of being remedied, then an Event of Default
shall not occur herein on account thereof until twenty (20) days after
the earlier of (i) the date Borrower or any Obligated Party became
aware of the inaccurate or misleading representation, warranty or
certification or (ii) the date the Agent or any Bank provides the
Borrower with notice thereof.
(c) Borrower or any Obligated Party shall fail to perform,
observe or comply with (i) any covenant, agreement, or term contained
in clause (i) of Section 10.2, Sections 10.5 or 10.6, Article 11 or
Article 12 of this Agreement or (ii) any covenant, agreement, or term
contained in any Loan Document relating to the creation, perfection or
protection of the Liens required to be granted to secure the obligation
of any Obligated Party under the Loan Documents.
(d) The Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
any Loan Document (other than covenants to pay the Obligations and the
covenants described in subsection 13.1(c)) and such
CREDIT AGREEMENT - PAGE 53
62
failure shall continue for a period of twenty (20) days after the
earlier of (i) the date the Agent or any Bank provides the Borrower
with notice thereof or (ii) the date the Borrower has knowledge of such
failure and should have, with the exercise of reasonable diligence,
notified the Agent thereof in accordance with subsection 10.1(g).
(e) The Borrower or any Obligated Party shall (i) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner, liquidator, or the like of
itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect, the "Bankruptcy Code"), (iv) institute any
proceeding or file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the Bankruptcy Code, (vi) admit in writing its inability to, or be
generally unable to pay its debts as such debts become due, or (vii)
take any corporate action for the purpose of effecting any of the
foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval, or consent of the Borrower or any Obligated
Party, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement, or winding-up,
or the composition or readjustment of its debts, (ii) the appointment
of a receiver, custodian, trustee, examiner, liquidator, or the like of
the Borrower or any such Obligated Party or of all or any substantial
part of its property, or (iii) similar relief in respect of the
Borrower or any such Obligated Party under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of thirty (30) or more days, or an order for relief
against the Borrower or any Obligated Party shall be entered in an
involuntary case under the Bankruptcy Code.
(g) The Borrower or any Obligated Party shall fail to
discharge within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, forfeiture, or similar
proceeding or proceedings involving an aggregate amount in excess of
One Hundred Thousand Dollars ($100,000) against any of its assets or
properties.
(h) A final judgment or judgments for the payment of money in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate
shall be rendered by a court or courts against the Borrower or any
Subsidiaries and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall
not be procured, within thirty (30) days from the date of entry
thereof, and the Borrower or the relevant Obligated Party shall not,
within said period of thirty (30) days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal.
CREDIT AGREEMENT - PAGE 54
63
(i) The Borrower or any Obligated Party shall fail to pay when
due any principal of or interest on any Debt if the aggregate principal
amount of the affected Debt equals or exceeds One Hundred Thousand
Dollars ($100,000) (other than the Obligations), or the maturity of any
such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof or any
event shall have occurred with respect to any Debt in the aggregate
principal amount equal to or in excess of One Hundred Thousand Dollars
($100,000) that permits (or, with the giving of notice or lapse of time
or both, would permit) any holder or holders of such Debt or any Person
acting on behalf of such holder or holders to accelerate the maturity
thereof or require any such prepayment.
(j) This Agreement shall cease to be in full force and effect
or shall be declared null and void or the validity or enforceability
thereof shall be contested or challenged by the Borrower or any
Obligated Party or the Borrower or any Obligated Party shall deny that
it has any further liability or obligation under any of the Loan
Documents, or any lien or security interest created by the Loan
Documents shall for any reason (other than the negligence of the Agent
or the release thereof in accordance with the Loan Documents) cease to
be a valid, first priority perfected security interest in and lien upon
any of the Collateral purported to be covered thereby.
(k) Any of the following events shall occur or exist with
respect to the Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA from
a Multiemployer Plan or the reorganization, insolvency, or termination
of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, have
subjected or could in the reasonable opinion of Required Banks subject
the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed or could reasonably be expected to exceed
One Hundred Thousand Dollars ($100,000).
(l) Any Person or group (as defined in Section 13(d)(3) or
14(d)(2) of the Exchange Act) shall become after the Closing Date the
direct or indirect beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of more than 20% of the total voting power of all classes
of capital stock then outstanding of the Parent entitled (without
regard to the occurrence of any contingency) to vote in elections of
directors of the Parent.
(m) Any event of default shall occur under any Bond Document.
(n) Any event of default shall occur under any Deed of Trust.
CREDIT AGREEMENT - PAGE 55
64
Section 13.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent shall, if directed by Required Banks, do any one or more
of the following:
(a) Acceleration. By notice to the Borrower, declare all
outstanding principal of and accrued and unpaid interest on the Notes
and all other amounts payable by the Borrower under the Loan Documents
immediately due and payable, and the same shall thereupon become
immediately due and payable, without further notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
(b) Termination of Commitments. Terminate the Commitments
without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment from a court of
law.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Agent for the benefit of itself and the Banks to secure
payment and performance of the Obligations in accordance with the terms
of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded
by the laws of the State of Texas or any other jurisdiction, by any of
the Loan Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
subsections 13.1(e) or (f), the Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and unpaid
interest on the Notes and all other amounts payable by the Borrower under the
Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
Section 13.3 Performance by the Agent. If the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or attempt
to perform such covenant or agreement on behalf of the Borrower. In such event,
the Borrower shall, at the request of the Agent, promptly pay any amount
expended by the Agent or the Banks in connection with such performance or
attempted performance to the Agent at the Principal Office, together with
interest thereon at the applicable Default Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent nor
any Bank shall have any liability or responsibility for the performance of any
obligation of the Borrower under any Loan Document.
Section 13.4 Setoff. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to the Borrower or any Obligated Party (any such notice being
hereby expressly waived by the Borrower and each Obligated
CREDIT AGREEMENT - PAGE 56
65
Party), to set off and apply any and all deposits (general, time, demand,
provisional, or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrower or any
Obligated Party against any and all of the Obligations, irrespective of whether
or not the Agent or such Bank shall have made any demand under such Loan
Documents and although such Obligations may be unmatured. Each Bank agrees
promptly to notify the Borrower (with a copy to the Agent) after any such setoff
and application; provided, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights and remedies of each
Bank hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Bank may have.
Section 13.5 Continuance of Default. For purposes of all Loan
Documents, a Default shall be deemed to have continued and exist until the Agent
shall have actually received evidence satisfactory to the Agent that such
Default shall have been remedied.
Section 13.6 Cash Collateral. If an Event of Default shall have
occurred and be continuing, the Borrower shall, if requested by the Agent or
Required Banks, pledge to the Agent as security for the Obligations (but
excluding the Obligations arising in connection with the Bond L/C) an amount in
immediately available funds equal to the then outstanding Commercial L/C
Liabilities, such funds to be held in a cash collateral account at the Agent
without any right of withdrawal by the Borrower.
ARTICLE 14
The Agent
Section 14.1 Appointment, Powers and Immunities. Each Bank hereby
appoints and authorizes First Union to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the Agent
by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Neither the Agent nor any of its Affiliates,
officers, directors, employees, attorneys, or agents shall be liable for any
action taken or omitted to be taken by any of them hereunder or otherwise in
connection with any Loan Document or any of the other Loan Documents except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, the Agent (i) may treat the payee of any
Note as the holder thereof until it receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(ii) shall have no duties or responsibilities except those expressly set forth
in the Loan Documents, and shall not by reason of any Loan Document be a trustee
or fiduciary for any Bank; (iii) shall not be required to initiate any
litigation or collection proceedings under any Loan Document except to the
extent requested by Required Banks; (iv) shall not be responsible to the Banks
for any recitals, statements, representations, or warranties contained in any
Loan Document, or any certificate or other documentation referred to or provided
for in, or received by any of them under, any Loan Document, or for the value,
validity, effectiveness, enforceability, or sufficiency of any Loan Document or
any other documentation referred to or provided for therein or for any failure
by any Person to perform any
CREDIT AGREEMENT - PAGE 57
66
of its obligations thereunder; (v) may consult with legal counsel, independent
public accountants, and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants, or experts; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any matters not
expressly provided for by any Loan Document, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by Required Banks, and such instructions of Required
Banks and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks; provided, however, that the Agent shall not be required to
take any action which exposes it to personal liability or which is contrary to
any Loan Document or applicable law.
Section 14.2 Rights of Agent as a Bank. With respect to its
Commitments, the Loans made by it and the Notes issued to it, First Union (and
any successor acting as the Agent) in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other Bank and may exercise the
same as though it were not acting as the Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to, act as trustee under
indentures of, provide merchant banking services to, and generally engage in any
kind of banking, trust, or other business with the Borrower or any Obligated
Party, and any other Person who may do business with or own securities of the
Borrower or any Obligated Party, all as if it were not acting as the Agent and
without any duty to account therefor to the Banks.
Section 14.3 Defaults. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default (other than the non-payment of
principal of or interest on the Loans or of commitment fees) unless the Agent
has received notice from a Bank or the Borrower specifying such Default and
stating that such notice is a "Notice of Default." In the event that the Agent
receives such a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each Bank prompt notice of
each such non-payment). The Agent shall (subject to Section 14.1) take such
action with respect to such Default as shall be directed by Required Banks,
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable and
in the best interest of the Banks.
Section 14.4 Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY THE
AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 15.1 AND 15.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWER UNDER SECTIONS 15.1 AND 15.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE
AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN
CREDIT AGREEMENT - PAGE 58
67
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN
RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE FOR
ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
EXPRESS INTENTION OF THE BANKS THAT THE AGENT SHALL BE INDEMNIFIED HEREUNDER
FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY KIND OR
NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF THE AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF
THIS SECTION, EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR
ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF THE COMMITMENTS PERCENTAGES) OF
ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES)
INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE
AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 14.5 Independent Credit Decisions. Each Bank agrees that it has
independently and without reliance on the Agent or any other Bank, and based on
such documentation and information as it has deemed appropriate, made its own
credit analysis of the Borrower and decision to enter into any Loan Document and
that it will, independently and without reliance upon the Agent or any other
Bank, and based upon 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 any Loan Document. Except as otherwise specifically set
forth herein, the Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any Obligated Party of any Loan
Document or to inspect the properties or books of the Borrower or any Obligated
Party. Except for notices, reports, and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other financial information concerning the
affairs, financial condition, or business of the Borrower or any Obligated Party
(or any of their Affiliates) which may come into the possession of the Agent or
any of its Affiliates.
Section 14.6 Several Commitments. The Commitments and other obligations
of the Banks under any Loan Document are several. The default by any Bank in
making a Loan in accordance with its Revolving Commitment shall not relieve the
other Banks of their obligations under any Loan Document. In the event of any
default by any Bank in making any Loan, each nondefaulting bank shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. No Bank shall be
responsible for any act or omission of any other Bank.
CREDIT AGREEMENT - PAGE 59
68
Section 14.7 Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving notice thereof to the Banks and the Borrower, and the Agent may be
removed at any time by Required Banks if it has breached its obligations under
the Loan Documents. Upon any such resignation or removal, Required Banks will
have the right to appoint a successor Agent with the Borrower's consent, which
shall not be unreasonably withheld. If no successor Agent shall have been so
appointed by Required Banks and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of resignation or
the Required Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or any State
thereof and having combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000). Upon the acceptance of its appointment as successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all rights, powers, privileges, immunities, contractual obligations, and duties
of the resigning or removed Agent, and the resigning or removed Agent shall be
discharged from its duties and obligations under the Loan Documents. After any
Agent's resignation or removal as Agent, the provisions of this Article 14 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was the Agent.
Section 14.8 Agent Fee. The Borrower agrees to pay to the Agent, on the
Closing Date and on each anniversary of the Closing Date, a nonrefundable
administrative fee equal to $5,000.
ARTICLE 15
Miscellaneous
Section 15.1 Expenses. The Borrower hereby agrees to pay on demand: (a)
all costs and expenses of the Agent and the Banks arising in connection with the
preparation, negotiation, execution, and delivery of the Loan Documents executed
and delivered on the Closing Date, including, without limitation, the reasonable
fees and expenses of legal counsel for the Agent and the Banks; (b) (i) all
costs and expenses of the Agent and the Banks arising in connection with the
preparation, negotiation, execution, and delivery of any of the Loan Documents
executed and delivered after the Closing Date and any and all amendments or
other modifications to the Loan Documents and (ii) all costs and expenses of the
Agent arising in connection with the syndication of the Loans in accordance with
Section 15.8(f), including in all instances, without limitation, the fees and
expenses of legal counsel; (c) all costs and expenses of the Agent and the Banks
in connection with any Default and the enforcement of any Loan Document,
including, without limitation, the fees and expenses of legal counsel for the
Agent and each of the Banks (including the allocated costs of in house counsel);
(d) all transfer, stamp, documentary, or other similar taxes, assessments, or
charges levied by any Governmental Authority in respect of any Loan Document;
(e) all costs, expenses, assessments, and other charges incurred in connection
with any filing, registration, recording, or perfection of any security interest
or Lien contemplated by any Loan Document; and (f) all other costs and expenses
incurred by the Agent and the Banks in connection
CREDIT AGREEMENT - PAGE 60
69
with any Loan Document, including, without limitation, all costs, expenses, and
other charges incurred in connection with obtaining any audit or appraisal in
respect of the Collateral.
Section 15.2 Indemnification. THE BORROWER SHALL INDEMNIFY THE AGENT
AND EACH BANK AND EACH AFFILIATE (INCLUDING WITHOUT LIMITATION, CHASE
SECURITIES, INC.) THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) TO WHICH
ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE
TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY
OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED
RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON,
ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR
ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; PROVIDED THAT THE PERSON
ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION SHALL NOT BE INDEMNIFIED FROM OR
HELD HARMLESS AGAINST ANY LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, OR EXPENSES ARISING OUT OF OR RESULTING FROM
ITS GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS OBLIGATIONS UNDER THE
LOAN DOCUMENTS. WITHOUT LIMITING ANY PROVISION OF ANY LOAN DOCUMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER
THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) ARISING
OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 15.3 Limitation of Liability. None of the Agent, any Bank, or
any Affiliate, officer, director, employee, attorney, or agent thereof shall
have any liability with respect to, and the Borrower and, by the execution of
the Loan Documents to which it is a party, each Obligated Party, hereby waives,
releases, and agrees not to xxx any of them upon, any claim for any special,
indirect, incidental, consequential, or punitive damages suffered or incurred by
the Borrower or any Obligated Party in connection with, arising out of, or in
any way related to any of the Loan Documents, or any of the transactions
contemplated by any of the Loan Documents.
CREDIT AGREEMENT - PAGE 61
70
Section 15.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent or any Bank shall
have the right to act exclusively in the interest of the Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to the Borrower or any of the
Borrower's shareholders or any other Person.
Section 15.5 No Fiduciary Relationship. The relationship between the
Borrower and the Obligated Parties on the one hand and the Agent and each Bank
on the other is solely that of debtor and creditor, and neither the Agent nor
any Bank has any fiduciary or other special relationship with the Borrower or
any Obligated Parties, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between the Borrower and the
Obligated Parties on the one hand and the Agent and each Bank on the other and
any Bank to be other than that of debtor and creditor.
Section 15.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower or any Obligated Party fails to pay, perform, observe, or
discharge any or all of the obligations under the Loan Documents, any remedy at
law may prove to be inadequate relief to the Agent and the Banks. The Borrower
therefore agrees that the Agent and the Banks, if the Agent or the Required
Banks so request, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 15.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in the Loan Documents are
cumulative and not exclusive of any rights and remedies provided by law.
Section 15.8 Successors and Assigns.
(a) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns. The Borrower may not assign or transfer any of
its rights or obligations hereunder without the prior written consent
of the Agent and all of the Banks.
(b) Participations. Any Bank may sell participations to one or
more banks or other institutions in or to all or a portion of its
rights and obligations under the Loan Documents (including, without
limitation, all or a portion of its Commitments and the Loans owing to
it); provided, however, that (i) such Bank's obligations under the Loan
Documents (including, without limitation, its Commitments) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the
Borrower for the performance of such obligations, (iii) such Bank shall
remain the holder of its Notes and owner of its participation or other
interests for all purposes of any Loan Document, (iv) the Borrower
shall continue to deal
CREDIT AGREEMENT - PAGE 62
71
solely and directly with such Bank in connection with such Bank's
rights and obligations under the Loan Documents, and (v) such Bank
shall not sell a participation that conveys to the participant the
right to vote or give or withhold consents under any Loan Document,
other than the right to vote upon or consent to (1) any increase of
such Bank's Commitments, (2) any reduction of the principal amount of,
or interest to be paid on, the Loans or other Obligations of such Bank,
(3) any reduction of any commitment fee, or other amount payable to
such Bank under any Loan Document, (4) any postponement of any date for
the payment of any amount payable in respect of the Loans or other
Obligations of such Bank, or (5) the release of Borrower, any Obligated
Party or any Collateral. All costs and expenses incurred by a
participating institution as a result of such institution's becoming a
participant shall be borne solely by such institution.
(c) Assignments. The Borrower and each of the Banks agree that
any Bank (the "Assigning Bank") may at any time assign to an Eligible
Assignee all, or a proportionate part of all, of its rights and
obligations under the Loan Documents (including, without limitation,
its Commitments and Loans) (each an "Assignee"); provided, however,
that (i) each such assignment shall be of a consistent, and not a
varying, percentage of all of the assigning Bank's rights and
obligations under the Loan Documents, (ii) except in the case of an
assignment of all of a Bank's rights and obligations under the Loan
Documents, the amount of the Commitments of the assigning Bank being
assigned or if any Commitment has terminated or otherwise been
fulfilled, the outstanding principal amount of the related Loans
pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than Five Million Dollars ($5,000,000), (iii) the parties
to each such assignment shall execute and deliver to the Agent for its
acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Notes subject to such
assignment, and a processing and recordation fee of Three Thousand
Dollars ($3,000) payable by the assignor or assignee (and not the
Borrower); provided that such fee shall not be payable to Agent if the
Assigning Bank is making an assignment to one of its Affiliates; (iv)
the Agent must consent to such assignment, which consent shall not be
unreasonably withheld, with such consents to be evidenced by the
Agent's execution of the Assignment and Acceptance; (v) at no time
shall Agent hold Commitments less than any other Bank's Commitments;
and (vi) if no Event of Default has occurred and is continuing,
Borrower has consented to such assignment, which consent shall not be
unreasonably withheld. Upon such execution, delivery, acceptance, and
recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, or, if so specified in
such Assignment and Acceptance, the date of acceptance thereof by the
Agent, (x) the assignee thereunder shall be a party hereto as a "Bank"
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 of a Bank hereunder and under the Loan
Documents, and (y) the Bank that is an assignor thereunder 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 the Loan Documents (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of a Bank's
CREDIT AGREEMENT - PAGE 63
72
rights and obligations under the Loan Documents, such Bank shall cease
to be a party thereto). The Agent shall maintain at its Principal
Office a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of
the Loans owing to each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent, and the
Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes under the Loan Documents. The Register
shall be available for inspection by the Borrower or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
Upon its receipt of an Assignment and Acceptance executed by an
Assigning Bank and Assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "G" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after its receipt of
such notice the Borrower, at its expense, shall execute and deliver to
the Agent in exchange for the surrendered Notes new Notes to the order
of such Eligible Assignee in an amount equal to the Commitments or
Loans assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Bank has retained Commitments or Loans, Notes to the
order of the assigning Bank in an amount equal to the Commitments and
Loans retained by it hereunder (each such promissory note shall
constitute a "Note" for purposes of the Loan Documents). Such new Notes
shall be in an aggregate principal amount of the surrendered Notes,
shall be dated the effective date of such Assignment and Acceptance,
and shall otherwise be in substantially the form of the applicable
Exhibit hereto.
(d) Information. Any Bank may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant, any information relating to Parent or
the Subsidiaries furnished to such Bank by or on behalf of Parent or
the Subsidiaries.
(e) Pledge to Federal Reserve. Notwithstanding anything in
this Section 15.8 to the contrary, any Bank may, in the ordinary course
of its business, pledge its Notes to any United States Federal Reserve
Bank to secure advances made by such Federal Reserve Bank to such Bank.
(f) Syndication Fee. To the extent First Union assigns its
interest to other Banks, other than assignments arranged by Borrower to
Banks identified by Borrower, Borrower will pay a syndication fee in an
amount to be agreed upon among the parties.
Section 15.9 Survival. All representations and warranties made in any
Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by the Agent or any Bank or any closing
shall affect the representations and warranties or the right of the Agent or any
Bank to rely upon them. Without prejudice to the survival of any other
obligation of the Borrower
CREDIT AGREEMENT - PAGE 64
73
hereunder, the obligations of the Borrower under Article 7 and Sections 15.1 and
15.2 shall survive repayment of the Notes and termination of the Commitments.
