EXHIBIT 10.1
Dated as of February 27, 1998
by and between
BAGCRAFT CORPORATION OF AMERICA
as Borrower
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent and as Lender
TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT........................................1
1.1 Revolving Credit Advances................................1
1.2 Term Loans...............................................2
1.3 Capital Expenditure Loan.................................5
1.4 Swing Line Facility......................................6
1.5 Letters of Credit........................................7
1.6 Prepayment...............................................7
1.7 Single Loan..............................................9
1.8 Use of Proceeds..........................................9
1.9 Interest.................................................9
1.10 Eligible Accounts.......................................12
1.11 Eligible Inventory......................................12
1.12 Fees....................................................12
1.13 Cash Management Systems.................................12
1.14 Receipt of Payments.....................................12
1.15 Application and Allocation of Payments..................13
1.16 Loan Account and Accounting.............................14
1.17 Indemnity...............................................14
1.18 Access..................................................15
1.19 Taxes...................................................16
1.20 Capital Adequacy and Other Adjustments..................16
1.21 Amendment and Restatement...............................18
2. CONDITIONS PRECEDENT.............................................18
2.1 Conditions to Initial Loans, Advances
and Letter of Credit Obligations........................18
2.2 Further Conditions to each Loan,
Advance and Letter of Credit Obligation.................19
2.3 Further Conditions to Each
Capital Expenditure Advance.............................20
3. REPRESENTATIONS AND WARRANTIES...................................22
3.1 Corporate Existence; Compliance with Law................22
3.2 Executive Offices.......................................22
3.3 Corporate Power Authorization,
Enforceable Obligations.................................22
3.4 Financial Statements and Projections....................23
3.5 Collateral Reports......................................23
3.6 Material Adverse Effect.................................23
3.7 Ownership of Property; Liens............................23
3.8 Restrictions; No Default................................24
3.9 Labor Matters...........................................24
3.10 Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness......................24
3.11 Government Regulation...................................25
3.12 Margin Regulations......................................25
3.13 Taxes...................................................25
3.14 ERISA...................................................26
3.15 No Litigation...........................................27
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3.16 Brokers.................................................27
3.17 Employment Matters......................................27
3.18 Patents, Trademarks, Copyrights and Licenses............28
3.19 Full Disclosure.........................................28
3.20 Hazardous Materials.....................................28
3.21 Insurance Policies......................................29
3.22 Deposit and Disbursement Accounts.......................29
3.23 Government Contracts....................................29
3.24 Customer and Trade Relations............................29
3.25 Agreements and Other Documents..........................29
3.26 Kansas Indebtedness.....................................29
4. FINANCIAL STATEMENTS AND INFORMATION.............................30
4.1 Reports and Notices.....................................30
4.2 Communication with Accountants..........................30
5. AFFIRMATIVE COVENANTS............................................30
5.1 Maintenance of Existence and Conduct of Business........30
5.2 Payment of Obligations..................................30
5.3 Books and Records.......................................31
5.4 Litigation..............................................31
5.5 Insurance...............................................31
5.6 Compliance with Laws....................................32
5.7 Agreements..............................................32
5.8 Supplemental Disclosure.................................32
5.9 Employee Plans..........................................33
5.10 Environmental Matters...................................33
5.11 Landlords' Agreements, Bailee Letters
and Mortgagee Agreements................................33
5.12 Leased Locations of Collateral..........................34
5.13 Subsidiaries............................................34
5.14 Maintenance of Equipment and Fixtures...................34
5.15 Purchase Offers.........................................34
5.16 Board of Directors......................................34
5.17 ARTRA Tax Loss Carryforwards............................34
6. NEGATIVE COVENANTS...............................................34
6.1 Mergers, Etc.....................................................35
6.2 Investments; Loans and Advances.........................35
6.3 Indebtedness............................................35
6.4 Employee Loans and Transactions.........................35
6.5 Capital Structure and Business..........................36
6.6 Guaranteed Indebtedness.................................36
6.7 Liens...................................................36
6.8 Sale of Assets..........................................36
6.9 Events of Default.......................................37
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6.10 ERISA...................................................37
6.11 Financial Covenants.....................................37
6.12 Hazardous Materials.....................................37
6.13 SaleLeasebacks..........................................38
6.14 Cancellation of Indebtedness............................38
6.15 Restricted Payments.....................................38
6.16 Leases..................................................38
6.17 Composition.............................................38
6.18 Accounting Changes......................................38
6.19 Change of Corporate Name................................38
6.20 Sale of Stock...........................................38
6.21 Cash Management.........................................38
6.22 No Impairment of Upstreaming............................39
6.23 No Amendment............................................39
6.24 No Change in Management.................................39
6.25 Management Agreements...................................39
6.26 Overriding Agreements...................................39
7. TERM.............................................................39
7.1 Termination.............................................39
7.2 Survival of Obligations Upon Termination
of Financing Arrangements...............................39
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES...........................40
8.1 Events of Default.......................................40
8.2 Remedies................................................43
8.3 Waivers by Borrower.....................................43
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..............44
9.1 Assignment and Participations...........................44
9.2 Appointment of Agent....................................45
9.3 Agent's Reliance, Etc...................................46
9.4 GE Capital and Affiliates...............................47
9.5 Lender Credit Decision..................................47
9.6 Indemnification.........................................47
9.7 Successor Agent.........................................48
9.8 Setoff and Sharing of Payments..........................48
9.9 Advances; Payments; NonFunding Lenders;
Information.............................................49
10. MISCELLANEOUS....................................................51
10.1 Successors and Assigns..................................51
10.2 Complete Agreement; Modification of Agreement...........51
10.3 Amendments and Waivers..................................51
10.4 Fees and Expenses.......................................54
10.5 No Waiver...............................................55
10.6 Remedies................................................55
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10.7 Severability............................................55
10.8 Conflict of Terms.......................................55
10.9 Authorized Signature....................................56
10.10 GOVERNING LAW...........................................56
10.11 Notices.................................................57
10.12 Section Titles..........................................57
10.13 Counterparts............................................57
10.14 MUTUAL WAIVER OF JURY TRIAL.............................57
10.15 Reinstatement...........................................58
10.16 Advice of Counsel.......................................58
10.17 Confidentiality.........................................58
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INDEX OF EXHIBITS, SCHEDULES AND ANNEXES
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Term Note
Exhibit E - Form of Notice of Capital Expenditure Advance
Exhibit F - Form of Capital Expenditure Advance
Compliance Certificate
Exhibit G - Form of Capital Expenditure Loan Note
Exhibit H - Form of Swing Line Note
Exhibit I - Form of Notice of Conversion/Continuation
Exhibit J - Form of Assignment Agreement
Schedule 3.2 - Executive Offices
Schedule 3.7 - Real Estate and Leases
Schedule 3.9 - Labor Matters
Schedule 3.10 - Ventures, Subsidiaries, Affiliates;
Outstanding Stock and Indebtedness
Schedule 3.13 - Tax Matters
Schedule 3.14 - ERISA Plans
Schedule 3.15 - Litigation
Schedule 3.17 - Employment Matters
Schedule 3.18 - Intellectual Property
Schedule 3.20 - Hazardous Materials
Schedule 3.21 - Insurance Policies
Schedule 3.22 - Deposit and Disbursement Accounts
Schedule 3.23 - Government Contracts
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4 - Affiliate and Employee Loans, Transactions and Agreements
Schedule 10.8 - Authorized Signatures
Annex A - Definitions
Annex B - Letters of Credit
Annex C - Cash Management Systems
Annex D - Schedule of Documents
Annex E - Responsible Individual
Annex F - Eligible Accounts
Annex G - Eligible Inventory
Annex H - Insurance Standards
Annex I - Financial Statements and Projections
Annex J - Collateral Reports
Annex K - Financial Covenants
Annex L - Notice Addresses
Annex M - Wire Transfer information
Annex N - Commitments
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
February 27, 1998, is by and between BAGCRAFT CORPORATION OF AMERICA, a Delaware
corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (in its individual capacity, "GE Capital"), for itself, as Lender,
and as Agent for Lenders.
RECITALS
A. The parties hereto are parties to an Amended and Restated Credit Agreement
dated as of December 30, 1996 (as heretofore amended, supplemented or otherwise
modified, the "Prior Credit Agreement") pursuant to which Lenders provided to
Borrower aggregate commitments of up to Fifty Million Five Hundred Thousand
Dollars ($50,500,000), subject to the terms and conditions set forth therein.
B. The parties hereto desire to amend and restate the Prior Credit Agreement and
the "Obligations" (as defined therein) to reflect continued aggregate
commitments of up to Fifty Million Five Hundred Thousand Dollars ($50,500,000)
provided by Lenders to Borrower, subject to the terms and conditions set forth
herein.
C. Capitalized terms used in this Agreement and not otherwise defined in this
Agreement shall have the meanings ascribed to them in Annex A. All Schedules,
Exhibits, Annexes and other attachments hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Revolving Credit Advances. Upon and subject to the terms and
conditions hereof, each Lender agrees to make available, from time to time,
until the Commitment Termination Date, for Borrower's use and upon the request
of Borrower therefor, advances (each, a "Revolving Credit Advance") against
Eligible Accounts and Eligible Inventory in an aggregate amount outstanding
which, pursuant to Section 1.1(b), shall not at any given time exceed the lesser
at such time of (i) the Maximum Revolving Credit Loan minus the sum of
outstanding Letter of Credit Obligations, and (ii) an amount equal to the
Borrowing Base minus the sum of outstanding Letter of Credit Obligations
("Borrowing Availability"), in each case less the Swing Line Loan outstanding at
such time and such reserves as Agent may deem appropriate from time to time in
its sole and absolute discretion. Until all amounts outstanding in respect of
the Revolving Credit Loan shall become due and payable on the Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow
under this Section 1.1(a). Each Revolving Credit Advance shall be made on notice
by Borrower to the individual responsible for Borrower as identified on Annex E
at the address specified thereon, given no later than (1) 11:30 a.m. (Chicago
time) on the Business Day of the proposed Revolving Credit Advance, in the case
of an Index Rate Loan and (2) 11:30
a.m. (Chicago time) on the date which is three Business Days prior to the
proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
(a "Notice of Revolving Credit Advance") shall be substantially in the form of
Exhibit A, specifying therein the requested date, the amount of such Revolving
Credit Advance, and such other information as may be required by Agent and shall
be given in writing (by telecopy, telex or cable) or by telephone confirmed
immediately in writing. If Borrower desires to have the Revolving Credit Advance
bear interest by reference to a LIBOR Rate, it must comply with Section 1.9(f).
Agent shall be entitled to rely upon, and shall be fully protected under this
Agreement in relying upon, any Notice of Revolving Credit Advance believed by
Agent to be genuine and to assume that each Person executing and delivering the
same was duly authorized unless the responsible individual, or a designee
thereof, acting thereon for Agent shall have, at the time of reliance thereon,
actual knowledge to the contrary.
(b) Borrower shall execute and deliver to each Lender a note to
evidence the Revolving Credit Loan, such note to be in the principal amount of
the Revolving Loan Commitment of such Lender, dated the Closing Date and
substantially in the form of Exhibit C (each, as executed and as it may be
amended, restated, supplemented or otherwise modified from time to time, a
"Revolving Credit Note" and, collectively, the "Revolving Credit Notes"). The
Revolving Credit Notes shall represent the obligation of Borrower to pay the
amount of the Maximum Revolving Credit Loan or, if less, the aggregate unpaid
principal amount of all Revolving Credit Advances made by Lenders to Borrower
and all other Obligations with interest thereon as prescribed in Section 1.9.
The date and amount of each Revolving Credit Advance and each payment of
principal with respect thereto shall be recorded on the books and records of
Agent, which books and records shall constitute prima facie evidence of the
accuracy of the information therein recorded. The entire unpaid balance of the
Revolving Credit Loan shall be immediately due and payable on the Commitment
Termination Date.
1.2 Term Loans. (a) Upon and subject to the terms and conditions
hereof, each Lender agrees to provide its Pro Rata Share of a term loan to
Borrower on the Closing Date, in the amount of Twenty Million Dollars
($20,000,000) ("Term Loan A"). Amounts repaid under Term Loan A may not
thereafter be reborrowed. Borrower shall pay the principal amount of Term Loan A
in consecutive installments on the twentieth day of March, June, September and
December of each year (each, a "Payment Date"), commencing March 20, 1998, as
follows:
Payment Date Installment Amount
Each of the four (4) $300,000
Payment Dates occurring
from March 20, 1998
through December 20, 1998
Each of the four (4) $450,000
Payment Dates occurring
from March 20, 1999
through December 20, 1999
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Each of the four (4) $1,375,000
Payment Dates occurring
from March 20, 2000
through December 20, 2000
Each of the four (4) $1,375,000
Payment Dates occurring
from March 20, 2001
through December 20, 2001
Each of the four (4) $1,500,000
Payment Dates occurring
from March 20, 2002
through December 20, 2002
Notwithstanding anything to the contrary contained herein or in the Term Loan A
Notes, the then entire unpaid balance of Term Loan A shall be immediately due
and payable upon the first to occur of the (i) Commitment Termination Date and
(ii) acceleration of the Revolving Credit Loan.
Borrower shall execute and deliver to each Lender a note to
evidence Term Loan A, such note to be in a principal amount equal to the amount
of Term Loan A provided by such Lender, dated the Closing Date and substantially
in the form of Exhibit D (each, as executed and as it may be amended, restated,
supplemented or otherwise modified and in effect from time to time, a "Term Loan
A Note" and, collectively, the "Term Loan A Notes"). The Term Loan A Notes shall
represent the obligation of Borrower to pay the amount of Term Loan A and all
other obligations with interest thereon as prescribed in Section 1.9. The date
and amount of each payment of principal and interest on Term Loan A shall be
recorded on the books and records of Agent, which books and records shall
constitute prima facie evidence of the accuracy of the information therein
recorded.
(b) Upon and subject to the terms and conditions hereof, each
Lender agrees to provide its Pro Rata Share of a term loan to Borrower on the
Closing Date, in the amount of Five Million Dollars ($5,000,000) ("Term Loan
B"). Amounts repaid under Term Loan B may not thereafter be reborrowed. Borrower
shall pay the principal amount of Term Loan B in consecutive installments on
each Payment Date, commencing March 20, 1998, as follows:
Payment Date Installment Amount
Each of the twenty (20) $12,500
Payment Dates
occurring from March 20, 1998
through December 20, 2002
Each of the four (4) $1,187,500
Payment Dates occurring
from March 20, 2003
through December 20, 2003
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Notwithstanding anything to the contrary contained herein or in the Term Loan B
Notes, the then entire unpaid balance of Term Loan B shall be immediately due
and payable upon the first to occur of the (i) Commitment Termination Date and
(ii) acceleration of the Revolving Credit Loan.
Borrower shall execute and deliver to each Lender a note to
evidence Term Loan B, such note to be in a principal amount equal to the amount
of Term Loan B provided by such Lender, dated the Closing Date and substantially
in the form of Exhibit D (each, as executed and as it may be amended, restated,
supplemented or otherwise modified and in effect from time to time, a "Term Loan
B Note" and, collectively, the "Term Loan B Notes"). The Term Loan B Notes shall
represent the obligation of Borrower to pay the amount of Term Loan B and all
other obligations with interest thereon as prescribed in Section 1.9. The date
and amount of each payment of principal and interest on Term Loan B shall be
recorded on the books and records of Agent, which books and records shall
constitute prima facie evidence of the accuracy of the information therein
recorded.
(c) Upon and subject to the terms and conditions hereof, each
Lender agrees to provide its Pro Rata Share of a term loan to Borrower on the
Closing Date, in the amount of Seven Million Five Hundred Thousand Dollars
($7,500,000) ("Term Loan C"). Amounts repaid under Term Loan C may not
thereafter be reborrowed. Borrower shall pay the principal amount of Term Loan C
in consecutive installments on each Payment Date, commencing March 20, 1998, as
follows:
Payment Date Installment Amount
Each of the twenty-four (24) $18,750
Payment Dates
occurring from March 20, 1998
through December 20, 2003
Each of the four (4) $1,762,500
Payment Dates occurring
from March 20, 2004
through December 20, 2004
Notwithstanding anything to the contrary contained herein or in the Term Loan C
Notes, the then entire unpaid balance of Term Loan C shall be immediately due
and payable upon the first to occur of the (i) Commitment Termination Date and
(ii) acceleration of the Revolving Credit Loan.
Borrower shall execute and deliver to each Lender a note to
evidence Term Loan C, such note to be in a principal amount equal to the amount
of Term Loan C provided by such Lender, dated the Closing Date and substantially
in the form of Exhibit D (each, as executed and as it may be amended, restated,
supplemented or otherwise modified and in effect from time to time, a "Term Loan
C Note" and, collectively, the "Term Loan C Notes"). The Term Loan C Notes shall
represent the obligation of Borrower to pay the amount of Term Loan C and all
other obligations with interest thereon as prescribed in Section 1.9. The date
and amount of each payment of principal and interest
4
on Term Loan C shall be recorded on the books and records of Agent, which books
and records shall constitute prima facie evidence of the accuracy of the
information therein recorded.
1.3 Capital Expenditure Loan. (a) Subject to the terms and
conditions hereof, each Lender agrees to make available from time to time, until
December 31, 1999, in connection with the financing of Capital Expenditures
constituting the acquisition cost of Equipment, its Pro Rata Share of advances
(each, a "Capital Expenditure Advance") under the Capital Expenditure Loan. The
aggregate Capital Expenditure Advances incurred during the term of this
Agreement shall not exceed the Capital Expenditure Loan Commitment. In addition,
each Capital Expenditure Advance shall not exceed the lesser of (x) the Maximum
Capital Expenditure Advance Amount or (y) Capital Expenditure Loan Availability
as of the date of such Capital Expenditure Advance. Amounts from time to time
borrowed under this Section 1.3(a) and repaid may not be reborrowed. Each
Capital Expenditure Advance must be in a minimum amount of $500,000 and integral
multiples of $500,000 in excess of such amount. Subject to the additional
advance notice requirements set forth in Section 2.3, each Capital Expenditure
Advance shall be made on notice by Borrower to the individual responsible for
Borrower as identified on Annex E at the address specified thereon, given no
later than (1) 11:30 a.m. (Chicago time) on the Business Day of the proposed
Capital Expenditure Advance, in the case of an Index Rate Loan and (2) 11:30
a.m. (Chicago time) on the date which is two Business Days prior to the proposed
Capital Expenditure Advance, in the case of a LIBOR Loan. Each such notice (a
"Notice of Capital Expenditure Advance") shall be substantially in the form of
Exhibit E, specifying therein the requested date, the amount of such Capital
Expenditure Advance, and such other information as may be required by Agent and
shall be given in writing (by telecopy, telex or cable) or by telephone
confirmed immediately in writing. If Borrower desires to have the Capital
Expenditure Advance bear interest by reference to a LIBOR Rate, it must comply
with Section 1.9(f). Agent shall be entitled to rely upon, and shall be fully
protected under this Agreement in relying upon, any Notice of Capital
Expenditure Advance believed by Agent to be genuine and to assume that each
Person executing and delivering the same was duly authorized unless the
responsible individual, or a designee thereof, acting thereon for Agent shall
have, at the time of reliance thereon, actual knowledge to the contrary.
(b) Borrower shall execute and deliver to each Lender a note
to evidence the Capital Expenditure Loan, such note to be in the maximum
principal amount of the Capital Expenditure Loan Commitment of such Lender,
dated the Closing Date and substantially in the form of Exhibit G (each, as
executed and as it may be amended, restated, supplemented or otherwise modified
from time to time, a "Capital Expenditure Loan Note" and, collectively, the
"Capital Expenditure Loan Notes"). The Capital Expenditure Loan Notes shall
represent the obligation of Borrower to pay the amount of the Capital
Expenditure Loan Commitment or, if less, the aggregate unpaid principal amount
of the Capital Expenditure Loan made by Lenders to Borrower and all other
Obligations with interest thereon as prescribed in Section 1.9. Borrower shall
pay the principal amount of each Capital Expenditure Advance in equal
installments on twelve (12) consecutive Payment Dates, commencing with the first
Payment Date to occur after the making of such Capital Expenditure Advance. The
date and amount of each Capital Expenditure Advance and each payment of
principal with respect thereto shall be recorded on the books and records of
Agent, which books and records shall constitute prima facie evidence of the
accuracy of the information therein recorded. Notwithstanding the foregoing, the
entire unpaid balance of the Capital
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Expenditure Loan shall be immediately due and payable on the Commitment
Termination Date, if not sooner paid in full.
1.4 Swing Line Facility. (a) Agent shall notify the Swing
Line Lender upon Agent's receipt of any Notice of Revolving Credit Advance.
Subject to the terms and conditions hereof, the Swing Line Lender may, in its
discretion, make available from time to time until the Commitment Termination
Date advances (each, a "Swing Line Advance") in accordance with any such notice.
The aggregate amount of Swing Line Advances outstanding shall not exceed the
lesser of (i) the Borrowing Base minus the sum of the Revolving Credit Loan and
Letter of Credit Obligations outstanding at such time and reserves established
by Agent in accordance with this Agreement and (ii) the Swing Line Commitment
("Swing Line Availability"). Until the Commitment Termination Date, Borrower may
from time to time borrow, repay and reborrow under this Section 1.4(a). Each
Swing Line Advance shall be made pursuant to a Notice of Revolving Credit
advance delivered by Borrower to Agent in accordance with Section 1.1(a). Those
notices must be given no later than 11:30 a.m. (Chicago time) on the Business
Day of the proposed Swing Line Advance. Notwithstanding any other provision of
this Agreement or the other Loan Documents, the Swing Line Loan shall constitute
an Index Rate Loan. Borrower shall repay the aggregate outstanding principal
amount of the Swing Line Loan upon demand therefor by Agent.
(b) Borrower shall execute and deliver to the Swing Line
Lender a note to evidence the Swing Line Commitment, such note to be in the
principal amount of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit H (as executed and as
it may be amended, restated, supplemented or otherwise modified from time to
time, the "Swing Line Note"). The Swing Line Note shall represent the obligation
of Borrower to pay the amount of the Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all Swing Line Advances made to Borrower
with interest thereon as prescribed in Section 1.9. The date and amount of each
Swing Line Advance and each payment of principal with respect thereto shall be
recorded on the books and records of Agent, which books and records shall
constitute prima facie evidence of the accuracy of the information therein
recorded. The entire unpaid balance of the Swing Line Loan shall be immediately
due and payable on the Commitment Termination Date if not sooner paid in full.
(c) Refunding of Swing Line Loans. The Swing Line Lender, at
any time and from time to time in its sole and absolute discretion, may on
behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing Line
Lender to so act on its behalf) request each Lender (including the Swing Line
Lender) with a Revolving Loan Commitment (each, a "Revolving Lender") to make a
Revolving Credit Advance to Borrower (which shall be an Index Rate Loan) in an
amount equal to such Revolving Lender's Pro Rata Share of the principal amount
of the Swing Line Loan (the "Refunded Swing Line Loan") outstanding on the date
such notice is given. Unless any of the events described in Sections 8.1(g),
8.1(h) or 8.1(i) shall have occurred (in which event the procedures of Section
1.4(d) shall apply) and regardless of whether the conditions precedent set forth
in this Agreement to the making of a Revolving Credit Advance are then
satisfied, each Revolving Lender shall disburse directly to Agent, its Pro Rata
Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior to
2:00 p.m. (Chicago time), in immediately available funds on the Business Day
next succeeding the date such notice is given. The proceeds of such
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Revolving Credit Advances shall be immediately paid to the Swing Line Lender and
applied to repay the Refunded Swing Line Loan.
(d) Participation in Swing Line Loans. If, prior to refunding
a Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.4(c),
one of the events described in Sections 8.1(g), 8.1(h) or 8.1(i) shall have
occurred, then, subject to the provisions of Section 1.4(e), each Revolving
Lender will, on the date such Revolving Credit Advance was to have been made for
the benefit of Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount equal to its Pro Rata
Share of such Swing Line Loan. Upon request, each Revolving Lender will promptly
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation.
(e) Revolving Lenders' Obligations Unconditional. Each
Revolving Lender's obligation to make Revolving Credit Advances in accordance
with Section 1.4(c) and to purchase participating interests in accordance with
Section 1.4(d) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the Swing Line Lender,
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of any Default or Event of Default; (C) any inability of Borrower to
satisfy the conditions precedent to borrowing set forth in this Agreement on the
date upon which such participating interest is to be purchased or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Revolving Lender does not make available to Agent or the
Swing Line Lender, as applicable, the amount required pursuant to Section 1.4(c)
or 1.4(d), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two Business Days and at the Index
Rate thereafter.
1.5 Letters of Credit. Subject to the terms and conditions of
this Agreement, including Annex B, Borrower shall have the right to request, and
each Lender agrees to incur or purchase participations in its Pro Rata Share of,
Letter of Credit Obligations in accordance with Annex B.
1.6 Prepayment. In the event that the outstanding balance of
the Revolving Credit Loan shall, at any time, exceed the lesser at such time of
(i) the Maximum Revolving Credit Loan minus the sum of Letter of Credit
Obligations then outstanding and (ii) the Borrowing Base minus the sum of Letter
of Credit Obligations then outstanding, in each case less the Swing Line Loan
then outstanding and reserves established by Agent pursuant to this Agreement,
Borrower shall immediately repay the Revolving Credit Loan in the amount of such
excess.
(b) Borrower shall have the right at any time on thirty (30)
days' prior written notice to Agent to terminate and prepay the entire Revolving
Credit Loan. Upon any such termination and prepayment, Borrower's right to
receive Advances or request the incurrence of Letter of Credit Obligations shall
simultaneously terminate and, notwithstanding anything to the contrary contained
herein or the Notes, the entire outstanding balances of the Term Loans and the
7
Capital Expenditure Loan shall be immediately due and payable. Each such
prepayment and termination shall be accompanied by the payment of all accrued
and unpaid interest and all Fees and other remaining Obligations, including the
Letter of Credit Obligations and the then outstanding balances of the Term Loans
and the Capital Expenditure Loan. Any prepayment made pursuant hereto shall be
accompanied by the payment of Fees in accordance with Section 1.12 and LIBOR
funding breakage costs in accordance with Section 1.17(b).
(c) Borrower shall have the right at any time on thirty (30)
days' prior written notice to Agent to voluntarily prepay all or any portion of
any Term Loan or the Capital Expenditure Loan. Any prepayments of less than all
of the outstanding balance of any Term Loan or the Capital Expenditure Loan
shall be applied to the then remaining installments of such Loan in the inverse
order of maturity until paid in full. Any prepayment made pursuant hereto shall
be accompanied by the payment of Fees in accordance with Section 1.12 and LIBOR
funding breakage costs in accordance with Section 1.17(b).
(d) Immediately upon receipt by Borrower of Net Proceeds of
any Asset Disposition, Borrower shall apply all of such Net Proceeds in the
order set forth in Section 1.15(a); provided, however, the foregoing shall not
apply to an Asset Disposition to the extent the Net Proceeds thereof are (i)
used to refund or fund Borrower's purchase within sixty (60) days prior to such
Asset Disposition of capital assets for use in its business or (ii) used by
Borrower within one-hundred eighty (180) days following such Asset Disposition
to purchase capital assets for use in its business (and to the extent such Net
Proceeds exceed the costs of any of the foregoing purchases, such excess Net
Proceeds shall be governed by this Section 1.6(d)). Notwithstanding the
preceding sentence, immediately upon Borrower's receipt of Net Proceeds to be
utilized pursuant to the foregoing proviso, such Net Proceeds shall be applied
to the outstanding principal amount of the Revolving Credit Loan (without
permanent reduction of the Revolving Loan Commitment); provided, that if the
purchases referred to in such proviso are not made by the expiration of the
applicable time periods indicated therein, such Net Proceeds shall then be
applied in the order set forth in Section 1.15(a). All sales or purchases of
assets referred to herein (A) shall be subject to the provisions of Section 6.8
and (B) shall be, or shall have been, as the case may be, offered or sold to, or
purchased from, a Person that is not an Affiliate of Borrower or any of its
Subsidiaries on an arms' length basis.
(e) Immediately upon receipt by Borrower of the proceeds of
any issuance of Stock or debt securities, Borrower shall apply all of such
proceeds, net of underwriting discounts and commissions and other reasonable
costs paid to non-Affiliates in connection therewith, in the order set forth in
Section 1.15(a).
(f) Within sixty (60) days following the end of each Fiscal
Year, Borrower shall prepay the Loans in an amount equal to fifty percent (50%)
of Excess Cash Flow for such Fiscal Year calculated on the basis of Borrower's
financial statements for such Fiscal Year delivered to Agent pursuant to Section
4.1. All such prepayments from Excess Cash Flow shall be applied in the order
set forth in Section 1.15(a). Concurrently with the making of any such payment,
Borrower shall deliver to Agent a certificate of its chief executive officer or
chief financial officer demonstrating its calculation of the amount required to
be paid.
8
1.7 Single Loan. All Loans, Advances, Letter of Credit
Obligations and other Obligations of Borrower under this Agreement and the other
Loan Documents shall constitute one (1) obligation of Borrower secured, until
repaid in full and Commitments therefor are terminated, by all of the
Collateral.
1.8 Use of Proceeds. Borrower shall utilize the proceeds of
all Revolving Credit Advances, Swing Line Advances and the Term Loans for the
financing of ordinary working capital needs and Capital Expenditures to the
extent permitted hereunder. Borrower shall utilize the proceeds of all Capital
Expenditure Advances for the financing of Capital Expenditures to the extent
permitted hereunder.
1.9 Interest. Borrower shall pay interest to Agent, for the
ratable benefit of Lenders, in arrears (i) as to any Index Rate Loan, on the
first day of each calendar month to occur while such Loan is outstanding, (ii)
as to any LIBOR Loan, on the last day of the LIBOR Period applicable thereto,
(iii) on the Commitment Termination Date, and (iv) if any interest accrues or
remains payable after the Commitment Termination Date, upon demand by Agent.
(b) If any interest or other payment on any Loan becomes due
and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(c) Borrower shall be obligated to pay interest to Agent, for
the ratable benefit of Lenders, at a rate equal to (i) the Index Rate plus the
applicable per annum rate (the "Index Margin") set forth in the following grid
or (ii) at Borrower's election in accordance with Section 1.9(f), the applicable
LIBOR Rate plus the applicable per annum rate (the "LIBOR Margin"; the Index
Margin and LIBOR Margin, each a "Margin"), in each case based on the amounts
outstanding from time to time under the applicable Loan.
> 1.5
Margin Ratio < 1.5 but < 1.75 > 1.75
------------ ----- ---------- ------
Revolving Credit Loan
LIBOR Margin 2.50 2.25 2.00
Index Margin 0.00 0.00 0.00
Swing Line Loan
LIBOR Margin n.a. n.a. n.a.
Index Margin 0.00 0.00 0.00
Term Loan A
LIBOR Margin 3.00 2.75 2.50
Index Margin 0.25 0.00 0.00
9
Term Loan B
LIBOR Margin 3.50 3.50 3.50
Index Margin 0.75 0.75 0.75
Term Loan C
LIBOR Margin 3.75 3.75 3.75
Index Margin 1.00 1.00 1.00
Capital Expenditure Loan
LIBOR Margin 3.00 2.75 2.50
Index Margin 0.25 0.00 0.00
Initially, the applicable Margin for each Loan shall be the highest rates set
forth in the foregoing grid for such Loan. Thereafter, all determinations of
each Margin will be based on the ratio of (1) EBITDA to (2) the sum of (A) Fixed
Charges plus (B) the greater of (I) actual Capital Expenditures and (II)
$2,500,000 (collectively, the "Margin Ratio"), all as determined for Borrower
and its Subsidiaries on a consolidated basis as of the last day of each Fiscal
Quarter for the trailing twelve (12) Fiscal Months then ended. All adjustments
(up or down) in the Margins will be implemented prospectively on a quarterly
basis, effective on the first day of the first Fiscal Quarter that occurs more
than five (5) days after delivery of Borrower's quarterly Financial Statements
for the preceding Fiscal Quarter to Lenders, commencing with Financial
Statements delivered for the fourth Fiscal Quarter of 1997. Concurrently with
the delivery of such Financial Statements, Borrower shall deliver to Agent and
Lenders a certificate, signed by its chief financial officer, setting forth in
reasonable detail the basis for the determination of each Margin. If a Default
or an Event of Default shall have occurred or be continuing at the time, the
applicable Margin for each Loan shall be the highest rate set forth in the
foregoing grid for such Loan until the first day of the first calendar month
following the date on which such Default or Event of Default is waived or cured.
Thereafter, each Margin shall be as determined based on the foregoing grid.
(d) All computations of interest shall be made by Agent on
the basis of a three hundred and sixty (360) day year, in each case for the
actual number of days occurring in the period for which such interest is
payable. The Index Rate applicable during each calendar month shall be
determined on the last day of the preceding calendar month, and the interest
rate applicable during each calendar month shall be calculated based on the
Index Rate as in effect for that calendar month. Each determination by Agent of
an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error or bad faith.
(e) (i) So long as any Default or Event of Default not
described in the following clause (ii) shall have occurred and be continuing, at
the election of Agent (or upon the written request of Requisite Lenders)
confirmed by written notice from Agent to Borrower and (ii) so long as any Event
of Default specified in Section 8.1(g), (h) or (i) shall have occurred and be
continuing, the interest rate applicable to the Loans and all other Obligations
shall be increased by two percent (2%) per annum above the rates of interest
otherwise applicable hereunder ("Default Rate").
10
(f) So long as no Default or Event of Default shall have
occurred and be continuing, and subject to the additional conditions precedent
set forth in Section 2.2, Borrower shall have the option to (i) request that any
Revolving Credit Advances or Capital Expenditure Loan Advances be made as a
LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans (other
than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs
in accordance with Section 1.17(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the
expiration of the applicable LIBOR Period, in which case the succeeding LIBOR
Period of that continued Loan shall commence on the last day of the LIBOR Period
of the Loan to be continued. Any Loan to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $1,000,000 and integral
multiples of $500,000 in excess of such amount. Any such election must be made
by 11:30 a.m. (Chicago time) on the third (3rd) Business Day prior to (1) the
date of any proposed Advance which is to bear interest at the LIBOR Rate, (2)
the end of each LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower wishes to convert any Index Rate Loan to
a LIBOR Loan for a LIBOR Period designated by Borrower in such election. If no
election is received with respect to a LIBOR Loan by 11:30 a.m. (Chicago time)
on the third (3rd) Business Day prior to the end of the LIBOR Period with
respect thereto (or if a Default or an Event of Default shall have occurred and
be continuing or the additional conditions precedent set forth in Section 2.2 or
2.3, as applicable, shall not have been satisfied), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must
make such election by notice to Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such election must be
made pursuant to a written notice (a "Notice of Conversion/Continuation") in the
form of Exhibit I.
(g) Notwithstanding anything to the contrary set forth in
this Section 1.9, if, at any time until payment in full of all of the
Obligations, any rate of interest payable hereunder exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, such rate of interest payable hereunder shall be reduced to be equal
to the Maximum Lawful Rate; provided, however, that if at any time thereafter
the rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent, on behalf of Lenders,
from the making of such advances hereunder is equal to the total interest which
would have been received had the interest rate payable hereunder been (but for
the operation of this paragraph) the interest rate payable since the Closing
Date, as otherwise provided in this Agreement. Thereafter, the interest rate
payable hereunder shall be the applicable rate of interest provided in Section
1.9(c) or (e) of this Agreement, unless and until the rate of interest again
exceeds the Maximum Lawful Rate, in which event this paragraph shall again
apply. In no event shall the total interest received by any Lender pursuant to
the terms hereof exceed the amount which such Lender could lawfully have
received had the interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate. In the event the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. In the event that a court of competent
jurisdiction,
11
notwithstanding the provisions of this Section 1.9 (g), shall make a final
determination that a Lender has received interest hereunder or under any of the
other Loan Documents in excess of the Maximum Lawful Rate, Agent shall, to the
extent permitted by applicable law, promptly apply such excess in the order set
forth in Section 1.15(a) and, thereafter, with respect to any excess, to
Borrower or as a court of competent jurisdiction may otherwise order.
1.1 Eligible Accounts. Based on the most recent Schedule of
Accounts delivered by Borrower to Agent and on other information available to
Agent, Agent shall at its sole discretion determine which Accounts shall be
deemed to be "Eligible Accounts" for purposes of determining the amounts, if
any, to be advanced to Borrower under the Revolving Credit Loan. In determining
whether a particular Account constitutes an Eligible Account, Agent shall not
include any such Account which is excluded by the criteria set forth on Annex F.
1.11 Eligible Inventory. Based on the most recent Schedule of
Inventory delivered by Borrower to Agent and on other information available to
Agent, Agent shall in its sole discretion determine which Inventory shall be
deemed to be "Eligible Inventory" for purposes of determining the amounts, if
any, to be advanced to Borrower under the Revolving Credit Loan. In determining
whether any particular Inventory constitutes Eligible Inventory, Agent shall not
include Inventory which is excluded by the criteria set forth on Annex G.
1.12 Fees. Borrower shall pay to GE Capital, individually,
the fees specified in that certain Fee Letter, dated as of the Closing Date (as
from time to time amended, restated, supplemented or otherwise modified, the "GE
Capital Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for Lenders' costs and risks
in making the Revolving Credit Loan available to Borrower, Borrower agrees to
pay to Agent, for the ratable benefit of Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a fee for Borrower's non-use of available funds
(the "Non-use Fee") in an amount equal to three-eighths of one percent (.375%)
per annum (calculated on the basis of a three hundred and sixty (360) day year
and actual days elapsed) of the difference between the respective daily averages
of (i) the Maximum Revolving Credit Loan (as it may be adjusted and in effect
from time to time hereunder) and (ii) the amount of the Revolving Credit Loan
plus the Swing Line Loan plus the Letter of Credit Obligations outstanding
during the period for which the Non-Use Fee is due.
1.13 Cash Management Systems. Prior to the Closing Date,
Borrower shall have established and will at all times maintain the cash
management systems described on Annex C.
1.14 Receipt of Payments. Borrower shall make each payment
under this Agreement not later than 12:00 noon (Chicago time) on the day when
due in lawful money of the United States of America in immediately available
funds to the Collection Account. For purposes of computing interest and fees and
determining the amount of funds available for borrowing pursuant to Section
1.1(a) and 1.3(a), (a) all payments (including cash sweeps) consisting of cash,
wire or electronic transfers in immediately available funds shall be deemed
received on the date of
12
deposit thereof in the Collection Account and notice to Agent of such deposit,
and (b) all payments consisting of checks, drafts, or similar non-cash items
shall be deemed received one (1) Business Day after the date of receipt of good
funds following deposit of any such payment in the Collection Account and notice
to Agent of such deposit.
1.15 Application and Allocation of Payments. So long as no
Default or Event of Default shall have occurred and be continuing, (i) payments
consisting of proceeds of Accounts received in the ordinary course of business
shall be applied to the Swing Line Loan and the Revolving Credit Loan, (ii)
payments matching specific scheduled payments then due shall be applied to those
scheduled payments, (iii) voluntary prepayments shall be applied as set forth in
Section 1.6(b) or 1.6(c), as applicable and (iv) mandatory prepayments shall be
applied as set forth in Sections 1.6(d), 1.6(e) or 1.6(f), as applicable. As to
each other payment, and as to all payments made when a Default or Event or
Default shall have occurred and be continuing or following the Commitment
Termination Date, Borrower hereby irrevocably waives the right to direct the
application of any and all payments at any time or times hereafter received from
or on behalf of Borrower and Borrower hereby irrevocably agrees that Agent shall
have the continuing exclusive right to apply any and all such payments against
the then due and payable Obligations as Agent may deem advisable notwithstanding
any previous entry by Agent upon the Loan Account or any other books and
records. In the absence of a specific determination by Agent with respect
thereto, the same shall be applied in the following order: (1) to unpaid Fees
and expenses; (2) to any interest due and not yet paid hereunder in respect of
Term Loan A; (3) to any interest due and not yet paid hereunder in respect of
the Capital Expenditure Loan; (4) to any interest due and not yet paid hereunder
in respect of the Swing Line Loan; (5) to any interest due and not yet paid
hereunder in respect of the Revolving Credit Loan; (6) to any interest due and
not yet paid hereunder in respect of Term Loan B; (7) to any interest due and
not yet paid hereunder in respect of Term Loan C; (8) to the then remaining
installments of Term Loan A in the inverse order of maturity; (9) to the then
remaining installments of the Capital Expenditure Loan in the inverse order of
maturity (and thereupon the Capital Expenditure Loan Commitment shall be
permanently reduced by the amount of such prepayment); (10) to the outstanding
principal of the Swing Line Loan; (11) to the outstanding principal of the
Revolving Credit Loan (and thereupon the Revolving Loan Commitment shall be
permanently reduced by the amount of such prepayment); (12) to any Letter of
Credit Obligations to provide cash collateral therefor, until fully cash
collateralized, in the manner set forth in Annex B; (13) to the then remaining
outstanding balance of Term Loan B; (14) to the then remaining outstanding
balance of Term Loan C; and (xiii) to all other unpaid Obligations. Agent is
authorized to, and, upon the expiration of the applicable time period, if any,
set forth in Section 8.1, at its option may, make or cause to be made Revolving
Credit Advances on behalf of Borrower for payment of all Fees, expenses,
Charges, costs, principal, interest, or other Obligations owing by Borrower
under this Agreement or any of the other Loan Documents if and to the extent
Borrower fails to promptly pay any such amounts as and when due, even if such
Revolving Credit Advance would cause total Revolving Credit Advances and Swing
Line Advances to exceed Borrowing Availability or the Maximum Revolving Credit
Loan amount. At Agent's option and to the extent permitted by law, any advances
so made shall be deemed Revolving Credit Advances constituting part of the
Revolving Credit Loan hereunder.
13
1.16 Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record: all Advances and payments
made under Letter of Credit Obligations, all payments made by Borrower and all
other appropriate debits and credits as provided in this Agreement with respect
to the Obligations. All entries in the Loan Account shall be made in accordance
with Agent's customary accounting practices as in effect from time to time.
Borrower shall pay all Obligations as such amounts become due or are declared
due pursuant to the terms of this Agreement.
The balance in the Loan Account, as recorded on Agent's most
recent printout or other written statement, shall be presumptive evidence of the
amounts due and owing to Agent and Lenders by Borrower; provided, that, any
failure to so record or any error in so recording shall not limit or otherwise
affect Borrower's obligations to pay the Obligations. Agent shall render to
Borrower a monthly accounting of transactions under the Loans, setting forth the
balance of the Loan Account. Each and every such accounting shall (absent
manifest error) be deemed final, binding and conclusive upon Borrower in all
respects as to all matters reflected therein, unless Borrower, within thirty
(30) days after the date any such accounting is rendered, shall notify Agent in
writing of any objection which Borrower may have to any such accounting,
describing the basis for such objection with specificity. In that event, only
those items expressly objected to in such notice shall be deemed to be disputed
by Borrower. Agent's determination, based upon the facts available, of any item
objected to by Borrower in such notice shall be presumptively correct, unless
Borrower shall further object to such determination within a reasonable period
of time thereafter.
1.17 Indemnity. Borrower shall indemnify and hold each of
Agent, Lenders and their respective Affiliates, officers, directors, employees,
attorneys, agents and representatives (each, an "Indemnified Person"), harmless
from and against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including attorneys' fees and disbursements
and other costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended under this
Agreement and the other Loan Documents or in connection with or arising out of
the transactions contemplated hereunder and thereunder, including any and all
Environmental Liabilities and costs; provided, that Borrower shall not be liable
for any indemnification to such Indemnified Person to the extent that any such
suit, action, proceeding, claim, damage, loss, liability or expense results
solely from such Indemnified Person's gross negligence or willful misconduct, as
finally determined by a court of competent jurisdiction after all possible
appeals have been exhausted. NEITHER AGENT, ANY LENDER NOR ANY OTHER INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any
14
other Loan Document or is the result of acceleration, by operation of law or
otherwise); (ii) Borrower shall default in payment when due of the principal
amount of or interest on any LIBOR Loan; (iii) Borrower shall default in making
any borrowing of, conversion into or continuation of LIBOR Loans after Borrower
has given notice requesting the same in accordance herewith; or (iv) Borrower
shall fail to make any prepayment of a LIBOR Loan after Borrower has given a
notice thereof in accordance herewith, Borrower shall indemnify and hold
harmless each Lender from and against all losses, costs and expenses resulting
from or arising from any of the foregoing. Such indemnification shall include
any loss (including loss of margin) or expense arising from the reemployment of
funds obtained by it or from fees payable to terminate deposits from which such
funds were obtained. For the purpose of calculating amounts payable to a Lender
under this Section 1.17(b), each Lender shall be deemed to have actually funded
its relevant LIBOR Loan through the purchase of a deposit bearing interest at
the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a
maturity comparable to the relevant Interest Period; provided, however, that
each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this Section 1.17(b). This covenant shall survive the termination
of this Agreement and the payment of the Notes and all other amounts payable
hereunder. As promptly as practicable under the circumstances, each Lender shall
provide Borrower with its written calculation of all amounts payable pursuant to
this Section 1.17(b), and such calculation shall be binding on the parties
hereto unless Borrower shall object in writing within ten (10) Business Days of
receipt thereof, specifying the basis for such objection in detail.
(c) Borrower hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real Estate or of
Borrower's affairs, and (ii) does not have the capacity through the provisions
of the Loan Documents to influence Borrower's conduct with respect to the
ownership, operation or management of any of its real property, including any of
its Real Estate.
1.18 Access. Borrower shall (i) provide full access during
normal business hours, from time to time upon five (5) Business Days' prior
notice, to Agent and any of its officers, employees and agents, as frequently as
Agent determines, in its sole discretion, to be appropriate (unless a Default or
Event of Default shall have occurred and be continuing or if access is necessary
to protect or preserve the Collateral, as determined by Agent, in any of which
events Agent and Lenders, and their respective officers, employees, designees,
agents and representatives shall have access at any and all times and without
any notice), to the properties, facilities, books, records, suppliers,
customers, advisors and employees (including officers) of Borrower and its
Subsidiaries, to the Collateral, to the accountants of Borrower and its
Subsidiaries and to the work papers of such accountants. Without limiting the
generality of the foregoing, Borrower shall permit Agent, and any of its
officers, employees, agents and representatives, on two (2) separate occasions
per annum (unless a Default or an Event of Default has occurred and is
continuing or if access is necessary to protect or preserve the Collateral, as
determined by Agent, then, in any of such cases, with respect to Agent and
Lenders, at any and all times) determined by Agent in its sole discretion, to
(i) inspect, audit and make extracts from all of Borrower's and its
Subsidiaries' records, files and books of account and (ii) inspect, review and
evaluate the Accounts, Inventory at Borrower's and its Subsidiaries' locations
and at premises not owned by or leased to Borrower or any Subsidiary of
15
Borrower. Representatives of other Lenders may accompany Agent's representatives
on regularly scheduled audits at no charge to Borrower. Borrower shall make
available to Agent, its counsel and advisors, immediately upon Agent's request
therefor, originals or copies of all books, records, board minutes, contracts,
insurance policies, environmental audits, business plans, files, financial
statements (actual and pro forma), filings with federal, state and local
regulatory agencies, and other instruments and documents which Agent may
request. Borrower shall deliver any document or instrument necessary for Agent,
as it may from time to time request, to obtain records from any service bureau
or other Person which maintains records for Borrower, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by Borrower. Borrower shall instruct its certified public
accountants and its banking and other financial institutions to make available
to Agent such information and records as Agent may request. Confidential
information obtained by Agent and Lenders pursuant to this Section 1.18 shall be
subject to Section 10.14.
1.19 Taxes. Any and all payments by Borrower hereunder or
under the Notes shall be made, in accordance with this Section 1.19, free and
clear of and without deduction for any and all present or future Taxes. If
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note, (i) the sum payable shall be increased
as much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
1.19) Agent or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law.
(b) Borrower shall indemnify and pay, within ten (10) days of
demand therefor, Agent and each Lender for the full amount of Taxes (including
any Taxes imposed by any jurisdiction on amounts payable under this Section
1.19) paid by Agent or such Lender, as appropriate, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
(c) Within thirty (30) days after the date of any payment of
Taxes, Borrower shall furnish to Agent, at its address referred to in Section
10.10, the original or a certified copy of a receipt evidencing payment thereof.