Section 15.10 Entire Agreement. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 15.11 Amendments. No amendment or waiver of any provision of
any Loan Document to which the Borrower is a party, nor any consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be agreed or consented to by Required Banks and the Borrower, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, that no amendment, waiver,
or consent shall, unless in writing and signed by all of the Banks and the
Borrower, do any of the following: (a) increase Commitments of the Banks; (b)
reduce the principal of, or interest on, the Notes, or any fees or other amounts
payable hereunder; (c) postpone any date fixed for any payment of principal of,
or interest on, the Notes, or any fees or other amounts payable hereunder; (d)
waive or amend any of the conditions specified in Article 8; (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes or the number of Banks which shall be required for the Banks or any of
them to take any action under any Loan Document; (f) change any provision
contained in this Section 15.11; or (g) release any Collateral or release the
Borrower or any Obligated Party from liability. Notwithstanding anything to the
contrary contained in this Section, no amendment waiver, or consent shall be
made with respect to Article 14 hereof without the prior written consent of the
Agent.
Section 15.12 Maximum Interest Rate.
(a) No interest rate specified in any Loan Document shall at
any time exceed the Maximum Rate. If at any time the interest rate (the
"Contract Rate") for any Obligation shall exceed the Maximum Rate,
thereby causing the interest accruing on such Obligation to be limited
to the Maximum Rate, then any subsequent reduction in the Contract Rate
for such Obligation shall not reduce the rate of interest on such
Obligation below the Maximum Rate until the aggregate amount of
interest accrued on such Obligation equals the aggregate amount of
interest which would have accrued on such Obligation if the Contract
Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the
payment or the collection of interest in excess of the maximum amount
permitted by applicable law. If any excess of interest in such respect
is hereby provided for, or shall be adjudicated to be so
CREDIT AGREEMENT - PAGE 65
74
provided, in any Loan Document or otherwise in connection with this
loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors,
successors, or assigns of the Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the
use, forbearance, or detention of sums loaned pursuant hereto. In the
event any Bank ever receives, collects, or applies as interest any such
sum, such amount which would be in excess of the maximum amount
permitted by applicable law shall be applied as a payment and reduction
of the principal of the Obligations, and, if the principal of the
Obligations has been paid in full, any remaining excess shall forthwith
be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and each Bank
shall, to the extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee, or premium rather than as
interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the entire contemplated
term of the Obligations so that interest for the entire term does not
exceed the Maximum Rate.
Section 15.13 Notices. All notices and other communications provided
for in any Loan Document to which the Borrower or any Obligated Party is a party
shall be given or made in writing and telecopied, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof and, if to
an Obligated Party, at the address for notices for the Borrower, or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party given in accordance with this Section. Except as otherwise
provided in any Loan Document, all such communications shall be deemed to have
been duly given when transmitted by telecopy, subject to telephone confirmation
of receipt, or when personally delivered or, in the case of a mailed notice,
three (3) Business Days after being duly deposited in the mails, in each case
given or addressed as aforesaid; provided, however, notices to the Agent
pursuant to Section 6.3 shall not be effective until received by the Agent.
Section 15.14 Governing Law; Venue of Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. ANY
ACTION OR PROCEEDING AGAINST BORROWER UNDER OR IN CONNECTION WITH ANY LOAN
DOCUMENT MAY BE BROUGHT IN ANY STATE COURT LOCATED IN DALLAS, TEXAS OR TRENTON,
NEW JERSEY OR ANY FEDERAL COURT IN THE NORTHERN DISTRICT OF TEXAS OR THE
DISTRICT OF NEW JERSEY. BORROWER HEREBY IRREVOCABLY (a) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (b) WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT
IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. BORROWER AGREES THAT
SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 15.13 OF THIS AGREEMENT. NOTHING IN THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO SERVE
CREDIT AGREEMENT - PAGE 66
75
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR WITH
RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTION. ANY ACTION OR
PROCEEDING BY BORROWER AGAINST THE AGENT OR ANY BANK SHALL BE BROUGHT ONLY IN A
COURT LOCATED IN CHARLOTTE, NORTH CAROLINA.
Section 15.15 Counterparts. This Agreement may be executed in one or
more counterparts and on telecopy counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 15.16 Severability. Any provision of any Loan Document held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of any Loan Document and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 15.17 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 15.18 Non-Application of Chapter 346 of The Finance Code of
Texas. The provisions of Chapter 346 of The Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 15.19 Construction. The Borrower, each Obligated Party (by its
execution of the Loan Documents to which it is a party), the Agent, and each
Bank acknowledges that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review the Loan Documents
with its legal counsel and that the Loan Documents shall be construed as if
jointly drafted by the parties thereto.
Section 15.20 Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.
Section 15.21 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
CREDIT AGREEMENT - PAGE 67
76
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
TUFCO, L.P.
By: Tufco Tech, Inc.,
its Managing General Partner
By: /s/ XXXX XXXXXXX
--------------------------------
Name: Xxxx Xxxxxxx
------------------------------
Title: CFO/COO
-----------------------------
PARENT:
TUFCO TECHNOLOGIES, INC.
By: /s/ XXXX XXXXXXX
----------------------------------------
Name: Xxxx Xxxxxxx
--------------------------------------
Title: CFO/COO
-------------------------------------
Address for Notices to Borrower and Parent:
0000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Telephone No: 000-000-0000
Facsimile No: 000-000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Battle & Xxxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx xx Xxxxx
Bradford Ventures, Partners
0 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
CREDIT AGREEMENT - PAGE 68
77
AGENT:
Revolving Commitment: FIRST UNION NATIONAL BANK, individually as a
Bank and as the Agent
$4,500,000
By: /s/ XXXX X. XXXXX
----------------------------------------
Term Commitment: Name: Xxxx X. Xxxxx
Title: Vice President
$5,325,000
Address for Notices and Lending Office for
Base Rate Accounts and Eurodollar Accounts:
$9,825,000 Total 000 Xxxxxx Xxxx
Xxxx Xxxxxxx, Xxx Xxxxxx 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Attention: Xxxx X. Xxxxx
re: Tufco, L.P.
CREDIT AGREEMENT - PAGE 69
78
OTHER BANKS:
Revolving Commitment: CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
$4,500,000
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Term Commitment: Xxxxx X. Xxxxxx
Vice President
$5,325,000
Address for Notices:
X.X. Xxx 000000
$9,825,000 Total 00000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
CREDIT AGREEMENT - PAGE 70
79
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Term Note
"C" Master Guaranty
"D" Borrower Security Agreement
"E" Guarantor Security Agreement
"F" Joinder Agreement
"G" Assignment and Acceptance
"H" Compliance Certificate
"I" Notice of Borrowing, Conversion,
Continuation or Prepayment
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
1.1(a) Previous Senior Debt
8.1(g) Real Property
9.14 List of Subsidiaries
11.1 Debt
11.2 Existing Liens
11.5 Existing Investments
CREDIT AGREEMENT - PAGE 71
80
SCHEDULE 1.1(a)
TO
TUFCO, L.P.
CREDIT AGREEMENT
Previous Senior Debt
The Debt evidenced by that certain Second Amended and Restated Loan Agreement
dated as of November 13, 1997, between Tufco, L.P. and Bank One, Wisconsin.
Schedule 1.1(a) - Previous Senior Debt - Solo Page
81
SCHEDULE 8.1(g)
TO
TUFCO, L.P.
CREDIT AGREEMENT
Real Property
1. 0000 Xxxxx Xxxxx Xxxx
Xxxxx Xxx, Xxxxxxxxx 00000
Xxxxx County
2. 0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxxx Xxxxxx
3. 000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxxxxx Xxxxxx
Schedule 8.1(g) - Real Property - Solo Page
82
SCHEDULE 9.14
TO
TUFCO, L.P.
CREDIT AGREEMENT
List of Subsidiaries
I. FIRST TIER SUBSIDIARIES
Equity Equity Issued
Subsidiary Parent % Ownership Type Jurisdiction Authorized and Outstanding
---------- ------ ----------- ---- ------------ ---------- ---------------
A. Tufco Tech, Inc. Parent 100% Corp. Delaware 1,000 1,000
B. Technologies I, Inc. Parent 100% Corp. Delaware 1,000 1,000
C. Tufco, Inc. Parent 100% Corp. Delaware 1,000 1,000
D. TFCO, Inc. Parent 100% Corp. Delaware 1,000 1,000
E. Foremost Manufacturing Parent 100% Corp. Missouri 30,000 10,000
Company, Inc.
II. SECOND TIER SUBSIDIARIES
Subsidiary Owner % Interest Type Jurisdiction
---------- ----- ---------- ---- ------------
A. Borrower Tufco Tech, Inc. l% Limited Delaware
Partnership
Technologies I, Inc. 43%
Tufco, Inc. 28%
TFCO, Inc. 28%
Schedule 9.14 - List of Subsidiaries - Solo Page
83
SCHEDULE 11.1
TO
TUFCO, L.P.
CREDIT AGREEMENT
Debt
1. IBM Hardware Lease, dated June, 1997, for the original principal amount
of $452,938.
2. Debt relating to the Bonds with aggregate principal outstanding as of
the date hereof, $1,750,000.
3. The Previous Senior Debt.
Schedule 11.1 - Debt - Solo Page
84
SCHEDULE 11.2
TO
TUFCO, L.P.
CREDIT AGREEMENT
Existing Liens
========================================================================================================================
UCC-1 UCC-1
Company Secured Party Collateral No. Date
========================================================================================================================
Tufco, L.P. IBM Credit Leased IBM 97-163590 8/5/97
Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Tufco Technologies, Inc. Caterpillar Financial Leased lift 97-255060 12/17/97
Services Corporation trucks (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc. Bank One, Green Bay Collateral 121797 6/24/96
covered by (TX S/S)
certain contracts
described on
Addendum A
attached to the
UCC-1
financing
statement
------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc. Sanwa Leasing Leased copier 1563051 2/5/96
Corporation (WI S/S)
------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc. Sanwa Leasing Leased copier 1523537 7/24/95
Corporation (WI S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 93-171044 9/1/93
Corporation and Executive Roll Services Corporation equipment (TX S/S)
Manufacturing, Inc.
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 93-201087 10/18/93
Corporation and Executive Roll Services Corporation equipment (TX S/S)
Manufacturing, Inc.
------------------------------------------------------------------------------------------------------------------------
Executive Converting Georgia Pacific Consignment of 93-220010 11/16/93
Corporation Corporation bleached board (TX S/S)
and wrapping
paper
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 94-026341 2/10/94
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 94-060337 3/30/94
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Xxxx Equipment Co. Pallet Xxxx 94-062679 4/4/94
Corporation (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 94-194423 10/3/94
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Schedule 11.2 - Existing Liens - Page 1 of 2
85
========================================================================================================================
UCC-1 UCC-1
Company Secured Party Collateral No. Date
========================================================================================================================
Executive Converting Caterpillar Financial Leased 94-194424 10/3/94
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 95-014874 1/23/95
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 95-014875 1/23/95
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 95-014876 1/23/95
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting International Paper Consignment of 95-102410 5/22/95
Corporation Company goods (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Xxxx Equipment Co. New Caterpillar 95-219039 11/10/95
Corporation (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Caterpillar Financial Leased 97-037229 2/24/97
Corporation Services Corporation equipment (TX S/S)
------------------------------------------------------------------------------------------------------------------------
Executive Converting Georgia-Pacific Consignment of Vol. 11/17/93
Corporation Corporation bleached board 93006,
and wrapping Pg. 1512,
paper XXX
#000000
(Xxxxxx
Xx., XX)
------------------------------------------------------------------------------------------------------------------------
Schedule 11.2 - Existing Liens - Page 2 of 2
86
SCHEDULE 11.5
TO
TUFCO, L.P.
CREDIT AGREEMENT
Existing Investments
None
Schedule 11.5 - Existing Investments - Cover Page
87
EXHIBIT "A"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Revolving Note
EXHIBIT "A", Cover Page
88
REVOLVING NOTE
$_______________ Dallas, Texas ____________, 1998
FOR VALUE RECEIVED, the undersigned, TUFCO, L.P., a Delaware limited
partnership (the "Borrower"), hereby promises to pay to the order of
_______________________ (the "Bank"), at the Principal Office of the Agent, in
lawful money of the United States of America and in immediately available funds,
the principal amount of __________________________ DOLLARS
($______________________) or such lesser amount as shall equal the aggregate
unpaid principal amount of the Revolving Loans made by the Bank to the Borrower
under the Credit Agreement referred to below, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Revolving Loan, at such office, in like money and
funds, for the period commencing on the date of such Revolving Loan until such
Revolving Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The Borrower hereby authorizes the Bank to record in its records the
amount of each Revolving Loan and Type of Accounts established under each
Revolving Loan and all Continuations, Conversions and payments of principal in
respect thereof, which records shall, in the absence of manifest error,
constitute prima facie evidence of the accuracy thereof; provided, however, that
the failure to make such notation with respect to any such Revolving Loan or
payment shall not limit or otherwise affect the obligations of the Borrower
under the Credit Agreement or this Revolving Note.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement dated as of August 28, 1998, among the Borrower, Tufco
Technologies, Inc., the Bank, the other banks named therein and First Union
National Bank, as agent for such banks ("Agent") (such Credit Agreement, as the
same may be amended or otherwise modified from time to time, being referred to
herein as the "Credit Agreement"), and evidences Revolving Loans made by the
Bank thereunder. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity of this Revolving Note upon the happening of
certain stated events and for prepayments of Revolving Loans prior to the
maturity of this Revolving Note upon the terms and conditions specified in the
Credit Agreement. Capitalized terms used in this Revolving Note have the
respective meanings assigned to them in the Credit Agreement.
This Revolving Note shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United States
of America.
Except for any notices expressly required by the Loan Documents, the
Borrower and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this Revolving Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of
REVOLVING NOTE - Page 1
89
any kind, and consent to all extensions without notice for any period or periods
of time and partial payments, before or after maturity, and any impairment of
any collateral securing this Revolving Note, all without prejudice to the
holder. The holder shall similarly have the right to deal in any way, at any
time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release any such party or to release or substitute part
or all of the collateral securing this Revolving Note, or to grant any other
indulgences or forbearances whatsoever, without notice to any other party and
without in any way affecting the personal liability of any party hereunder.
TUFCO, L.P.
By: Tufco Tech, Inc.,
its general partner
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
REVOLVING NOTE - Page 2
90
EXHIBIT "B"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Term Note
EXHIBIT "B", Cover Page
91
TERM NOTE
$________________ Dallas, Texas ____________, 1998
FOR VALUE RECEIVED, the undersigned, TUFCO, L.P., a Delaware limited
partnership (the "Borrower"), hereby promises to pay to the order of
________________ (the "Bank"), at the Principal Office of the Agent, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ______________________ ($___________) or such lesser amount
as shall equal the aggregate unpaid principal amount of the Term Loan made by
the Bank to the Borrower under the Credit Agreement referred to below, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of such Term Loan, at such office, in
like money and funds, for the period commencing on the date of such Term Loan
until such Term Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The Borrower hereby authorizes the Bank to record in its records the
amount of the Term Loan and Type of Accounts established thereunder and all
Continuations, Conversions and payments of principal in respect thereto, which
records shall, in the absence of manifest error constitute prima facie evidence
of the accuracy thereof; provided, however, that the failure to make such
notation with respect to the Term Loan, or such Accounts or payment shall not
limit or otherwise affect the obligations of the Borrower under the Credit
Agreement or this Term Note.
This Term Note is one of the Term Notes referred to in the Credit
Agreement dated as of August 28, 1998, among the Borrower, Tufco Technologies,
Inc., the Bank, the other banks named therein and First Union National Bank, as
agent for such banks ("Agent") (such Credit Agreement, as the same may be
amended or otherwise modified from time to time, being referred to herein as the
"Credit Agreement") and evidences the Term Loan made by the Bank thereunder. The
Credit Agreement, among other things, contains provisions for acceleration of
the maturity of this Term Note upon the happening of certain stated events and
for prepayments of the Term Loan prior to the maturity of this Term Note upon
the terms and conditions specified in the Credit Agreement. Capitalized terms
used in this Term Note have the respective meanings assigned to them in the
Credit Agreement.
This Term Note shall be governed by and construed in accordance with
the laws of the State of Texas and the applicable laws of the United States of
America.
Except for any notice expressly required by the Loan Documents, the
Borrower and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this Term Note jointly and severally
waive notice, presentment, demand for payment, protest, notice of protest and
non-payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, grace and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Term Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions
TERM A NOTE - Page 1
92
of time for payment of any of said indebtedness, or to release any such party or
to grant any other indulgences or forbearances whatsoever, without notice to any
other party and without in any way affecting the personal liability of any party
hereunder.
TUFCO, L.P.
By: Tufco Tech, Inc.,
its general partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
TERM A NOTE - Page 2
93
EXHIBIT "C"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Master Guaranty
EXHIBIT "C", Cover Page
94
GUARANTY AGREEMENT
WHEREAS, TUFCO, L.P., a Delaware limited partnership (the "Borrower"),
has entered into that certain Credit Agreement dated August 28, 1998, among
Borrower, Tufco Technologies, Inc., the banks party thereto (the "Banks") and
FIRST UNION NATIONAL BANK, as agent for the Banks (the "Agent") (such Credit
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being hereinafter referred to as the "Credit Agreement", and capitalized
terms not otherwise defined herein shall have the same meaning as set forth in
the Credit Agreement);
WHEREAS, the execution of this Guaranty Agreement is a condition to the
Agent's and each Bank's obligations under the Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each of the undersigned parties and any party
hereafter added as a "Guarantor" hereto pursuant to a Joinder Agreement
(individually a "Guarantor" and collectively the "Guarantors"), hereby
irrevocably and unconditionally guarantees to Agent and the Banks the full and
prompt payment and performance of the Guaranteed Indebtedness (hereinafter
defined), this Guaranty Agreement being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all of the
"Obligations", as defined in the Credit Agreement and shall include any and all
post-petition interest and expenses (including attorneys' fees) whether or not
allowed under any bankruptcy, insolvency, or other similar law; provided that
the Guaranteed Indebtedness shall be limited, with respect to each Guarantor, to
an aggregate amount equal to the largest amount that would not render such
Guarantor's obligations hereunder subject to avoidance under Section 544 or 548
of the United States Bankruptcy Code or under any applicable state law relating
to fraudulent transfers or conveyances.
2. Each Guarantor under this Guaranty Agreement, and each guarantor
under other guaranties, if any, relating to the Credit Agreement (the "Related
Guaranties") which contain a contribution provision similar to that set forth in
this paragraph 2, together desire to allocate among themselves (collectively,
the "Contributing Guarantors"), in a fair and equitable manner, their
obligations arising under this Guaranty Agreement and the Related Guaranties.
Accordingly, in the event any payment or distribution is made by a Guarantor
under this Guaranty Agreement or a guarantor under a Related Guaranty (a
"Funding Guarantor") that exceeds its Fair Share (as defined below), that
Funding Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the amount of such other Contributing Guarantor's
Fair Share Shortfall (as defined below), with the result that all such
contributions will cause each Contributing Guarantor's Aggregate Payments (as
defined below) to equal its Fair Share. "Fair Share" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (i)
the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to
such Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty Agreement and the Related Guaranties in respect of the
obligations guarantied. "Fair Share Shortfall" means, with respect to a
Contributing Guarantor as of any date of determination, the excess, if any, of
the Fair Share of such Contributing Guarantor over the
GUARANTY AGREEMENT - Page 1
95
Aggregate Payments of such Contributing Guarantor. "Adjusted Maximum Amount"
means, with respect to a Contributing Guarantor as of any date of determination,
the maximum aggregate amount of the obligations of such Contributing Guarantor
under this Guaranty Agreement and the Related Guaranties, in each case
determined in accordance with the provisions hereof and thereof; provided that,
solely for purposes of calculating the "Adjusted Maximum Amount" with respect to
any Contributing Guarantor for purposes of this paragraph 2, the assets or
liabilities arising by virtue of any rights to or obligations of contribution
hereunder or under any similar provision contained in a Related Guaranty shall
not be considered as assets or liabilities of such Contributing Guarantor.
"Aggregate Payments" means, with respect to a Contributing Guarantor as of any
date of determination, the aggregate amount of all payments and distributions
made on or before such date by such Contributing Guarantor in respect of this
Guaranty Agreement and the Related Guaranties (including, without limitation, in
respect of this paragraph 2 or any similar provision contained in a Related
Guaranty). The amounts payable as contributions hereunder and under similar
provisions in the Related Guaranties shall be determined as of the date on which
the related payment or distribution is made by the applicable Funding Guarantor.