1.20 Capital Adequacy and Other Adjustments.
(a) In the event that any Lender shall have determined that
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or directive regarding
capital adequacy, reserve requirements or similar requirements (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), in each case adopted after the Closing Date, from any central bank or
governmental agency or body having jurisdiction does or would have the effect of
increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall
16
from time to time within fifteen (15) days after notice and demand from such
Lender (together with the certificate referred to in the next sentence and with
a copy to Agent) pay to Agent, for the account of such Lender, additional
amounts sufficient to compensate such Lender for such reduction; provided,
however, that, notwithstanding the foregoing, Borrower shall have no obligation
to make any such payment in the event, if any, that such notice and demand was
sent by such Lender more than ninety (90) days after it became aware of such
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order. A certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by such Lender to Borrower and Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.
(b) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form 4224 or Form 1001
or other applicable form, certificate or document prescribed by the IRS or the
United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Prior to becoming a Lender under this
Agreement and within fifteen (15) days after a reasonable written request of
Agent or Borrower from time to time thereafter, each Foreign Lender that becomes
a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent. No foreign Person may become a Lender hereunder if such
Person is unable to deliver a Certificate of Exemption. If a Foreign Lender does
not provide a Certificate of Exemption to Agent and Borrower within the time
periods set forth above, Borrower shall withhold taxes from payments to such
Foreign Lender at the applicable statutory rate and Borrower shall not be
required to pay any additional amounts as a result of such withholding;
provided, that all such withholding shall cease upon delivery by such Foreign
Lender of a Certificate of Exemption to Agent and Borrower.
(c) In the event Borrower shall be required to pay any
increased cost to any Lender pursuant to Section 1.20(a), Borrower shall be
entitled, by so notifying Agent and such Lender within thirty (30) days after
such Lender notifies Borrower of any such increased cost, to arrange for the
substitution of a new lender for such Lender within sixty (60) days thereafter
pursuant to the relevant provisions of Section 9.1, whereupon, upon the
effectiveness of such substitution, all of such Lender's Pro Rata Share shall be
assigned to such new lender; provided, however, that: (i) such Lender shall be
entitled to withdraw its notice of increased costs within a period of thirty
(30) days from the date of Borrower's notice of substitution, whereupon Borrower
shall no longer be entitled to substitute for such Lender as described above;
(ii) in no event shall Borrower be entitled to substitute for any Lender unless
the net present value of the additional cost to Borrower (including closing
costs) of such substitution is less than the net present value of the additional
cost referred to in this Section 1.20 to Borrower of maintaining such Lender's
Pro Rata Share; and (iii) in all events (other than those described in clause
(i) above), Borrower shall remain liable for the increased costs of such Lender
for the period prior to the actual repayment of such Lender's Pro Rata Share.
(d) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, in
17
each case, after the Closing Date, for any Lender to make or to continue to fund
or maintain any LIBOR Loan, then, unless that Lender is able to make or to
continue to fund or to maintain such LIBOR Loan at another branch or office of
that Lender without, in that Lender's opinion, adversely affecting it or its
Loans or the income obtained therefrom, on notice thereof and demand therefor by
such Lender to Borrower through Agent, (i) the obligation of such Lender to make
or to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower
shall forthwith prepay in full all outstanding LIBOR Loans owing to such Lender,
together with interest accrued thereon, unless Borrower, within five (5)
Business Days after the delivery of such notice and demand, converts all such
Loans into a Loan bearing interest based on the Index Rate.
1.21 Amendment and Restatement. (a) This Agreement amends and
restates in its entirety the Prior Credit Agreement and, upon effectiveness of
this Agreement, the terms and provisions of the Prior Credit Agreement shall,
subject to this Section 1.21, be superseded hereby. All references to "Credit
Agreement" contained in the Loan Documents delivered in connection with the
Prior Credit Agreement shall be deemed to refer to this Agreement.
Notwithstanding the amendment and restatement of the Prior Credit Agreement by
this Agreement, the Obligations outstanding under the Prior Credit Agreement as
of the Closing Date shall remain outstanding and constitute continuing
Obligations hereunder and shall continue to be secured by the Collateral. Such
outstanding Obligations and the Liens securing payment thereof shall in all
respects be continuing, and this Agreement shall not be deemed to evidence or
result in a novation or repayment and re- borrowing of such Obligations. In
furtherance of and without limiting the foregoing, from and after the Closing
Date and except as expressly specified herein, the terms, conditions, and
covenants governing the Obligations outstanding under the Prior Credit Agreement
shall be solely as set forth in this Agreement, which shall supersede the Prior
Credit Agreement in its entirety.
(b) This is the final expression of a credit agreement among
Borrower, Agent and Lenders. This Agreement cannot be contradicted by evidence
of any prior oral credit agreement or of a contemporaneous oral credit agreement
among Borrower, Agent and Lenders. Borrower and Agent affirm that they have no
oral agreement or agreement by course of dealing with respect to the subject
matter hereof.
2. CONDITIONS PRECEDENT
2.1 Conditions to Initial Loans, Advances and Letter of
Credit Obligations. Notwithstanding any other provision of this Agreement and
without affecting in any manner the rights of Agent and Lenders hereunder,
Borrower shall have no rights under this Agreement (but shall have all
applicable obligations hereunder), and no Lender shall be obligated to make any
Advance or Loan or incur any Letter of Credit Obligation, or to take, fulfill,
or perform any other action hereunder, until the following conditions have been
satisfied, in Agent's sole and reasonable discretion, or waived in writing by
Agent:
(a) This Agreement or counterparts hereof shall have been
duly executed by, and delivered to, Borrower, Agent and Lenders.
18
(b) Agent shall have received such guaranties, documents,
instruments, agreements and amendments thereto and legal opinions as Agent shall
request in connection with the transactions contemplated by this Agreement and
the other Loan Documents, including all guaranties, documents, instruments,
agreements and legal opinions listed in Annex D, each in form and substance
satisfactory to Agent.
(c) Agent shall have received evidence satisfactory to it
that Borrower has obtained consents and acknowledgments of all Persons whose
consents and acknowledgments may be required, including, but not limited to, all
requisite Governmental Authorities, to the terms, and to the execution and
delivery, of this Agreement, the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby.
(d) Borrower shall have paid to GE Capital all Fees required
to be paid at or prior to the Closing Date under the terms of the GE Capital Fee
Letter.
(e) Since December 31, 1996, there shall have been: (i) no
Material Adverse Effect on the business, operations, financial condition,
prospects or projections of Borrower, the industries in which it operates, the
Collateral, or any of its Subsidiaries; (ii) no litigation will have commenced
which, if successful, could have any such Material Adverse Effect or could
challenge any of the transactions contemplated by this Agreement and the other
Loan Documents; (iii) except as expressly permitted in accordance with the Prior
Credit Agreement, no dividends, distributions, payments, loans, contributions,
fees or other transfers of cash, property or other assets to any stockholders or
Affiliate of Borrower, including ARTRA or its employees, directors, officers or
Affiliates; and (iv) no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of Borrower or any of its
Subsidiaries.
(f) Agent shall have completed its business and legal due
diligence with respect to Borrower and its Subsidiaries and the legal and
corporate structure thereof and the results of such due diligence shall be
satisfactory to Agent, in its sole discretion.
(g) Agent shall have received such other documents as Agent
or any Lender may reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents.
2.2 Further Conditions to each Loan, Advance and Letter of
Credit Obligation. It shall be a further condition to the making of each
Advance, the incurrence of each Letter of Credit Obligation and the continuance
of each Term Loan that the following statements shall be true on the date of
each such advance, incurrence or funding (or any conversion or continuation of
any Loan into or as a LIBOR Loan), as the case may be:
(a) All of Borrower's representations and warranties
contained herein or in any of the other Loan Documents shall be true and correct
on and as of the Closing Date and the date on which each such Advance is made or
such Letter of Credit Advance is incurred, as though made on and as of such
date, except to the extent that any such representation or warranty expressly
relates
19
to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement.
(b) Borrower and each of its Subsidiaries shall be in
compliance in all material respects with all of the covenants and other
agreements contained herein or in any of the other Loan Documents.
(c) No event shall have occurred and be continuing, or would
result from the making of any Advance, the incurrence of any Letter of Credit
Obligation or the funding of any Term Loan, as the case may be, which
constitutes or would constitute a Default or an Event of Default.
(d) After giving effect to such Revolving Credit Advance or
Swing Line Advance or the incurrence of such Letter of Credit Obligation, as the
case may be, the aggregate principal amount of the Revolving Credit Loan shall
not exceed the maximum amount permitted by Section 1.6(a).
(e) After giving effect to such Capital Expenditure Advance,
the aggregate principal amount of the Capital Expenditure Loan shall not exceed
the maximum amount permitted by Section 1.3(a).
(f) After giving effect to such Swing Line Advance, the
aggregate principal amount of the Swing Line Loan shall not exceed the maximum
amount permitted by Section 1.4(a).
(g) Each of the conditions set forth in Section 2.1 shall
continue to be satisfied as of such date.
The request and acceptance by Borrower of the proceeds of any Advance or any
Term Loan, or the request by Borrower for the incurrence by Lenders of any
Letter of Credit Obligation, or the conversion or continuation of any Loan into,
or as, a LIBOR Loan, as the case may be, shall be deemed to constitute, as of
the date of such request or acceptance, (i) a representation and warranty by
Borrower that the conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation by Borrower of the granting and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.
2.3 Further Conditions to Each Capital Expenditure Advance.
It shall be a further condition to the initial and each subsequent Capital
Expenditure Advance that each of the following conditions shall have been
satisfied:
(a) Capital Expenditure Advance Compliance Certificate. At
least five (5) Business Days prior to the funding of any such Capital
Expenditure Advance, Borrower shall deliver to Agent a Capital Expenditure
Advance Compliance Certificate, fully executed by the chief financial officer or
chief executive officer of Borrower. Such Certificate must be in the form of
Exhibit F and must describe the nature and amount of Equipment proposed to be
acquired in connection with a Capital Expenditure Advance and certify that (i)
the proceeds of such Capital
20
Expenditure Advance shall be used solely to fund Capital Expenditures
constituting the Hard Costs of such Equipment, (ii) the aggregate amount of such
Capital Expenditure Advance does not exceed the lesser of (x) the Maximum
Capital Expenditure Advance Amount or (y) Capital Expenditure Loan Availability
as of such date, (iii) after giving effect to such Capital Expenditure Advance,
the aggregate principal amount of the Capital Expenditure Advances made during
the term of this Agreement shall not exceed the Capital Expenditure Loan
Commitment and (iv) such Equipment can and shall be used by Borrower in the
ordinary course of its business consistent with past practices.
(b) Additional Requirements. Concurrently with the delivery of
each Capital Expenditure Advance Compliance Certificate (or, in the case of
clause (iv) below, promptly upon receipt by Borrower), Borrower shall deliver to
Agent:
(i) to the extent necessary or requested by Agent, evidence
of the proper filing in all required filing offices of duly executed Code
financing statements or amendments to existing financing statements with respect
to the Equipment acquired with the proceeds of such Advance (and termination or
partial release statements, as required to terminate or release any Liens on
such Equipment at the time of the acquisition thereof by Borrower), and such
other documents, instruments and agreements as Agent may request, including duly
endorsed certificates of title for all titled Equipment, all in form
satisfactory to Agent and perfecting first priority security interests of Agent
on behalf of Lenders in such Equipment.
(ii) if requested by Agent, copies of policies of insurance
and loss payable endorsements in form and substance satisfactory to Agent
regarding the Equipment acquired with the proceeds of such Capital Expenditure
Advance, duly executed, and evidence of the payment of the premiums therefor;
(iii) duly executed originals of a letter of direction from
Borrower addressed to Agent with respect to the disbursement on the applicable
funding date of the proceeds of such Capital Expenditure Advance, which
disbursement shall be made by Agent directly to the seller of the Equipment;
(iv) stamped invoices, delivery and acceptance certificates
and other documentary evidence satisfactory to Agent evidencing the acceptance
and purchase of the applicable Equipment by Borrower; and
(v) such other documents as Agent or any Lender may reasonably
request in connection with such Capital Expenditure Advance.
The request and acceptance by Borrower of the proceeds of any Capital
Expenditure Advance shall be deemed to constitute, as of the date of such
request, (i) a representation and warranty by Borrower that the conditions in
this Section 2.3 have been satisfied and (ii) a reaffirmation by Borrower of the
granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
21
REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and Advances and to incur
the Letter of Credit Obligations, Borrower makes the following representations
and warranties to Agent and each Lender, each and all of which shall be true and
correct as of the date of execution and delivery of this Agreement, and shall
survive the execution and delivery of this Agreement:
3.1 Corporate Existence; Compliance with Law. Borrower and
each of its Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
been duly qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, where failure to so qualify could have a
Material Adverse Effect; (ii) has the requisite corporate power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (iii) has all
licenses, permits, consents or approvals from or by, and has made all filings
with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct,
where failure to do so could have a Material Adverse Effect; (iv) is in
compliance with its certificate or articles of incorporation and by-laws; and
(v) is in compliance with all applicable provisions of law, where failure to so
comply could have a Material Adverse Effect.
3.2 Executive Offices. The current location of Borrower's
executive office and principal place of business is set forth on Schedule 3.2
and, except as set forth on Schedule 3.2, none of such locations have changed
within the past six (6) months.
3.3 Corporate Power Authorization, Enforceable Obligations.
The execution, delivery and performance by Borrower of the Loan Documents and
all instruments and documents to be delivered by Borrower, to the extent it is a
party thereto, hereunder and thereunder and the creation of all Liens provided
for herein and therein: (i) are within Borrower's corporate power; (ii) have
been duly authorized by all necessary or proper corporate and shareholder
action; (iii) are not in contravention of any provision of Borrower's
certificate or articles or incorporation or bylaws; (iv) will not violate any
law or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which Borrower or any of its
property is bound, including, without limitation, the Kansas Loan documents;
(vi) will not result in the creation or imposition of any Lien upon any of the
property of Borrower other than those in favor of Agent, on behalf of itself and
Lender, all pursuant to the Loan Documents; and (vii) do not require the consent
or approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(d), all of which will have been duly obtained, made
or complied with prior to the Closing Date. At or prior to the Closing Date,
each of the Loan Documents shall have been duly executed and delivered for the
benefit of or on behalf of Borrower and each shall then constitute a legal,
valid and binding obligation of Borrower, to the extent it is a party thereto,
enforceable against it in accordance with its terms, except as enforceability
may be limited by
22
bankruptcy, insolvency or other similar laws affecting the rights of creditors
generally or by application of general principles of equity.
3.4 Financial Statements and Projections. Borrower has
delivered to Agent the Financial Statements and Projections most recently
required to be delivered to Agent as of the Closing Date pursuant to the Prior
Credit Agreement.
3.5 Collateral Reports. Borrower has delivered to Agent all
Collateral Reports most recently required to be delivered to Agent as of the
Closing Date pursuant to the Prior Credit Agreement.
3.6 Material Adverse Effect. Neither Borrower nor any of its
Subsidiaries, as of December 31, 1996, had any obligations, contingent
liabilities, or liabilities for Charges, long-term leases or unusual forward or
long-term commitments which are not reflected in the audited Financial
Statements of Borrower and its Subsidiaries as of such date and which could,
alone or in the aggregate, have or result in a Material Adverse Effect. There
has been no material adverse change in the business, assets, operations,
prospects, projections or financial or other condition of Borrower or any of its
Subsidiaries since December 31, 1996. Except as expressly permitted under the
Prior Credit Agreement prior to the Closing Date or under this Agreement (a) no
dividends, advances or other distributions have been declared, paid or made upon
any Stock of Borrower or any of its Subsidiaries and (b) no shares of Stock of
Borrower have been, or are required to be, redeemed, retired, purchased or
otherwise acquired for value.
3.7 Ownership of Property; Liens. Except as described on
Schedule 3.7, the real estate listed on Schedule 3.7 constitutes all of the real
property owned, leased, or used in its business by Borrower or its Subsidiaries.
Borrower and each of its Subsidiaries own good and marketable fee simple title
to: (i) all of its Real Estate, subject to no Liens other than Permitted
Encumbrances, and has valid and marketable leasehold interests in all of its
Leases (both as lessor and lessee, sublessee or assignee), all as described on
Schedule 3.7, and (ii) good and marketable title to, or valid leasehold
interests in, all of its other properties and assets, and none of the properties
and assets of Borrower or any of its Subsidiaries are subject to any Liens,
except Permitted Encumbrances; and Borrower or such Subsidiary has received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents, and duly effected all
recordings, filings and other actions necessary to perfect and, in all material
respects, establish and protect, Borrower's or such Subsidiary's right, title
and interest in and to all such real estate and other assets or property.
Neither Borrower, any of its Subsidiaries nor any other party to any such Lease
described on Schedule 3.7 is in any material default of its obligations
thereunder or has delivered or received any notice of default under any such
Lease, and no event has occurred which, with the giving of notice, the passage
of time or both, would constitute a default under any such Lease. Except as
described on Schedule 3.7, (i) neither Borrower nor any of its Subsidiaries owns
or holds or is obligated under or a party to, any option, right of first refusal
or any other contractual right to purchase, acquire, sell, assign or dispose of
any real property owned or leased by Borrower or such Subsidiary; and (ii) no
portion of any real property owned or leased by Borrower or any of its
Subsidiaries has suffered any material damage by fire or other casualty loss or
a Release which has not heretofore been completely repaired and restored to its
original condition
23
or is being remedied. To the best of Borrower's knowledge after good faith and
diligent investigation, except as disclosed on Schedule 3.20 as required
pursuant to Section 3.20, all permits, including environmental air and waste
permits, required to have been issued or appropriate to enable the real property
owned or leased by Borrower or such Subsidiary to be lawfully occupied and used
for all of the purposes for which they are currently occupied and used, have
been lawfully issued and are, as of the Closing Date, in full force and effect.
3.8 Restrictions; No Default. No contract, lease, agreement
or other instrument to which Borrower or any of its Subsidiaries is a party or
by which it or any of its properties or assets is bound or affected and no
provision of applicable law or governmental regulation has or results in a
Material Adverse Effect, or could have or result in a Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries is in default, and to Borrower's or
such Subsidiary's knowledge no third party is in default, under or with respect
to any contract, agreement, lease or other instrument to which it is a party. No
Default or Event of Default has occurred and is continuing or will result from
the consummation of the transactions contemplated by the Loan Documents.
3.9 Labor Matters. There are no strikes or other labor
disputes against Borrower or any of its Subsidiaries that are pending or
threatened. Hours worked by and payment made to employees of Borrower and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable federal, state, local or foreign law dealing with such matters.
All payments due from Borrower or any of its Subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of Borrower. Except as set forth on Schedule 3.9, neither Borrower nor any
of its Subsidiaries has any obligation under any collective bargaining agreement
or any employment agreement. There is no organizing activity involving Borrower
or any of its Subsidiaries pending or threatened by any labor union or group of
employees. Except as set forth on Schedule 3.9, there are no representation
proceedings pending or threatened with the National Labor Relations Board, and
no labor organization or group of employees of Borrower or any of its
Subsidiaries has made a pending demand for recognition. There are no complaints
or charges against Borrower or any of its Subsidiaries pending or threatened to
be filed with any federal, state, local or foreign court, governmental agency or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment of any individual by Borrower or
any of its Subsidiaries. Neither Borrower nor any of its Subsidiaries is a
contractor or subcontractor and, except as set forth on Schedule 3.9, neither
Borrower nor any Subsidiary has a legal obligation to engage in affirmative
action.
3.10 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness. Except as set forth on Schedule 3.10, (i) Borrower has no
subsidiaries, is not engaged in any joint venture or partnership with any other
Person, and or an Affiliate of any other Person, (ii) there are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Person may be required to issue or sell any Stock or other equity
security of Borrower, and there are no outstanding stock appreciation rights or
similar arrangements, and (iii) Borrower is the sole direct or indirect
beneficial owner of all of the outstanding capital stock of its Subsidiaries.
All of the issued and outstanding Stock of Borrower is owned, and all of the
stock appreciation rights and similar arrangements granted by Borrower are held,
by each of the Persons named on Schedule 3.10. Except as set forth on Schedule
3.10, there are no outstanding rights to
24
purchase, options, warrants or similar rights or agreements pursuant to which
any Person may be required to issue or sell any Stock or other equity security
of any Subsidiary of Borrower, and there are no outstanding stock appreciation
rights or similar arrangements. As of the Closing Date, all outstanding
Indebtedness and all Liens of Borrower and its Subsidiaries are described in
Section 6.3 (including Schedule 6.3) and 6.7, respectively.
3.11 Government Regulation. Neither Borrower nor any of its
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940 as amended. Neither
Borrower nor any of its Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or any other federal or state statute that restricts or limits its
ability to incur Indebtedness or to perform its obligations hereunder, and the
making of the Advances and Loans, and the incurrence of Letter of Credit
Obligations, in each case by Lenders, the application of the proceeds and
repayment thereof by Borrower or such Subsidiary and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.
3.12 Margin Regulations. Neither Borrower nor any of its
Subsidiaries is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin security" within the respective meanings
of each of the quoted terms under Regulation U or G of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") as now and from time to
time hereafter in effect. Neither Borrower nor any of its Subsidiaries owns any
"margin security", as that term is defined in Regulations G and U of the Board
of Governors of the Federal Reserve Board, and none of the proceeds of any Loan,
Advance or Letter of Credit will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the loans or other extensions of credit under this Agreement to be considered a
"purpose credit" within the meaning of Regulation G, T, U or X of the Federal
Reserve Board. Neither Borrower nor any of its Subsidiaries will take or permit
any agent acting on its behalf to take any action which might cause this
Agreement or any other Loan Document or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.
3.13 Taxes. All federal, state, local and foreign tax
returns, reports and statements, including, but not limited to, information
returns (Form 1120-S) required to be filed by Borrower or any of its
Subsidiaries, have been filed with the appropriate Governmental Authority and
all Charges and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid; provided, that, Borrower may in good faith
contest, by proper legal action or proceedings, the validity or amount of any
such Charges or claims, so long as, at the time of commencement of any such
action or proceeding, and during the pendency thereof (i) adequate reserves with
respect thereto are maintained on the books of Borrower, in accordance with
GAAP, (ii) such contest operates to suspend collection of such
25
Charges or claims and such contest is maintained and prosecuted continuously and
with diligence, and (iii) Agent has not advised Borrower in writing that Agent
reasonably believes that nonpayment or nondischarge thereof could have or result
in a Material Adverse Effect. Borrower and each of its Subsidiaries has paid
when due and payable all Charges required to be paid by it. Proper and accurate
amounts have been withheld by Borrower and its Subsidiaries from its respective
employees for all periods in full compliance in all material respects with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities. Schedule 3.13 sets forth those
taxable years for which Borrower's tax returns are currently being audited by
the IRS or any other applicable Governmental Authority and any assessments or
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described on Schedule 3.13, neither Borrower nor any of
its Subsidiaries has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. Neither
Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC Section
341(f) or agreed to have IRC Section 341(f) (2) apply to any dispositions of
subsection (f) assets (as such term is defined in IRC Section 341(f)(4)). None
of the property owned by Borrower or any of its Subsidiaries is property which
Borrower or such Subsidiary is required to treat as being owned by any other
Person pursuant to the provisions of IRC Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended, and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of the IRC Section 168 (h). Neither Borrower nor any of its
Subsidiaries has agreed or been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise. Neither
Borrower nor any of its Subsidiaries have any obligation under any written tax
sharing agreement, except, subject to Section 6.15, the Tax Sharing Agreement.
3.14 ERISA. Neither Borrower nor any of its Subsidiaries has
now, or has ever had, any Pension Plans and neither Borrower nor any of its
Subsidiaries has any liabilities with respect to any Pension Plans. Schedule
3.14 lists all Plans maintained or contributed to by Borrower or any of its
Subsidiaries and all Qualified Plans maintained or contributed to by any ERISA
Affiliate, and separately identifies the Title IV Plans, Multiemployer Plans,
any multiple employer plans subject to Section 4064 of ERISA, unfunded Pension
Plans, Welfare Plans and Retiree Welfare Plans. Each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and to the best knowledge of Borrower
nothing has occurred which would cause the loss of such qualification or
tax-exempt status. Each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the filing of reports required under the IRC or
ERISA which are true and correct as of the date filed, and with respect to each
Plan, other than a Qualified Plan, all required contributions and benefits have
been paid in accordance with the provisions of each such Plan. With respect to
any Qualified Plan, neither Borrower, any of its Subsidiaries nor any ERISA
Affiliate has failed to make any contribution or pay any amount due as required
by Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
With respect to all Retiree Welfare Plans, the present value of future
anticipated expenses pursuant to the latest actuarial projections of liabilities
does not exceed Fifty Thousand Dollars ($50,000), and copies of such latest
projections have been provided to Agent. Neither Borrower nor any of its
26
Subsidiaries has engaged in a prohibited transaction, as defined in Section 4975
of the IRC or Section 406 of ERISA, in connection with any Plan, which would
subject Borrower or such Subsidiary (after giving effect to any exemption) to a
material tax on prohibited transactions imposed by Section 4975 of the IRC or
any other material liability.
(b) Except as set forth on Schedule 3.14: (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) No ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
Borrower or any of its Subsidiaries, threatened claims, actions or lawsuits
(other than claims for benefits in the normal course), asserted or instituted
against (x) any Plan or its assets, (y) any fiduciary with respect to any Plan
or (z) Borrower, any of its Subsidiaries or any ERISA Affiliate with respect to
any Plan; (iv) neither Borrower, any of its Subsidiaries, nor any ERISA
Affiliate has incurred or reasonably expects to incur any Withdrawal Liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 of ERISA as a
result of a complete or partial withdrawal from a Multiemployer Plan; (v) within
the last five years neither Borrower, any of its Subsidiaries, nor any ERISA
Affiliate has engaged in a transaction which resulted in a Title IV Plan with
Unfunded Liabilities being transferred outside of the "controlled group" (within
the meaning of Section 4001(a)(14) of ERISA) of any such entity; (vi) Borrower,
each of its Subsidiaries and each ERISA Affiliate have complied with the notice
and continuation coverage requirements of Section 4980B of the IRC and the
regulations thereunder except where the failure to comply could not have or
result in any Material Adverse Effect; and (vii) no liability under any Plan has
been funded, nor has such obligation been satisfied, with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation and the equivalent by each other nationally recognized rating
agency.
3.15 No Litigation. Except as set forth on Schedule 3.15, no
action, claim or proceeding is now pending or, to the knowledge of Borrower or
any of its Subsidiaries, threatened against Borrower or such Subsidiary, at law,
in equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, local or foreign government or of any
agency or subdivision thereof, or before any arbitrator or panel of arbitrators,
(i) which challenges Borrower's or such Subsidiary's right, power or competence
to enter into or perform any of its obligations under the Loan Documents, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (ii) which if determined adversely, could have or result in a Material
Adverse Effect, nor to the best knowledge of Borrower or such Subsidiary does a
state of facts exist which is reasonably likely to give rise to such
proceedings.
3.16 Brokers. No broker or finder acting on behalf of
Borrower or any of its Subsidiaries brought about the obtaining, making or
closing of the loans made pursuant to this Agreement or the transactions
contemplated by the Loan Documents and neither Borrower nor any of its
Subsidiaries has any obligation to any Person in respect of any finder's or
brokerage fees in connection therewith.
3.17 Employment Matters. Except as set forth on Schedule
3.17, there are no (i) employment, consulting or management agreements covering
management of Borrower or any of
27
its Subsidiaries, or (ii) collective bargaining agreements or other labor
agreements covering any employees of Borrower or any of its Subsidiaries. Except
as furnished pursuant to the Prior Credit Agreement, a true and complete copy of
each such agreement has been furnished to Agent as of the Closing Date.
3.18 Patents, Trademarks, Copyrights and Licenses. Except as
otherwise set forth on Schedule 3.18, Borrower and each of its Subsidiaries owns
all material licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, and trade names necessary to continue to
conduct its business as heretofore conducted by it, now conducted by it and
proposed to be conducted by it, each of which is listed, together with Copyright
Office or Patent and Trademark Office application or registration numbers, where
applicable, on Schedule 3.18. Schedule 3.18 lists all tradenames or other names
under which Borrower and each of its Subsidiaries conducts business. Borrower
and each of its Subsidiaries conducts (or has within the past six (6) years
conducted) its business without infringement or claim of infringement of any
license, patent, copyright, service xxxx, trademark, trade name, trade secret or
other intellectual property right of others. There is no infringement or claim
of infringement by others of any license, patent, copyright, service xxxx,
trademark, trade name, trade secret or other intellectual property right of
Borrower or any of its Subsidiaries.
3.19 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, the Projections, the Financial
Statements, the Collateral Reports or any written statement furnished by or on
behalf of Borrower or any of its Subsidiaries pursuant to the terms of this
Agreement, which has previously been, or is currently being, delivered to Agent,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents are
fully perfected first priority Liens in and to the Collateral described therein
and the Liens granted to Agent, on behalf of itself and Lenders, pursuant to the
Mortgages are fully perfected first priority Liens in and to the Mortgaged
Property described therein, subject only to Permitted Encumbrances then
existing. Since December 31, 1996, no event has occurred and is continuing which
has had or could have or result in a Material Adverse Effect.
3.20 Hazardous Materials. Except as set forth on Schedule
3.20, the Real Property is free of contamination from any Hazardous Material. In
addition, Schedule 3.20 discloses potential material environmental liabilities
of Borrower or any of its Subsidiaries of which any of them have knowledge (i)
related to noncompliance with the Environmental Laws, or (ii) associated with
the Real Estate. Neither Borrower nor any of its Subsidiaries has caused or
suffered to occur any Release with respect to any Hazardous Material at, under,
above or within any real property which it owns or leases. Neither Borrower nor
any of its Subsidiaries is involved in operations which could lead to the
imposition of any liability or Lien on it, or any owner of any premises which it
occupies, under any Environmental Law, and neither Borrower nor any of its
Subsidiaries has permitted any tenant or occupant of such premises to engage in
any such activity. Borrower has provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities and Costs, in each case
relating to Borrower and each of its Subsidiaries.
28
3.21 Insurance Policies. Schedule 3.21 lists all insurance of
any nature maintained for current occurrences by Borrower and its Subsidiaries,
as well as a summary of the terms of such insurance. Borrower covenants that
such Insurance complies with and shall at all times comply with the standards
set forth on Annex H.
3.22 Deposit and Disbursement Accounts. Schedule 3.22 lists
all banks and other financial institutions at which Borrower or its Subsidiaries
maintains deposits and/or other accounts, including any disbursement accounts,
and such Schedule correctly identifies the name, address and telephone number of
each depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number.
3.23 Government Contracts. Except as set forth on Schedule
3.23, neither Borrower nor any of its Subsidiaries is a party to any contract or
agreement with the federal government and none of the Accounts are subject to
the Federal Assignment of Claims Act (31 U.S.C. Section 3727) relative to the
assignment of such Accounts.
3.24 Customer and Trade Relations. There exists no actual or
threatened termination or cancellation of, or any material adverse modification
or change in: the business relationship of Borrower or any of its Subsidiaries
with any customer or group of customers whose purchases individually or in the
aggregate are material to the operations of Borrower, such Subsidiary, or
Borrower and its Subsidiaries taken as a whole; or the business relationship of
Borrower or any of its Subsidiaries with any supplier material to the operations
of Borrower, such Subsidiary, or Borrower and its Subsidiaries taken as a whole.
3.25 Agreements and Other Documents. As of the Closing Date,
Borrower has provided (except as provided under the Prior Credit Agreement) to
Agent, on behalf of Lenders, accurate and complete copies (or summaries) of all
of the following agreements or documents to which Borrower or any of its
Subsidiaries is subject: each Plan; supply agreements not terminable by Borrower
or such Subsidiary, as appropriate, within sixty (60) days following written
notice issued by Borrower or such Subsidiary; purchase agreements not terminable
by Borrower or such Subsidiary, as appropriate, within sixty (60) days following
written notice issued by Borrower or such Subsidiary; leases of real property;
any lease of equipment having a remaining term of one (1) year or longer and
requiring aggregate rental and other payments in excess of Fifty Thousand
Dollars ($50,000) per annum; licenses and permits necessary for the conduct of
Borrower's or such Subsidiary's businesses; employment, consulting, severance,
"golden parachute" and other similar agreements with any officer of Borrower or
such Subsidiary; instruments or documents evidencing Indebtedness of Borrower or
such Subsidiary and any security interest granted by Borrower or such Subsidiary
with respect thereto; and instruments and agreements evidencing the issuance of
any equity securities, warrants, rights or options to purchase equity securities
of Borrower or such Subsidiary.
3.26 Kansas Indebtedness. No default or event of default has
occurred and is continuing under the Kansas Loan Documents or will result
thereunder from the consummation of the transactions contemplated by the Loan
Documents.
29
FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. Borrower covenants and agrees that
from and after the Closing Date and until the Commitment Termination Date, it
shall deliver to Agent and/or Lenders, as required, the Financial Statements,
notices and Projections at the times, to the Persons and in the manner set forth
on Annex I.
(b) Borrower covenants and agrees that from and after the
Closing Date, it shall deliver to Agent and/or Lenders, as required, the various
Collateral Reports at the times, to the Persons and in the manner set forth on
Annex J.
4.2 Communication with Accountants. Borrower authorizes Agent
to communicate directly with its independent certified public accountants and
tax advisors, including Coopers & Xxxxxxx, and authorizes those accountants and
advisors to disclose to Agent any and all financial statements and other
supporting financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other affairs of
Borrower or any of its Subsidiaries. To permit Borrower's attendance thereat,
Agent shall provide one (1) day's prior notice to Borrower of any such
communications between Agent and the foregoing persons.
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless Agent shall
otherwise consent in writing, from and after the Closing Date and until the
Commitment Termination Date:
5.1 Maintenance of Existence and Conduct of Business.
Borrower shall, and shall cause each of its Subsidiaries to: do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and its rights and franchises; continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder; at
all times maintain, preserve and protect all of its copyrights, patents,
trademarks, trade names and all other intellectual property and rights as
licensee or licensor thereof in use or useful in the conduct of its business,
preserve all the remainder of its property, in use or useful in the conduct of
its business and keep each of the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; and transact business only in such names
as are set forth on Schedule 5.1.
5.2 Payment of Obligations. Borrower shall: (i) pay and
discharge or cause to be paid and discharged all Obligations; and (ii) prior to
an Event of Default, pay and discharge, or cause to be paid and discharged, its
Indebtedness other than the Obligations at the time such amounts are due and
payable, and, subject to Section 5.2(b), pay and discharge or cause to be paid
and discharged promptly all (A) Charges imposed upon it, its income and profits,
or any of its property (real, personal or mixed), and (B) lawful claims for
labor, materials, supplies and services or otherwise, before any thereof shall
become in default.
30
(b) Borrower may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges described in Section 5.2 (a)
(ii); provided, that (i) adequate reserves with respect to such contest are
maintained on the books of Borrower, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges other than Permitted Encumbrances
and such contest is maintained and prosecuted continuously and with diligence
and operates to suspend collection or enforcement of such Charges, (iii) none of
the Collateral becomes subject to forfeiture or loss as a result of such
contest, (iv) Borrower shall promptly pay or discharge such contested Charges or
claims and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Agent evidence acceptable to Agent of such compliance, payment
or discharge, if such contest is terminated or discontinued adversely to
Borrower or the conditions set forth in this Section 5.2(b) are no longer met,
and (v) Agent has not advised Borrower in writing that Agent reasonably believes
that nonpayment or nondischarge thereof could have or result in a Material
Adverse Effect.
5.3 Books and Records. Borrower shall keep adequate records
and books of account with respect to Borrower's and each of its Subsidiaries'
business activities, in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements referred to in Section 3.4.
5.4 Litigation. Borrower shall notify Agent in writing,
promptly upon learning thereof, of any litigation commenced or threatened
against Borrower or any of its Subsidiaries, and of the institution against it
of any suit or administrative proceeding that may involve an amount in excess of
One Hundred Thousand Dollars ($100,000) or seeks injunctive relief or could have
or result in a Material Adverse Effect if adversely determined.
5.5 Insurance. Borrower shall maintain the policies of
insurance described on Schedule 3.21 in form and with insurers recognized as
adequate by Agent. Except to the extent permitted under Section 6.15, Borrower
shall maintain such policies at its sole cost and expense. Such policies shall
be in such amounts as are set forth on Schedule 3.21 and, in no event, less than
the amounts maintained on the Closing Date, except for appropriate changes in
such amounts resulting from acquisitions or dispositions made in accordance with
this Agreement. Borrower shall notify Agent promptly of any occurrence causing a
material loss or decline in value of any real or personal property and the
estimated (or actual, if available) amount of such loss or decline. Except as
otherwise specified on Schedule 3.21, Borrower hereby directs all present and
future insurers under its "All Risk" policies of insurance to pay all proceeds
payable thereunder directly to Agent, on behalf of itself and Lenders. Borrower
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent) as Borrower's true and lawful agent and
attorney-in-fact for the purpose, upon the occurrence and during the continuance
of a Default or an Event of Default, of making, settling and adjusting claims
under the "All Risk" policies of insurance, endorsing the name of Borrower on
any check, draft, instrument or other item of payment for the proceeds of such
"All Risk" policies of insurance, and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Unless a
Default or an Event of Default shall have occurred and be continuing, at
Borrower's request, Agent shall release casualty insurance proceeds to Borrower
necessary to pay for the repair, replacement or reconstruction of the assets
subject to such casualty, provided that Agent reasonably believes that, in the
event that the reasonably anticipated costs of such repair, replacement or
reconstruction will exceed the amount
31
of such insurance proceeds, Borrower is and will be able to meet such additional
cost. In the event Borrower at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, Agent, without waiving or
releasing any Obligations or Default or Event of Default hereunder, may at any
time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which Agent deems advisable. All sums so disbursed, including
attorneys, fees, court costs and other charges related thereto, shall be
payable, on demand, by Borrower to Agent and shall be additional Obligations
hereunder secured by the Collateral, provided, that, if and to the extent
Borrower fails to promptly pay any of such sums upon demand therefor, Agent is
authorized to, and at its option may, make or cause to be made Revolving Credit
Advances on behalf of Borrower for payment thereof.
(b) Agent reserves the right at any time, upon review of
Borrower's risk profile, to require additional forms and limits of insurance to,
in Agent's sole opinion, adequately protect both Agent and Lenders' interests in
all or any portion of the Collateral and to ensure that Borrower and each of its
Subsidiaries is protected by insurance in amounts and with coverage customary
for businesses engaged in their businesses. Upon the occurrence and during the
continuance of any Default or Event of Default, Agent reserves the right at any
time, upon review of Borrower's and/or any of its Subsidiaries' risk profile, to
require additional forms and limits of insurance to, in Agent's sole opinion,
adequately protect Agent's and Lenders' interests, including, but not limited
to, their interests in the Collateral. Borrower shall, if so requested by Agent,
deliver to Agent, from time to time upon request of Agent, a report of a
reputable insurance broker, satisfactory to Agent, with respect to its insurance
policies.
(c) On the Closing Date and from time to time thereafter, as
requested by Agent, Borrower shall deliver to Agent endorsements to all (i) "All
Risk" and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured.
5.6 Compliance with Laws. Borrower and each of its
Subsidiaries shall comply in all material respects with all federal, state and
local laws, regulations, orders and agreements (including conciliation
agreements) applicable to it, including those relating to licensing,
environmental, consumer credit, truth-in-lending, ERISA and labor matters.
5.7 Agreements. Borrower and each of its Subsidiaries shall
perform in all material respects, within all required time periods (after giving
effect to any applicable grace periods), all of its obligations and enforce all
of its rights under each agreement to which it is a party, including any lease
or customer contracts to which it is a party. Borrower or any of its
Subsidiaries may terminate or modify any provision of any agreement to which it
is a party, so long as such termination or modification could not have or result
in a Material Adverse Effect.
5.8 Supplemental Disclosure. On the request of Agent (in the
event that such information is not otherwise delivered by Borrower to Agent
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, and with reasonable frequency (unless a Default or an Event of
Default has occurred and is continuing, then, in such case, as frequently as
requested
32
by Agent), Borrower will supplement each schedule or representation herein with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such schedule or as an exception to such representation or which is necessary to
correct any information in such schedule or representation which has been
rendered inaccurate thereby; provided, however, that such supplement to such
schedule or representation shall not be deemed an amendment thereof unless
expressly consented to in writing by Agent and Requisite Lenders, and no such
supplements, except as the same may be consented to in a writing which expressly
includes a waiver, shall be or be deemed a waiver of any Default or Event of
Default disclosed therein.
5.9 Employee Plans. Borrower shall notify Agent of (i) any
and all claims, actions, or lawsuits asserted or instituted, and of any
threatened litigation or claims, against Borrower, any of its Subsidiaries, or
against any ERISA Affiliate in connection with any Plan or Qualified Plan or/and
against any such Plan itself, or against any fiduciary of or service provided to
any such Plan and (ii) the occurrence of any Reportable Event with respect to
any Pension Plan.
5.10 Environmental Matters. Borrower shall, and shall cause
all of its Subsidiaries to, (i) comply in all respects with the Environmental
Laws applicable to it, (ii) notify Agent promptly after Borrower or such
Subsidiary becomes aware of any Release upon any premises owned or occupied by
it, and (iii) promptly forward to Agent a copy of any order, notice, permit,
application, or any communication or report received by Borrower or such
Subsidiary in connection with any such Release or any other matter relating to
the Environmental Laws that may affect such premises or Borrower or such
Subsidiary. The provisions of this Section 5.10 shall apply whether or not the
Environmental Protection Agency, any other federal agency or any state, local or
foreign environmental agency has taken or threatened any action in connection
with any Release or the presence of any Hazardous Materials.
5.11 Landlords' Agreements, Bailee Letters and Mortgagee
Agreements. Borrower shall have obtained as of the Closing Date a landlord's
agreement in form and substance acceptable to Agent from the lessor of each
leased premise currently being used by Borrower or any of its Subsidiaries and
shall obtain such an agreement from the lessor of each premise leased after the
Closing Date, in each case where Collateral is currently or may be located.
Borrower shall have obtained as of the Closing Date a bailee letter in form and
substance acceptable to Agent with respect to any warehouse currently being used
by Borrower or any of its Subsidiaries and shall obtain such a letter with
respect to each warehouse established after the Closing Date, in each case where
Collateral is currently or may be located. Borrower shall have obtained as of
the Closing Date a mortgagee's agreement in form and substance acceptable to
Agent from the mortgagee of each owned property currently being used by Borrower
or any of its Subsidiaries and shall obtain such an agreement from the mortgagee
of each property mortgaged after the Closing Date, in each case where Collateral
is currently or may be located. No real property shall be leased, established as
a warehouse or acquired by Borrower or any of its Subsidiaries after the Closing
Date, unless and until a landlord agreement, bailee letter or mortgagee
agreement, as appropriate, shall first have been obtained in form and substance
acceptable to Agent with respect to such location.
33
5.12 Leased Locations of Collateral. Borrower shall timely
and fully pay and perform in all material respects its obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located. Borrower shall promptly
deliver to Agent copies of (a) any and all default notices received under or
with respect to any such leased location or public warehouse and (b) any and all
other notices received under or with respect to any such lease or other
agreement. Upon Agent's request, Borrower shall promptly deliver to Agent copies
of (i) all invoices received by Borrower for the payment of rent or other
obligations with respect to any such leased location or warehouse and (ii) all
cancelled checks evidencing payment of such rent and other obligations.
5.13 Subsidiaries. Prior to forming any Subsidiary, Borrower
shall provide not less than thirty (30) days prior written notice to Agent,
receive the prior written consent of Agent, (c) enter into a pledge agreement
with Agent, for the benefit of Agent and Lenders, pledging the capital stock of
such Subsidiary as additional security for the Obligations and (d) cause such
Subsidiary to enter into a guaranty, security agreement and all other mortgages,
deeds of trust and other documents, instruments and agreements as Agent may
request with Agent, for the benefit of Agent and Lenders, securing all of the
assets of such Subsidiary as additional security for the Obligations.
5.14 Maintenance of Equipment and Fixtures. Borrower shall
keep and maintain its Equipment and Fixtures in good operating condition
sufficient for the continuation of Borrower's business conducted on a basis
consistent with past practices, and Borrower shall provide or arrange for all
maintenance and service and all repairs necessary for such purpose.
5.15 Purchase Offers. Promptly upon Borrower's receipt of any
offer by any Person to acquire all or substantially all of Borrower's capital
stock or assets, prior to execution or delivery of any document in response to
such offer Borrower shall deliver a copy of such offer, together with all
supporting documentation received by Borrower with respect thereto, to Agent for
its review. Confidential information received by Agent and Lenders from Borrower
pursuant to this Section 5.15 shall be subject to Section 10.14.
5.16 Board of Directors. Immediately upon any change in the
composition of Borrower's board of directors, Borrower shall notify Agent of the
same.
5.17 ARTRA Tax Loss Carryforwards. Borrower shall cause ARTRA
to offset tax loss carryforwards available to ARTRA ("Carryforwards") against
all potential tax liabilities (including Borrower's obligations under the Tax
Sharing Agreement (the "Tax Sharing Obligations")) attributable to Borrower's
change of its Inventory accounting from a last-in first-out method to a first-in
first-out method (the "Conversion") and, pursuant thereto, Borrower may permit
ARTRA to offset up to $1,820,000 of Carryforwards so applied to the Tax Sharing
Obligations against the outstanding balance of all intercompany accounts owing
from ARTRA to Borrower on the date of the Conversion as indicated on Borrower's
financial statements prepared pursuant to this Agreement.
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NEGATIVE COVENANTS
Borrower covenants and agrees that, without Agent's prior
written consent, from and after the Closing Date until the Commitment
Termination Date:
6.1 Mergers, Etc. Borrower shall not, nor shall Borrower
permit any of its Subsidiaries to, directly or indirectly, by operation of law
or otherwise, merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person or, except
as otherwise permitted by Section 5.13, form any Subsidiary.
6.2 Investments; Loans and Advances. Except as otherwise
permitted by Sections 6.3 or 6.4, or by the Security Agreement, Borrower shall
not, nor shall Borrower permit any of its Subsidiaries to, make any investment
in, or make or accrue loans or advances of money to any Person, through the
direct or indirect lending of money, holding of securities or otherwise;
provided that not more than (a) $12,500,000 of intercompany demand loans
advanced by Borrower to ARTRA prior to the Closing Date (which shall not
increase but rather amortize in accordance with the terms thereof) may remain
outstanding until the first to occur of the (i) Commitment Termination Date and
(ii) acceleration of the Revolving Credit Loan, so long as such loans are
evidenced by demand promissory notes in form and substance acceptable to Agent
and pledged to Agent as additional Collateral securing the Obligations and (b)
the intercompany loan advanced by Borrower to ARTRA prior to the Closing Date
and described in Section 8.1(q) may remain outstanding in accordance with the
terms of such Section 8.1(q).
6.3 Indebtedness. Borrower shall not, nor shall Borrower
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except (i) Indebtedness secured by Liens described in clause (x)
of the definition of Permitted Encumbrances, (ii) the Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and
liabilities not to exceed One Million Five Hundred Thousand Dollars ($1,500,000)
in the aggregate and then only to the extent they are permitted to remain
unfunded under applicable law and (vi) the Kansas Indebtedness, all of which
shall be described separately on Schedule 6.3 in detail reasonably satisfactory
to Agent, indicating, without limitation, the respective amounts thereof
outstanding as of the Closing Date, the amortization schedules relating thereto
and the documents pursuant to which such Indebtedness was incurred.
6.4 Employee Loans and Transactions. Borrower shall not, nor
shall Borrower permit any of its Subsidiaries to, except as otherwise expressly
permitted hereunder, enter into any lending, borrowing or other commercial
transaction with any of its employees, officers, directors, Subsidiaries,
Affiliates or related parties without the prior written consent of Agent,
including (i) downstreaming or upstreaming of cash or intercompany advances or
guarantees and (ii) payment of any management consulting, advisory or similar
fee based on or related to Borrower's or such Subsidiary's operating performance
or income or any percentage thereof other than full-time employment agreements
and incentive compensation programs with current employees in accordance with
the agreements described on Schedule 6.4, and (iii) payment of all or a portion
of the salaries or compensation to any Person employed by any Affiliate of
Borrower, including ARTRA and its Affiliates; provided, that in the case of the
foregoing clause (iii) Borrower may
35
make payments on behalf of ARTRA in respect of "BMS Healthcare" (or a
replacement primary health care insurance provider) premiums and claims so long
as the amount of such payments is fully reimbursed as an offset against payments
(to the fullest extent of such payments in the consecutive order of their
occurrence) owing by Borrower to ARTRA pursuant to the Tax Sharing Agreement.