The allocation among Contributing Guarantors of their obligations as set forth
in this paragraph 2 or any similar provision contained in a Related Guaranty
shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder or under a Related Guaranty. Each Contributing Guarantor
under a Related Guaranty is a third party beneficiary to the contribution
agreement set forth in this paragraph 2.
3. This instrument shall be an absolute, continuing, irrevocable and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and each Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which Borrower may have against Agent, any
Bank or any other party, or which any Guarantor may have against Borrower,
Agent, any Bank or any other party, shall be available to, or shall be asserted
by, any Guarantor against Agent, any Bank or any subsequent holder of the
Guaranteed Indebtedness or any part thereof or against payment of the Guaranteed
Indebtedness or any part thereof.
4. If a Guarantor becomes liable for any indebtedness owing by Borrower
to Agent or any Bank by endorsement or otherwise, other than under this Guaranty
Agreement, such liability shall not be in any manner impaired or affected
hereby, and the rights of Agent and the Banks hereunder shall be cumulative of
any and all other rights that Agent and the Banks may ever have against such
Guarantor. The exercise by Agent and the Banks of any right or remedy hereunder
or under any other instrument, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy.
5. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise (after
expiration of any applicable grace or cure period afforded to Borrower in
writing, if any), the Guarantors shall, jointly and severally, promptly pay the
amount due thereon to Agent and the Banks, without notice or demand, in lawful
currency of the United States of America, and it shall not be necessary for
Agent or any Bank, in order to enforce such payment by any Guarantor, first to
institute suit or exhaust its remedies against Borrower or others liable on such
Guaranteed Indebtedness, or to enforce any rights against any collateral which
shall
GUARANTY AGREEMENT - Page 2
96
ever have been given to secure such Guaranteed Indebtedness. In the event such
payment is made by a Guarantor, then such Guarantor shall be subrogated to the
rights then held by Agent and any Bank with respect to the Guaranteed
Indebtedness to the extent to which the Guaranteed Indebtedness was discharged
by such Guarantor and, in addition, upon payment by such Guarantor of any sums
to Agent and any Bank hereunder, all rights of such Guarantor against Borrower,
any other guarantor or any Collateral arising as a result therefrom by way of
right of subrogation, reimbursement, or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full of the Guaranteed Indebtedness.
6. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by the Guarantors hereunder forthwith on demand by Agent or any Bank to
the extent permitted by applicable law.
7. Each Guarantor hereby agrees that its obligations under this
Guaranty Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including, without limitation, one or more of the following events, whether or
not with notice to or the consent of any Guarantor: (a) the taking or accepting
of collateral as security for any or all of the Guaranteed Indebtedness or the
release, surrender, exchange, or subordination of any collateral now or
hereafter securing any or all of the Guaranteed Indebtedness; (b) any partial
release of the liability of any Guarantor hereunder, or the full or partial
release of any other guarantor from liability for any or all of the Guaranteed
Indebtedness; (c) any disability of Borrower, or the dissolution, insolvency, or
bankruptcy of Borrower, any Guarantor, or any other party at any time liable for
the payment of any or all of the Guaranteed Indebtedness; (d) any renewal,
extension, modification, waiver, amendment, or rearrangement of any or all of
the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or compromise
that may be granted or given by Agent or any Bank to Borrower, any Guarantor, or
any other party ever liable for any or all of the Guaranteed Indebtedness; (f)
any neglect, delay, omission, failure, or refusal of Agent or any Bank to take
or prosecute any action for the collection of any of the Guaranteed Indebtedness
or to foreclose or take or prosecute any action in connection with any
instrument, document, or agreement evidencing, securing, or otherwise relating
to any or all of the Guaranteed Indebtedness; (g) the unenforceability or
invalidity of any or all of the Guaranteed Indebtedness or of any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (h) any payment by Borrower or any other party
to Agent or any Bank is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason Agent or any Bank is
required to refund any payment or pay the amount thereof to someone else; (i)
the settlement or compromise of any of the Guaranteed Indebtedness; (j) the
non-perfection of any security interest or lien securing any or all of the
Guaranteed Indebtedness; (k) any impairment of any collateral securing any or
all of the Guaranteed Indebtedness; (l) the failure of Agent or any Bank to sell
any collateral securing any or all of the Guaranteed Indebtedness in a
commercially reasonable manner or as otherwise required by law; (m) any change
in the corporate existence, structure, or ownership of Borrower; or (n) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, Borrower or any Guarantor (other than payment of the Guaranteed
Indebtedness).
GUARANTY AGREEMENT - Page 3
97
8. Each Guarantor represents and warrants to Agent and the Banks as
follows:
(a) All representations and warranties in the Credit Agreement
relating to it are true and correct as of the date hereof and on each date the
representations and warranties hereunder are restated pursuant to any of the
Loan Documents with the same force and effect as if such representations and
warranties had been made on and as of such date except to the extent that such
representations and warranties relate specifically to another date or to the
extent that a fact, event or circumstance has occurred that makes such
representation or warranty untrue but which is not prohibited to occur or exist
(or which does not cause an Event of Default) under the Loan Documents.
(b) It has, independently and without reliance upon Agent or
any Bank and based upon such documents and information as it has deemed
appropriate, made its own analysis and decision to enter into the Loan Documents
to which it is a party.
(c) It has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition and assets of
Borrower and it is not relying upon Agent or any Bank to provide (and neither
the Agent nor any Bank shall have any duty to provide) any such information to
it either now or in the future.
(d) The value of the consideration received and to be received
by each Guarantor as a result of Borrower's and the Banks' entering into the
Credit Agreement and each Guarantor's executing and delivering this Guaranty
Agreement is reasonably worth at least as much as the liability and obligation
of each Guarantor hereunder, and such liability and obligation and the Credit
Agreement have benefitted and may reasonably be expected to benefit each
Guarantor directly or indirectly.
9. Each Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Bank has any commitment
under the Credit Agreement, it will comply with all covenants set forth in the
Credit Agreement specifically applicable to it.
10. When an Event of Default exists, Agent and each Bank shall have the
right to set-off and apply against this Guaranty Agreement or the Guaranteed
Indebtedness or both, at any time and without notice to any Guarantor, any and
all deposits (general or special, time or demand, provisional or final, but
excluding any account established by a Guarantor as a fiduciary for another
party) or other sums at any time credited by or owing from Agent and the Banks
to any Guarantor whether or not the Guaranteed Indebtedness is then due and
irrespective of whether or not Agent or any Bank shall have made any demand
under this Guaranty Agreement. Each Bank agrees promptly to notify the Borrower
(with a copy to the Agent) after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff and
application. The rights and remedies of Agent and the Banks hereunder are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which Agent or any Bank may have.
11. (a) Each Guarantor hereby agrees that the Subordinated Indebtedness
(as defined below) shall be subordinate and junior in right of payment to the
prior payment in full of all Guaranteed Indebtedness as herein provided. The
Subordinated Indebtedness shall not be payable,
GUARANTY AGREEMENT - Page 4
98
and no payment of principal, interest or other amounts on account thereof, and
no property or guarantee of any nature to secure or pay the Subordinated
Indebtedness shall be made or given, directly or indirectly by or on behalf of
any Debtor (hereafter defined) or received, accepted, retained or applied by any
Guarantor unless and until the Guaranteed Indebtedness shall have been paid in
full in cash; except that prior to the occurrence and continuance of an Event of
Default, a Guarantor shall have the right to receive payments on the
Subordinated Indebtedness made in the ordinary course of business. After the
occurrence and during the continuance of an Event of Default, no payments of
principal or interest may be made or given, directly or indirectly, by or on
behalf of any Debtor or received, accepted, retained or applied by any Guarantor
unless and until the Guaranteed Indebtedness shall have been paid in full in
cash. If any sums shall be paid to a Guarantor by any Debtor or any other Person
on account of the Subordinated Indebtedness when such payment is not permitted
hereunder, such sums shall be held in trust by such Guarantor for the benefit of
Agent and the Banks and shall forthwith be paid to Agent without affecting the
liability of any Guarantor under this Guaranty Agreement and may be applied by
Agent against the Guaranteed Indebtedness in accordance with the Credit
Agreement. Upon the request of Agent, a Guarantor shall execute, deliver, and
endorse to Agent such documentation as Agent may request to perfect, preserve,
and enforce its rights hereunder. For purposes of this Guaranty Agreement and
with respect to a Guarantor, the term "Subordinated Indebtedness" means all
indebtedness, liabilities, and obligations of Borrower or any Obligated Party
other than such Guarantor (Borrower and such Obligated Parties herein the
"Debtors") to such Guarantor, whether such indebtedness, liabilities, and
obligations now exist or are hereafter incurred or arise, or are direct,
indirect, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such indebtedness, liabilities, or
obligations are evidenced by a note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such indebtedness,
obligations, or liabilities may, at their inception, have been, or may hereafter
be created, or the manner in which they have been or may hereafter be acquired
by such Guarantor.
(b) Each Guarantor agrees that any and all Liens (including
any judgment liens), upon any Debtor's assets securing payment of any
Subordinated Indebtedness shall be and remain inferior and subordinate to any
and all Liens upon any Debtor's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such Liens in favor of a
Guarantor, Agent or any Bank presently exist or are hereafter created or
attached. Without the prior written consent of Agent, no Guarantor shall (i)
file suit against any Debtor or exercise or enforce any other creditor's right
it may have against any Debtor, or (ii) foreclose, repossess, sequester, or
otherwise take steps or institute any action or proceedings (judicial or
otherwise, including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any obligations of any Debtor to such Guarantor or any
Liens held by such Guarantor on assets of any Debtor.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving any Debtor as debtor, Agent shall have the right to prove and vote any
claim under the Subordinated Indebtedness and to receive directly from the
receiver, trustee or other court custodian all dividends, distributions, and
payments made in respect of the Subordinated Indebtedness until the Guaranteed
Indebtedness has been paid in full in cash. Agent may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in accordance
with the Credit Agreement.
GUARANTY AGREEMENT - Page 5
99
(d) Each Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
12. Except for modifications made pursuant to the execution and
delivery of a Joinder Agreement (which needs to be signed only by the party
thereto), no amendment or waiver of any provision of this Guaranty Agreement or
consent to any departure by any Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Agent and Required
Banks except as otherwise provided in the Credit Agreement. No failure on the
part of Agent or any Bank to exercise, and no delay in exercising, any right,
power, or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
13. To the extent permitted by law, any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by Borrower
or others (including any Guarantor), with respect to any of the Guaranteed
Indebtedness shall, if the statute of limitations in favor of a Guarantor
against Agent or any Bank shall have commenced to run, toll the running of such
statute of limitations and, if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.
14. This Guaranty Agreement is for the benefit of Agent and the Banks
and their successors and assigns, and in the event of an assignment of the
Guaranteed Indebtedness, or any part thereof, the rights and benefits hereunder,
to the extent applicable to the indebtedness so assigned, may be transferred
with such indebtedness. This Guaranty Agreement is binding not only on each
Guarantor, but on each Guarantor's successors and assigns.
15. Each Guarantor recognizes that Agent and the Banks are relying upon
this Guaranty Agreement and the undertakings of each Guarantor hereunder and
under the other Loan Documents to which each is a party in making extensions of
credit to Borrower under the Credit Agreement and further recognizes that the
execution and delivery of this Guaranty Agreement and the other Loan Documents
to which each Guarantor is a party is a material inducement to Agent and the
Banks in entering into the Credit Agreement and continuing to extend credit
thereunder. Each Guarantor hereby acknowledges that there are no conditions to
the full effectiveness of this Guaranty Agreement or any other Loan Document to
which it is a party.
16. Any notice or demand to any Guarantor under or in connection with
this Guaranty Agreement or any other Loan Document to which it is a party shall
be deemed effective if given to the Guarantor, care of Borrower in accordance
with the notice provisions in the Credit Agreement.
17. The Guarantors shall, jointly and severally, pay on demand all
reasonable attorneys' fees and all other reasonable costs and expenses incurred
by Agent and the Banks in connection with the administration, enforcement, or
collection of this Guaranty Agreement.
GUARANTY AGREEMENT - Page 6
100
18. Each Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by Borrower of additional indebtedness, and
all other notices and demands with respect to the Guaranteed Indebtedness and
this Guaranty Agreement.
19. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
each Guarantor agrees that Agent and the Banks may exercise any and all rights
granted to any of them under the Credit Agreement and the other Loan Documents
without affecting the validity or enforceability of this Guaranty Agreement.
20. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
EACH GUARANTOR, AGENT AND THE BANKS WITH RESPECT TO EACH GUARANTOR'S GUARANTY OF
THE GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY
EACH GUARANTOR, AGENT AND THE BANKS AS A FINAL AND COMPLETE EXPRESSION OF THE
TERMS OF THE GUARANTY AGREEMENT, AND NO COURSE OF DEALING AMONG ANY GUARANTOR,
AGENT AND THE BANKS, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY,
SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL
AGREEMENTS AMONG ANY GUARANTOR, AGENT AND THE BANKS.
21. This Guaranty Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas and applicable laws of the
United States of America.
GUARANTY AGREEMENT - Page 7
101
EXECUTED as of the day and year first written above.
GUARANTORS:
TUFCO TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TUFCO TECH, INC.
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TECHNOLOGIES I, INC.
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TUFCO, INC.
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TFCO, INC.
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FOREMOST MANUFACTURING COMPANY, INC.
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
GUARANTY AGREEMENT - Page 8
102
EXHIBIT "D"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Borrower Security Agreement
EXHIBIT "D", Cover Page
103
SECURITY AGREEMENT
(Borrower)
THIS SECURITY AGREEMENT (the "Agreement") dated as of August 28, 1998,
is by and between TUFCO, L.P., a Delaware limited partnership (the "Debtor") and
FIRST UNION NATIONAL BANK, as agent for the Banks, as that term is defined below
(the "Secured Party").
R E C I T A L S:
Debtor is entering into that certain Credit Agreement dated of even
date herewith with Tufco Technologies, Inc., the lenders parties thereto (each
individually a "Bank" and collectively, the "Banks"), and the Secured Party as
agent for the Banks (such agreement as it may be amended or otherwise modified
from time to time herein as the "Credit Agreement"). The execution and delivery
of this Agreement is a condition to the Secured Party's and the Banks' entering
into the Credit Agreement and making the extensions of credit thereunder.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party and Banks to make
the Loans and issue the Letters of Credit under the Credit Agreement, the
parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"Account" means any "account," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased,
services rendered or the license of Intellectual Property, whether or
not earned by performance, (b) all accounts receivable of the Debtor,
(c) all rights of the Debtor to receive any payment of money or other
form of consideration, (d) all security pledged, assigned or granted to
or held by the Debtor to secure any of the foregoing, (e) all
guaranties of, or indemnifications with respect to, any of the
foregoing, (f) all rights of the Debtor as an unpaid seller of goods or
services, including, but not limited to, all rights of stoppage in
transit, replevin, reclamation and resale, and (g) all rights to
brokerage commissions.
"Chattel Paper" means any "chattel paper," as such term is
defined in Article or Chapter 9 of the UCC, now owned or hereafter
acquired by the Debtor.
SECURITY AGREEMENT (Borrower) - Page 1
104
"Collateral" has the meaning specified in Section 2.1 of
this Agreement.
"Copyright License" means any written agreement now or
hereafter in existence granting to the Debtor any right to use any
Copyright including, without limitation, the agreements identified on
Schedule 3.4.
"Copyrights" means all of the following: (a) all copyrights,
works protectable by copyright, copyright registrations and copyright
applications of the Debtor, including, without limitation, those
identified on Schedule 3.4; (b) all renewals, extensions and
modifications thereof; (c) all income, royalties, damages, profits and
payments relating to or payable under any of the foregoing; (d) the
right to xxx for past, present or future infringements of any of the
foregoing; and (e) all other rights and benefits relating to any of the
foregoing throughout the world; in each case, whether now owned or
hereafter acquired by the Debtor.
"Copyright Security Agreement" means a security agreement in a
form satisfactory to Secured Party pursuant to which the Debtor grants
to the Secured Party, for the benefit of the Banks, a first priority
security interest in the Copyrights and the Copyright Licenses for
purposes of recording such security interest with any copyright office
of a Governmental Authority, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"Deposit Accounts" means any and all deposit accounts or other
bank accounts now owned or hereafter acquired or opened by the Debtor,
and any account which is a replacement or substitute for any of such
accounts including, without limitation, those deposit accounts
identified on Schedule 3.2.
"Document" means any "document," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, including, without limitation, all documents of title and all
receipts covering, evidencing or representing goods now owned or
hereafter acquired by the Debtor.
"Equipment" means any "equipment," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor and, in any event, shall include, without limitation, all
machinery, furniture, trailers, rolling stock, vessels, aircraft and
vehicles now owned or hereafter acquired by the Debtor and any and all
additions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"Financial Assets" means any "financial asset," as such term
is defined in Article or Chapter 8 of the UCC.
SECURITY AGREEMENT (Borrower) - Page 2
105
"Fixtures" means all of the following now owned or hereafter
acquired by Debtor: plant fixtures; business fixtures; other fixtures
and storage office facilities, wherever located; and all additions and
accessions thereto and replacements therefor.
"General Intangibles" means any "general intangibles," as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by the Debtor and, in any event, shall include,
without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (a) all of the Debtor's Intellectual
Property together with all of the Debtor's trade secrets, proprietary
information, customer lists, designs and inventions; (b) all of the
Debtor's books, records, data, plans, manuals, computer software,
computer tapes, computer disks, computer programs, source codes, object
codes and all rights of the Debtor to retrieve data and other
information from third parties; (c) all of the Debtor's contract
rights, which include, without limitation, the following: (i) all
rights of the Debtor to receive moneys due and to become due under or
pursuant to such agreements, (ii) all rights of the Debtor to receive
proceeds of any insurance, indemnity, warranty, or guaranty with
respect to such agreements, (iii) all claims of the Debtor for damages
arising out of or for breach of or default under such agreements, and
(iv) all rights of the Debtor to terminate such agreements, to perform
thereunder and to compel performance and otherwise exercise all rights
and remedies thereunder, (d) all of Debtor's partnership interests,
joint venture interests, and certificates of deposit; (e) all rights of
the Debtor to payment under letters of credit and similar agreements;
(f) all tax refunds and tax refund claims of the Debtor; (g) all choses
in action and causes of action of the Debtor (whether arising in
contract, tort or otherwise and whether or not currently in litigation)
and all judgments in favor of the Debtor; (h) all rights and claims of
the Debtor under warranties and indemnities; and (i) all rights of the
Debtor under any insurance, surety or similar contract or arrangement.
"Instrument" means any "instrument," as such term is defined
in Article or Chapter 9 of the UCC, now owned or hereafter acquired by
the Debtor, and, in any event, shall include all promissory notes,
drafts, bills of exchange and trade acceptances of the Debtor, whether
now owned or hereafter acquired.
"Intellectual Property" means the Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.
"Inventory" means any "inventory," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all goods and other personal property of the Debtor that are held
for sale or lease or to be furnished under any contract of service; (b)
all raw materials, work-in-process, finished goods, inventory, supplies
and materials of the Debtor; (c) all wrapping, packaging, advertising
and shipping materials of the Debtor; (d) all goods that have been
returned to, repossessed by or stopped in transit by the Debtor; and
(e) all Documents evidencing any of the foregoing.
SECURITY AGREEMENT (Borrower) - Page 3
106
"Investment Property" means any "investment property" as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by the Debtor, and, in any event, shall include,
without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (a) any security, whether
certificated or uncertificated; (b) any security entitlement; (c) any
securities account (including, without limitation, those described on
Schedule 3.2); (d) any commodity contract; and (e) any commodity
account (including, without limitation, those identified on Schedule
3.2).
"Patent License" means any written agreement now or hereafter
in existence granting to the Debtor any right to use any invention on
which a Patent is in existence, including, without limitation, the
agreements identified on Schedule 3.4.
"Patents" means all of the following: (a) all patents, patent
applications and patentable inventions of the Debtor, including without
limitation, those identified on Schedule 3.4, and all of the inventions
and improvements described and claimed therein; (b) all continuations,
divisions, renewals, extensions, modifications, substitutions,
continuations-in-part or reissues of any of the foregoing; (c) all
income, royalties, profits, damages, awards and payments relating to or
payable under any of the foregoing; (d) the right to xxx for past,
present and future infringements of any of the foregoing; and (e) all
other rights and benefits relating to any of the foregoing throughout
the world; in each case, whether now owned or hereafter acquired by the
Debtor.
"Patent Security Agreement" means a security agreement in a
form satisfactory to Secured Party pursuant to which the Debtor grants
to the Secured Party, for the benefit of the Banks, a first priority
security interest in the Patents and the Patent Licenses for purposes
of recording such security interest with any patent office of a
Governmental Authority, as such agreement may be amended, supplemented
or otherwise modified from time to time.