Borrower shall not: (a) permit the direct and indirect compensation of its ten
(10) most highly compensated employees to exceed, in the aggregate, during any
Fiscal Year one hundred twenty-five percent (125%) of the amount of such
compensation during the immediately preceding Fiscal Year; or (b) amend, alter
or otherwise modify Borrower's incentive or other compensation plans, or
establish other such plans, except as required in accordance with Borrower's
1996 Bonus Incentive Program, as restated on an annual basis, provided that such
program shall not permit Borrower to increase the amount of such compensation
provided to its ten (10) highest paid employees above the amounts otherwise
permitted in accordance with the foregoing clause (a). Notwithstanding the
foregoing, ARTRA shall be permitted to offer compensation to directors or
employees of Borrower pursuant to an equity incentive plan, in form and
substance reasonably satisfactory to Agent.
6.5 Capital Structure and Business. Borrower shall not, nor
shall Borrower permit any of its Subsidiaries to: (i) make any changes in any of
its business objectives, purposes or operations which could in any way
materially adversely affect the repayment of the Obligations or could have or
result in a Material Adverse Effect, (ii) make or permit to exist any change in
its capital structure as described on Schedule 3.10 (including the issuance of
any shares of Stock, options, warrants or other securities or agreements
convertible into Stock or any revision of the terms of its outstanding Stock
other than pursuant to the Warrant), or (iii) amend its certificate or articles
of incorporation or bylaws. Neither Borrower nor any of its Subsidiaries shall
engage in any business other than the businesses currently engaged in by
Borrower or such Subsidiary or businesses in industries related to the
businesses currently engaged in by Borrower or such Subsidiary. Parent shall not
engage in any business activities other than the ownership of Borrower's Stock
and those activities incidental to Parent's corporate existence and good
standing.
6.6 Guaranteed Indebtedness. Borrower shall not, nor shall
Borrower permit any of its Subsidiaries to, incur any Guaranteed Indebtedness
except by endorsement of instruments or items of payment for deposit to the
general account of Borrower, and for Guaranteed Indebtedness incurred for the
benefit of Borrower or such Subsidiary if the primary obligation is expressly
permitted by this Agreement.
6.7 Liens. Borrower shall not, nor shall Borrower permit any
of its Subsidiaries to, create, incur, assume or permit to exist any Lien on or
with respect to any properties or assets (including any documents or instrument
with respect to Goods or Accounts) of Borrower or any of its Subsidiaries,
whether now owned or hereafter acquired, or any income or profits therefrom,
except Permitted Encumbrances. In addition, neither Borrower nor any of its
Subsidiaries shall become a party to any agreement, note, indenture or
instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations.
6.8 Sale of Assets. Borrower shall not, nor shall Borrower
permit any of its Subsidiaries to, sell, transfer, convey, assign or otherwise
dispose of any of its properties or other
36
assets, including the capital stock of any Subsidiary or any of its Accounts;
provided, however, that the foregoing shall not prohibit (a) the sale of
Inventory in the ordinary course of business or (b) the disposition of other
assets (excluding dispositions of Accounts and dispositions of Inventory not
sold in the ordinary course of Business) which are no longer in use or useful to
Borrower or such Subsidiary in the conduct of its business in an amount or
amounts not exceeding One Million Five Hundred Thousand Dollars ($1,500,000) in
the aggregate per annum.
6.9 Events of Default. Borrower shall not, nor shall Borrower
permit any of its Subsidiaries to, take any action or omit to take any action,
which act or omission would constitute a Default or an Event of Default under,
pursuant to, or noncompliance with any of, the terms of this Agreement or any of
the other Loan Documents or a default or an event of default which could cause
or result in a Material Adverse Effect pursuant to, or noncompliance with, any
other contract, lease, mortgage, deed of trust or instrument to which it is a
party or by which it or any of its property is bound, or any document creating a
Lien.
6.10 ERISA. Neither Borrower, any of its Subsidiaries, nor
any ERISA Affiliate shall without Agent's prior written consent acquire any new
ERISA Affiliate that maintains or has an obligation to contribute to a Pension
Plan that has either an "accumulated funding deficiency", as defined in Section
302 of ERISA, or any "unfunded vested benefits", as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any plan other than a Multiemployer
Plan, and in Section 4211 of ERISA in the case of a Multiemployer Plan.
Additionally, neither Borrower, any of its Subsidiaries, nor any ERISA Affiliate
shall, without Agent's prior written consent, permit or suffer any condition set
forth on Schedule 3.13 to cease to be met and satisfied at any time; terminate
any Pension Plan that is subject to Title IV of ERISA where such termination
could reasonably be anticipated to result in liability to such Person; permit
any accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA, to
be incurred with respect to any Pension Plan; fail to make any contributions or
fail to pay any amounts due and owing as required by the terms of any Plan
before such contributions or amounts become delinquent; make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan; or at any time fail to provide Agent with copies of any Plan
documents or governmental reports or filings, if requested by Agent. Neither
Borrower, any of its Subsidiaries, nor any ERISA Affiliate shall cause or permit
to occur any event described in Section 4062(e) of ERISA with respect to any
Title IV Plan or any ERISA Event to the extent such ERISA Event could reasonably
be expected to have a Material Adverse Effect.
6.11 Financial Covenants. Borrower shall not breach or fail
to comply with any of the Financial Covenants (the "Financial Covenants") set
forth on Annex K.
6.12 Hazardous Materials. Except as set forth on Schedule
3.20, Borrower shall not, nor shall Borrower permit any of its Subsidiaries or
any other Person within its control to, cause or permit a Release or the
presence, use, generation, manufacture, installation, Release, discharge,
storage or disposal of any Hazardous Materials on, under, in, above or about any
of its real estate or the transportation of any Hazardous Materials to or from
any real estate where such Release or such presence, use, generation,
manufacture, installation, Release, discharge, storage or disposal would violate
or form the basis for liability under any Environmental Laws. If a Default or
Event
37
of Default shall have occurred and be continuing, Borrower, at its own expense,
shall cause the performance of such environmental audits and preparation of such
environmental reports as Agent may from time to time request as to any location
at which Collateral is then located, by reputable environmental consulting firms
acceptable to Agent, and in form and substance acceptable to Agent.
6.13 Sale-Leasebacks. Neither Borrower nor any of its
Subsidiaries shall engage in any sale-leaseback or similar transaction involving
any of its assets.
6.14 Cancellation of Indebtedness. Neither Borrower nor any
of its Subsidiaries shall cancel any claim or debt owing to it, except for
reasonable consideration negotiated on an arm's-length basis and in the ordinary
course of its business.
6.15 Restricted Payments. Borrower shall not, nor shall
Borrower cause or permit any of its Subsidiaries to, make any Restricted
Payment; provided, however, that, so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, Borrower may make payments
pursuant to the Tax Sharing Agreement and the Services Agreement, in each case
not to exceed the lesser of (a) Borrower's allocated portion of the items
respectively covered by each such agreement and (b) the actual cost which
Borrower would incur for each such respective item independently of Borrower's
affiliation with ARTRA or any other Person party to either such agreement.
6.16 Leases. Borrower shall not, nor shall Borrower cause or
permit any of its Subsidiaries to, enter into any lease of real property or
similar agreement or arrangement, if the aggregate payment for Borrower and its
Subsidiaries under all such leases, agreements and arrangements would exceed
Five Hundred Thousand Dollars ($500,000) for any successive twelve (12) month
period.
6.17 Composition. Borrower shall not, nor shall Borrower
cause or permit any of its Subsidiaries to, cause or suffer the occurrence of
any change in the composition of its Stockholders as of the Closing Date.
6.18 Accounting Changes. Borrower shall not, nor shall
Borrower cause or permit any of its Subsidiaries to, make any change in
accounting treatment or reporting practices, except as required by GAAP, or
change its Fiscal Year.
6.19 Change of Corporate Name. Borrower shall not, nor shall
Borrower cause or permit any of its Subsidiaries to, change its corporate name.
6.20 Sale of Stock. Borrower shall not, nor shall Borrower
cause or permit any of its Subsidiaries to, sell (whether in a public or private
offering or otherwise) or otherwise provide rights to any Person (other than
rights provided to Borrower or Parent as of the Closing Date which are not
otherwise prohibited by any Loan Document) with respect to any of its Stock,
except pursuant to the exercise of the Warrant.
38
6.21 Cash Management. Except for xxxxx cash accounts
described in the following sentence, Borrower shall not, nor shall Borrower
permit or cause any of its Subsidiaries to, maintain any bank account not
expressly permitted to be maintained by Annex C and identified on Schedule 3.22
as required by Annex C. Except for xxxxx cash accounts (all of which are
identified on Schedule 3.22) with an aggregate balance not in excess of Twenty
Five Thousand Dollars ($25,000) at any time, collectively, Borrower shall not,
nor shall Borrower cause or permit any of its Subsidiaries to, maintain a cash
balance in any bank account which, as of any date, exceeds the amount necessary
to cover outstanding checks to be drawn against such account in the ordinary
course of business on such date.
6.22 No Impairment of Upstreaming. Borrower shall not, nor
shall Borrower permit or cause any of its Subsidiaries to, directly or
indirectly, enter into or become bound by any agreement, instrument, indenture
or other obligation which could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making of Intercompany Loans by any Subsidiary to Borrower.
6.23 No Amendment. Borrower shall not, nor shall Borrower
permit or cause any of its Subsidiaries to, directly or indirectly, amend,
restate, supplement or otherwise modify the Tax Sharing Agreement or the
Services Agreement. None of the Kansas Loan Documents shall be amended,
restated, supplemented or otherwise modified.
6.24 No Change in Management. Borrower shall not cause or
suffer the occurrence of any change in its senior management (including its
chief executive officer, chief financial officer and chief operating officer) as
of the Closing Date; provided, that, in the event of the resignation, retirement
or death of any of the foregoing, Borrower shall replace the same with a Person
reasonably acceptable to Agent.
6.25 Management Agreements. Except to the extent that the
annual payments under all management, consulting, advisory or other similar
agreements of Borrower do not exceed $250,000 in the aggregate, Borrower shall
not enter into any such agreement or amend, alter or otherwise modify, or renew
or extend, any such agreement to which it is a party as of the Closing Date.
Notwithstanding the foregoing, Borrower may compensate its employees in
accordance with Section 6.4.
6.26 Overriding Agreements. Except as expressly specified in
this Agreement, Borrower shall not pay, make, declare or guaranty or become
obligated to pay, make, declare or guaranty, whether directly or indirectly, any
dividend, distribution, payment, loan or advance, contribution, investment,
Restricted Payment or other transfer of cash, property or other assets to or in
respect of Parent, ARTRA, any Subsidiary of any of the foregoing, Xxxxx X.
Xxxxxx or any of his family members, or any stockholder, employee, director,
officer or Affiliate of any of the foregoing.
39
7. TERM
7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until, and the Loans, Letter of Credit Obligations and
all other Obligations shall be automatically due and payable in full on, the
Commitment Termination Date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of Borrower or the rights of Agent and
Lenders relating to any unpaid portion of any Loan, Letter of Credit Obligations
or any other Obligation, due or not due, liquidated, contingent or unliquidated
or any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is not required until after the
Commitment Termination Date. Except as otherwise expressly provided herein or in
any other Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon Borrower, and all rights of Agent and
Lenders, all as contained in the Loan Documents shall not terminate or expire,
but rather shall survive such termination or cancellation and shall continue in
full force and effect until such time as the Loans, Letter of Credit Obligations
and all other Obligations have been indefeasibly paid in full in accordance with
the terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) (i) Borrower shall fail to make any payment hereunder or
under any of the other Loan Documents when due and payable or declared due and
payable, consisting of principal of, interest on or Fees with respect to the
Obligations.
(ii) Borrower shall fail to make any payment hereunder or
under any of the other Loan Documents when due and payable or declared due and
payable, consisting of a payment not described in clause (i) above, and such
payment shall remain unremedied for a period ending on the first to occur of
three (3) Business Days after Borrower shall (A) receive written notice of such
failure from Agent or (B) become aware of such failure.
(b) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 1.13 or Section 6, including any of the
provisions set forth on Annexes C and K, respectively, or there shall exist any
agreement or other document accomplishing or purporting to accomplish (whether
on a conditional basis or otherwise) any event, condition or other occurrence
prohibited by any Loan Document.
(c) Borrower shall fail or neglect to perform, keep or
observe any term or provision of this Agreement (other than any such term or
provision referred to in other paragraphs of this Section 8.1) or of any of the
other Loan Documents, and the same shall remain unremedied for a period ending
on the first to occur of thirty (30) days after Borrower shall (i) receive
written notice of any such failure from Agent or (ii) become aware thereof.
40
(d) Borrower shall, or shall cause or permit any of its
Subsidiaries to, fail to timely and fully pay and perform its obligations in all
material respects under all leases and other agreements with respect to each
leased location or public warehouse, if any, at which Collateral is located or
shall fail or neglect to perform, keep or observe any of the provisions of
Section 5.12; provided, that, Borrower may in good faith contest, by proper
legal action or proceedings, the validity, amount or enforcement of any such
obligation or provision, so long as, at the time of commencement of any such
action or proceeding, and during the pendency thereof (i) no Default or Event of
Default shall have occurred, (ii) adequate reserves with respect thereto are
maintained on the books of Borrower, in accordance with GAAP, (iii) such contest
operates to suspend collection of the contested obligations, or enforcement of
the contested provisions, and such contest is maintained and prosecuted
continuously and with diligence, and (iv) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
(e) A default shall occur under any other agreement, document
or instrument to which Borrower is a party or by which Borrower or Borrower's
property is bound and such default (i) involves the failure to make any payment
(whether of principal, interest or otherwise) due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) in respect of
any Indebtedness of Borrower in an aggregate amount exceeding One Hundred
Thousand Dollars ($100,000) or (ii) causes (or permits any holder of such
Indebtedness or a trustee to cause) such Indebtedness, or a portion thereof in
an aggregate amount exceeding One Hundred Thousand Dollars ($100,000) to become
due prior to its stated maturity or prior to its regularly scheduled dates of
payment.
(f) Any representation or warranty herein or in any other
Loan Document or in any written statement pursuant thereto or hereto, or any
report, financial statement or certificate made or delivered to Agent or any
Lenders by Borrower shall be untrue or incorrect in any material respect, as of
the date when made or deemed made (including those made or deemed made pursuant
to Section 2.2).
(g) Any material amount of the assets of Borrower or any of
its Subsidiaries shall be attached, seized, levied upon or subjected to a writ
or distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of Borrower or such
Subsidiary, as the case may be, and shall remain unstayed or undismissed for
sixty (60) consecutive days; or any Person other than Borrower shall apply for
the appointment of a receiver, trustee or custodian for any of Borrower's assets
and shall remain unstayed or undismissed for sixty (60) consecutive days; or
Borrower or such Subsidiary, as the case may be, shall have concealed, removed
or permitted to be concealed or removed, any part of its property, with intent
to hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other similar law.
(h) A case or proceeding shall have been commenced against
Borrower or any of its Subsidiaries in a court having competent jurisdiction
seeking a decree or order (i) under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable
41
federal, state or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or any of its Subsidiaries or of any substantial part of
any of their properties, or (iii) ordering the winding up or liquidation of the
affairs of Borrower or such Subsidiary and such case or proceeding shall remain
undismissed or unstayed for thirty (30) consecutive days or such court shall
enter a decree or order granting the relief sought in such case or proceeding.
(i) Borrower or any of its Subsidiaries shall (i) file a
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Borrower or any of
its Subsidiaries or of any substantial part of any of their properties, (iii)
fail generally to pay its debts as such debts become due, or (iv) take any
corporate action in furtherance of any such action.
(j) A final judgment or judgments (after the expiration of
all times to appeal therefrom) for the payment of money in excess of One Hundred
Thousand Dollars ($100,000) in the aggregate shall be rendered against Borrower
or any of its Subsidiaries unless the same shall be (i) fully covered by
insurance in accordance with Section 5.5 or (ii) vacated, stayed, bonded, paid
or discharged within a period of thirty (30) days from the date of such
judgment.
(k) Any event not specified in this Section 8 shall have
occurred which Agent reasonably believes could have or could result in a
Material Adverse Effect and Agent shall have given Borrower at least ten (10)
days notice thereof.
(l) Any provisions of any Collateral Document, including the
Security Agreement or any Mortgage, after delivery thereof pursuant to Section
2.1, shall for any reason cease to be valid, binding and enforceable in
accordance with its terms in a manner which, in Agent's sole and absolute
discretion, could adversely affect Agent, Lenders or the Collateral, or any
security interest created under any Collateral Document, including the Security
Agreement or any Mortgage, shall cease to be a valid and perfected security
interest or Lien having the first priority in any of the Collateral purported to
be covered thereby (subject only to Permitted Encumbrances).
(m) Without Agent's prior written consent, (i) there shall
occur any Change in Control.
(n) Without Agent's prior written consent, there shall occur
any (i) merger, acquisition or consolidation transaction involving Borrower or
(ii) sale of all or substantially all of the assets of Borrower.
(p) Any determination or notice is received by Borrower from
the United States (or any department or agency thereof) with respect to a claim
or other assertion for damages or any other amounts resulting from any violation
of the Xxxxx-Xxxxx Act by Borrower in the construction of its Kansas Facility,
which claim or other assertion could, in the sole and absolute discretion of
42
Agent, result in a Material Adverse Affect or otherwise adversely affect
Borrower's ability to repay the Obligations pursuant to the Loan Documents or
the rights and privileges of Agent or Lenders thereunder.
(q) ARTRA shall fail to repay in full to Borrower as soon as
possible and, in any event, in individual increments of at least $50,000 not
later than March, June, September and December of 1998, the $200,000 principal
balance of the loan outstanding as of the Closing Date made by Borrower to ARTRA
pursuant to the Acknowledgment and Consent dated as of December 28, 1994 between
Borrower and Agent.
8.2 Remedies. If any Event of Default shall have occurred and
be continuing or if a Default shall have occurred and be continuing and (i)
Agent or Requisite Revolving Lenders shall have determined not to make any
Revolving Credit Advances or incur any Letter of Credit Obligations or (ii)
Agent or Requisite Capital Expenditure Lenders shall have determined not to make
any Capital Expenditure Advances, so long as that specific Default is
continuing, Agent may (and shall, at the written request of the (i) Requisite
Revolving Lenders with respect to Revolving Credit Advances and Letter of Credit
Obligations and (ii) Requisite Capital Expenditure Lenders with respect to
Capital Expenditure Advances), without notice, suspend this facility with
respect to, further Revolving Credit Advances, the incurrence of further Letter
of Credit Obligations and/or further Capital Expenditure Advances, as
applicable, whereupon any further Revolving Credit Advances, Letter of Credit
Obligations and Capital Expenditure Advances, as applicable, shall be made or
extended in Agent's sole discretion (or in the sole discretion of (i) Requisite
Revolving Lenders or (ii) Requisite Capital Expenditure Lenders, as applicable,
if such suspension occurred at their respective direction) so long as such
Default or Event of Default is continuing. If any Default or Event of Default
shall have occurred and be continuing, Agent may (and shall, at the written
request of the Requisite Revolving Lenders), without notice except as otherwise
expressly provided herein, increase the rate of interest applicable to the Loans
and the Fees applicable to Letters of Credit to the Default Rate.
(b) If any Event of Default shall have occurred and be
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate this facility with respect to further
Advances and the incurrence of further Letter of Credit Obligations; (ii)
declare all or any portion of the Obligations, including all or any portion of
any Loan to be forthwith due and payable, and require that all Letter of Credit
Obligations be cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower; and (iii) exercise any rights and remedies
provided to Agent under the Loan Documents and/or at law or equity, including
all remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Sections 8.1(g), (h) or (i), all
of the Obligations, including the aggregate Revolving Credit Loan, shall become
immediately due and payable without declaration, notice or demand by any Person.
8.3 Waivers by Borrower. Except as otherwise provided for in
this Agreement or by applicable law, Borrower waives): (a) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all
43
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which Borrower may in any way
be liable, and hereby ratifies and confirms whatever Agent may do in this
regard, (b) all rights to notice and a hearing prior to Agent's taking
possession or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior to
allowing Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshalling and exemption laws. Borrower acknowledges that
it has been advised by counsel of its choice with respect to this Agreement, the
other Loan Documents and the transactions evidenced by this Agreement and the
other Loan Documents and understands fully the terms, conditions and
implications of each of the foregoing.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. The Borrower consents to
any Lender's assignment of, and/or sale of participations in, at any time or
times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or of any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder, whether
evidenced by a writing or not. Any assignment by a Lender shall (i) require the
consent of Agent (which shall not be unreasonably withheld or delayed) and the
execution of an assignment agreement substantially in the form attached hereto
as Exhibit J and otherwise in form and substance satisfactory to, and
acknowledged by, Agent (an "Assignment Agreement"); (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) if a
partial assignment, be in an amount at least equal to $5,000,000 and, after
giving effect to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000; and (iv) include
a payment to Agent of an assignment fee of $3,500. In the case of an assignment
by a Lender under this Section 9.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as it would if it
were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Borrower hereby acknowledges
and agrees that any assignment will give rise to a direct obligation of Borrower
to the assignee and that the assignee shall be considered to be a "Lender".
Agent shall deliver a copy of each executed Assignment Agreement to Borrower. In
all instances, each Lender's liability to make Loans hereunder shall be several
and not joint and shall be limited to such Lender's Pro Rata Share of the
applicable Commitment. In the event Agent or any Lender assigns or otherwise
transfers all or any part of a Note, Agent or any such Lender shall so notify
Borrower and Borrower shall, upon the request of Agent or such Lender, execute
new Notes in exchange for the Notes being assigned. Notwithstanding the
foregoing provisions of this Section 9.1(a), any Lender may at any time pledge
or assign all or any portion of such Lender's rights under this Agreement and
the other Loan Documents to a Federal Reserve Bank; provided, however, that no
such pledge or assignment shall release such Lender from such Lender's
obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined
44
as if that Lender had not sold such participation, and that the holder of any
such participation shall not be entitled to require such Lender to take or omit
to take any action hereunder except actions directly affecting (i) any reduction
in the principal amount of, or interest rate or Fees payable with respect to,
any Loan in which such holder participates, (ii) any extension of the scheduled
amortization of the principal amount of any Loan in which such holder
participates or the final maturity date thereof, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the terms of
this Agreement, the Collateral Documents or the other Loan Documents). Solely
for purposes of Sections 1.17, 1.19, 1.20 and 9.8, Borrower acknowledges and
agrees that a participation shall give rise to a direct obligation of Borrower
to the participant and the participant shall be considered to be a "Lender".
Except as set forth in the preceding sentence, Borrower shall not have any
obligation or duty to any participant. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Borrower shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably required to
enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and the
preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. Borrower shall certify
the correctness, completeness and accuracy of all descriptions of Borrower and
its affairs contained in any selling materials provided by it and all other
information provided by it and included in such materials, except that any
Projections delivered by Borrower shall only be certified by Borrower as (i)
having been prepared by Borrower in light of the past operations of its business
(but including future payments of known contingent liabilities), based upon
estimates and assumptions stated therein (all of which Borrower believes to be
reasonable and fair in light of current conditions and current facts known to
Borrower) and (ii) reflecting, as of the Closing Date, Borrower's good faith and
reasonable estimates of its future financial performance and of the other
information projected therein for the period set forth therein.
(e) A Lender may furnish any information concerning Borrower
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 10.17.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.20(a),
increased costs under Section 1.20(c), an inability to fund LIBOR Loans under
Section 1.20(d), or withholding taxes in accordance with Section 1.20(b).