"Pledged Collateral" means the Pledged Shares and the
Instruments evidencing the obligations of Debtor's subsidiaries to
Debtor described in Section 2.1(c).
"Pledged Shares" means the shares of capital stock or other
equity, partnership or membership interests identified on Schedule 1.1
attached hereto or on Schedule 1 to an amendment to this Agreement in
the form of Exhibit A hereto.
"Proceeds" means any "proceeds," as such term is defined in
Article or Chapter 9 of the UCC and, in any event, shall include, but
not be limited to, (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Debtor from time to time
with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the Debtor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting, or purporting to act, for
SECURITY AGREEMENT (Borrower) - Page 4
107
or on behalf of any Governmental Authority), and (c) any and all other
amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Trademark License" means any written agreement now or
hereafter in existence granting to the Debtor any right to use any
Trademark, including, without limitation, the agreements identified on
Schedule 3.4.
"Trademarks" means all of the following: (a) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing appear,
all registrations and recordings thereof and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
state thereof or any other country or any political subdivision
thereof, including, without limitation, those identified in Schedule
3.4; (b) all reissues, extensions and renewals thereof; (c) all income,
royalties, damages and payments now or hereafter relating to or payable
under any of the foregoing, including, without limitation, damages or
payments for past or future infringements of any of the foregoing; (d)
the right to xxx for past, present and future infringements of any of
the foregoing; (e) all rights corresponding to any of the foregoing
throughout the world; and (f) all goodwill associated with and
symbolized by any of the foregoing; in each case, whether now owned or
hereafter acquired by the Debtor.
"Trademark Security Agreement" means a security agreement in a
form satisfactory to Secured Party which the Debtor grants to the
Secured Party, for the benefit of the Banks, a first priority security
interest in the Trademarks and the Trademark Licenses for purposes of
recording such security interest with the trademark office of any
Governmental Authority, as such agreement may be amended, supplemented
or otherwise modified from time to time.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas provided, that if, by applicable law, the perfection or
effect of perfection or non-perfection of the security interest created
hereunder in any Collateral is governed by the Uniform Commercial Code
as in effect on or after the date hereof in any other jurisdiction,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or the effect of perfection or nonperfection.
Section 1.2 Other Definitional Provisions. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. References to
"Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. All
references to statutes and regulations
SECURITY AGREEMENT (Borrower) - Page 5
108
shall include any amendments of the same and any successor statutes and
regulations. References to particular sections of the UCC should be read to
refer also to parallel sections of the Uniform Commercial Code as enacted in
each state or other jurisdiction where any portion of the Collateral is or may
be located. Terms used herein, which are defined in the UCC, unless otherwise
defined herein or in the Credit Agreement, shall have the meanings determined in
accordance with the UCC.
ARTICLE 2
Security Interest
Section 2.1 Security Interest. As collateral security for the prompt
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration or otherwise), the Debtor hereby pledges and assigns
to the Secured Party, and grants to the Secured Party a continuing lien on and
security interest in, all of the Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments, including, without limitation, or in
addition, all instruments evidencing indebtedness from time to
time owed to the Debtor by the Subsidiaries of the Debtor, and
all interest, cash and other property from time to time
received, receivable or otherwise distributed or distributable
in respect of or in exchange for any or all of such
indebtedness;
(d) all General Intangibles;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
(h) all Inventory;
(i) all Financial Assets and Investment Property, including,
without limitation or in addition, the following:
(1) all the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends,
cash, Instruments and other property from time to
time
SECURITY AGREEMENT (Borrower) - Page 6
109
received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or
all of the Pledged Shares;
(2) all additional shares of stock of the Subsidiaries of
Debtor from time to time owned or acquired by the
Debtor in any manner, and all dividends, cash,
Instruments and other property from time to time
received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or
all of such shares; and
(j) all Deposit Accounts of the Debtor and all funds,
certificates, Documents, Instruments, checks, drafts, wire
transfer receipts and other earnings, profits or other
Proceeds from time to time representing, evidencing, deposited
into or held in the Deposit Accounts; and
(k) all products and Proceeds, in cash or otherwise, of any of the
property described in the foregoing clauses (a) through (j).
Section 2.2 Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein, (a) the Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of its rights or remedies hereunder shall not release the Debtor from any of
its duties or obligations under such documentation, (c) the Secured Party shall
not have any obligation under any of such documentation included in the
Collateral by reason of this Agreement, and (d) the Secured Party shall not be
obligated to perform any of the obligations of the Debtor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
ARTICLE 3
Representations and Warranties
To induce the Secured Party and the Banks to enter into this Agreement
and the Credit Agreement, the Debtor represents and warrants to the Secured
Party and the Banks that:
Section 3.1 Location of Equipment, Fixtures and Inventory; Third
Parties in Possession. All of the Equipment, Fixtures and Inventory are located
at the places specified in Schedule 3.1. Schedule 3.1 correctly identifies the
landlords or mortgagees, if any, of each location identified in Schedule 3.1.
Except for the Persons identified on Schedule 3.2, no Person other than Debtor
and Secured Party has possession of any of the Collateral. None of the
Collateral other than the Pledged Stock has been located in any location within
the past four months other than as set forth on Schedule 3.1.
SECURITY AGREEMENT (Borrower) - Page 7
110
Section 3.2 Deposit, Commodity and Securities Accounts. Schedule 3.2
correctly identifies all deposit, commodity and securities accounts owned by
Debtor and the institutions holding such accounts. No Person other than Debtor
has control over any Investment Property.
Section 3.3 Office Locations; Fictitious Names; Tax I.D. Number. The
principal place of business and the chief executive office of Debtor is
identified on Schedule 3.1. Schedule 3.1 also sets forth all other places where
Debtor keeps its books and records and all other locations where Debtor has a
place of business. Debtor does not do business and has not done business during
the past five years under any trade-name or fictitious business name except as
disclosed on Schedule 3.3. Debtor's United States Federal Income Tax I.D. Number
is identified on Schedule 3.3.
Section 3.4 Delivery of Collateral. Except as provided by Section 4.2,
Debtor has delivered to Secured Party all Collateral the possession of which is
necessary to perfect the security interest of Secured Party therein. All
certificates of title evidencing Equipment have been delivered to Secured Party
to the extent required by Section 10.10 of the Credit Agreement.
Section 3.5 Intellectual Property. All Intellectual Property of the
Debtor that is registered with or for which an application for registration has
been filed with any Governmental Authority is identified on Schedules 3.4, and
such information is true, correct and complete.
ARTICLE 4
Covenants
The Debtor covenants and agrees with the Secured Party that until the
Obligations are paid and performed in full, all Revolving Commitments of the
Secured Party and the Banks to the Debtor have expired or have been terminated
and no Letter of Credit remains outstanding:
Section 4.1 Accounts. The Debtor shall, in accordance with its
customary business practices, endeavor to collect or cause to be collected from
each account debtor under its Accounts, as and when due, any and all amounts
owing under such Accounts. Without the prior written consent of the Secured
Party, the Debtor shall not, except in the ordinary course of business and in no
event when an Event of Default exists, (a) grant any extension of time for any
payment with respect to any of the Accounts beyond 120 days after such payment's
due date, (b) compromise, compound, or settle any of the Accounts for less than
the full amount thereof, (c) release, in whole or in part, any Person liable for
payment of any of the Accounts, (d) allow any credit or discount for payment
with respect to any Account other than trade or other customary discounts
granted in the ordinary course of business, or (e) release any Lien or guaranty
securing any Account unless the Account has been paid.
Section 4.2 Further Assurances; Exceptions to Perfection. At any time
and from time to time, upon the request of the Secured Party, and at the sole
expense of the Debtor, the Debtor shall, subject to the exceptions to the
creation, perfection and/or protection of Liens permitted by
SECURITY AGREEMENT (Borrower) - Page 8
111
Section 10.10 of the Credit Agreement, promptly execute and deliver all such
further agreements, documents and instruments and take such further action as
the Secured Party may reasonably deem necessary or appropriate to preserve and
perfect its security interest in the Collateral and carry out the provisions and
purposes of this Agreement or to enable the Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.
Without limiting the generality of the foregoing, the Debtor shall, upon
reasonable request by the Secured Party, but subject to the exceptions to the
creation, perfection and/or protection of liens permitted by Section 10.10 of
the Credit Agreement, (a) execute and deliver to the Secured Party such
financing statements as the Secured Party may from time to time require; (b)
take such action after a Default as the Secured Party may request to permit the
Secured Party to have control over any Investment Property or any Deposit
Account; (c) deliver to the Secured Party all Collateral the possession of which
is necessary to perfect the security interest therein, duly endorsed and/or
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party; except that, prior to the
occurrence of a Default, a Debtor may: (i) retain for collection in the ordinary
course of business checks representing Proceeds of Accounts received in the
ordinary course of business; (ii) retain any letters of credit received in the
ordinary course of business; (iii) retain and utilize in the ordinary course of
business all dividends and interest paid in respect to any of the Pledged
Collateral or any other Investment Property; and (iv) retain any Documents
received and further negotiated in the ordinary course of business; (d) deliver
any and all certificates of title, applications for title or similar evidence of
ownership of Equipment and cause Secured Party to be named as lienholder
thereon; and (e) execute and deliver to the Secured Party such other agreements,
documents and instruments as the Secured Party may reasonably require to perfect
and maintain the validity, effectiveness and priority of the Liens intended to
be created by the Loan Documents.
Section 4.3 Third Parties in Possession of Collateral. Except as
otherwise permitted by Section 10.10 of the Credit Agreement, Debtor shall not
permit any third Person (including any warehouseman, bailee, agent, consignee or
processor) to hold any Collateral, unless Debtor shall: (i) notify such third
Person of the security interests created hereby; (ii) instruct such Person to
hold all such Collateral for Secured Party's account subject to Secured Party's
instructions; and (iii) take all other actions the Secured Party reasonably
deems necessary to perfect and protect its and the Debtor's interests in such
Collateral pursuant to the requirements of the UCC of the applicable
jurisdiction where the warehouseman, bailee, consignee, agent, processor or
other third Person is located (including the filing of a financing statement in
the proper jurisdiction naming the applicable third Person as debtor and the
Debtor as secured party and notifying the third Person's secured lenders of the
Debtor's interest in such Collateral before the third Person receives possession
of the Collateral in question).
Section 4.4 Corporate Changes. The Debtor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading, and
shall not change its United States Federal Tax I.D. Number unless the Debtor
shall have given the Secured Party thirty (30) days prior written notice thereof
and shall have taken all action reasonably deemed necessary or desirable by the
Secured Party to protect its Liens with the perfection and priority thereof
required by the Loan Documents.
SECURITY AGREEMENT (Borrower) - Page 9
112
The Debtor shall not change its principal place of business, chief executive
office or the place where it keeps its books and records unless it shall have
given the Secured Party thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by the Secured Party to
cause its security interest in the Collateral to be perfected with the priority
required by the Loan Documents.
Section 4.5 Equipment, Fixtures and Inventory. The Debtor shall keep
the Equipment, Fixtures and Inventory at (or in transit to) any of the locations
specified on Schedule 3.1 hereto or, upon thirty (30) days prior written notice
to the Secured Party, at such other places within the United States of America
where all action required to perfect the Secured Party's security interest in
such Collateral with the priority required by the Loan Documents shall have been
taken.
Section 4.6 Warehouse Receipts Non-Negotiable. The Debtor agrees that
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any portion of the Collateral, such warehouse receipt or
receipt in the nature thereof shall not be "negotiable" (as such term is used in
Section 7.104 of the UCC) unless such warehouse receipt or receipt in the nature
thereof is delivered to the Secured Party.
Section 4.7 Voting Rights; Distributions, Etc. So long as no Event of
Default shall have occurred and be continuing, the Debtor shall be entitled to
exercise any and all voting and other consensual rights (including, without
limitation, the right to give consents, waivers and notifications) pertaining to
any of the Pledged Collateral or any other Investment Property; provided,
however, that no vote shall be cast or consent, waiver or ratification given or
action taken without the prior written consent of the Secured Party which would
be inconsistent with or violate any provision of this Agreement or any other
Loan Document.
Section 4.8 Transfers and Other Liens; Additional Investments. Except
as is not prohibited by the terms of the Credit Agreement or this Agreement, the
Debtor agrees that it will (i) cause each issuer of any of the Collateral not to
issue any shares of stock, notes or other securities or instruments in addition
to or in substitution for any of the Collateral, (ii) pledge hereunder,
immediately upon its acquisition thereof, any and all such shares of stock,
membership interests, notes or instruments, and (iii) promptly, (and in any
event within 3 Business Days) deliver to the Secured Party an amendment hereto,
duly executed by the Debtor, in substantially the form of Exhibit A hereto (an
"Amendment"), in respect of such shares of stock, membership interests, notes or
instruments, together with all certificates, notes or other instruments
representing or evidencing the same. The Debtor hereby (i) authorizes the
Secured Party to attach each Amendment to this Agreement, and (ii) agrees that
all such shares of stock, membership interests, notes or instruments listed on
any Amendment delivered to the Secured Party shall for all purposes hereunder
constitute Pledged Collateral.
Section 4.9 Intellectual Property Covenants. If, before the Obligations
are paid in full, Debtor obtains any new Intellectual Property or rights thereto
or becomes entitled to the benefit of any Intellectual Property, Debtor shall
give to Secured Party prompt written notice thereof, and shall execute and
deliver, in form and substance satisfactory to Secured Party, a Copyright
SECURITY AGREEMENT (Borrower) - Page 10
113
Security Agreement, Patent Security Agreement or Trademark Security Agreement,
as applicable, describing any such new Intellectual Property. Debtor shall: (a)
prosecute diligently any copyright, patent, or trademark application at any time
pending which is necessary for the conduct of Debtor's business; (b) make
application on all new copyrights, patents and trademarks as reasonably deemed
appropriate by Debtor; (c) preserve and maintain all rights in the Intellectual
Property that are necessary for the conduct of Debtor's business; and (d) upon
and after the occurrence and during the continuance of an Event of Default, use
its reasonable efforts to obtain any consents, waivers or agreements necessary
to enable Secured Party to exercise its remedies with respect to the
Intellectual Property. Debtor shall not abandon any pending copyright, patent or
trademark application, or Copyright, Patent, Trademark or any other Intellectual
Property which is necessary for the conduct of Debtor's business without the
prior written consent of Secured Party.
Section 4.10 Deposit, Commodity and Security Accounts. Debtor shall not
open any new deposit, commodity or security account or otherwise utilize any
such account other than the accounts identified on Schedule 3.2 unless Debtor
shall have given the Secured Party thirty (30) days prior written notice thereof
and shall have taken all action deemed necessary or desirable by the Secured
Party to cause its security interest therein to be perfected with priority
required by the Loan Documents. Prior to the occurrence and continuance of a
Default, the Debtor may make purchases and sales of Investment Property and
Financial Assets in accordance with the restrictions on investment set out in
the Credit Agreement. After the occurrence and during the continuance of an
Event of Default the Debtor shall not be authorized to make purchases and sales
of the Investment Property or Financial Assets and Debtor shall take such steps
as Secured Party may reasonably request to give Secured Party control over all
Investment Property and Financial Assets. Debtor will not give any party control
over any Investment Property or Financial Assets.
ARTICLE 5
Rights of the Secured Party
Section 5.1 POWER OF ATTORNEY. THE DEBTOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE SECURED PARTY AND ANY OFFICER OR AGENT THEREOF,
WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH
FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF THE DEBTOR OR IN ITS OWN
NAME, TO TAKE, WHEN A DEFAULT EXISTS, ANY AND ALL ACTIONS AND TO EXECUTE ANY AND
ALL DOCUMENTS AND INSTRUMENTS WHICH THE SECURED PARTY AT ANY TIME AND FROM TIME
TO TIME DEEMS NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS
AGREEMENT AND, WITHOUT LIMITING THE GENERALITY OF THE FORE GOING, THE DEBTOR
HEREBY GIVES THE SECURED PARTY THE POWER AND RIGHT ON BEHALF OF THE DEBTOR AND
IN ITS OWN NAME TO DO ANY OF THE FOLLOWING WHEN A DEFAULT EXISTS, WITH NOTICE TO
DEBTOR BUT WITHOUT THE CONSENT OF THE DEBTOR:
SECURITY AGREEMENT (Borrower) - Page 11
114
(i) to demand, xxx for, collect or receive, in the name
of the Debtor or in its own name, any money or property at any time
payable or receivable on account of or in exchange for any of the
Collateral and, in connection therewith, endorse checks, notes, drafts,
acceptances, money orders, documents of title or any other instruments
for the payment of money under the Collateral or any policy of
insurance;
(ii) to pay or discharge taxes, Liens or other
encumbrances levied or placed on or threatened against the Collateral;
(iii) to notify post office authorities to change the
address for delivery of mail of the Debtor to an address designated by
the Secured Party and to receive, open, and dispose of mail addressed
to the Debtor;
(iv) (A) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of
any and all monies due and to become due thereunder directly to the
Secured Party or as the Secured Party shall direct (Debtor agrees that
if any Proceeds of any Collateral (including payments made in respect
of Accounts) shall be received by the Debtor while an Event of Default
exists, the Debtor shall promptly deliver such Proceeds to the Secured
Party with any necessary endorsements, and until such Proceeds are
delivered to the Secured Party, such Proceeds shall be held in trust by
the Debtor for the benefit of the Secured Party and shall not be
commingled with any other funds or property of the Debtor); (B) to
receive payment of and receipt for any and all monies, claims and other
amounts due and to become due at any time in respect of or arising out
of any Collateral; (C) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, proxies, stock powers, verifications and
notices in connection with accounts and other documents relating to the
Collateral; (D) to commence and prosecute any suit, action or
proceeding at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Debtor with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges
or releases as the Secured Party may deem appropriate; (G) to exchange
any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms as the Secured Party may
determine; (H) to add or release any guarantor, indorser, surety or
other party to any of the Collateral; (I) to renew, extend or otherwise
change the terms and conditions of any of the Collateral; (J) to grant
or issue any exclusive or nonexclusive license under or with respect to
any of the Intellectual Property (subject to the rights of third
parties under pre-existing licenses); (K) to endorse the Debtor's name
on all applications, documents, papers and instruments necessary or
desirable in order for the Secured Party to use any of the Intellectual
Property; (L) to make, settle, compromise or adjust any claims under or
pertaining to any of the Collateral
SECURITY AGREEMENT (Borrower) - Page 12
115
(including claims under any policy of insurance); and (M) to sell,
transfer, pledge, convey, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Secured Party were the absolute owner thereof for all
purposes, and to do, at the Secured Party's option and the Debtor's
expense, at any time, or from time to time, all acts and things which
the Secured Party deems necessary to protect, preserve, maintain, or
realize upon the Collateral and the Secured Party's security interest
therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11.
The Secured Party shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or implicitly
granted to the Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Neither the Secured Party nor any
Person designated by the Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law, except any of the
same resulting from its or their gross negligence or willful misconduct. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.
Section 5.2 Assignment by the Secured Party. The Secured Party and each
Bank may at any time assign or otherwise transfer all or any portion of their
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, the Obligations) to any other Person, to the
extent permitted by, and upon the conditions contained in, the Credit Agreement,
and such Person shall thereupon become vested with all the benefits thereof
granted to the Secured Party and the Banks, respectively, herein or otherwise.
Section 5.3 Possession; Reasonable Care. The Secured Party may, from
time to time, in its sole discretion, appoint one or more agents to hold
physical custody, for the account of the Secured Party, of any or all of the
Collateral that the Secured Party has a right to possess. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Collateral.
SECURITY AGREEMENT (Borrower) - Page 13
116
ARTICLE 6
Default
Section 6.1 Rights and Remedies. If an Event of Default shall have
occurred and be continuing, the Secured Party shall have the following rights
and remedies:
(i) In addition to all other rights and remedies
granted to the Secured Party in this Agreement or in any other Loan
Document or by applicable law, the Secured Party shall have all of the
rights and remedies of a secured party under the UCC (whether or not
the UCC applies to the affected Collateral). Without limiting the
generality of the foregoing, the Secured Party may (A) without demand
or notice to the Debtor, collect, receive or take possession of the
Collateral or any part thereof and for that purpose the Secured Party
may enter upon any premises on which the Collateral is located and
remove the Collateral therefrom or render it inoperable, and/or (B)
sell, lease or otherwise dispose of the Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at
the Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Secured Party may
deem commercially reasonable or otherwise as may be permitted by law.
The Secured Party shall have the right at any public sale or sales,
and, to the extent permitted by applicable law, at any private sale or
sales, to bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) and become a purchaser of the Collateral
or any part thereof free of any right or equity of redemption on the
part of the Debtor, which right or equity of redemption is hereby
expressly waived and released by the Debtor. Upon the request of the
Secured Party, the Debtor shall assemble the Collateral and make it
available to the Secured Party at any place designated by the Secured
Party that is reasonably convenient to the Debtor and the Secured
Party. The Debtor agrees that the Secured Party shall not be obligated
to give more than ten (10) days prior written notice of the time and
place of any public sale or of the time after which any private sale
may take place and that such notice shall constitute reasonable notice
of such matters. The Secured Party shall not be obligated to make any
sale of Collateral if it shall determine not to do so, regardless of
the fact that notice of sale of Collateral may have been given. The
Secured Party may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same
was so adjourned. The Debtor shall be liable for all reasonable
expenses of retaking, holding, preparing for sale or the like, and all
reasonable attorneys' fees, legal expenses and other costs and expenses
incurred by the Secured Party in connection with the collection of the
Obligations and the enforcement of the Secured Party's rights under
this Agreement. The Debtor shall remain liable for any deficiency if
the Proceeds of any sale or other disposition of the Collateral applied
to the Obligations are insufficient to pay the Obligations in full. The
Secured Party may apply the Collateral against the Obligations as
provided in the Credit Agreement. The Debtor waives all rights of
marshalling, valuation and appraisal in respect of the Collateral. Any
cash held by the Secured Party
SECURITY AGREEMENT (Borrower) - Page 14
117
as Collateral and all cash proceeds received by the Secured Party in
respect of any sale of, collection from or other realization upon all
or any part of the Collateral may, in the discretion of the Secured
Party, be held by the Secured Party as collateral for, and then or at
any time thereafter applied in whole or in part by the Secured Party
against, the Obligations in the order permitted by the Credit
Agreement. Any surplus of such cash or cash proceeds and interest
accrued thereon, if any, held by the Secured Party and remaining after
payment in full of all the Obligations shall be promptly paid over to
the Debtor or to whomsoever may be lawfully entitled to receive such
surplus; provided that the Secured Party shall have no obligation to
invest or otherwise pay interest on any amounts held by it in
connection with or pursuant to this Agreement.
(ii) The Secured Party may cause any or all of the
Collateral held by it to be transferred into the name of the Secured
Party or the name or names of the Secured Party's nominee or nominees.
(iii) The Secured Party may exercise any and all rights
and remedies of the Debtor under or in respect of the Collateral,
including, without limitation, any and all rights of the Debtor to
demand or otherwise require payment of any amount under, or performance
of any provision of, any of the Collateral and any and all voting
rights and corporate powers in respect of the Collateral. Debtor shall
execute and deliver (or cause to be executed and delivered) to the
Secured Party all such proxies and other instruments as the Secured
Party may reasonably request for the purpose of enabling the Secured
Party to exercise the voting and other rights which it is entitled to
exercise pursuant to this clause (iii) and to receive the dividends,
interest and other distributions which it is entitled to receive
hereunder.
(iv) The Secured Party may collect or receive all money
or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to
do so.
(v) On any sale of the Collateral, the Secured Party is
hereby authorized to comply with any limitation or restriction with
which compliance is necessary, in the view of the Secured Party's
counsel, in order to avoid any violation of applicable law or in order
to obtain any required approval of the purchaser or purchasers by any
applicable Governmental Authority.
(vi) For purposes of enabling the Secured Party to
exercise its rights and remedies under this Section 6.1 and enabling
the Secured Party and its successors and assigns to enjoy the full
benefits of the Collateral in each case as the Secured Party shall be
entitled to exercise its rights and remedies under this Section 6.1,
the Debtor hereby grants to the Secured Party an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to the Debtor) to use, assign, license or sublicense any
of the Intellectual Property, including in such license reasonable
access to all media in which any of the licensed items may be recorded
or stored and all computer
SECURITY AGREEMENT (Borrower) - Page 15
118
programs used for the completion or printout thereof and further
including in such license such rights of quality control and inspection
as are reasonably necessary to prevent the Trademarks included in such
license from claims of invalidation. This license shall also inure to
the benefit of all successors, assigns and transferees of the Secured
Party.
Section 6.2 Private Sales. The Debtor recognizes that the Secured Party
may be unable to effect a public sale of any or all of the Collateral by reason
of certain prohibitions contained in the laws of any jurisdiction outside the
United States or in the Securities Act of 1933, as amended from time to time
(the "Securities Act") and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. The Debtor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall, to the extent permitted by law, be
deemed to have been made in a commercially reasonable manner. Neither the
Secured Party nor the Banks shall be under any obligation to delay a sale of any
of the Collateral for the period of time necessary to permit the issuer of such
securities to register such securities under the laws of any jurisdiction
outside the United States, under the Securities Act or under any applicable
state securities laws, even if such issuer would agree to do so. The Debtor
further agrees to do or cause to be done, to the extent that the Debtor may do
so under applicable law, all such other reasonable acts and things as may be
necessary to make such sales or resales of any portion or all of the Collateral
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Debtor's expense.
ARTICLE 7
Miscellaneous
Section 7.1 No Waiver; Cumulative Remedies. No failure on the part of
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Debtor and the Secured Party and respective
successors and assigns, except that the Debtor may not assign any of its rights
or obligations under this Agreement without the prior written consent of the
Banks and Secured Party may not appoint a successor Secured Party except in
accordance with the Credit Agreement.
SECURITY AGREEMENT (Borrower) - Page 16
119
SECTION 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto and the Required Banks.
Section 7.4 Notices. All notices and other communications provided for
in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 7.5 Governing Law. This agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas and applicable laws
of the United States of America.
Section 7.6 Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 7.9 Waiver of Bond. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.10 Severability. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECURITY AGREEMENT (Borrower) - Page 17
120
Section 7.11 Termination. If all of the Obligations shall have been
paid and performed in full, all Commitments of the Secured Party and the Banks
to the Debtor shall have expired or terminated and no Letters of Credit shall
remain outstanding, the Secured Party shall, upon the written request of the
Debtor, execute and deliver to the Debtor a proper instrument or instruments
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to the Debtor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Secured Party and has not previously been sold
or otherwise applied pursuant to this Agreement.
SECURITY AGREEMENT (Borrower) - Page 18
121
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
TUFCO, L.P.
By: Tufco Tech, Inc.,
its general partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
SECURED PARTY:
FIRST UNION NATIONAL BANK,
as Agent for the Banks
By:
---------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
SECURITY AGREEMENT (Borrower) - Page 19
122
Schedule 1.1
TO
SECURITY AGREEMENT
Pledged Shares
Description of Each
State of Class and Series Number of
Name Incorporation (If Applicable) Par Value Issued Shares Certificate No.
---- ------------- -------------------- --------- ------------- ---------------
None
Schedule 1.1, Solo Page
123
SCHEDULE 3.1
TO
SECURITY AGREEMENT
Locations
I. Principal Place of Business
Address Landlord/Mortgagee
------- ------------------
0000 Xxxxxxxx Xx. Xxxx-Xxxxxxxx Limited
Xxxxxx, Xxxxx 00000 (Xxxxxxxx Xxxx)
Dallas County
II. Other Locations
Address Landlord/Mortgagee
------- ------------------
0000 Xxxxx Xxxxx Xx. Xx Xxxxxxxx
Xxxxx Xxx, XX 00000
Xxxxx County
0000 Xxxxxxxx Xxxxxx Bero, Garland, Gephardt & XxXxxxx
Ashwaubenon, WI
Xxxxx County
0000 Xxxxxx Xxxx Xx Xxxxxxxx
Xxxxxx, XX 00000
Catawba County
XX 0, Xxx 000 Synthetic Lease with Asset
Xxxxxxx, XX 00000 Holdings Corp. as landlord
Clarendon County
000 Xxxxx Xxxxxx Xx Xxxxxxxx
Xxxxxxx, XX 00000
Clarendon County
0000 Xxxxxx Xxxx Xxxx. Eleven Eleven Partnership
Xx. Xxxxx, XX 00000
Xx. Xxxxx Xxxxxx
Schedule 3.1, Page 1
124
Warehouse Locations
-------------------
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX
Schenectady County
0000 XXX Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxxxxx Xxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
East Baton Rouge, Parish
72 Sharp
Xxxxxxx, XX 00000
Plymouth County
0000 X. Xxxxxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxxx
0000 Xxxxx Xxxx XX Xxxxxx, X.X.
Xxxxxxx, XX 00000
Xxxxxx County
0000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxxxxx Xxxxxx
0000 Xxxxx Xxx Xxxxx
Xxxxxxxx, XX 00000
Xxxx Xxxxxx
0000 XX 000xx Xxxxxx
Xxxxx, XX 00000
Dade County
000 00xx Xxxxxx, XX
Xxxxxxxxxxx, XX 00000
Hennpin County
0000 Xxxxx Xxxx
Xx. Xxxxx, XX 00000
St. Louis County
Schedule 3.1, Page 2
125
70 W.E.H. Xxxxx
Memphis, TN
Hall County
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxx
000-X Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Santa Xxx County
0000 X. Xxxxxxxxx Xx.
Xxxxxxx, XX 00000
Maricopa County
0000 Xxxxxxxx
Xxxxxxx, XX
Xxxxx County
00000 00xx Xxxxxx, X
Xxxx, XX 00000
King County
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxx Xxxxxxxxx Xxxxxx
Schedule 3.1, Page 3
126
SCHEDULE 3.2
TO
SECURITY AGREEMENT
Deposit, Commodity and Security Accounts
Bank Name Account Name Account Number Purpose of Account
--------- ------------ -------------- ------------------
Bank of Clarendon, Tufco, L.P. 830018990
Manning, South
Carolina
Bank of Granite, Tufco, L.P. 1609327
Newton, North
Carolina
Bank One Tufco, L.P. 676277542 Concentration
Account
Bank One Tufco, L.P. 030008445 Green Bay
Disbursement
Account
Bank One Tufco, L.P. 030008461 Xxxxxx
Disbursement
Account
Bank One Tufco, L.P. 030008453 Dallas Disbursement
Account
Bank One Tufco, L.P. 676275523 Employee Benefits
Account
Bank One Tufco, L.P. 676252568 Green Bay Payroll
Account
Bank One Tufco, L.P. 020813261 Cafeteria Plan
Clearing Account
Bank One Tufco, L.P. 1822146682 Xxxxxx Lockbox
Account
Bank One Tufco, L.P. 1822146674 Dallas Lockbox
Account
Bank One Tufco Industries, 3808228208 Money Market
Inc.
Schedule 3.2, Page 1
127
Bank One Tufco Industries of 3808236307 Money Market
South Carolina, Inc.
Bank of Granite, Hamco Industries, 1061032
Newton, North Inc.
Carolina
Bank One South Carolina IRB 615346202 Loan Payment re
IRB
Xxxxxx Xxxxx Bank, Hamco Industries, 40916
Chantilly, Virginia Inc.
Schedule 3.2, Page 2
128
SCHEDULE 3.3
TO
SECURITY AGREEMENT
Trade and Other Names; Tax I.D. Number
Trade and Other Names:
Hamco Industries
Tufco Division Limited Partnership
United States Federal Income Tax I.D. Number:
00-0000000
Schedule 3.3, Solo Page
129
SCHEDULE 3.4
TO
SECURITY AGREEMENT
Intellectual Property
COPYRIGHTS AND COPYRIGHT LICENSES
None
PATENTS AND PATENT LICENSES
None
=================================================================================================================================
TRADEMARKS
=================================================================================================================================
Country
of Application or Filing Expiration
Owner of Record Registration Trademark Registration No. Date Date Goods
=================================================================================================================================
Tufco, L.P., U.S. HAMCO (stylized letters) 1,703,259 7/28/92 papers and ink for
d/b/a Hamco Industries business machines
---------------------------------------------------------------------------------------------------------------------------------
Tufco, L.P., U.S. HAMCO (and design) 1,375,847 12/17/85 business machine
d/b/a Hamco Industries paper
=================================================================================================================================
TRADEMARK LICENSES
None
Schedule 3.4, Intellectual Property, Solo Page
130
EXHIBIT A
TO
SECURITY AGREEMENT
FORM OF AMENDMENT
This Amendment, dated _______________, 19___, is delivered pursuant to
Section 4.8 of the Security Agreement (as herein defined) referred to below. The
undersigned hereby agrees that this Amendment may be attached to the Security
Agreement dated as of August 28, 1998, between the undersigned and First Union
National Bank, as agent for the ratable benefit of the Banks referred to therein
(the "Security Agreement"), and that the shares of stock, membership interests,
notes or other instruments listed on Schedule 1 annexed hereto shall be and
become part of the Collateral referred to in the Security Agreement and shall
secure payment and performance of all Obligations as provided in the Security
Agreement.
Capitalized terms used herein but not defined herein shall have the
meanings therefor provided in the Security Agreement.
TUFCO, L.P.
By: Tufco Tech, Inc.,
its general partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Form of Amendment - Page 1
131
Schedule 1
to
Security Agreement Amendment
Stock Number Percentage of
Stock Issuer Class of Stock Certificate No(s). Par Value of Shares Outstanding Shares
------------ -------------- ------------------ --------- --------- ------------------
Schedule 1 to Security Agreement Amendment, Solo Page
132
EXHIBIT "E"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Guarantor Security Agreement
EXHIBIT "E", Cover Page
133
GUARANTOR SECURITY AGREEMENT
THIS GUARANTOR SECURITY AGREEMENT (the "Agreement") dated as of August
28, 1998, is by and among the undersigned, any party who may become a party
hereto pursuant to the execution and delivery of a Joinder Agreement (each
a"Debtor" and collectively the "Debtors") and FIRST UNION NATIONAL BANK (the
"Secured Party"), as agent for the Banks, as that term is defined below.
R E C I T A L S:
TUFCO, L.P. is entering into that certain Credit Agreement dated of
even date herewith with Tufco Technology, Inc., the banks party thereto (each
individually a "Bank" and collectively, the "Banks") and the Secured Party, as
agent for the Banks (such agreement, as it may be amended or otherwise modified
from time to time, herein the "Credit Agreement"). The execution and delivery of
this Agreement is a condition to the Secured Party's and the Banks' entering
into the Credit Agreement and making the extensions of credit thereunder.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party and the Banks to
make the Loans and issue the Letters of Credit under the Credit Agreement, the
parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, and with respect to
each Debtor, the following terms have the following meanings:
"Account" means any "account," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased,
services rendered or the license of Intellectual Property, whether or
not earned by performance, (b) all accounts receivable of the Debtor,
(c) all rights of the Debtor to receive any payment of money or other
form of consideration, (d) all security pledged, assigned or granted to
or held by the Debtor to secure any of the foregoing, (e) all
guaranties of, or indemnifications with respect to, any of the
foregoing, (f) all rights of the Debtor as an unpaid seller of goods or
services, including, but not limited to, all rights of stoppage in
transit, replevin, reclamation and resale; and (g) all rights to
brokerage commissions.
Guarantor Security Agreement, Page 1
134
"Chattel Paper" means any "chattel paper," as such term is
defined in Article or Chapter 9 of the UCC, now owned or hereafter
acquired by the Debtor.
"Collateral" has the meaning specified in Section 2.1 of this
Agreement.
"Copyright License" means any written agreement now or
hereafter in existence granting to the Debtor any right to use any
Copyright including, without limitation, the agreements identified on
Schedule 3.4.
"Copyrights" means all of the following: (a) all copyrights,
works protectable by copyright, copyright registrations and copyright
applications of the Debtor, including, without limitation, those
identified on Schedule 3.4; (b) all renewals, extensions and
modifications thereof; (c) all income, royalties, damages, profits and
payments relating to or payable under any of the foregoing; (d) the
right to xxx for past, present or future infringements of any of the
foregoing; and (e) all other rights and benefits relating to any of the
foregoing throughout the world; in each case, whether now owned or
hereafter acquired by the Debtor.
"Copyright Security Agreement" means a security agreement in a
form satisfactory to Secured Party pursuant to which the Debtor grants
to the Secured Party, for the benefit of the Banks, a first priority
security interest in the Copyrights and the Copyright Licenses for
purposes of recording such security interest with any copyright office
of a Governmental Authority, as such agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"Deposit Accounts" means any and all deposit accounts or other
bank accounts now owned or hereafter acquired or opened by the Debtor,
and any account which is a replacement or substitute for any of such
accounts including, without limitation, those deposit accounts
identified on Schedule 3.2.
"Document" means any "document," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, including, without limitation, all documents of title and all
receipts covering, evidencing or representing goods now owned or
hereafter acquired by the Debtor.
"Equipment" means any "equipment," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor and, in any event, shall include, without limitation, all
machinery, furniture, trailers, rolling stock, vessels, aircraft and
vehicles now owned or hereafter acquired by the Debtor and any and all
additions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
Guarantor Security Agreement, Page 2
135
"Financial Assets" means any "financial asset," as such term
is defined in Article or Chapter 8 of the UCC.
"Fixtures" means all of the following now owned or hereafter
acquired by the Debtor: plant fixtures; business fixtures; other
fixtures and storage office facilities, wherever located; and all
additions and accessions thereto and replacements therefor.
"General Intangibles" means any "general intangibles," as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by the Debtor and, in any event, shall include,
without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (a) all of the Debtor's Intellectual
Property together with all of the Debtor's trade secrets, proprietary
information, customer lists, designs and inventions; (b) all of the
Debtor's books, records, data, plans, manuals, computer software,
computer tapes, computer disks, computer programs, source codes, object
codes and all rights of the Debtor to retrieve data and other
information from third parties; (c) all of the Debtor's contract
rights, which include, without limitation, the following: (i) all
rights of the Debtor to receive moneys due and to become due under or
pursuant to such agreements, (ii) all rights of the Debtor to receive
proceeds of any insurance, indemnity, warranty, or guaranty with
respect to such agreements, (iii) all claims of the Debtor for damages
arising out of or for breach of or default under such agreements, and
(iv) all rights of the Debtor to terminate such agreements, to perform
thereunder and to compel performance and otherwise exercise all rights
and remedies thereunder, (d) all of Debtor's partnership interests,
joint venture interests, and certificates of deposit; (e) all rights of
the Debtor to payment under letters of credit and similar agreements;
(f) all tax refunds and tax refund claims of the Debtor; (g) all choses
in action and causes of action of the Debtor (whether arising in
contract, tort or otherwise and whether or not currently in litigation)
and all judgments in favor of the Debtor; (h) all rights and claims of
the Debtor under warranties and indemnities; and (i) all rights of the
Debtor under any insurance, surety or similar contract or arrangement.
"Instrument" means any "instrument," as such term is defined
in Article or Chapter 9 of the UCC, now owned or hereafter acquired by
the Debtor, and, in any event, shall include all promissory notes,
drafts, bills of exchange and trade acceptances of the Debtor, whether
now owned or hereafter acquired.
"Intellectual Property" means the Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.
"Inventory" means any "inventory," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all goods and other personal property of the Debtor that are held
for sale or lease or to be furnished under any contract of service; (b)
all raw materials, work-in-process, finished goods, inventory, supplies
and materials of the
Guarantor Security Agreement, Page 3
136
Debtor; (c) all wrapping, packaging, advertising and shipping materials
of the Debtor; (d) all goods that have been returned to, repossessed by
or stopped in transit by the Debtor; and (e) all Documents evidencing
any of the foregoing.
"Investment Property" means any "investment property" as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by the Debtor, and, in any event, shall include,
without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (a) any security, whether
certificated or uncertificated; (b) any security entitlement; (c) any
securities account (including, without limitation, those described on
Schedule 3.2); (d) any commodity contract; and (e) any commodity
account (including, without limitation, those identified on Schedule
3.2).
"Obligations" means all "Obligations" as such term is defined
in the Credit Agreement and, with respect to each Debtor, all present
and future indebtedness, liabilities, and obligations of such Debtor to
the Secured Party and the Banks arising under the Master Guaranty.
"Patent License" means any written agreement now or hereafter
in existence granting to the Debtor any right to use any invention on
which a Patent is in existence including, without limitation, the
agreements identified on Schedule 3.4.
"Patents" means all of the following: (a) all patents, patent
applications and patentable inventions of the Debtor, including without
limitation, those identified on Schedule 3.4, and all of the inventions
and improvements described and claimed therein; (b) all continuations,
divisions, renewals, extensions, modifications, substitutions,
continuations-in-part or reissues of any of the foregoing; (c) all
income, royalties, profits, damages, awards and payments relating to or
payable under any of the foregoing; (d) the right to xxx for past,
present and future infringements of any of the foregoing; and (e) all
other rights and benefits relating to any of the foregoing throughout
the world; in each case, whether now owned or hereafter acquired by the
Debtor.