45
9.2 Appointment of Agent. GE Capital is hereby appointed to
act on behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and neither Borrower nor any other Person shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, Agent shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower or any other Person. Agent shall have no
duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of Agent shall be mechanical
and administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Neither Agent nor any of its Affiliates
nor any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages solely caused by its or their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
If Agent shall request instructions from Requisite Lenders,
Requisite Capital Expenditure Lenders, Requisite Revolving Lenders,
Supermajority Revolving Lenders or all affected Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Loan Document, then Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
Requisite Lenders, Requisite Capital Expenditure Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders, or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Capital Expenditure Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages solely caused by its or their own gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction. Without limitation
of the generality of the foregoing, Agent: (a) may treat the payee of any Note
as the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) 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; (c) makes no warranty or
46
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of
Borrower or to inspect the Collateral (including the books and records) of
Borrower; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (f) shall incur no liability under or
in respect of this Agreement or the other Loan Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 GE Capital and Affiliates. With respect to its
Commitments hereunder, GE Capital shall have the same rights and powers under
this Agreement and the other Loan Documents as any other Lender and may exercise
the same as though it were not Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include GE Capital in its individual
capacity. GE Capital and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, Borrower, any of its Affiliates
and any Person who may do business with or own securities of Borrower or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders. GE Capital has
also received a warrant from Borrower. Each Lender acknowledges the potential
conflict of interest between GE Capital as a Lender holding disproportionate
interests in the Loans, GE Capital as a warrant holder of Borrower, GE Capital
as a stockholder of Borrower and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and based
on the Financial Statements referred to in Section 3.4 and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of Borrower and its own decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement. Each Lender acknowledges the
potential conflict of interest of each other Lender as a result of Lenders
holding disproportionate interests in the Loans, and expressly consents to, and
waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower and without limiting the obligations of
Borrower hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,
47
expenses or disbursements resulting solely from Agent's gross negligence or
wilful misconduct as finally determined by a court of competent jurisdiction.
Without limiting the foregoing, each Lender agrees to reimburse Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agent is not reimbursed for such expenses by
Borrower.
9.7 Successor Agent. Agent may resign at any time by giving
not less than thirty (30) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within 30 days
after the resigning Agent's giving notice of resignation, then the resigning
Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a
Lender, if a Lender is willing to accept such appointment, or otherwise shall be
a commercial bank or financial institution or a subsidiary of a commercial bank
or financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed; provided
that such approval shall not be required if a Default or an Event of Default
shall have occurred and be continuing. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor Agent or the effective date of the resigning Agent's
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents. Agent may be removed at the written direction of the holders of
fifty-one percent or more of the Commitments (including Agent's Commitment);
provided that in so doing, such Lenders shall be deemed to have waived and
released any and all claims they may have against Agent.
9.8 Setoff and Sharing of Payments. In addition to any rights
now or hereafter granted under applicable law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender and each holder of any Note is hereby authorized at any
time or from time to time, without notice to Borrower or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of Borrower (regardless of whether such balances are then due to Borrower) and
any other properties or assets any time held
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or owing by that Lender or that holder to or for the credit or for the account
of Borrower against and on account of any of the Obligations which are not paid
when due. Any Lender or holder of any Note exercising a right to set off or
otherwise receiving any payment on account of the Obligations in excess of its
Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders
shall sell) such participations in each such other Lender's or holder's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation under
this Section 9.8 shall be in addition to and not in limitation of its
obligations to purchase a participation in an amount equal to its Pro Rata Share
of the Swing Line Loans under Section 1.4. Borrower agrees, to the fullest
extent permitted by law, that (a) any Lender or holder may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
(a) Advances; Payments. (i) Revolving Lenders shall refund or
participate in the Swing Line Loan in accordance with clauses (c) and (d) of
Section 1.4. If the Swing Line Lender declines to make a Swing Line Loan or if
Swing Line Availability is zero, Agent shall notify Revolving Lenders, promptly
after receipt of a Notice of Revolving Advance and in any event prior to 12:00
noon (Chicago time) on the date such Notice of Revolving Advance is received, by
telecopy, telephone or other similar form of transmission. Each Lender shall
make the amount of such Lender's Pro Rata Share of each Revolving Credit Advance
and Capital Expenditure Advance available to Agent in same day funds by wire
transfer to Agent's account as set forth in Annex H not later than 2:00 p.m.
(Chicago time) on the requested funding date, in the case of an Index Rate Loan
and not later than 10:00 a.m. (Chicago time) on the requested funding date in
the case of a LIBOR Loan. After receipt of such wire transfers (or, in the
Agent's sole discretion, before receipt of such wire transfers), subject to the
terms hereof, Agent shall make the requested Revolving Credit Advance or Capital
Expenditure Advance to Borrower. All such payments by each Lender shall be made
without setoff, counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day of each calendar week or more
frequently as aggregate cumulative payments in excess of $3,000,000 are received
with respect to all Loans (each, a "Settlement Date"), Agent will advise each
Lender by telephone, or telecopy of the amount of such Lender's Pro Rata Share
of principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that such Lender has made all payments required
to be made by it and purchased all participations required to be purchased by it
under this Agreement and the other Loan Documents as of such Settlement Date,
Agent will pay to each Lender such Lender's Pro Rata Share of principal,
interest and Fees paid by Borrower since the
49
previous Settlement Date for the benefit of that Lender on the Loans held by it.
Such payments shall be made by wire transfer to such Lender's account (as
specified by such Lender in Annex M or the applicable Assignment Agreement) not
later than 1:00 p.m. (Chicago time) on the next Business Day following each
Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume
that each Lender will make its Pro Rata Share of each Revolving Credit Advance
and Capital Expenditure Advance available to Agent on each funding date. If such
Pro Rata Share is not, in fact, paid to Agent by such Lender when due, Agent
will be entitled to recover such amount on demand from such Lender without
set-off, counterclaim or deduction of any kind. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of any
Lender or to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Borrower may have against any Lender
as a result of any default by such Lender hereunder. To the extent that Agent
advances funds to Borrower on behalf of any Lender and is not reimbursed
therefor on the same Business Day as such advance is made, Agent shall be
entitled to retain for its account all interest accrued on such advance until
reimbursed by the applicable Lender.
(c) Return of Payments. (i) If Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related payment
has been or will be received by Agent from Borrower and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from
such Lender on demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Lender (such
Lender, a "Non- Funding Lender") to make any Advance to be made or purchased by
it on the date specified therefor shall not relieve any other Lender (each such
other Lender, an "Other Lender") of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make an
Advance to be made, or to purchase a participation required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" (or be included in the calculation of
"Requisite Lenders", "Requisite Capital Expenditure Lenders", "Requisite
Revolving Lenders" or "Supermajority Revolving Lenders" hereunder) for any
voting or consent rights under or with respect to any Loan Document.
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(e) Dissemination of Information. Agent will use reasonable
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, however,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable solely to Agent's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction. Lenders acknowledge that Borrower is required to provide Financial
Statements and Collateral Reports to Lenders in accordance with Annexes I and J
hereto and agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent or Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
MISCELLANEOUS
10.1 Successors and Assigns. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of Borrower,
Agent, Lenders and their respective successors and assigns, except as otherwise
provided herein or therein. Borrower may not assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent and Requisite Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by Borrower without the prior express written
consent of Agent shall be null and void, as if the same shall have never
occurred. The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of Borrower, Agent and Lenders with
respect to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this Agreement or any
of the other Loan Documents.
10.2 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 10.2. Any Letter of Interest, Commitment Letter, proposal
or other similar letter or understanding between Borrower and Agent or any of
its affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be merged with and into and
superseded by this Agreement.
10.3 Amendments and Waivers. Except for actions expressly
permitted to be taken by Agent, no amendment, modification, termination or
waiver of any provision of this Agreement or any of the Notes, or any consent to
any departure by Borrower or any of its Subsidiaries therefrom, shall in any
event be effective unless the same shall be in writing and signed by Agent and
Borrower, and by Requisite Lenders, Requisite Capital Expenditure Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders, as applicable. Except
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as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
which makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in Annex F and G, shall be
effective unless the same shall be in writing and signed by Agent, Supermajority
Revolving Lenders and Borrower. No amendment, modification, termination or
waiver of or consent with respect to any provision of this Agreement which
waives compliance with the conditions precedent set forth in Section 2.2 to the
making of any Revolving Credit Advance or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Revolving Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Sections 2.2 or 2.3 to the making of any Capital Expenditure Advance shall be
effective unless the same shall be in writing and signed by Agent, Requisite
Capital Expenditure Lenders and Borrower. Notwithstanding anything contained in
this Agreement to the contrary (i) no waiver or consent with respect to any
Default (if in connection therewith Agent or Requisite Revolving Lenders, as the
case may be, have exercised its or their right to suspend the making or
incurrence of further Revolving Credit Advances or Letter of Credit Obligations
pursuant to Section 8.2(a)) or any Event of Default shall be effective for
purposes of the conditions precedent to the making of Revolving Credit Advances
or the incurrence of Letter of Credit Obligations set forth in Section 2.2
unless the same shall be in writing and signed by Agent, Requisite Revolving
Lenders and Borrower and (ii) no waiver or consent with respect to any Default
(if in connection therewith Agent or Requisite Capital Expenditure Lenders, as
the case may be, have exercised its or their right to suspend the making or
incurrence of further Capital Expenditure Advances pursuant to Section 8.2(a))
or any Event of Default shall be effective for purposes of the conditions
precedent to the making of Capital Expenditure Advances set forth in Sections
2.2 or 2.3 unless the same shall be in writing and signed by Agent, Requisite
Capital Expenditure Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby,
do any of the following: (i) increase the principal amount of any Lender's
Commitment (which action shall be deemed to directly affect all Lenders); (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any
Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date or final maturity date of the principal amount of any
Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any
payment of interest or Fees as to any affected Lender; (v) release any Guaranty
or Pledge Agreement, except as otherwise permitted herein or in the other Loan
Documents, release or permit any Credit Party to sell or otherwise dispose of
any Collateral with a value exceeding $5,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Loans which
shall be required for Lenders or any of them to take any action hereunder; and
(vii) amend or waive this Section 10.3 or the definitions of the terms
"Requisite Lenders", "Requisite Capital Expenditure Lenders", "Requisite
Revolving Lenders" or "Supermajority Revolving Lenders" insofar as such
definitions affect the substance of this Section
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10.3. Furthermore, no amendment, modification, termination or waiver affecting
the rights or duties of Agent under this Agreement or any other Loan Document
shall be effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 10.3 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination:
(i) requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained
(any such Lender whose consent is not obtained as described
this clause (i) and in clauses (ii), (iii) and (iv) below
being referred to as a Non-Consenting Lender), or
(ii) requiring the consent of Supermajority Revolving
Lenders, the consent of Requisite Revolving Lenders is
obtained, but the consent of Supermajority Revolving Lenders
is not obtained, or
(iii) requiring the consent of (a) Requisite
Revolving Lenders, the consent of Lenders holding 51% or more
of the aggregate Revolving Loan Commitments is obtained, but
the consent of Requisite Revolving Lenders is not obtained or
(b) Requisite Capital Expenditure Lenders, the consent of
Lenders holding 51% or more of the aggregate Capital
Expenditure Loan Commitments is obtained, but the consent of
Requisite Capital Expenditure Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate
Commitments is obtained, but the consent of Requisite Lenders
is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person acceptable to Agent shall have the
right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lender for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lender and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
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(e) Upon indefeasible payment in full in cash and performance
of all of the Obligations, termination of the Commitments and a release of all
claims against Agent and Lenders, and so long as no suits, actions proceedings,
or claims are pending or threatened against any Indemnified Person asserting any
damages, losses or liabilities that are Indemnified Liabilities, Agent shall
deliver (and Lenders shall deliver, to the extent not delivered by the Agent and
legally required to be delivered by Lenders) to Borrower termination statements,
mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
10.4 Fees and Expenses. Borrower shall reimburse Agent for
all reasonable out-of-pocket expenses reasonably incurred in connection with (a)
the preparation of the Loan Documents (including the reasonable fees and
expenses of all of its special loan counsel, advisors, consultants and auditors
retained in connection with the Loan Documents and the transactions contemplated
thereby and advice in connection therewith), (b) wire transfers to the account
of Borrower and (c) Letter of Credit Obligations. Borrower shall reimburse Agent
(and, with respect to clauses (c) and (d) below, Lenders) for all reasonable
fees, costs and expenses reasonably incurred, including the fees, costs and
expenses of counsel or other advisors (including environmental and management
consultants) for advice, assistance, or other representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf
of Borrower by Lender of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, Borrower or any other Person)
in any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents;
(d) any attempt to enforce any rights of Agent or any Lender
against Borrower or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) any attempt to (i) monitor the Loans or other
Obligations, (ii) evaluate, observe, assess Borrower, any of its Subsidiaries or
their respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
54
in each of clauses (a) through (f) above, including all the attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions described
in this Section 10.3 shall be payable, on demand, by Borrower to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services. Notwithstanding the foregoing (a) Agent shall charge
Borrower according to Agent's policy in effect from time to time and on the same
basis that Agent charges its other borrowers with respect to fees, costs and
expenses of photocopying and duplication, long distance telephone charges, air
express charges, telegram charges, and secretarial overtime charges and (b) all
fees, costs and expenses incurred in connection with any valuation performed
pursuant to the Warrant shall be governed by the terms of the Warrant.
10.5 No Waiver. Agent's or any Lender's failure, at any time
or times, to require strict performance by Borrower of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default under this Agreement or any of the other Loan Documents shall not
suspend, waive or affect any other Event of Default under this Agreement and any
of the other Loan Documents whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Default or Event of
Default by Borrower under this Agreement and no defaults by Borrower under any
of the other Loan Documents shall be deemed to have been suspended or waived by
Agent or any Lender, unless such waiver or suspension is by an instrument in
writing signed by an officer of or other authorized employee of Agent and
Requisite Lenders and directed to Borrower specifying such suspension or waiver.
10.6 Remedies. Agent's and Lenders' rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies which Agent or any Lender may have under any other agreement, including
the other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
10.7 Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.8 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement,
55
if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
10.9 Authorized Signature. Until Agent shall be notified by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of Borrower listed on Schedule 10.8
shall bind Borrower and be deemed to be the act of Borrower affixed pursuant to
and in accordance with resolutions duly adopted by Borrower's Board of
Directors.
10.10 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. BORROWER, AGENT AND LENDERS HEREBY CONSENT AND AGREE THAT THE STATE
OR FEDERAL COURTS LOCATED IN THE COUNTY OF XXXX, CITY OF CHICAGO, ILLINOIS,
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND
BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF THE COUNTY OF XXXX, CITY OF CHICAGO, ILLINOIS AND,
PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND BORROWER HEREBY AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE UPON CT CORPORATION
SYSTEM, 000 XXXXX XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX 00000, AND SUCH OTHER
PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF
56
SERVICE OF ALL PROCESS IN ANY SUCH ACTION OR SUIT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A
COPY OF ANY SUCH PROCESS SO SERVED MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH ON ANNEX L OF THIS AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY
FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS.
IF ANY AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT SERVICE, BORROWER HEREBY
AGREES THAT THE FOREGOING SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
10.11 Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
either of the parties by the other party, or whenever either of the parties
desires to give or serve upon the other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (ii)
upon transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
10.10), (iii) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (iv) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on Annex L or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated on Annex L
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
10.12 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
10.13 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
10.14 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING
IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
57
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND
BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO. BORROWER WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
10.15 Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against Borrower for liquidation or reorganization, should Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
10.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of Sections 10.10 and 10.14, with its counsel.
10.17 Confidentiality. So long as no Default or Event of
Default has occurred, Agent and each Lender agrees to exercise reasonable
efforts to keep any non-public information delivered or made available to it
pursuant to this Agreement or any other Loan Document, which Borrower has
identified as confidential information, confidential from all Persons other than
(a) officers, employees, agents, designees, representatives or affiliates of
Agent or Lenders, (b) bona fide prospective or actual assignees, transferees or
participants of Agent or Lenders pursuant to Section 1.20(b) or 9.1, (c)
consultants or advisors that have agreed to comply with this Section 10.14 on
terms and conditions conforming to Agent's policy in effect from time to time,
or (d) as required or requested by any Governmental Authority or representative
thereof or pursuant to a legal process or as required in connection with the
exercise of any remedy under this Agreement or any of the other Loan Documents.
[signature page follows]
58
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
BAGCRAFT CORPORATION OF AMERICA
By: _______________________________
Title: ____________________________
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and as Lender
By: _______________________________
Title: Duly Authorized Signatory
ANNEX A
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Agreement shall have (unless
otherwise provided elsewhere in the Agreement) the following respective meanings
and all section references in the following definitions shall refer to sections
of the Agreement:
"Account Debtor" shall mean any Person who may become
obligated to Borrower, or any of its Subsidiaries under, with respect to, or on
account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by Borrower or any of its
Subsidiaries, and, in any event, including (a) all accounts receivable, other
receivables, book debts and other forms of obligations (other than forms of
obligations evidenced by chattel paper, documents or instruments) now owned or
hereafter received or acquired by or belonging or owing to Borrower or any of
its Subsidiaries, whether arising out of goods sold or services rendered by it
or from any other transaction (including any such obligations which may be
characterized as an account or contract right under the Code), (b) all of
Borrower's and each of its Subsidiaries' rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of Borrower's and each of its Subsidiaries' rights to any goods
represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all monies due or to become due
to Borrower, or any of its Subsidiaries, under all purchase orders and contracts
for the sale of goods or the performance of services or both by Borrower or any
of its Subsidiaries or in connection with any other transaction (whether or not
yet earned by performance on the part of Borrower or such Subsidiary, as
appropriate) now or hereafter in existence, including the right to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Advance" shall mean any Revolving Credit Advance, Swing Line
Advance or Capital Expenditure Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (iii) each of such Person's officers,
directors, joint venturers and partners. For the purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean GE Capital or its successor appointed
pursuant to Section 9.2.
1
"Agreement" shall mean the Second Amended and Restated Credit
Agreement dated as of the Closing Date by and among Borrower, Agent and Lenders,
including all restatements and modifications thereof and amendments and
supplements thereto and any appendices, exhibits, schedules or annexes to any of
the foregoing, and shall refer to the Agreement as the same may be in effect at
any and all times such reference becomes operative.
"ARTRA" shall mean ARTRA GROUP Incorporated, a Pennsylvania
corporation.
"Asset Disposition" shall mean the sale, transfer, conveyance,
assignment, sale and leaseback or other disposition or the pledge, mortgage or
other encumbrance by Borrower of any of its properties or other assets,
including the capital stock of any Subsidiary or any of its Accounts, except for
the sale of inventory in the ordinary course pursuant to the terms of the
Agreement.
"Assignment Agreement" shall have the meaning assigned to it
in Section 9.1(a).
"Borrower" shall mean Bagcraft Corporation of America, a
Delaware corporation.
"Borrowing Availability" shall have the meaning assigned to it
in Section 1.1(a).
"Borrowing Base" shall mean at any time an amount determined
by Agent from time to time, equal to the sum at such time of:
(a) Up to eighty-five percent (85%) of Eligible Accounts; and
(b) up to (i) fifty-five percent (55%) of Eligible Inventory
not consisting of Min- Max Inventory and (ii) sixty percent (60%) of
Eligible Inventory consisting of Min-Max Inventory, valued, in each
case, on a first-in, first-out basis (at the lower of cost or market).
"Borrowing Base Certificate" shall mean a certificate in the
form attached to the Agreement as Exhibit B.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York or the State of Illinois and in reference to LIBOR Loans shall
mean any such day that is also a LIBOR Business Day.
"Capital Expenditure Advance" shall have the meaning assigned
to it in Section 1.3(a).
"Capital Expenditure Loan" shall mean the aggregate amount of
Capital Expenditure Advances outstanding at any time.
"Capital Expenditure Loan Availability" shall mean, as of any
date of determination, the lesser of (a) the Capital Expenditure Loan Commitment
as of such date less the aggregate amount of all Capital Expenditure Advances
made under this Agreement through such date of determination and (b) the Term
Loan A Commitment less the sum of (i) aggregate amount of all
2
Capital Expenditure Advances made under this Agreement through such date of
determination and (ii) the then outstanding aggregate principal amount of Term
Loan A, all of the foregoing calculated without giving effect to any payments or
prepayments of principal in respect of the Capital Expenditure Loan which may
have been made at any time or from time to time on or prior to such date of
determination.
"Capital Expenditure Loan Commitment" shall mean (a) as to any
Lender with a Capital Expenditure Loan Commitment, the aggregate commitment of
such Lender to make the Capital Expenditure Advances as set forth on Annex N or
in the most recent Lender Addition Agreement executed by such Lender and (b) as
to all Lenders with a Capital Expenditure Loan Commitment, the aggregate
commitment of all Lenders to make Capital Expenditure Advances, which aggregate
commitment shall be the lesser of (i) the Maximum Capital Expenditure Loan and
(ii) eighty percent (80%) of the aggregate Hard Costs of all Equipment acquired
with proceeds of the Capital Expenditure Loan.
"Capital Expenditure Loan Note" shall have the meaning
assigned to it in Section 1.3(b).
"Capital Expenditures" shall mean all payments (including all
payments under Capital Leases, installment purchase agreements and other similar
purchase money financing arrangements) for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one (1) year and that are required to be capitalized under GAAP, to
the extent so required.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet, other than, with respect
to such Person, any such lease under which such Person is the lessor.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Change in Control" shall mean any event, transaction or
occurrence as a result of which (a) after the Closing Date, any Person or
"group" shall acquire "beneficial ownership" (as such terms are defined under
Section 13d-3 of and Regulation 13D under the Securities Exchange Act of 1934,
as amended), either directly or indirectly, of more than twenty-five percent
(25%) of the outstanding shares of Stock of ARTRA having the right to vote for
the election of directors of ARTRA under ordinary circumstances, (b) ARTRA shall
cease to own and control all of the economic and voting rights associated with
all outstanding shares of each class of capital Stock of Parent on a fully
diluted basis, (c) Parent shall cease to own and control all of the economic and
voting rights associated with all outstanding shares of each class of capital
Stock of Borrower on a
3
fully diluted basis or (d) the existence of any agreement or other document
accomplishing or purporting to accomplish (whether on a conditional basis or
otherwise) any of the foregoing.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the employees, payroll, income or gross receipts of Borrower
or any of its Subsidiaries, (iv) Borrower's or any of its Subsidiaries'
ownership or use of any of its properties or other assets, or (v) any other
aspect of Borrower's or any of its Subsidiaries' businesses.
"Chattel Paper" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by Borrower or any of
its Subsidiaries, wherever located.
"Closing Date" shall mean the date of execution of the
Agreement.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Illinois; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Illinois, the term "Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction solely for
purposes of the provisions of the Loan Documents relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
"Collateral" shall mean the property covered by the Collateral
Documents and any other property, real or personal (including Investment
Property), tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the
Pledge Agreement, the Mortgages, the Copyright Assignments, the Patent and
Trademark Assignments and any other agreement or other document pursuant to
which a security interest or Lien is granted in favor of Agent, on behalf of
itself and Lenders, to secure the Obligations.
"Collateral Reports" shall mean the reports with respect to
the Collateral referred to in Section 3.5.
"Collection Account" shall mean that certain account of Agent,
account number 502 328 54 in the name of General Electric Capital Corporation,
Commercial Finance Group, at Bankers Trust Company, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx ABA number 021 001 033.
"Commitment" or "Commitments" shall mean (a) as to any Lender,
the aggregate of such Lender's Revolving Loan Commitment (including without
duplication, in the case of the Swing Line Lender, the Swing Line Commitment as
a subset of its Revolving Loan Commitment), Term Loan Commitments and Capital
Expenditure Loan Commitment and (b) as to all Lenders, the
4
aggregate of all Lenders' Revolving Loan Commitments (including without
duplication the Swing Line Lender's Swing Line Commitment as a subset of its
Revolving Loan Commitment), Term Loan Commitments and Capital Expenditure Loan
Commitments, which aggregate commitment shall not exceed Fifty Million Five
Hundred Thousand Dollars ($50,500,000) on the Closing Date, as such amount may
be adjusted, if at all, from time to time in accordance with the Agreement.
"Commitment Termination Date" shall mean the earliest of (i)
September 30, 2002, (ii) the date of termination of Lenders' obligations to
advance funds or permit existing advances to remain outstanding pursuant to
Section 8.2, and (iii) the date of indefeasible prepayment in full by Borrower
of all Loans in accordance with the provisions of Section 1.6 and discharge of
all Letter of Credit Obligations and all other Obligations under the Agreement
and the other Loan Documents.
"Concentration Account" shall have the meaning assigned to it
in Annex C.
"Contracts" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by Borrower or any of its
Subsidiaries, and, in any event, including all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Borrower or any of its Subsidiaries may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
"Copyright Assignments" shall mean the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by Borrower
and its Subsidiaries, as each may be amended, restated, supplemented or
otherwise modified from time to time.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by Borrower or any of its Subsidiaries under any written
agreement granting any right to use any Copyright or Copyright registration, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by Borrower or any of its Subsidiaries: (i) all copyrights
and general intangibles of like nature (whether registered or unregistered), now
owned or existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (ii) all
reissues, extensions or renewals thereof.