"Patent Security Agreement" means a security agreement in a
form satisfactory to Secured Party pursuant to which the Debtor grants
to the Secured Party, for the benefit of the Banks, a first priority
security interest in the Patents and the Patent Licenses for purposes
of recording such security interest with any patent office of a
Governmental Authority, as such agreement may be amended, supplemented
or otherwise modified from time to time.
"Pledged Collateral" means the Pledged Shares and the
Instruments evidencing the obligations of Debtor's subsidiaries to
Debtor described in Section 2.1(c).
"Pledged Shares" means, with respect to each Debtor, the
shares of capital stock or other equity, partnership or membership
interests identified for such Debtor on
Guarantor Security Agreement, Page 4
137
Schedule 1.1 attached hereto or on Schedule 1 to an amendment to this
Agreement in the form of Exhibit A hereto.
"Proceeds" means any "proceeds," as such term is defined in
Article or Chapter 9 of the UCC and, in any event, shall include, but
not be limited to, (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Debtor from time to time
with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the Debtor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting, or purporting to act, for
or on behalf of any Governmental Authority), and (c) any and all other
amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Trademark License" means any written agreement now or
hereafter in existence granting to the Debtor any right to use any
Trademark, including, without limitation, the agreements identified on
Schedule 3.4.
"Trademarks" means all of the following: (a) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing appear,
all registrations and recordings thereof and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
state thereof or any other country or any political subdivision
thereof, including, without limitation, those identified in Schedule
3.4; (b) all reissues, extensions and renewals thereof; (c) all income,
royalties, damages and payments now or hereafter relating to or payable
under any of the foregoing, including, without limitation, damages or
payments for past or future infringements of any of the foregoing; (d)
the right to xxx for past, present and future infringements of any of
the foregoing; (e) all rights corresponding to any of the foregoing
throughout the world; and (f) all goodwill associated with and
symbolized by any of the foregoing; in each case, whether now owned or
hereafter acquired by the Debtor.
"Trademark Security Agreement" means a security agreement in a
form satisfactory to Secured Party which the Debtor grants to the
Secured Party, for the benefit of the Banks, a first priority security
interest in the Trademarks and the Trademark Licenses for purposes of
recording such security interest with the trademark office of any
Governmental Authority, as such agreement may be amended, supplemented
or otherwise modified from time to time.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas provided, that if, by applicable law, the perfection or
effect of perfection or non- perfection of the security interest
created hereunder in any Collateral is governed by the Uniform
Commercial Code as in effect on or after the date hereof in any other
jurisdiction,
Guarantor Security Agreement, Page 5
138
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or the effect of perfection or non-perfection.
Section 1.2 Other Definitional Provisions. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. References to
"Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. All
references to statutes and regulations shall include any amendments of the same
and any successor statutes and regulations. References to particular sections of
the UCC should be read to refer also to parallel sections of the Uniform
Commercial Code as enacted in each state or other jurisdiction where any portion
of the Collateral is or may be located. Terms used herein, which are defined in
the UCC, unless otherwise defined herein or in the Credit Agreement, shall have
the meanings determined in accordance with the UCC.
ARTICLE 2
Security Interest
Section 2.1 Security Interest. As collateral security for the prompt
payment and performance in full when due of its Obligations (whether at stated
maturity, by acceleration or otherwise), each Debtor hereby pledges and assigns
to the Secured Party, and grants to the Secured Party a continuing lien on and
security interest in, all of the Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively with respect to the Debtor or all Debtors, as the context
requires, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments, including, without limitation, or in
addition, all instruments evidencing indebtedness from time to
time owed to the Debtor by the Subsidiaries of the Debtor, and
all interest, cash and other property from time to time
received, receivable or otherwise distributed or distributable
in respect of or in exchange for any or all of such
indebtedness;
(d) all General Intangibles;
(e) all Documents;
Guarantor Security Agreement, Page 6
139
(f) all Equipment;
(g) all Fixtures;
(h) all Inventory;
(i) all Financial Assets and Investment Property, including,
without limitation or in addition, the following:
(1) all the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends,
cash, Instruments and other property from time to
time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or
all of the Pledged Shares;
(2) all additional shares of stock of the Subsidiaries of
the Debtor from time to time owned or acquired by the
Debtor in any manner, and all dividends, cash,
Instruments and other property from time to time
received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or
all of such shares; and
(j) all Deposit Accounts of the Debtor and all funds,
certificates, Documents, Instruments, checks, drafts, wire
transfer receipts and other earnings, profits or other
Proceeds from time to time representing, evidencing, deposited
into or held in the Deposit Accounts; and
(k) all products and Proceeds, in cash or otherwise, of any of the
property described in the foregoing clauses (a) through (j).
Section 2.2 Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein, (a) each Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of its rights or remedies hereunder shall not release the Debtor from any of
its duties or obligations under such documentation, (c) the Secured Party shall
not have any obligation under any of such documentation included in the
Collateral by reason of this Agreement, and (d) the Secured Party shall not be
obligated to perform any of the obligations of the Debtor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
ARTICLE 3
Representations and Warranties
To induce the Secured Party and the Banks to enter into this Agreement
and the Credit Agreement, each Debtor represents and warrants to the Secured
Party and the Banks that:
Guarantor Security Agreement, Page 7
140
Section 3.1 Location of Equipment, Fixtures and Inventory; Third
Parties in Possession. All of its Equipment, Fixtures and Inventory are located
at the places specified in Schedule 3.1 for the Debtor. Schedule 3.1 correctly
identifies the landlords or mortgagees, if any, of each of such Debtor's
locations identified in Schedule 3.1. Except for the Persons identified on
Schedule 3.2, no Person other than such Debtor and Secured Party has possession
of any of the Collateral. None of such Debtor's Collateral other than the
Pledged Stock has been located in any location within the past four months other
than as set forth on Schedule 3.1 for the Debtor.
Section 3.2 Deposit, Commodity and Securities Accounts. Schedule 3.2
correctly identifies all deposit, commodity and securities accounts owned by
such Debtor and the institutions holding such accounts. No Person other than
such Debtor has control over any Investment Property.
Section 3.3 Office Locations; Fictitious Names; Tax I.D. Number. Its
principal place of business and its chief executive office are located at the
place identified for the Debtor on Schedule 3.1. Schedule 3.1 also sets forth
all other places where such Debtor keeps its books and records and all other
locations where such Debtor has a place of business. Such Debtor does not do
business and has not done business during the past five years under any
trade-name or fictitious business name except as disclosed on Schedule 3.3. Such
Debtor's United States Federal Income Tax I.D. Number is identified on Schedule
3.3.
Section 3.4 Delivery of Collateral. Except as provided by Section 4.2,
it has delivered to Secured Party all Collateral the possession of which is
necessary to perfect the security interest of Secured Party therein. All
certificates of title evidencing such Debtor's Equipment have been delivered to
Secured Party to the extent required by Section 10.10 of the Credit Agreement.
Section 3.5 Intellectual Property. All of its Intellectual Property
that is registered with or for which an application for registration has been
filed with any Governmental Authority is identified on Schedule 3.4, and such
information is true, correct and complete.
ARTICLE 4
Covenants
Each Debtor covenants and agrees with the Secured Party that until its
Obligations are paid and performed in full, all commitments of the Secured Party
and the Banks under the Credit Agreement have expired or have been terminated
and no Letter of Credit remains outstanding:
Section 4.1 Accounts. It shall, in accordance with its customary
business practices, endeavor to collect or cause to be collected from each
account debtor under its Accounts, as and when due, any and all amounts owing
under such Accounts. Without the prior written consent of the Secured Party, it
shall not, except in the ordinary course of business and in no event when an
Event of Default exists, (a) grant any extension of time for any payment with
respect to any
Guarantor Security Agreement, Page 8
141
of its Accounts beyond 120 days after such payment's due date, (b) compromise,
compound, or settle any of its Accounts for less than the full amount thereof,
(c) release, in whole or in part, any Person liable for payment of any of its
Accounts, (d) allow any credit or discount for payment with respect to any of
its Accounts other than trade or other customary discounts granted in the
ordinary course of business, or (e) release any Lien or guaranty securing any of
its Accounts unless the Account has been paid.
Section 4.2 Further Assurances; Exceptions to Perfection. At any time
and from time to time, upon the request of the Secured Party, and at its sole
expense, it shall, promptly execute and deliver all such further agreements,
documents and instruments and take such further action as the Secured Party may
reasonably deem necessary or appropriate to preserve and perfect its security
interest in the Collateral and carry out the provisions and purposes of this
Agreement or to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral. Without limiting the
generality of the foregoing, it shall, upon reasonable request by the Secured
Party, but subject to the exceptions to the creation, perfection and/or
protection of Liens permitted by Section 10.10 of the Credit Agreement, (a)
execute and deliver to the Secured Party such financing statements as the
Secured Party may from time to time require; (b) take such action after a
Default as the Secured Party may request to permit the Secured Party to have
control over any Investment Property or any Deposit Account; (c) deliver to the
Secured Party all Collateral the possession of which is necessary to perfect the
security interest therein, duly endorsed and/or accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured Party; except that, prior to the occurrence of a Default, a Debtor may
(i) retain for collection in the ordinary course of business checks representing
Proceeds of Accounts received in the ordinary course of business; (ii) retain
any letters of credit received in the ordinary course of business; (iii) retain
and utilize in the ordinary course of business all dividends and interest paid
in respect to any of the Pledged Collateral or any other Investment Property;
and (iv) retain any Documents received and further negotiated in the ordinary
course of business; (d) deliver any and all certificates of title, applications
for title or similar evidence of ownership of Equipment and cause Secured Party
to be named as lienholder thereon; and (e) execute and deliver to the Secured
Party such other agreements, documents and instruments as the Secured Party may
reasonably require to perfect and maintain the validity, effectiveness and
priority of the Liens intended to be created by the Loan Documents.
Section 4.3 Third Parties in Possession of Collateral. Except as
otherwise permitted by Section 10.10 of the Credit Agreement, it shall not
permit any third Person (including any warehouseman, bailee, agent, consignee or
processor) to hold any Collateral, unless it shall: (i) notify such third Person
of the security interests created hereby; (ii) instruct such Person to hold all
such Collateral for Secured Party's account subject to Secured Party's
instructions; and (iii) take all other actions the Secured Party reasonably
deems necessary to perfect and protect its and such Debtor's interests in such
Collateral pursuant to the requirements of the UCC of the applicable
jurisdiction where the warehouseman, bailee, consignee, agent, processor or
other third Person is located (including the filing of a financing statement in
the proper jurisdiction naming the applicable third Person as debtor and it as
secured party and notifying the third Person's
Guarantor Security Agreement, Page 9
142
secured lenders of its interest in such Collateral before the third Person
receives possession of the Collateral in question).
Section 4.4 Corporate Changes. It shall not change its name, identity,
or corporate structure in any manner that might make any financing statement
filed in connection with this Agreement seriously misleading, and it shall not
change its United States Federal Tax I.D. Number unless it shall have given the
Secured Party thirty (30) days prior written notice thereof and shall have taken
all action reasonably deemed necessary or desirable by the Secured Party to
protect the Secured Party's Liens with the perfection and priority thereof
required by the Loan Documents. It shall not change its principal place of
business, chief executive office or the place where it keeps its books and
records unless it shall have given the Secured Party thirty (30) days prior
written notice thereof and shall have taken all action deemed necessary or
desirable by the Secured Party to cause the Secured Party's security interest in
the Collateral to be perfected with the priority required by the Loan Documents.
Section 4.5 Equipment, Fixtures and Inventory. It shall keep its
Equipment, Fixtures and Inventory at (or in transit to) any of its locations
specified on Schedule 3.1 hereto or, upon thirty (30) days prior written notice
to the Secured Party, at such other places within the United States of America
where all action required to perfect the Secured Party's security interest in
such Collateral with the priority required by the Loan Documents shall have been
taken.
Section 4.6 Warehouse Receipts Non-Negotiable. It agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued in
respect of any portion of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC) unless such warehouse receipt or receipt in the nature thereof
is delivered to the Secured Party.
Section 4.7 Voting Rights; Distributions, Etc. So long as no Event of
Default shall have occurred and be continuing, it shall be entitled to exercise
any and all voting and other consensual rights (including, without limitation,
the right to give consents, waivers and notifications) pertaining to any of the
Pledged Collateral or any other Investment Property; provided, however, that no
vote shall be cast or consent, waiver or ratification given or action taken
without the prior written consent of the Secured Party which would be
inconsistent with or violate any provision of this Agreement or any other Loan
Document.
Section 4.8 Transfers and Other Liens; Additional Investments. Except
as is not prohibited by the terms of the Credit Agreement or this Agreement, it
agrees that it will (i) cause each issuer of any of the Collateral not to issue
any shares of stock, notes or other securities or instruments in addition to or
in substitution for any of the Collateral, (ii) pledge hereunder, immediately
upon its acquisition thereof, any and all such shares of stock, membership
interests, notes or instruments, and (iii) promptly, (and in any event within 3
Business Days) deliver to the Secured Party an amendment hereto, duly executed
by it, in substantially the form of Exhibit A hereto (an "Amendment"), in
respect of such shares of stock, membership interests, notes or instruments,
together with all certificates, notes or other instruments representing or
evidencing
Guarantor Security Agreement, Page 10
143
the same. Each Debtor hereby (i) authorizes the Secured Party to attach each
Amendment to this Agreement, and (ii) agrees that all such shares of stock,
membership interests, notes or instruments listed on any Amendment delivered to
the Secured Party shall for all purposes hereunder constitute Pledged
Collateral.
Section 4.9 Intellectual Property Covenants. If, before the Obligations
are paid in full, it obtains any new Intellectual Property or rights thereto or
becomes entitled to the benefit of any Intellectual Property, it shall give to
Secured Party prompt written notice thereof, and shall execute and deliver, in
form and substance satisfactory to Secured Party, a Copyright Security
Agreement, Patent Security Agreement or Trademark Security Agreement, as
applicable, describing any such new Intellectual Property. It shall: (a)
prosecute diligently any copyright, patent, trademark or license application at
any time pending which is necessary for the conduct of its business; (b) make
application on all new copyrights, patents and trademarks as it may reasonably
deem appropriate; (c) preserve and maintain all rights in the Intellectual
Property that is necessary for the conduct of its business; and (d) upon and
after the occurrence and during the continuance of an Event of Default, use its
reasonable efforts to obtain any consents, waivers or agreements necessary to
enable Secured Party to exercise its remedies with respect to the Intellectual
Property. It shall not abandon any pending copyright, patent or trademark
application, or Copyright, Patent, Trademark or any other Intellectual Property
which is necessary for the conduct of its business without the prior written
consent of Secured Party.
Section 4.10 Deposit, Commodity and Security Accounts. It shall not
open any new deposit, commodity or security account or otherwise utilize any
such account other than the accounts identified on Schedule 3.2 unless it shall
have given the Secured Party thirty (30) days prior written notice thereof and
shall have taken all action deemed necessary or desirable by the Secured Party
to cause its security interest therein to be perfected with the priority
required by the Loan Documents. Prior to the occurrence and continuance of a
Default, it may make purchases and sales of Investment Property or Financial
Assets in accordance with the restrictions on investment set out in the Credit
Agreement. After the occurrence and during the continuance of an Event of
Default it shall not be authorized to make purchases and sales of the Investment
Property or Financial Assets and it shall take such steps as Secured Party may
reasonably request to give Secured Party control over all Investment Property
and Financial Assets. It will not give any party control over any Investment
Property or Financial Assets.
ARTICLE 5
Rights of the Secured Party
Section 5.1 POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE SECURED PARTY AND ANY OFFICER OR AGENT THEREOF,
WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH
FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF THE DEBTOR OR IN ITS OWN
NAME, TO TAKE, WHEN A DEFAULT EXISTS, ANY AND ALL ACTIONS AND TO EXECUTE ANY AND
ALL DOCUMENTS
Guarantor Security Agreement, Page 11
144
AND INSTRUMENTS WHICH THE SECURED PARTY AT ANY TIME AND FROM TIME TO TIME DEEMS
NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, IT HEREBY GIVES THE SECURED PARTY THE
POWER AND RIGHT ON ITS BEHALF AND IN ITS OWN NAME TO DO ANY OF THE FOLLOWING
WHEN A DEFAULT EXISTS, WITH NOTICE TO BORROWER BUT WITHOUT THE CONSENT OF THE
DEBTOR:
(i) to demand, xxx for, collect or receive, in the name
of it or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and,
in connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, Liens or other
encumbrances levied or placed on or threatened against the Collateral;
(iii) to notify post office authorities to change the
address for delivery of mail of the Debtor to an address designated by
the Secured Party and to receive, open, and dispose of mail addressed
to the Debtor;
(iv) (A) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of
any and all monies due and to become due thereunder directly to the
Secured Party or as the Secured Party shall direct (each Debtor agrees
that if any Proceeds of any Collateral (including payments made in
respect of Accounts) shall be received by it while a Default exists, it
shall promptly deliver such Proceeds to the Secured Party with any
necessary endorsements, and until such Proceeds are delivered to the
Secured Party, such Proceeds shall be held in trust by it for the
benefit of the Secured Party and shall not be commingled with any other
funds or property of it); (B) to receive payment of and receipt for any
and all monies, claims and other amounts due and to become due at any
time in respect of or arising out of any Collateral; (C) to sign and
endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
proxies, stock powers, verifications and notices in connection with
accounts and other documents relating to the Collateral; (D) to
commence and prosecute any suit, action or proceeding at law or in
equity in any court of competent jurisdiction to collect the Collateral
or any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought
against it with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or releases as the
Secured Party may deem appropriate; (G) to exchange any of the
Collateral for other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Collateral
with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms as the Secured Party
Guarantor Security Agreement, Page 12
145
may determine; (H) to add or release any guarantor, indorser, surety or
other party to any of the Collateral; (I) to renew, extend or otherwise
change the terms and conditions of any of the Collateral; (J) to grant
or issue any exclusive or nonexclusive license under or with respect to
any of the Intellectual Property (subject to the rights of third
parties under pre-existing licenses); (K) to endorse its name on all
applications, documents, papers and instruments necessary or desirable
in order for the Secured Party to use any of the Intellectual Property;
(L) to make, settle, compromise or adjust any claims under or
pertaining to any of the Collateral (including claims under any policy
of insurance); and (M) to sell, transfer, pledge, convey, make any
agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Secured Party were the absolute
owner thereof for all purposes, and to do, at the Secured Party's
option and the Debtors' expense, at any time, or from time to time, all
acts and things which the Secured Party deems necessary to protect,
preserve, maintain, or realize upon the Collateral and the Secured
Party's security interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11.
The Secured Party shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or implicitly
granted to the Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Neither the Secured Party nor any
Person designated by the Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law, except any of the
same resulting from its or their gross negligence or willful misconduct. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.
Section 5.2 Assignment by the Secured Party. The Secured Party and each
Bank may at any time assign or otherwise transfer all or any portion of their
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, the Obligations) to any other Person, to the
extent permitted by, and upon the conditions contained in, the Credit Agreement,
and such Person shall thereupon become vested with all the benefits thereof
granted to the Secured Party and the Banks, respectively, herein or otherwise.
Section 5.3 Possession; Reasonable Care. The Secured Party may, from
time to time, in its sole discretion, appoint one or more agents to hold
physical custody, for the account of the Secured Party, of any or all of the
Collateral that the Secured Party has a right to possess. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters
Guarantor Security Agreement, Page 13
146
relative to any Collateral, whether or not the Secured Party has or is deemed to
have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any parties with respect to any Collateral.
ARTICLE 6
Default
Section 6.1 Rights and Remedies. If an Event of Default shall have
occurred and be continuing, the Secured Party shall have the following rights
and remedies:
(i) In addition to all other rights and remedies
granted to the Secured Party in this Agreement or in any other Loan
Document or by applicable law, the Secured Party shall have all of the
rights and remedies of a secured party under the UCC (whether or not
the UCC applies to the affected Collateral). Without limiting the
generality of the foregoing, the Secured Party may (A) without demand
or notice to it, collect, receive or take possession of the Collateral
or any part thereof and for that purpose the Secured Party may enter
upon any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (B) sell, lease or
otherwise dispose of the Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at the Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially
reasonable or otherwise as may be permitted by law. The Secured Party
shall have the right at any public sale or sales, and, to the extent
permitted by applicable law, at any private sale or sales, to bid
(which bid may be, in whole or in part, in the form of cancellation of
indebtedness) and become a purchaser of the Collateral or any part
thereof free of any right or equity of redemption on the part of the
Debtor, which right or equity of redemption is hereby expressly waived
and released by each Debtor. Upon the request of the Secured Party,
each Debtor shall assemble its Collateral and make it available to the
Secured Party at any place designated by the Secured Party that is
reasonably convenient to it and the Secured Party. Each Debtor agrees
that the Secured Party shall not be obligated to give more than ten
(10) days prior written notice of the time and place of any public sale
or of the time after which any private sale may take place and that
such notice shall constitute reasonable notice of such matters. The
Secured Party shall not be obligated to make any sale of Collateral if
it shall determine not to do so, regardless of the fact that notice of
sale of Collateral may have been given. The Secured Party may, without
notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. Each
Debtor shall be liable for all reasonable expenses of retaking,
holding, preparing for sale or the like, and all reasonable attorneys'
fees, legal expenses and other costs and expenses incurred by the
Secured Party in connection with the collection of the
Guarantor Security Agreement, Page 14
147
Obligations and the enforcement of the Secured Party's rights under
this Agreement. Each Debtor shall remain liable for any deficiency if
the Proceeds of any sale or other disposition of the Collateral applied
to the Obligations are insufficient to pay the Obligations in full. The
Secured Party may apply the Collateral against the Obligations as
provided in the Credit Agreement. Each Debtor waives all rights of
marshaling, valuation and appraisal in respect of the Collateral. Any
cash held by the Secured Party as Collateral and all cash proceeds
received by the Secured Party in respect of any sale of, collection
from or other realization upon all or any part of the Collateral may,
in the discretion of the Secured Party, be held by the Secured Party as
collateral for, and then or at any time thereafter applied in whole or
in part by the Secured Party against, the Obligations in the order
permitted by the Credit Agreement. Any surplus of such cash or cash
proceeds and interest accrued thereon, if any, held by the Secured
Party and remaining after payment in full of all the Obligations shall
be promptly paid over to the Debtor entitled thereto or to whomsoever
may be lawfully entitled to receive such surplus; provided that the
Secured Party shall have no obligation to invest or otherwise pay
interest on any amounts held by it in connection with or pursuant to
this Agreement.
(ii) The Secured Party may cause any or all of the
Collateral held by it to be transferred into the name of the Secured
Party or the name or names of the Secured Party's nominee or nominees.
(iii) The Secured Party may exercise any and all of the
rights and remedies of the Debtor under or in respect of the
Collateral, including, without limitation, any and all rights of it to
demand or otherwise require payment of any amount under, or performance
of any provision of, any of the Collateral and any and all voting
rights and corporate powers in respect of the Collateral. Each Debtor
shall execute and deliver (or cause to be executed and delivered) to
the Secured Party all such proxies and other instruments as the Secured
Party may reasonably request for the purpose of enabling the Secured
Party to exercise the voting and other rights which it is entitled to
exercise pursuant to this clause (iii) and to receive the dividends,
interest and other distributions which it is entitled to receive
hereunder.
(iv) The Secured Party may collect or receive all money
or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to
do so.
(v) On any sale of the Collateral, the Secured Party is
hereby authorized to comply with any limitation or restriction with
which compliance is necessary, in the view of the Secured Party's
counsel, in order to avoid any violation of applicable law or in
order to obtain any required approval of the purchaser or purchasers
by any applicable Governmental Authority.
Guarantor Security Agreement, Page 15
148
(vi) For purposes of enabling the Secured Party to
exercise its rights and remedies under this Section 6.1 and enabling
the Secured Party and its successors and assigns to enjoy the full
benefits of the Collateral in each case as the Secured Party shall be
entitled to exercise its rights and remedies under this Section 6.1,
each Debtor hereby grants to the Secured Party an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to it) to use, assign, license or sublicense any of its
Intellectual Property, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored
and all computer programs used for the completion or printout thereof
and further including in such license such rights of quality control
and inspection as are reasonably necessary to prevent the Trademarks
included in such license from claims of invalidation. This license
shall also inure to the benefit of all successors, assigns and
transferees of the Secured Party.
Section 6.2 Private Sales. Each Debtor recognizes that the Secured
Party may be unable to effect a public sale of any or all of the Collateral by
reason of certain prohibitions contained in the laws of any jurisdiction outside
the United States or in the Securities Act of 1933, as amended from time to time
(the "Securities Act") and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent permitted
by law, be deemed to have been made in a commercially reasonable manner. Neither
the Secured Party nor the Banks shall be under any obligation to delay a sale of
any of the Collateral for the period of time necessary to permit the issuer of
such securities to register such securities under the laws of any jurisdiction
outside the United States, under the Securities Act or under any applicable
state securities laws, even if such issuer would agree to do so. Each Debtor
further agrees to do or cause to be done, to the extent that it may do so under
applicable law, all such other reasonable acts and things as may be necessary to
make such sales or resales of any portion or all of the Collateral valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Debtors' expense.
ARTICLE 7
Miscellaneous
Section 7.1 No Waiver; Cumulative Remedies. No failure on the part of
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any
Guarantor Security Agreement, Page 16
149
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided for in this
Agreement are cumulative and not exclusive of any rights and remedies provided
by law.
Section 7.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of each Debtor and the Secured Party and their
respective successors and assigns, except that no Debtor may assign any of its
rights or obligations under this Agreement without the prior written consent of
the Banks and Secured Party may not appoint a successor Secured Party except in
accordance with the Credit Agreement.
SECTION 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. Except as contemplated by
the execution and delivery of a Joinder Agreement (which only needs to be signed
by the Subsidiary a party thereto), the provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto
and the Required Banks.
Section 7.4 Notices. All notices and other communications provided for
in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 7.5 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas and applicable laws
of the United States of America. ANY ACTION OR PROCEEDING AGAINST ANY DEBTOR
UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE COURT
LOCATED IN DALLAS, TEXAS OR ANY FEDERAL COURT IN THE NORTHERN DISTRICT OF TEXAS.
EACH DEBTOR HEREBY IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURTS, AND (b) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. EACH DEBTOR AGREES THAT SERVICE OF PROCESS UPON IT MAY
BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7.4
OF THIS AGREEMENT. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL
AFFECT THE RIGHT OF THE SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER
Guarantor Security Agreement, Page 17
150
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE SECURED PARTY TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY DEBTOR OR WITH RESPECT TO ANY OF ITS PROPERTY
IN COURTS IN OTHER JURISDICTIONS. ANY ACTION OR PROCEEDING BY ANY DEBTOR AGAINST
THE SECURED PARTY OR ANY BANK SHALL BE BROUGHT ONLY IN A COURT LOCATED IN
DALLAS, TEXAS.
Section 7.6 Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 7.9 Waiver of Bond. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.10 Severability. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.11 Termination. If all of the Obligations shall have been
paid and performed in full, all Commitments of the Secured Party and the Banks
shall have expired or terminated and no Letters of Credit shall remain
outstanding, the Secured Party shall, upon the written request of it, execute
and deliver to it a proper instrument or instruments acknowledging the release
and termination of the security interests created by this Agreement, and shall
duly assign and deliver to each Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Secured Party and has not previously been sold or otherwise applied
pursuant to this Agreement.
Section 7.12 Obligations Absolute. All rights and remedies of the
Secured Party hereunder, and all obligations of each Debtor hereunder, shall be
absolute and unconditional irrespective of:
Guarantor Security Agreement, Page 18
151
(a) any lack of validity or enforceability of any of the Loan
Documents;
(b) any change in the time, manner, or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any of the
Loan Documents;
(c) any exchange, release, or nonperfection of any Collateral,
or any release or amendment or waiver of or consent to any departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, a third party pledgor.
Section 7.13 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE SECURED
PARTY OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
Guarantor Security Agreement, Page 19
152
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTORS:
TUFCO TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TUFCO TECH, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TECHNOLOGIES I, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TUFCO, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TFCO, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FOREMOST MANUFACTURING COMPANY, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Guarantor Security Agreement, Page 20
153
SECURED PARTY:
FIRST UNION NATIONAL BANK,
as Agent for the Banks
By:
---------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
Guarantor Security Agreement, Page 21
154
Schedule 1.1
TO
SECURITY AGREEMENT
Pledged Shares
Description of Each Number of
State of Class and Series Issued Shares
Name of Issuer Name of Owner Organization (or each interest) Par Value (or % interest) Certificate No.
-------------- ------------- ------------ ------------------ --------- --------------- ---------------
A. Tufco Tech, Inc. Parent Delaware Common $ 0.001 1,000 2
B. Technologies I, Inc. Parent Delaware Common $ 0.001 1,000 1
C. Tufco, Inc. Parent Delaware Common $ 0.001 1,000 1
D. TFCO, Inc. Parent Delaware Common $ 0.001 1,000 1
E. Foremost Manufacturing Parent Missouri Common None 5,000 1
Company, Inc.
F. Foremost Manufacturing Parent Missouri Common None 5,000 2
Company, Inc.
G. Tufco, L.P. Tufco Tech, Inc. Delaware General Partner N/A 1% N/A
H. Tufco, L.P. Technologies I, Inc. Delaware Limited Partner N/A 43% N/A
I. Tufco, L.P. Tufco, Inc. Delaware Limited Partner N/A 28% N/A
J. Tufco, L.P. TFCO, Inc. Delaware Limited Partner N/A 28% N/A
Schedule 1.1, Solo Page
155
SCHEDULE 3.1
TO
SECURITY AGREEMENT
Locations
I. Principal Place of Business
Address Landlord/Mortgagee
------- ------------------
a. TUFCO TECHNOLOGIES, INC.
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
b. TUFCO TECH, INC.
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
c. TECHNOLOGIES I, INC.
P. O. Xxx 00000
Xxxxxxxxx, XX 00000
0000 Xxxxxxxx
Xxxxxx, XX 00000
d. TUFCO, INC.
P. O. Xxx 00000
Xxxxxxxxx, XX 00000
0000 Xxxxxxxx
Xxxxxx, XX 00000
e. TFCO, INC.
P. O. Xxx 00000
Xxxxxxxxx, XX 00000
0000 Xxxxxxxx
Xxxxxx, XX 00000
f. FOREMOST MANUFACTURING COMPANY, INC.
0000 Xxxxxx Xxxx Xxxx.
Xx. Xxxxx, XX 00000
Schedule 3.1, Page 1
156
0000 Xxxxxxxx
Xxxxxx, XX 00000
II. Other Locations
None
Schedule 3.1, Page 2
157
SCHEDULE 3.2
TO
SECURITY AGREEMENT
Deposit, Commodity and Security Accounts
----------------------------------------------------------------------------------
GUARANTOR INSTITUTION ACCOUNT NUMBER
----------------------------------------------------------------------------------
Tufco Technologies, Inc. Principal Financial Securities NEJ-950654-47
----------------------------------------------------------------------------------
Foremost Manufacturing Alligiant Bank, St. Louis, MO 0204042860
Company, Inc.
----------------------------------------------------------------------------------
Schedule 3.2, Solo Page
158
SCHEDULE 3.3
TO
SECURITY AGREEMENT
Trade and Other Names; Tax I.D. Number
Trade and Other Names:
TUFCO TECHNOLOGIES, INC.
TUFCO, LP
TUFCO TECH, INC.
TECHNOLOGIES I, INC.
TUFCO, INC.
TFCO, INC.
FOREMOST MANUFACTURING COMPANY, INC.
United States Federal Income Tax I.D. Number:
TUFCO TECHNOLOGIES, INC. -- 00-0000000
TUFCO TECH, INC. -- 00-0000000
TECHNOLOGIES I, INC. -- 00-0000000
TUFCO, INC. -- 00-0000000
TFCO, INC.-- 00-0000000
FOREMOST MANUFACTURING COMPANY, INC. -- 00-0000000
Schedule 3.3, Solo Page
159
SCHEDULE 3.4
TO
SECURITY AGREEMENT
Intellectual Property
COPYRIGHTS AND COPYRIGHTS LICENSES
None
===============================================================================================================================
PATENTS
===============================================================================================================================
Owner of Record After Application or Registration or
Assignment Agreements are Filed Country of Origin Patent Identification Registration No. Filing Date
===============================================================================================================================
Tufco Industries, Inc., U.S. multi-layered plastic 5,266,390 11/30/93
now known as dropcloth and sheet-
Tufco Technologies, Inc. like covers
-------------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc., U.S. "Ladder Guards" 4,771,862 9/20/88
now known as (expired)
Tufco Technologies, Inc.
===============================================================================================================================
=====================================================================================
PATENTS
=====================================================================================
Owner of Record After Issue Date Expiration Date
Assignment Agreements are Filed (if known)
=====================================================================================
Tufco Industries, Inc.,
now known as
Tufco Technologies, Inc.
-------------------------------------------------------------------------------------
Tufco Industries, Inc.,
now known as
Tufco Technologies, Inc.
=====================================================================================
PATENT LICENSES
None
===================================================================================================================================
TRADEMARKS
===================================================================================================================================
Application or Filing Expiration
Owner of Record Country of Registration Trademark Registration No. Date Date
===================================================================================================================================
Foremost Manufacturing U.S. COVER-UP 702,373 8/2/60
Company, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
=================================================================================
TRADEMARKS
=================================================================================
Owner of Record Goods
=================================================================================
Foremost Manufacturing protective covers made of paper, cloth or plastic
Company, Inc.
---------------------------------------------------------------------------------
Schedule 3.4, Page 1
160
==================================================================================================================================
TRADEMARKS
==================================================================================================================================
Application or Filing Expiration
Owner of Record Country of Registration Trademark Registration No. Date Date
==================================================================================================================================
Foremost Manufacturing U.S. PAINTER'S BEST 74/674,311 pending
Company, Inc. (design)
----------------------------------------------------------------------------------------------------------------------------------
Foremost Manufacturing U.S. STEP SAFELY 1,504,015
Company, Inc. (cancelled)
----------------------------------------------------------------------------------------------------------------------------------
Foremost Manufacturing U.S. DOUBLE GUARD in process of
Company, Inc. reapplying for
trademark
----------------------------------------------------------------------------------------------------------------------------------
Foremost Manufacturing U.S. EXECULINE in process of
Company, Inc. applying for new
trademark
----------------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc., U.S. PARTY TIME 1,679,060 3/17/92
now known as
Tufco Technologies, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc., U.S. TUFCO 1,297,621 9/25/84
now known as
Tufco Technologies, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc., U.S. CANVEX 950,941 1/16/73
now known as
Tufco Technologies, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc., U.S. (Wisconsin State) TUFCO 33,528 4/26/82
now known as
Tufco Technologies, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Tufco Industries, Inc., U.S. (Wisconsin State) TUFFY RETAIL 10/31/75
now known as PRODUCTS (and
Tufco Technologies, Inc. design)
==================================================================================================================================
====================================================================================
TRADEMARKS
====================================================================================
Owner of Record Goods
====================================================================================
Foremost Manufacturing hand-operated caulking guns and sanding blocks;
Company, Inc. protective safety goggles and face mask for painters;
plastic sheeting for use as drop cloths, wall xxxxxxx
and spray hoods; gloves, clothing to be worn by
painters, esp. socks, mitts, coveralls, shoe and boot
covers
------------------------------------------------------------------------------------
Foremost Manufacturing
Company, Inc.
------------------------------------------------------------------------------------
Foremost Manufacturing
Company, Inc.
------------------------------------------------------------------------------------
Foremost Manufacturing
Company, Inc.
------------------------------------------------------------------------------------
Tufco Industries, Inc., disposable table covers
now known as
Tufco Technologies, Inc.
------------------------------------------------------------------------------------
Tufco Industries, Inc., tarpaulins -- namely drop clothes, predominately
now known as plastic combination paper/plastic drop cloths,
Tufco Technologies, Inc. polyethylene roll cover film and painters' finishing
cloths
------------------------------------------------------------------------------------
Tufco Industries, Inc., painters' drop cloths composed essentially of paper
now known as and polyethylene film laminated together
Tufco Technologies, Inc.
------------------------------------------------------------------------------------
Tufco Industries, Inc., industrial and retail paper, plastic and cloth
now known as products, including painters' products, drop cloths,
Tufco Technologies, Inc. table cloths and similar products and paper
converting and packaging machinery
------------------------------------------------------------------------------------
Tufco Industries, Inc., retail products sold through distributors in the paint
now known as sundry market as well as the automotive after-
Tufco Technologies, Inc. market
====================================================================================
Schedule 3.4, Page 2
161
==========================================================================================
TRADEMARK LICENSES
==========================================================================================
Name of Agreement Parties Date of Agreement
==========================================================================================
==========================================================================================
Schedule 3.4, Page 3
162
EXHIBIT A
TO
SECURITY AGREEMENT
FORM OF AMENDMENT
This Amendment, dated _______________, 19___, is delivered pursuant to
Section 4.8 of the Guarantor Security Agreement (as herein defined) referred to
below. The undersigned hereby agrees that this Amendment may be attached to the
Guarantor Security Agreement dated as of August 28, 1998, among the undersigned,
certain of its affiliates and First Union National Bank, as agent for the
ratable benefit of the Banks referred to therein (the "Security Agreement"), and
that the shares of stock, membership interests, notes or other instruments
listed on Schedule 1 annexed hereto shall be and become part of the Collateral
referred to in the Security Agreement and shall secure payment and performance
of all Obligations as provided in the Security Agreement.
Capitalized terms used herein but not defined herein shall have the
meanings therefor provided in the Security Agreement.
[DEBTOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Amendment to Guarantor Security Agreement - Solo Page
163
Schedule 1
to
Guarantor Security Agreement Amendment
Stock Number Percentage of
Stock Issuer Class of Stock Certificate No(s). Par Value of Shares Outstanding Shares
------------ -------------- ------------------ --------- --------- ------------------
Schedule 1 to Guarantor Security Agreement Amendment, Solo Page
164
EXHIBIT "F"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Joinder Agreement
EXHIBIT "F", Cover Page
165
JOINDER AGREEMENT
This JOINDER AGREEMENT (the "Agreement") dated as of
____________________, is executed by the undersigned (the "Debtor") for the
benefit of FIRST UNION NATIONAL BANK, in its capacity as agent for the banks
party to the hereafter identified Credit Agreement (in such capacity herein, the
"Agent") and for the benefit of such banks in connection with that certain
Credit Agreement dated as of August 28, 1998, among the Agent, TUFCO, L.P. (the
"Borrower), TUFCO TECHNOLOGIES, INC. ("Parent"), and the banks party thereto (as
modified, the "Credit Agreement", and capitalized terms not otherwise defined
herein being used herein as defined in the Credit Agreement).
The Debtor is a newly formed or newly acquired Subsidiary to Parent and
is required to execute this Agreement pursuant to the Credit Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtor hereby agrees as follows:
1. The Debtor assumes all the obligations of a "Debtor" under the
Guarantor Security Agreement and agrees that it is a "Debtor" and bound as a
"Debtor" under the terms of the Guarantor Security Agreement as if it had been
an original signatory thereto. In furtherance of the foregoing, the Debtor
hereby assigns, pledges and grants to Agent a security interest in all of its
right, title and interest in and to Debtor's Collateral (as defined in the
Guarantor Security Agreement) to secure the Obligations (as defined in the
Guarantor Security Agreement) under the terms of the Guarantor Security
Agreement.
2. Schedules 1.1, 3.1, 3.2, 3.3 and 3.4 of the Guarantor Security
Agreement are hereby amended to add the information relating to Debtor set out
on Schedules 1.1, 3.1, 3.2, 3.3 and 3.4 hereof. The Debtor hereby confirms that
the representations and warranties set forth in Article III of the Guarantor
Security Agreement applicable to it and its Collateral and the representations
and warranties set forth in the Credit Agreement are true and correct after
giving effect to such amendment to the Schedules.
3. In furtherance of its obligations under Section 4.2 of the Security
Agreement, but subject to Section 10.10 of the Credit Agreement, Debtor agrees
to execute and deliver such UCC financing statements naming the Debtor as
debtor, the Agent as secured party and describing its Collateral and such other
documentation (including intellectual property security agreements) as the Agent
may require to evidence, protect and perfect the Liens created by the Guarantor
Security Agreement as modified hereby.
4. The Debtor hereby assumes all the obligations of a "Guarantor" under
the Master Guaranty and agrees that it is a "Guarantor" and bound as a
"Guarantor" under the terms of the Master Guaranty as if it had been an original
signatory thereto. In accordance with the forgoing and for valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
JOINDER AGREEMENT - Page 1
166
Debtor irrevocably and unconditionally guarantees to the Agent and the Banks the
full and prompt payment and performance of the Guaranteed Indebtedness (as
defined in the Guaranty) upon the terms and conditions set forth in the Master
Guaranty.
5. This Agreement shall be deemed to be part of, and a modification to,
the Guarantor Security Agreement and the Master Guaranty and shall be governed
by all the terms and provisions of the Guarantor Security Agreement and the
Master Guaranty, which terms are incorporated herein by reference, are ratified
and confirmed and shall continue in full force and effect as valid and binding
agreements of Debtor enforceable against Debtor. The Debtor hereby waives notice
of the Agent's or any Bank's acceptance of this Agreement.