"Default" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.9(e).
"Disbursement Account" shall have the meaning assigned to it
in Annex C.
5
"Distributable Cash" shall mean, for any Fiscal Year of
Borrower, an amount equal to EBITDA minus the sum of (i) Interest Expense, (ii)
Capital Expenditures incurred (but not in excess of Capital Expenditures
permitted for such Fiscal Year under the Loan Documents), (iii) scheduled
payments of principal paid on Funded Debt, and (iv) taxes paid in cash by
Borrower or any of its Subsidiaries, including payments made under the Tax
Sharing Agreement pursuant to Section 6.15.
"DOL" shall mean the United States Department of Labor or any
successor thereto.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by Borrower or any of its
Subsidiaries, wherever located.
"EBITDA" shall mean for any fiscal period of Borrower, Net
Income before interest, taxes, depreciation, amortization and, to the extent
recognized in determining such Net Income, extraordinary items, as defined by
GAAP.
"Eligible Accounts" shall have the meaning assigned to it in
Annex F.
"Eligible Inventory" shall have the meaning assigned to it in
Annex G.
"Environmental Laws" shall mean all federal, state, local and
foreign laws, statutes, ordinances and regulations, now or hereafter in effect,
and in each case as amended or supplemented from time to time, and any
applicable judicial or administrative interpretation thereof, including any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable real estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include, but are not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. xx.xx. 9601 et
seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C. xx.xx. 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as amended (7 U.S.C. xx.xx. 136 et seq.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. xx.xx. 6901 et seq.) ("RCRA"); the Toxic
Substance Control Act, as amended (15 U.S.C. xx.xx. 2601 et seq.); the Clean Air
Act, as amended (42 U.S.C. xx.xx. 740 et seq.); the Federal Water Pollution
Control Act, as amended (33 U.S.C. xx.xx. 1251 et seq.); the Occupational Safety
and Health Act, as amended (29 U.S.C. xx.xx. 651 et seq.) ("OSHA"); and the Safe
Drinking Water Act, as amended (42 U.S.C. xx.xx. 300(f) et seq.), and any and
all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification
or approval statutes.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, remedial actions, removal actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil
6
statute or common law (including any thereof arising under any Environmental
Law, permit, order or agreement with any Governmental Authority) and which
relate to any health or safety condition regulated under any Environmental Law
or in connection with any other environmental matter or Release, threatened
Release or the presence of a Hazardous Material or threatened Release of a
Hazardous Material.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by Borrower or any of its
Subsidiaries, wherever located and, in any event, including all Borrower's and
each of its Subsidiaries' machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer equipment with
software and peripheral equipment (other than software constituting part of the
Accounts), and all engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools, attachments,
accessories, automotive equipment, trailers, trucks, forklifts, molds, dies,
stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property, all
whether now owned or hereafter acquired, and wherever situated, together with
all additions and accessions thereto, replacements therefor, all parts therefor,
all substitutes for any of the foregoing, fuel therefor, and all manuals,
drawings, instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Borrower or any
of its Subsidiaries, any trade or business (whether or not incorporated) under
common control with Borrower or such Subsidiary, as appropriate, and which,
together with Borrower or such Subsidiary, as appropriate, are treated as a
single employer within the meaning of Sections 414(b), (c), (m) or (o) of the
IRC.
"ERISA Event" shall mean, with respect to Borrower, any of its
Subsidiaries or any ERISA Affiliate, (i) a Reportable Event with respect to a
Title IV Plan or a Multiemployer Plan; (ii) the withdrawal of Borrower, any of
its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (iii) the complete or partial withdrawal
of Borrower, any of its Subsidiaries or any ERISA Affiliate from any
Multiemployer Plan; (iv) the filing of a notice of intent to terminate a Title
IV Plan or the treatment of a plan amendment as a termination under Section 4041
of ERISA; (v) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vi) the failure to make required contributions
to a Qualified Plan; or (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
7
"Excess Cash Flow" shall mean the total of the following
(without duplication) with respect to Borrower (i) Distributable Cash, plus (ii)
the net after-tax gains arising from extraordinary items, as defined by GAAP,
minus (iii) income attributable to Asset Dispositions (other than sales of
inventory in the ordinary course).
"Federal Funds Rate" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.
"Federal Reserve Board" shall have the meaning assigned to it
in Section 3.11.
"Fees" shall mean any and all fees due to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the financial statements
referred to in Section 3.4.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower ending on the Saturday occurring closest to the last day of
each calendar month, except that the last such period occurring in each calendar
year shall end on the last Saturday of such calendar year.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower.
"Fiscal Year" shall mean any of the annual fiscal accounting
periods of Borrower.
"Fixed Charges" shall mean, for any fiscal period of Borrower,
the sum of (i) cash interest expense (whether paid or accrued) in respect of
Funded Debt (excluding, with respect to the Obligations, the difference between
interest charged at the normal rates set forth in the Agreement and interest
charged at the Default Rate), plus (ii) regularly scheduled payments of
principal (whether paid or accrued) on Funded Debt for such fiscal period.
"Funded Debt" shall mean, with respect to Borrower and its
Subsidiaries, on a consolidated and consolidating basis, all of its Indebtedness
which by the terms of the agreement governing or instrument evidencing such
Indebtedness matures more than one (1) year from, or is directly or indirectly
renewable or extendible at its option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year from the date of creation thereof, including current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and shall also include the Loans,
Letter of Credit Obligations and other Obligations.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time, consistently
applied.
"GE Capital" shall mean General Electric Capital Corporation,
a New York corporation having an office at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000-0000.
8
"GE Capital Fee Letter" shall have the meaning assigned to it
in Section 1.12(a).
"General Intangibles" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by Borrower or
any of its Subsidiaries and, in any event, including all right, title and
interest which Borrower or any of its Subsidiaries may now or hereafter have in
or under any Contract, all customer lists, Copyrights, Trademarks, Patents,
service marks, trade names, business names, corporate names, trade styles, logos
and other source or business identifiers, and all applications therefor and
reissues, extensions or renewals thereof, rights in intellectual property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark license), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments and rights of indemnification.
"Goods" shall mean all "goods" as such term is defined in the
Code, now owned or hereafter acquired by Borrower or any of its Subsidiaries,
wherever located.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(i) to purchase or repurchase any such primary obligation, (ii) to advance or
supply funds (a) for the purchase or payment of any such primary obligation or
(b) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (iv) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Hard Costs" shall mean the aggregate cash purchase price paid
or payable by Borrower for the Equipment to which a Capital Expenditure Advance
relates, excluding amounts paid or payable in connection with such assets in
respect of insurance, taxes, tariffs, levies, freight, delivery, crating,
installation, packing, service, maintenance or similar contracts or
arrangements, warranties, software, financing costs, and/or similar costs or
charges so paid or payable.
9
"Hazardous Material" shall mean any substance, material or
waste, the generation, handling, storage, treatment or disposal of which is
regulated by or forms the basis of liability now or hereafter under, any
Government Authority in any jurisdiction in which Borrower or any of its
Subsidiaries has owned, leased, or operated real property or disposed of
hazardous materials, or by any Federal government authority, including any
material or substance which is (i) defined as a "solid waste" (other than
non-hazardous waste which is routinely disposed of in the ordinary course of
Borrower's business), "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste" or "restricted hazardous waste" or other
similar term or phrase under any Environmental Laws, (ii) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), any
radioactive substance, methane, volative hydrocarbons or any industrial solvent,
(iii) designated as a "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. xx.xx. 1251 et seq. (33 U.S.C. xx.xx. 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. ss. 1317), (iv)
defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903),
or (v) defined as a "hazardous substance" pursuant to Section 1012 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq. (42 U.S.C. ss. 9601).
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (including reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, but excluding obligations to trade creditors incurred in the ordinary
course of business), (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (iv) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under synthetic leases, (v) all Indebtedness referred to in
clause (i), (ii), (iii) or (iv) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property or other assets (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, (vi) the Obligations, and
(vii) all liabilities under Title IV of ERISA.
"Indemnified Person" shall have the meaning assigned to it in
Section 1.17(a).
"Index Margin" shall have the meaning assigned to it in
Section 1.9(c).
"Index Rate" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per
10
annum. Each change in any interest rate provided for in the Agreement based upon
the Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by Borrower or any of its
Subsidiaries, wherever located, and, in any event, including all certificated
securities, all certificates of deposit, including all notes and other evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Interest Expense" shall mean, for any fiscal period (a)
interest expense (whether cash or non-cash) of Borrower determined in accordance
with GAAP for the relevant period ended on such date (i) including, in any
event, interest expense with respect to any Funded Debt of such Person and (ii)
excluding, in any event non-cash interest expense (including amortization of
original issue discount) less (b) to the extent included in the determination of
interest expense pursuant to the foregoing clause (a), cash interest income
received by Borrower from ARTRA for the relevant period.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by, Borrower or any of
its Subsidiaries, wherever located, and, in any event, including inventory,
merchandise, goods and other personal property which are held by or on behalf of
Borrower or any of its Subsidiaries, for sale or lease or are furnished or are
to be furnished under a contract of service or which constitute raw materials,
work in process or materials used or consumed or to be used or consumed in
Borrower's or any of its Subsidiaries' businesses or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investment Property" shall have the meaning ascribed thereto
in Section 9-115 of the Code in those jurisdictions in which such definition has
been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of Borrower, including the
rights of Borrower to any securities account and the financial assets held by a
securities intermediary in such securities account and any free credit balance
or other money owing by any securities intermediary with respect to that
account; (iii) all securities accounts held by Borrower; (iv) all commodity
contracts held by Borrower; and (v) all commodity accounts held by Borrower.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor --- thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
11
"Kansas Collateral" shall mean the (a) business machinery,
equipment, furnishings and fixtures of Borrower located at the Kansas Facility
and subject to a second Lien (first Lien, in the case of that certain "sheeter"
identified as "machine #141" and located at the Kansas Faciliy) in favor of the
Kansas Lender, which second Lien is fully subordinated to Agent's first priority
Lien pursuant to the terms of the Kansas Loan Documents and (b) Real Estate
constituting the Kansas Facility and subject to a first Lien in favor of the
Kansas Lender pursuant to the Kansas Loan Documents.
"Kansas Facility" shall mean Borrower's owned facility in
Xxxxxx Springs, Kansas.
"Kansas Indebtedness" shall mean, collectively, the
subordinated secured loans made by the Kansas Lender to Borrower on the dates
indicated on Schedule 6.3, consisting of (a) one (1) term loan made by the City
of Xxxxxx Springs, Kansas, in the original maximum principal amount of Two
Hundred Fifty Thousand Dollars ($250,000), (b) a six (6) year term loan made by
the City of Xxxxxx Springs, Kansas in an original maximum principal amount of
Five Million Dollars ($5,000,000) and (c) a minimum five (5) year term loan made
by the City of Xxxxxx Springs, Kansas in an original maximum principal amount of
Seven Million Dollars ($7,000,000) and guaranteed by the State of Kansas and the
United States Department of Housing and Urban Development, all of the foregoing
in form and substance satisfactory to Agent in its sole discretion and
identified on Schedule 6.3 in the manner required by Section 6.3.
"Kansas Lender" shall mean the City of Xxxxxx Springs, Kansas.
"Kansas Loan Documents" shall mean the loan agreements,
security agreements, guarantees, notes and other instruments, documents,
certificates and agreements executed by Borrower and evidencing or relating to
the Kansas Indebtedness and the Kansas Collateral, including the subordination
provisions contained therein and the Kansas Intercreditor Agreements, as each of
the same may be amended, restated, supplemented or otherwise modified and in
effect from time to time, all of the foregoing in form and substance
satisfactory to Agent in its sole discretion.
"Kansas Intercreditor Agreements" shall mean the Intercreditor
Agreements entered into among Agent, on behalf of itself and Lenders (as senior
lenders), Kansas Lender (as subordinated lender), and Borrower, including all
amendments, modifications and supplements thereto, all in form and substance
satisfactory to Agent in its sole discretion, and shall refer to the
Intercreditor Agreements as the same may be in effect at the time such reference
becomes operative.
"Leases" shall mean all leasehold estates in real property now
owned or hereafter acquired by Borrower or any of its Subsidiaries, as lessee,
as each may be amended, restated, supplemented or otherwise modified from time
to time.
"Lenders" shall mean GE Capital and, if at any time GE Capital
shall decide to assign or syndicate all or any portion of the Obligations, such
term shall include such assignee or such other members of the syndicate.
12
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance or guarantee or purchase of a participation, by Lenders or another, of
letters of credit. The amount of Letter of Credit Obligations outstanding at any
time shall equal the maximum amount which may be payable by Lenders thereupon or
pursuant thereto at such time.
"Letters of Credit" shall mean commercial or standby letters
of credit issued at the request and for the account of Borrower for which
Lenders have incurred Letter of Credit Obligations, as each may be amended,
restated, supplemented or otherwise modified from time to time.
"LIBOR Business Day" shall mean a Business Day on which banks
in the city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Margin" shall have the meaning assigned to it in
Section 1.9(c).
"LIBOR Period" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower pursuant to
the Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.9(f); provided
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior
to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on
the last LIBOR Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such LIBOR Period) shall end on the last LIBOR Business Day of a
calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be
no more than three (3) separate LIBOR Loans in existence at any one
time.
13
"LIBOR Rate" shall mean for each LIBOR Period, a rate of
interest determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period which appears on Telerate Page 3750 as of
11:00 a.m., London time, on the second full LIBOR Business Day next
preceding the first day of each LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as now
and from time to time in effect) for Eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board
which are required to be maintained by a member bank of the Federal
Reserve System (such rate to be adjusted to the nearest one sixteenth
of one percent (1/16th of 1%) or, if there is not a nearest one
sixteenth of one percent (1/16th of 1%), to the next highest one
sixteenth of one percent (1/16th of 1%).
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by Borrower or any of its Subsidiaries.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction), any right of any Person
(other than Agent or Lenders) with respect to Collateral not expressly permitted
in accordance with the specific terms of the Loan Documents, or the existence of
any agreement or other document accomplishing or purporting to accomplish
(whether on a conditional basis or otherwise) any of the foregoing.
"Loan Account" shall have the meaning assigned to it in
Section 1.16.
"Loan Documents" shall mean the Agreement, the Notes, the
Collateral Documents, the Warrant and all other agreements, instruments,
documents and certificates identified in Annex D in favor of Agent and/or
Lenders and including all other pledges, powers of attorney, consents,
14
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of Borrower or any of its
Affiliates, or any employee of Borrower, or any of its Affiliates, and delivered
to Agent or any Lender in connection with the Agreement or the transactions
contemplated hereby, together with all documents delivered in connection with
the Prior Credit Agreement, to the extent not amended and restated pursuant to
the Agreement, as each may be amended, restated, supplemented or otherwise
modified from time to time.
"Loans" shall mean the Revolving Credit Loan, the Swing Line
Loan, the Term Loans and the Capital Expenditure Loan, collectively.
"Lock Box Account" shall have the meaning assigned to it in
Annex C.
"Margin Ratio" shall have the meaning assigned to it in
Section 1.9(c).
"Margins" means collectively the Index Margin and the LIBOR
Margin.
"Material Adverse Effect" shall mean (a) a material adverse
effect on (i) the business, assets, operations or financial or other condition
of Borrower or Borrower and its Subsidiaries considered as a whole, (ii)
Borrower's ability to pay any Loan, Advance, Letter of Credit Obligation or
other Obligation in accordance with the terms thereof, (iii) the Collateral or
Agent's Liens, on behalf of itself and Lenders, on the Collateral or the
priority of any such Lien, or (iv) Agent's or any Lender's rights and remedies
under the Agreement and the other Loan Documents or (b) except as otherwise
permitted under the Agreement or the other Loan Documents, the incurrence by
Borrower of any material liability, contingent or liquidated.
"Maximum Capital Expenditure Advance Amount" shall mean, with
respect to any Capital Expenditure Advance, an amount not in excess of 80% of
the Hard Costs of the Equipment to be acquired with the proceeds of such
Advance.
"Maximum Capital Expenditure Loan" shall mean, at any
particular time, an amount equal to Three Million Dollars ($3,000,000), as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section 1.9(g).
"Maximum Revolving Credit Loan" shall mean, at any particular
time, an amount equal to Eighteen Million Dollars ($18,000,000), as such amount
may be adjusted, if at all, from time to time in accordance with the Agreement.
"Min-Max Contract" shall mean a written agreement between
Borrower and a customer of Borrower containing a firm obligation of such
customer to purchase an amount of Inventory which is not less than the minimum
amount specified therein and not more than the maximum amount specified therein.
15
"Min-Max Inventory" shall mean Eligible Inventory which is the
subject of a Min- Max Contract, but only to the extent not exceeding the maximum
amount prescribed by the relevant Min-Max Contract.
"Mortgaged Properties" shall mean all Real Estate owned by
Borrower.
"Mortgages" shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by Borrower to Agent, with
respect to the Mortgaged Properties, all in form and substance satisfactory to
Agent, as each may be amended, restated, supplemented or otherwise modified from
time to time.
"Multiemployer Plan" shall mean a "multiemployer plan", as
defined in Section 4001(a)(3) of ERISA, to which Borrower, any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to make, or within
the last six (6) years has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
"Net Income" shall mean for any period Borrower's consolidated
net income (or loss) after income and franchise taxes and shall have the meaning
given such term by GAAP; provided, that, there shall be specifically excluded
therefrom the net after-tax gains and losses arising from extraordinary items,
as defined by GAAP.
"Net Proceeds" shall mean all cash proceeds received by
Borrower from any Asset Disposition (including insurance proceeds and awards of
compensation and all payments in respect of any promissory notes or other
non-cash consideration taken as consideration), net of the direct taxes and
reasonable costs and expenses of such Asset Disposition and amounts, if any,
required to be applied to repayment of Indebtedness (other than the Obligations)
secured by any lien, security interest, claim or encumbrance on the asset or
assets so disposed of.
"Non-use Fee" shall have the meaning assigned to it in Section
1.12(b).
"Notes" shall mean the Revolving Credit Notes, the Swing Line
Note, the Term Loan Notes and the Capital Expenditure Loan Notes, collectively.
"Notice of Capital Expenditure Advance" shall have the meaning
assigned to it in Section 1.3(a).
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable) owing by
Borrower to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other
16
instrument, arising under the Agreement or any of the other Loan Documents. This
term includes all principal, interest, Fees, Charges, expenses, attorneys' fees
and any other sum chargeable to Borrower under the Agreement or any of the other
Loan Documents.
"Other Taxes" shall have the meaning assigned to it in Section
1.19.
"Parent" shall mean BCA Holdings, Inc., a Delaware
corporation.
"Patent and Trademark Assignments" shall mean the patent and
trademark assignments made in favor of Agent, on behalf of itself and Lenders,
by Borrower and its Subsidiaries, as each may be amended, restated, supplemented
or otherwise modified from time to time.
"Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by Borrower or any of its Subsidiaries granting
any right with respect to any invention on which a Patent is in existence, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Patents" shall mean all of the following in which Borrower or
any of its Subsidiaries now holds or hereafter acquires any interest: (i) all
letters patent of the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of the United States
or any other country, including 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 or Territory thereof, or any other country, and
(ii) all reissues, continuations, continuations-in-part or extensions thereof.
"Payment Date" shall have the meaning assigned to it in
Section 1.2(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not
an individual account plan, as defined in Section 3(34) of ERISA, and which
Borrower or any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other governmental Charges
or levies, either not yet due and payable or to the extent that nonpayment
thereof is permitted by the terms of Section 5.2(b); (ii) pledges or deposits of
money securing statutory obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation
(excluding Liens under ERISA); (iii) pledges or deposits of money securing bids,
tenders, contracts (other than contracts for the payment of money) or leases to
which Borrower is a party as lessee made in the ordinary course of business;
(iv) inchoate and unperfected workers', mechanics', suppliers' or similar Liens
17
arising in the ordinary course of business; (v) carriers', warehousemen's or
other similar possessory liens arising in the ordinary course of business and
securing indebtedness not yet due and payable in an outstanding aggregate amount
not in excess of Ten Thousand Dollars ($10,000) at any time; (vi) deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to which
Borrower is a party; (vii) any attachment or judgment Lien, unless the judgment
it secures shall not, within thirty (30) days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have been
discharged within thirty (30) days after the expiration of any such stay; (viii)
zoning restrictions, easements, licenses, or other restrictions on the use of
real property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, lease or leasehold estate; (ix) purchase
money Liens with respect to Equipment acquired in the ordinary course of
business in accordance with past practice (subject to the limitations on Capital
Expenditures set forth in the Agreement, including Annex K thereto), so long as
such liens attach only to the Equipment so acquired without the proceeds of any
Loan or Advance; and (x) Liens on the Kansas Collateral securing, and granted
upon the incurrence of, the Kansas Indebtedness in accordance with this
Agreement and the Kansas Loan Documents.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean an employee benefit plan, as defined in
Section 3(3) of ERISA, which Borrower or any of its Subsidiaries, on behalf of
participants who are or were employed by any of them (a) currently maintains,
contributes to or has an obligation to contribute to or (b) within the last six
(6) years has maintained, contributed to or had an obligation to contribute to.
"Pledge Agreement" shall mean the Pledge Agreement made by
Parent in favor of Agent, on behalf of itself and Lenders, including all
amendments, restatements and modifications thereof and supplements thereto, and
shall refer to the Pledge Agreement as the same may be in effect at the time
such reference becomes operative.
"Proceeds" shall mean "proceeds," as such term is defined in
the Code and, in any event, shall include (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Borrower or any of its
Subsidiaries from time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to Borrower or
any of its Subsidiaries 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 body, authority, bureau or agency (or any person
acting under color of governmental authority), (iii) any claim of Borrower or
any of its Subsidiaries against third parties (a) for past, present or future
infringement of any Patent or Patent License, (b) for past, present or future
infringement or dilution of any Copyright or Copyright License or (c) for past,
present or future infringement or dilution of any Trademark or Trademark License
or for injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License, (iv) any
recoveries by
18
Borrower or any of its Subsidiaries against third parties with respect to any
litigation or dispute concerning any of the Collateral, and (v) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral, upon disposition or otherwise.
"Projections" shall mean any and all projections delivered
pursuant to or in connection with the Agreement.
"Pro Rata Share" shall mean with respect to matters relating
to (a) a Lender's portion of Term Loan A, the percentage obtained by dividing
(i) the portion of Term Loan A held by such Lender, by (ii) the outstanding
amount of Term Loan A, (b) a Lender's portion of Term Loan B, the percentage
obtained by dividing (i) the portion of Term Loan B held by such Lender, by (ii)
the outstanding amount of Term Loan B, (c) a Lender's portion of Term Loan C,
the percentage obtained by dividing (i) the portion of Term Loan C held by such
Lender, by (ii) the outstanding amount of Term Loan C, (d) a Lender's Commitment
with respect to Capital Expenditure Advances (including the making or repayment
of Capital Expenditure Advances pursuant to those Commitments) and, with respect
to all other matters, the percentage obtained by dividing (i) the Capital
Expenditure Loan Commitment of that Lender by (ii) the aggregate Capital
Expenditure Loan Commitments of all Lenders, (e) a Lender's Commitment with
respect to Revolving Credit Advances, Swing Line Advances and Letter of Credit
Obligations (including the making or repayment of Revolving Credit Advances and
Swing Line Advances and incurrence of Letter of Credit Obligations pursuant to
those Commitments) and, with respect to all other matters, the percentage
obtained by dividing (i) the Revolving Loan Commitment (including the Swing Line
Commitment as a subset of the Swing Line Lender's Revolving Loan Commitment) of
that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders, as
each of the foregoing percentages may be adjusted by assignments permitted
pursuant to Section 9.1, (f) a Lender's portion of all Loans, the percentage
obtained by dividing (i) the aggregate Commitment of such Lender by (ii) the
aggregate Commitments of all Lenders and (g) a Lender's portion of all Loans on
and after the Commitment Termination Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of the Loans held by such Lender
by (ii) the aggregate outstanding principal balance of the Loans held by all
Lenders.