IN WITNESS WHEREOF, the Debtor has executed this Agreement as of the
day and year first written above.
Debtor:
----------------------------------------
By:
----------------------------------
Name:
---------------------------------
Title:
---------------------------------
JOINDER AGREEMENT - Page 2
167
SCHEDULE 1.1
TO
JOINDER AGREEMENT
Pledged Shares
Class Stock Number Percentage of
Stock of Certificate Par of Outstanding
Issuer Stock No(s). Value Shares Shares
------ ----- ----------- ----- ------ -------------
Schedule 1.1 to Joinder Agreement, Solo Page
168
SCHEDULE 3.1
TO
JOINDER AGREEMENT
Locations
I. Principal Place of Business
Address Landlord/Mortgagee
II. Other Locations
Address Landlord/Mortgagee
Schedule 3.1 to Joinder Agreement, Solo Page
169
SCHEDULE 3.2
TO
JOINDER AGREEMENT
Trade and Other Names; Tax ID Number
Schedule 3.2 to Joinder Agreement, Solo Page
170
SCHEDULE 3.3
TO
JOINDER AGREEMENT
Deposit, Security and Commodity Accounts
Schedule 3.3 to Joinder Agreement, Page 1 of 2
171
SCHEDULE 3.4
TO
JOINDER AGREEMENT
Intellectual Property
COPYRIGHTS
============================================================================================================
Owner of Record Country of Registration Copyright Applications or Registration or Expiration Title
Registration Filing Date Date
No.
=============== ======================= ========== =============== =============== ============ =======
=============== ======================= ========== =============== =============== ============ =======
COPYRIGHT LICENSES
=================================================================================================
Name of Agreement Patent Date of Agreement
========================== =============================== ======================================
========================== =============================== ======================================
PATENTS
===========================================================================================================
Owner of Record After Application or
Assignment Agreements are Filed Country of Origin Patent Identification Registration No.
=================================== ===================== ====================== ========================
=================================== ===================== ====================== ========================
========================================================================
Registration or Issue Date Expiration Date
Filing Date (if known)
================= ==================== ==============================
================= ==================== ==============================
PATENT LICENSES
=================================================================================================
Name of Agreement Patent Date of Agreement
========================== =============================== ======================================
========================== =============================== ======================================
Schedule 3.4 to Joinder Agreement, Page 1 of 2
172
TRADEMARKS
=======================================================================================================
Application or
Owner of Record Country of Registration Trademark Registration No.
============================ ============================ ======================= ===================
============================ ============================ ======================= ===================
============================================================================
Filing Expiration
Date Date Goods
============= ============= ===============================================
============= ============= ===============================================
TRADEMARK LICENSES
=================================================================================================
Name of Agreement Parties Date of Agreement
========================== =============================== ======================================
========================== =============================== ======================================
Schedule 3.4 to Joinder Agreement, Page 2 of 2
173
EXHIBIT "G"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Assignment and Acceptance
EXHIBIT "G", Cover Page
174
ASSIGNMENT AND ACCEPTANCE
Dated _______________, 19__
Reference is made to the Credit Agreement dated as of August 28, 1998
(as the same may be amended and in effect from time to time, the "Credit
Agreement"), among Tufco, L.P., a Delaware limited partnership (the "Borrower"),
Tufco Technologies, Inc., the banks named therein (the "Banks"), First Union
National Bank, as agent for the Banks (the "Agent"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement. This Assignment and Acceptance is being executed
pursuant to Section 15.8(c) of the Credit Agreement.
_________________________ (the "Assignor") and _______________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse, representation or warranty except as specifically
set forth herein, and the Assignee hereby purchases and
assumes from the Assignor, a ___________% interest in and to
all the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the Effective
Date (as defined below) (including, without limitation, such
percentage interest in the Revolving Commitments of the
Assignor on the Effective Date and such percentage interest in
the Loans owing to, and Letter of Credit Liabilities
(including participations purchased pursuant to the Credit
Agreement) held by, the Assignor outstanding on the Effective
Date together with such percentage interest in all unpaid
interest and fees accrued from the Effective Date).
2. The Assignor (i) represents that as of the date hereof, its
Revolving Commitment is $_____________, the outstanding
principal balance of its Revolving Loans is $_____________,
the outstanding principal balance of its Term Loan is
$_____________, the outstanding Bond L/C Liabilities
(including participations purchased pursuant to the Credit
Agreement) held by it are $_________________, and the
outstanding Commercial L/C Liabilities (including
participations purchased pursuant to the Credit Agreement)
held by it are $____________, (all as unreduced by any
assignments which have not yet become effective); (ii) makes
no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any
other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the
Credit Agreement or any other Loan Document, other than that
it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and
clear of any adverse claim; (iii) makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Obligated Party or
the performance or observance
ASSIGNMENT AND ACCEPTANCE - Page 1
175
by the Borrower or any Obligated Party of any of their
obligations under the Credit Agreement or any other Loan
Document.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements
delivered pursuant to Section 10.1 thereof, and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Agent, the
Assignor, or any other Bank 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 the Credit Agreement and the other Loan
Documents; (iv) confirms that it is an Eligible Assignee; (v)
authorizes the Agent to take such action on its behalf and to
exercise such powers under the Loan Documents as are delegated
to the Agent by the terms thereof, together with such powers
as are reasonably incidental thereto; (vi) agrees that it will
perform in accordance with their terms all obligations which
by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Bank; [and
(vii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's
exemption from United States withholding taxes with respect to
all payments to be made to the Assignee under the Credit
Agreement or such other documents as are necessary to indicate
that all such payments are subject to such tax at a rate
reduced by an applicable tax treaty].(1)
4. The effective date for this Assignment and Acceptance shall be
_______________ (the "Effective Date").(2) Following the
execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the
Agent.
5. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this
Assignment and Acceptance, shall have the rights and
obligations of a Bank thereunder and under the other Loan
Documents and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement
and the other Loan Documents.
6. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect
of the interest assigned hereby (including payments of
principal, interest, fees, and other amounts) to the Assignee.
The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit
--------
(1) If the Assignee is organized under the laws of a jurisdiction outside the
United States.
(2) Such date shall be at least five (5) Business Days after the execution of
this Assignment and Acceptance and delivery thereof to the Agent or upon
acceptance by the Agent.
ASSIGNMENT AND ACCEPTANCE - Page 2
176
Agreement and the Revolving Note for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Texas
and applicable laws of the United States of America.
[NAME OF ASSIGNOR]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
[NAME OF ASSIGNEE]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
ACCEPTED BY:
FIRST UNION NATIONAL BANK,
as Agent
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
TUFCO, L.P.
By: Tufco Tech. Inc., its
Managing General Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ASSIGNMENT AND ACCEPTANCE - Page 3
177
EXHIBIT "H"
TO
TUFCO, L.P.
CREDIT AGREEMENT
Compliance Certificate
EXHIBIT "H", Cover Page
178
COMPLIANCE CERTIFICATE
for the
Fiscal Quarter ending ________ __, ____
To: First Union National Bank,
as Agent
000 Xxxxxx Xxxx
Xxxx Xxxxxxx, Xxx Xxxxxx 00000
re: TUFCO, L.P.
and each Bank
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 10.1(c) of that certain Credit Agreement (as amended, the
"Agreement") dated as of August 28, 1998, among Tufco, L.P., Tufco Technologies,
Inc. ("Parent"), the banks and lending institutions named therein (the "Banks")
and First Union National Bank, as agent for the Banks ("Agent"). All capitalized
terms, unless otherwise defined herein, shall have the same meanings as in the
Agreement. All the calculations set forth below shall be made pursuant to the
terms of the Agreement.
The undersigned, as an authorized financial officer of Parent, and not
individually, does hereby certify to the Agent and the Banks that:
1. DEFAULT.
No Default has occurred and is continuing or if a Default has occurred
and is continuing, I have described on the attached Exhibit "A" the
nature thereof and the steps taken or proposed to remedy such Default.
2. SECTION 10.1 - FINANCIAL STATEMENTS AND RECORDS
(a) Annual audited financial statements of Parent and its Subsidiaries Yes No N/A
on or before ninety (90) days after the end of each Fiscal Year.
(b) Quarterly unaudited financial statements of Parent and Yes No N/A
its Subsidiaries within forty-five (45) days after the end
of the first 3 Fiscal Quarters and within ninety (90) days
after the last Fiscal Quarter
(c) Financial Projections of Parent and its Subsidiaries within Yes No N/A
forty-five (45) days after the beginning of each Fiscal Year.
COMPLIANCE CERTIFICATE - Page 1
179
3. SECTION 11.1 - DEBT
(a) Purchase money not to exceed: $ 100,000
Actual Outstanding: $ Yes No
---------------
(b) Guarantees of surety, appeal bonds, etc. not to exceed: $ 100,000
Actual Outstanding: $ Yes No
---------------
(c) Other Debt not to exceed: $ 50,000
Actual Outstanding: $ Yes No
---------------
4. SECTION 11.4 - TREASURY STOCK
(a) Amount spent to purchase or redeem Parent stock during most
recently completed Fiscal Year $
---------------
(b) Maximum allowed by Credit Agreement $ 500,000 Yes No
5. SECTION 11.8 - ASSET DISPOSITIONS
(a) Aggregate book value of assets disposed during any 12-
month period not to exceed: $ 100,000
(b) Total book value of asset dispositions for 12-month
period most recently ending: $ Yes No
---------------
6. SECTION 12.1 - CONSOLIDATED TANGIBLE NET WORTH
(a) $ 13,500,000 $ 13,500,000
(b) Net income for Current Fiscal Quarter (if positive) $
---------------
(c) Aggregate positive Net Income since 9-30-97 Fiscal
Quarter end (excluding current Fiscal Quarter) $
---------------
(d) 6(b) + 6(c) $
---------------
(e) 50% of 6(d) $
---------------
(f) Aggregate amount of net cash proceeds or other capital
contribution to Parent since 9-30-97 $
---------------
(g) Required Consolidated Tangible Net Worth:
6(a) + 6(e) + 6(f) $
---------------
(h) Net Worth from balance sheet $
---------------
(i) Less gain due to write-up of assets $
---------------
(j) Less intangible assets $
---------------
(k) Less deferred income tax assets $
---------------
(l) Less unmarketable securities $
---------------
(m) Less cash for retirement of stock or Debt $
---------------
(n) Less translation adjustment $
---------------
(o) Less Parent stock included in assets $
---------------
(p) Less net worth attributable to minority interests $
---------------
(q) Consolidated Tangible Net Worth [6(h)-(6(i) through 6(p))] $ Yes No
---------------
COMPLIANCE CERTIFICATE - Page 2
180
7. SECTION 12.2 - FIXED CHARGE COVERAGE
(a) Consolidated Net Income for last four Fiscal Quarters
(from Schedule 1) $
---------------
(b) Plus deductions for tax $
---------------
(c) Less benefit from tax $
---------------
(d) Plus interest expense $
---------------
(e) Plus amortization $
---------------
(f) Plus depreciation $
---------------
(g) Plus lease expenses attributable to lease at Xxxxxxx,
S.C. $
---------------
(h) Parent's EBITDA:
(a) plus (b), (d), (e), (f), and (g) less (c) $
---------------
(i) Less deductions for cash taxes paid $
---------------
(j) Plus benefit from taxes $
---------------
(k) Cash Flow
7(h) plus 7(j) minus 7(i) $
---------------
(l) Fixed Charges
(i) Cash interest expense $
---------------
(ii) Scheduled principal payments on Debt $
---------------
(iii) Aggregate amount of Capital Expenditures $
---------------
(iv) 50% of amounts used by Parent to repurchase
Securities $
---------------
(v) less $1,800,000 for period ending 6-30-98 or
9-30-98 and $700,000 for period ending
12-31-98 $
---------------
(vi) plus lease expenses attributable to lease at
Xxxxxxx, S.C. $
---------------
(vii) Sum of 7(l)(i) through (iv) less (v) and (vi) $
---------------
(m) Actual Fixed Charge Coverage 7(k)/7(l)(vii) :1.00
------
(n) Minimum Fixed Charge Coverage :1.00 Yes No
------
8. SECTION 12.3 - INDEBTEDNESS TO EBITDA
(a) Debt for borrowed money $
---------------
(b) Debt evidenced by bonds, notes, etc. $
---------------
(c) Capital Lease Obligations $
---------------
(d) Liquidated reimbursement obligations and undrawn
letters of credit $
---------------
(e) Debt secured by lien on leased Xxxxxxx, S.C. facility $
---------------
(f) Indebtedness, sum of 8(a) through 8(e) $
---------------
(g) EBITDA (from 7(h)) $
---------------
(h) 8(f)/8(g) :1.00
------
(i) Maximum Indebtedness to EBITDA allowed by Credit
Agreement 3.0:1.00 Yes No
(j) Adjustment to margin and fees required by
Section 5.2? Yes No
(k) If adjustment required, set forth below new margins and fees in
accordance with Section 5.2.
COMPLIANCE CERTIFICATE - Page 3
181
(i) Base Margin %
---
(ii) Commitment Fee Rate %
---
(iii) Libor Rate Margin %
---
9. SECTION 12.4 - CAPITAL EXPENDITURES
(a) Capital Expenditures for current Fiscal Year $
---------------
(b) Maximum allowed by Credit Agreement $3,000,000 Yes No
(c) Capital Expenditures for last Fiscal Year $
---------------
(d) Sum of 9(a) plus 9(b) $
---------------
(e) Maximum Capital Expenditures for any two Fiscal $5,000,000 Yes No
Years allowed by Credit Agreement
10. ATTACHED SCHEDULES
Attached hereto as schedules are the calculations supporting the
computation set forth above in this Certificate. All information
contained herein and on the attached schedules is true and correct.
11. FINANCIAL STATEMENTS
The unaudited financial statements attached hereto were prepared in
accordance with GAAP (excluding footnotes) and fairly present (subject
to year end audit adjustments) the financial conditions and the results
of the operations of the Persons reflected thereon, at the date and for
the periods indicated therein.
12. CONFLICT
In the event of any conflict between the definitions or covenants
contained in the Credit Agreement and as they may be interpreted or abbreviated
in this Compliance Certificate, the Credit Agreement shall control.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective this _______ day of ____________, ____.
TUFCO TECHNOLOGIES, INC.
By:
-----------------------
Name:
---------------------
Title:
--------------------
COMPLIANCE CERTIFICATE - Page 4
182
Schedule 1
to
Compliance Certificate
Parent Consolidated Net Income
for period ______________ to _________________
1. GAAP for Parent, with inventory valued at the lower of its fair market
value on its historical cost (on a first-in, first-out basis), excluding
the following consolidated net income $
-----------
(a) extraordinary gains or losses or nonrecurring revenue
or expenses
-----------
(b) gains on sale of securities
-----------
(c) losses on sale of securities
-----------
(d) any gains or losses in respect of the write-up of any asset at greater
than original cost or write-down at less than original cost;
-----------
(e) any gains or losses realized upon the sale or other disposition of
property, plant, equipment or intangible assets which is not sold or
otherwise disposed of in the ordinary course of business;
-----------
(f) any gains or losses from the disposal of a discontinued business;
-----------
(g) any net gains or losses arising from the extinguishment of any debt;
-----------
(h) any restoration to income of any contingency reserve for long term
asset or long term liabilities, except to the extent that provision for
such reserve was made out of income accrued during such period;
-----------
(i) the cumulative effect of any change in an accounting principle on
income of prior periods;
-----------
(j) any deferred credit representing the excess of equity in any acquired
company or assets at the date of acquisition over the cost of the
investment in such company or asset;
-----------
(k) the income from any sale of assets in which the book value of such
assets prior to their sale had been the book value inherited;
-----------
(l) the income (or loss) of any Person (other than a subsidiary) in which
Parent or a Subsidiary has an ownership interest; provided,
however, that (i) Consolidated Net Income shall include amounts in
respect of the income of such Person when actually received in cash
by the Parent or such Subsidiary in the form of dividends or
similar distributions and (ii) Consolidated Net Income shall be
reduced by the aggregate amount of all investments, regardless of
the form thereof, made by Parent or any of the Subsidiaries in such
Person for the purpose of funding any deficit or loss of such Person;
-----------
(m) any reduction in or addition to income tax expense resulting from an
increase or decrease in a deferred income tax asset due to the
anticipation of future income tax benefits;
-----------
(n) any reduction in or addition to income tax expense due to the change in
a statutory tax rate resulting in an increase or decrease in a deferred
income tax asset or in a deferred income tax liability;
-----------
(o) any gains or losses attributable to returned surplus assets of any
pension-benefit plan or any pension credit attributable to the excess of
(i) the return on pension-plan assets over (ii) the pension obligation's
service cost and interest cost;
-----------
(p) the income or loss of any Person acquired by Parent or a Subsidiary for
any period prior to the date of such acquisition; and
-----------
Schedule 1 to Compliance Certificate, Page 1 of 2
183
(q) the income from any sale of assets in which the accounting basis of
such assets had been the book value of any Person acquired by
Parent or a Subsidiary prior to the date such Person became a
Subsidiary or was merged into or consolidated with Parent or a
Subsidiary.
-----------
TOTAL: $
===========
Schedule 1 to Compliance Certificate, Page 2 of 2
184
EXHIBIT "I"
to
TUFCO, L.P.
CREDIT AGREEMENT
Form of Notice of Borrowing, Conversion, Continuation or Prepayment
EXHIBIT I, COVER PAGE
185
NOTICE
---------- --, ----
First Union National Bank, as Agent
-----------------------------------
-----------------------------------
-----------------------------------
Attention: Loan Syndication Services
Re: Tufco, L.P.
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
August 28, 1998, between TUFCO, L.P. (the "Borrower"), TUFCO TECHNOLOGIES, INC.,
certain lenders, and FIRST UNION NATIONAL BANK, as agent for such lenders (the
"Agent") (as the same may be amended or otherwise modified, the "Credit
Agreement"). Capitalized terms that are not defined herein shall have the
meanings assigned to them in the Credit Agreement.
This irrevocable Notice is given by the Borrower pursuant to Section
6.3 of the Credit Agreement. The Borrower hereby notifies you of the following
(check and/or complete the applicable item):
____ (a) Borrowing.
(i) The Borrower requests a Revolving Loan in
the amount of: $__________________ on
_____________, _____ (the "Requested
Advance").
(ii) The Requested Advance will be of the
following Type: [ ] Base Rate Account; [ ]
Eurodollar Account.
(iii) If the Requested Advance will be in a
Eurodollar Account, the Interest Period will
be: [ ] 1 month; [ ] 2 months; [ ] 3 months;
[ ] 6 months.
____ (b) Conversion or Continuation of Loan.
(i) The Borrower requests a [ ] Conversion or
[ ] Continuation of an Account in the amount
of: $__________________ on _____________,
_____.
(ii) The Type of Account to be Converted or
Continued will be a: [ ] Base Rate Account;
[ ] Eurodollar Account.
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186
(iii) The Account resulting from the Conversion or
Continuation will be a: [ ] Base Rate
Account; [ ] Eurodollar Account.
(iv) If the Account resulting from the Conversion
or Continuation will be a Eurodollar
Account, the Interest Period for such
Account will be: [ ] 1 month; [ ] 2 months;
[ ] 3 months; [ ] 6 months.
____ (c) Prepayment.
(i) The Borrower will make a prepayment of the
principal of the [Revolving] [Term] Loans in
the amount of: $__________________ on
_____________.
(ii) The Account to be prepaid will be of the
following Type: [ ] Base Rate Account; [ ]
Eurodollar Account.
(iii) If the Account to be prepaid is a Eurodollar
Account, it has an Interest Period of _____
month(s) that will end on _____________, and
the breakage costs associated with the
prepayment of such Eurodollar Account is
$___________________.
In connection with each borrowing, Continuation or Conversion requested
hereby, the undersigned hereby certifies that the following statements are true
and correct:
(i) The representations and warranties contained in
Article 9 of the Credit Agreement and in each of the other
Loan Documents are true and correct on and as of the date
hereof with the same force and effect as if made on and as of
such date.
(ii) No Default has occurred and is continuing or
would result from the Requested Advance, Continuation or
Conversion.
(iii) Since __________________,* there has been no
material adverse change in the business, condition (financial
or otherwise), operations, prospects, or properties of Parent
or the Subsidiaries.
(iv) The amount of the Requested Advance, when added
to the principal amount of all Revolving Loans outstanding
will not exceed the Revolving Commitments.
--------
* Insert the effective date of the most recent financial statements
referred to in Section 10.1 of the Loan Agreement.
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187
Executed and Delivered as of .
----------------------------
Very truly yours,
TUFCO, L.P.
By: Tufco Tech, Inc., its
Managing General Partner
By:
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Name:
-----------------------------------------
Title:
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