"Qualified Plan" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which Borrower, any of its Subsidiaries or any
ERISA Affiliate, on behalf of participants who are or were employed by any of
them (a) currently maintains, contributes to or has an obligation to contribute
to or (b) within the last six (6) years has maintained, contributed to or had an
obligation to contribute to.
"Real Estate" shall mean all of the real estate of Borrower
listed in Schedule 3.7.
"Refunded Swing Line Loan" shall have the meaning assigned to
it in Section 1.4(c).
"Release" shall mean, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of
19
Hazardous Materials in the indoor or outdoor environment by such Person,
including the movement of Hazardous Materials through or in the air, soil,
surface water, ground water or property.
"Reportable Event" shall mean any of the events described in
Section 4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Requisite Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated, more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of all Loans and Letter of
Credit Obligations.
"Requisite Capital Expenditure Lenders" shall mean (a) Lenders
having more than sixty-six and two-thirds percent (66 2/3%) of the Capital
Expenditure Loan Commitments of all Lenders, or (b) if the Capital Expenditure
Loan Commitments have been terminated, more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of the Capital Expenditure
Loan.
"Requisite Revolving Lenders" shall mean (a) Lenders having
more than sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the Revolving Credit Loan and Letter of Credit
Obligations.
"Restricted Payment" shall mean (i) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(ii) any payment on account of the purchase, redemption, defeasance or other
retirement of a Person's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly, (iii) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Person, (iv) any dividend, distribution, payment, loan, contribution, fee
or other transfer of cash, property or other assets to any stockholder or
Affiliate of Borrower, including ARTRA or any of its employees, officers,
directors or Affiliates, including Xxxxx X. Xxxxxx or any of his family members
or Affiliates or (v) the existence of any agreement or other document
accomplishing or purporting to accomplish (whether on a conditional basis or
otherwise) any of the foregoing.
"Retiree Welfare Plan" shall mean any Welfare Plan providing
for continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a).
"Revolving Credit Loan" shall mean the aggregate amount of
Revolving Credit Advances outstanding at any time.
20
"Revolving Credit Note" shall have the meaning assigned to it
in Section 1.1(b).
"Revolving Lender" shall have the meaning assigned to it in
Section 1.4(c).
"Revolving Loan Commitment" shall mean (a) as to any Revolving
Lender, the aggregate commitment of such Lender to make Revolving Credit
Advances (including without duplication Swing Line Advances as a subset of the
Swing Line Lender's Revolving Loan Commitment) and incur Letter of Credit
Obligations as set forth on Annex N or in the most recent Lender Addition
Agreement executed by such Lender and (b) as to all Revolving Lenders, the
aggregate commitment of all Lenders to make Revolving Credit Advances (including
without duplication Swing Line Advances) and incur Letter of Credit Obligations,
which maximum aggregate commitment shall be equal to the Maximum Revolving
Credit Loan.
"Schedule of Accounts" shall mean the schedules of Accounts to
be delivered by Borrower to Agent pursuant to Annex F.
"Schedule of Documents" shall mean the schedule, including all
appendices, exhibits, schedules or annexes thereto, listing certain documents
and information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached as Annex D to the Agreement.
"Schedule of Inventory" shall mean the schedules of Inventory
to be delivered by Borrower to Agent pursuant to Annex G, including Borrower's
internal reports classifying and valuing Inventory.
"Security Agreement" shall mean the Security Agreement entered
into among Agent, on behalf of itself and Lenders and Borrower, including all
amendments, restatements and modifications thereof and supplements thereto, and
shall refer to the Security Agreement as the same may be in effect at the time
such reference becomes operative.
"Services Agreement" shall mean the agreement pursuant to
which Borrower and ARTRA each share certain costs and expenses of insurance,
including all amendments, modifications and supplements thereto, all in form and
substance satisfactory to Agent in its sole discretion, and shall refer to such
agreement as the same may be in effect at the time such reference becomes
operative.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Stockholder" shall mean each holder of Stock of Borrower or
any of its Subsidiaries, as the context may require.
21
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise and (ii) any
partnership in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%) or of which
any such Person is a general partner or may exercise the powers of a general
partner.
"Supermajority Revolving Lenders" shall mean (a) Lenders
having eighty percent (80%) or more of the Revolving Loan Commitments of all
Lenders, or (b) if the Revolving Loan Commitments have been terminated, eighty
percent (80%) or more of the aggregate outstanding amount of the Revolving
Credit Loan (with the Swing Line Loan being attributed to the Lender making such
Loan) and Letter of Credit Obligations.
"Swing Line Advance" has the meaning assigned to it in Section
1.4(a).
"Swing Line Availability" has the meaning assigned to it in
Section 1.4(a).
"Swing Line Commitment" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Loans as set
forth on Annex N, which commitment constitutes a subfacility of the Revolving
Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean at any time, the aggregate amount
of Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning assigned to it in Section
1.4(b).
"Tangible Net Worth" shall mean the (a) total assets of
Borrower on a consolidated basis (less applicable reserves and other properly
deductible items), after deducting therefrom organizational expenses, General
Intangibles, goodwill, covenants not to compete, research and development costs,
training costs, and all unamortized debt discount, deferred charges (other than
prepaid insurance and deferred financing fees relating to the Obligations and
the Kansas Indebtedness) and all receivables from Affiliates, including Xxxxx X.
Xxxxxx and XXXXX, less (b) total liabilities of Borrower on a consolidated
basis, which, in the case of all of the foregoing items, would be reflected on a
consolidated balance sheet of Borrower and its Subsidiaries under GAAP.
"Tax Sharing Agreement" shall mean, collectively, each of
those certain Tax Sharing Agreements by and between ARTRA, Borrower and Parent
dated as of January 1, 1991 and March 7, 1991, respectively, including all
amendments, modifications and supplements thereto, all in form
22
and substance satisfactory to Agent in its sole discretion, and shall refer to
the Tax Sharing Agreement as the same may be in effect at the time such
reference becomes operative.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are organized or any
political subdivision thereof.
"Term Loan A" shall have the meaning assigned to it in Section
1.2(a).
"Term Loan A Commitment" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Term Loan A as set forth on Annex N
or in the most recent Lender Addition Agreement executed by such Lender and (b)
as to all Lenders, the aggregate commitment of all Lenders to make Term Loan A,
which maximum aggregate commitment shall be Twenty Million Dollars
($20,000,000).
"Term Loan A Note" shall have the meaning assigned to it in
Section 1.2(c).
"Term Loan B" shall have the meaning assigned to it in Section
1.2(d).
"Term Loan B Commitment"shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Term Loan B as set forth on Annex N
or in the most recent Lender Addition Agreement executed by such Lender and (b)
as to all Lenders, the aggregate commitment of all Lenders to make Term Loan B,
which maximum aggregate commitment shall be Five Million Dollars ($5,000,000).
"Term Loan B Note" shall have the meaning assigned to it in
Section 1.2(f).
"Term Loan C" shall have the meaning assigned to it in Section
1.2(g).
"Term Loan C Commitment" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Term Loan C as set forth on Annex N
or in the most recent Lender Addition Agreement executed by such Lender and (b)
as to all Lenders, the aggregate commitment of all Lenders to make Term Loan C,
which maximum aggregate commitment shall be Seven Million Five Hundred Thousand
Dollars ($7,500,000).
"Term Loan C Note" shall have the meaning assigned to it in
Section 1.2(i).
"Term Loan Commitment" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make the Term Loans and (b) as to all
Lenders, the aggregate commitment of all Lenders to make the Term Loans.
"Term Loan Notes" shall mean, collectively, the Term Loan A
Notes, the Term Loan B Notes and the Term Loan C Notes.
23
"Term Loans" shall mean, collectively, Term Loan A, Term Loan
B and Term Loan C.
"Title IV Plan" shall mean a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by Borrower or any of its Subsidiaries
granting any right to use any Trademark or Trademark registration, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by Borrower or any of its Subsidiaries: (i) all trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including 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 or territory thereof, or any
other country or any political subdivision thereof; and (ii) all reissues,
extensions or renewals thereof.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (i) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions in
effect under such Title IV Plan, and (ii) for a period of five (5) years
following a transaction reasonably likely to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by
Borrower, any of its Subsidiaries or any ERISA Affiliate as a result of such
transaction.
"Warrant" shall mean the Warrant issued as of December 17,
1993 by Borrower in favor of GE Capital, as heretofore amended, and as
substituted as of the Closing Date, including all other amendments,
restatements, substitutions and modifications thereof and supplements thereto,
all in form and substance satisfactory to Agent in its sole discretion, and
shall refer to the Warrant as the same may be in effect at the time such
reference becomes operative.
"Welfare Plan" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by Borrower or any
of its Subsidiaries.
"Withdrawal Liability" shall mean, at any time, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any
increase in contributions pursuant to Section 4243 of ERISA, with respect to all
Multiemployer Plans.
Any accounting term used in the Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all
24
financial computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing. In
the event that any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in the Agreement or any other Loan Document, then
Borrower, Agent and Lenders agree to enter into negotiations in order to amend
such provisions of this Agreement so as to equitably reflect such Accounting
Changes with the desired result that the criteria for evaluating Borrower's and
its Subsidiaries' financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made; provided, further, that
the agreement of Requisite Lenders to any required amendments of such provisions
shall be sufficient to bind all Lenders. "Accounting Changes" means (a) changes
in accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), and (b) changes in accounting principles
concurred in by Borrower's certified public accountants. In the event, if any,
that Agent, Borrower and Requisite Lenders shall have agreed upon the required
amendments, then after such agreement has been evidenced in writing and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in this Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments
within sixty (60) days following the date of implementation of any Accounting
Change, then all financial statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.
All other undefined terms contained in the Agreement or any of
the other Loan Documents shall, unless the context indicates otherwise, have the
meanings provided for by the Code as in effect in the State of Illinois to the
extent the same are used or defined therein. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including the Exhibits, Schedules and Annexes thereto, as the same may from time
to time be amended, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations.
25
ANNEX B
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement, the
Revolving Loan Commitment may, in addition to Revolving Credit Advances, be
utilized, upon the request of Borrower, for the issuance of Letters of Credit or
guaranties thereof by Agent so long as GE Capital is Agent, on behalf of each
Lender (severally and not jointly) according to such Lender's Pro Rata Share of
the Revolving Loan Commitment to guaranty payment to banks (whether or not such
banks are Lenders) which issue Letters of Credit for the account of Borrower.
The aggregate amount of all Letter of Credit Obligations incurred by Agent and
Lenders pursuant to this paragraph (a) shall not exceed the lesser of (i) Three
Million Dollars ($3,000,000), (ii) the Maximum Revolving Credit Loan minus the
sum of the Revolving Credit Loan, Swing Line Loan and Letter of Credit
Obligations then outstanding and (iii) the Borrowing Base minus the sum of the
Revolving Credit Loan, Swing Line Loan and Letter of Credit Obligations then
outstanding and, in the case of the foregoing clauses (ii) and (iii), less
reserves established by Agent pursuant to this Agreement. No such Letter of
Credit shall have an expiry date which is more than one year following the date
of issuance thereof and Agent and Lenders shall be under no obligation to incur
Letter of Credit Obligations in respect of any Letter of Credit having an
initial or extended expiry date, or extension option, which is later than the
Commitment Termination Date. It is understood that the bank or other legally
authorized Person (including any Lender) which shall issue any Letter of Credit
contemplated by this paragraph (a) shall be selected by Borrower and acceptable
to Agent, in its sole discretion.
(b) In the event that any Lender shall make any payment on or
pursuant to any Letter of Credit Obligation, such payment shall then be deemed
automatically to constitute a Revolving Credit Advance under Section 1.1(a) of
the Agreement.
(c) In the event that any Letter of Credit Obligation, whether
or not then due and payable, shall for any reason be outstanding on the
Commitment Termination Date, Borrower will pay to Agent for the benefit of
Lenders cash or cash equivalents acceptable to Agent ("Cash Equivalents") in an
amount equal to the maximum amount then available to be drawn under the
applicable Letter of Credit plus all outstanding fees and expenses relating
thereto. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at Bankers Trust
Company, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, ABA#: 021 001 033, in the name of
General Electric Capital Corporation, Commercial Finance Group, Acct.#: 502 328
54. The Cash Collateral Account shall be in the name of Agent (as a cash
collateral account), and shall be under the sole dominion and control of Agent
and subject to the terms of this Annex B. Borrower hereby pledges, and grants to
Lender a security interest in, all such funds and Cash Equivalents held in the
Cash Collateral Account from time to time and all proceeds thereof, as security
for the payment of all amounts due in respect of the Letter of Credit
Obligations, whether or not then due. This Agreement shall constitute a security
agreement under applicable law.
1
From time to time after funds are deposited in the Cash
Collateral Account, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
Lenders with respect to such Letter of Credit Obligations.
Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Lenders in respect thereof, any funds remaining in the
Cash Collateral Account in excess of the then remaining Letter of Credit
Obligations shall be returned to Borrower.
Agent shall not have any obligation to invest the funds in the
Cash Collateral Account or deposit such funds in an interest bearing account,
and interest and earnings thereon, if any, shall be the property of Lenders.
(d) In the event that Lenders shall incur any Letter of Credit
Obligation pursuant hereto at the request or on behalf of Borrower, Borrower
agrees to pay to Agent for the benefit of Lenders, as compensation to Lenders
for such Letter of Obligation, (i) all costs and expenses incurred by any Lender
on account of such Letter of Credit Obligation and (ii) commencing with the
month in which such Letter of Credit Obligation is incurred by Lenders and
monthly thereafter for each month during which such Letter of Credit Obligation
shall remain outstanding, a fee in an amount equal to two percent (2.0%) per
annum of the maximum amount available from time to time to be drawn under the
applicable Letter of Credit, calculated on the basis of a 360-day year and the
actual number of days elapsed; provided, however, that (A) so long as any
Default or Event of Default not described in the following clause (B) shall have
occurred and be continuing, at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to Borrower
and (B) so long as any Event of Default specified in Section 8.1(g), (h) or (i)
shall have occurred and be continuing, such fee shall be increased to four
percent (4.0%) per annum, calculated on the basis of a 360-day year and the
actual number of days elapsed. Fees payable in respect of Letter of Credit
Obligations shall be paid to Agent for the benefit of Lenders in arrears, on the
first day of each month. The fees, costs and expenses provided for in this
paragraph (d) are in addition to any fees, costs and expenses payable to the
issuers of the Letters of Credit, all of which are solely for the account of
Borrower.
(e) Request for Lender Guaranties. Borrower shall give Agent
at least two (2) days prior written notice as to the issuance of a Letter of
Credit or letter credit guaranty, specifying the date such Letter of Credit or
guaranty is to be issued, identifying the beneficiary and describing the nature
of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the Letter of Credit to be guarantied and, to the
extent not previously delivered to Agent, copies of all agreement between
Borrower the issuer of the Letter of Credit to be guarantied pertaining to the
issuance of Letters of Credit.
2
(f) The obligation of Borrower to reimburse Lenders for
payments made with respect to any Letter of Credit Obligation shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms hereof under all circumstances including the following circumstances:
(1) any lack of validity or enforceability of any Letter of
Credit or any other agreement;
(2) the existence of any claim, set-off, defense or other
right which Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit (or any persons
or entities for whom any such transferee may be acting), any Lender, or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between Borrower or any of its Affiliates and the beneficiary for
which the Letter of Credit was procured);
(3) any draft, demand, certificate or any other document
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;
(4) payment by Agent, any Lender, or the issuing bank under
any Letter of Credit against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Letter of Credit,
provided that, in the case of any payment by Agent or any Lender under any
Letter of Credit, Agent or such Lender has not acted with gross negligence or
willful misconduct (as finally determined by a court of competent jurisdiction)
in determining that the demand for payment under such Letter of Credit or
guaranty thereof complies on its face with any applicable requirements for a
demand for payment under such Letter of Credit or guaranty thereof;
(5) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(6) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties. In addition to
amounts payable as elsewhere provided in this Agreement, Borrower hereby agrees
to protect, indemnify, pay and save Agent and each Lender harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) which Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (1) the issuance of any Letter of Credit or
guaranty thereof, other than as a result of the gross negligence or willful
misconduct of Agent or such Lender as finally determined by a court of competent
jurisdiction or (2) the failure of Agent or any Lender to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority.
3
As between Agent and Borrower and any Lender and Borrower,
Borrower assumes all risks of the acts and omissions of, or misuse of any Letter
of Credit by beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, neither Agent nor any Lender shall be responsible:
(i) for the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document issued by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit; provided that, in the case of any payment
by Agent under any Letter of Credit or guaranty thereof, Agent has not acted
with gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction) in determining that the demand for payment under such
Letter of Credit or guaranty thereof complies on its face with any applicable
requirements for a demand for payment under such Letter of Credit or guaranty
thereof; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a payment under any Letter of Credit or guaranty
thereof or of the proceeds thereof; (vii) for the credit of the proceeds of any
drawing under any Letter of Credit or guaranty thereof; and (viii) for any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder.
4
ANNEX C
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
The Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
Prior to the Closing Date and for so long as any Loan or any
other Obligation is outstanding, Borrower shall deposit and shall cause its
Subsidiaries to deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral into bank accounts in
Borrower's name or such Subsidiary's name (collectively, the "Borrower
Accounts") at banks set forth on Schedule 3.22. Prior to the Closing Date,
Borrower shall have established a concentration account in Borrower's name (the
"Concentration Account") at LaSalle National Bank, which shall be designated as
the Concentration Account bank on Schedule 3.22, in accordance with a blocked
account agreement in form and substance satisfactory to Agent, in its sole
discretion.
Prior to the Closing Date, LaSalle National Bank, as
Concentration Account bank, and all of the banks set forth on Schedule 3.22 with
which Borrower or any Subsidiary thereof has any relationship other than as the
holder of a deposit account, including by way of example any mortgage or other
lending relationship (each such bank a "Relationship Bank"), shall have entered
into triparty blocked account agreements with Agent, for the benefit of itself
and Lenders, and Borrower and/or each such Subsidiary, as applicable, in form
and substance acceptable to Agent, which shall become operative prior to the
Closing Date at LaSalle National Bank, as the bank where the Concentration
Account is maintained, and all Relationship Banks at which Borrower Accounts are
maintained. Borrower shall clearly designate each bank which is a Relationship
Bank as such on Schedule 3.22. Each such blocked account agreement shall
provide, among other things, that:
(i) all items of payment deposited in such Borrower Account
and proceeds thereof deposited in such Concentration Account are held
by such bank as agent or bailee-in- possession for Agent;
(ii) the bank executing such agreement has no rights of setoff
or recoupment or any other claim against such Borrower Account or
Concentration Account, as the case may be, other than for payment of
its service fees and other charges directly related to the
administration of such account and for returned checks or other items
of payment; and
(iii) prior to the Closing Date (A) with respect to each bank
at which a Borrower Account is located, such bank agrees to forward
immediately all amounts in Borrower Account to the Concentration
Account and to commence the process of daily sweeps from such Borrower
Account into the Concentration Account and (B) with respect to the bank
at which the Concentration Account is located, such bank agrees to
forward immediately all
1
amounts received in the Concentration Account to the Collection Account
through daily sweeps from such Concentration Account into the
Collection Account.
Prior to the Closing Date, Borrower shall cause each and every
bank at which any Borrower Account is located, including each Relationship Bank
and each of the other banks at which any Borrower Account is located, to (i)
forward immediately, and in no event less frequently than once each Business
Day, all amounts in Borrower Accounts at such bank to the Concentration Account
and (ii) commence, and continue each Business Day, the process of daily sweeps
from each such Borrower Account into the Concentration Account. Prior to the
Closing Date, Borrower shall cause LaSalle National Bank, as the bank where the
Concentration Account is located, to forward immediately all amounts received in
the Concentration Account to the Collection Account through daily sweeps from
such Concentration Account into the Collection Account.
So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 3.22 to add or replace a Borrower
Account or replace the Concentration Account; provided, however, that (i) Agent
shall have consented in writing to the opening of such account with the relevant
bank, and (ii) prior to the time of the opening of such account, Borrower and/or
the Subsidiaries thereof, as applicable, and such bank shall have executed and
delivered to Agent a triparty blocked account agreement, in form and substance
satisfactory to Agent.
The Borrower Accounts and the Concentration Account shall be
cash collateral accounts, with all cash, checks and other similar items of
payment in such accounts securing payment of all Loans, Letter of Credit
Obligations and other Obligations, and in which Borrower or such Subsidiary
shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to
the Security Agreement.
All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with Section 1.14 of the Agreement and
shall be applied (and allocated) by Agent in accordance with Section 1.15 of the
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.
The Borrower may maintain, in its name, an account (the
"Disbursement Account") at a bank acceptable to Agent into which, Agent shall,
from time to time, deposit proceeds of Revolving Credit Advances made pursuant
to Section 1.1 of the Agreement and Swing Line Advances made pursuant to Section
1.4 of the Agreement, in each case for use by Borrower solely in accordance with
the provisions of Section 1.8 of the Agreement. The Disbursement Account shall
be a cash collateral account, with all cash, checks and other similar items of
payment in such account securing payment of all Loans, Letter of Credit
Obligations and other Obligations, and in which Borrower shall have granted a
Lien to Agent, for the benefit of itself and Lenders, pursuant to the Security
Agreement. The Disbursement Account shall be subject to a triparty blocked
account agreement identical to the agreement governing Borrower Accounts and the
Concentration Account; provided, however, that, according to the terms thereof,
such agreement shall become effective upon the occurrence of a default or an
Event of Default.
2
The Borrower shall and shall cause its Subsidiaries to (i)
hold in trust for Agent, for the benefit of itself and Lenders, all checks, cash
and other items of payment received by Borrower or any such Subsidiary, and (ii)
within one (1) Business Day after receipt by Borrower or any such Subsidiary of
any checks, cash or other items or payment, deposit the same into a Borrower
Account. The Borrower and its Subsidiaries acknowledge and agree that all cash,
checks or items of payment constituting proceeds of Collateral are the property
of Lenders. All proceeds of the sale or other disposition of any Collateral,
other than sales of Inventory by Borrower in the ordinary course of business,
shall be deposited directly into the Concentration Account.
(i) Notwithstanding the foregoing, Borrower shall deliver to
Agent as soon as possible and in any event within 45 days after the Closing Date
a fully executed blocked account agreement, in accordance with the foregoing,
with respect to Borrower's bank account, number 1350016640, maintained at Union
Planters Bank, Hialeah, Florida.
3
ANNEX D
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SCHEDULE OF DOCUMENTS
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(b) of the Agreement, the following
items must be received by Agent in form and substance satisfactory to Agent on
or prior to the Closing Date (each capitalized term used but not otherwise
defined herein shall have the meaning ascribed thereto in Annex A to the
Agreement):
Exhibits, Schedules and Annexes. All Exhibits, Schedules and
Annexes to the Agreement, in form and substance satisfactory to Agent.
Revolving Credit Notes. For each Revolving Lender, one (1)
duly executed original Revolving Credit Note, dated the Closing Date.
Swing Line Note. For the Swing Line Lender, one (1) duly
executed original Swing Line Note, dated the Closing Date.
Term Loan A Notes. For each Lender with a Term Loan A
Commitment, one (1) duly executed original Term Loan A Note, dated the Closing
Date.
Term Loan B Notes. For each Lender with a Term Loan B
Commitment, one (1) duly executed original Term Loan B Note, dated the Closing
Date.
Term Loan C Notes. For each Lender with a Term Loan C
Commitment, one (1) duly executed original Term Loan C Note, dated the Closing
Date.
Capital Expenditure Loan Notes. For each Lender with a Capital
Expenditure Loan Commitment, one (1) duly executed original Capital Expenditure
Loan Note, dated the Closing Date.
Security Agreement . A duly executed Security Agreement,
amended and restated as of the Closing Date, including a power of attorney and
all other instruments, documents and agreements executed pursuant thereto, all
in form and substance satisfactory to Agent.
Copyrights, Patents and Trademarks. Duly executed supplements
to Borrower's Copyright Assignment and Patent and Trademark Assignment, with
respect to any applicable Collateral not secured pursuant thereto as of the
Closing Date.
Pledge Agreement . A duly executed Pledge Agreement, amended
and restated as of the Closing Date, including all instruments, documents and
agreements executed pursuant thereto, all in form and substance satisfactory to
Agent.
1
Warrant. A duly executed replacement Warrant, dated the
Closing Date, including all instruments, documents and agreements executed
pursuant thereto, all in form and substance satisfactory to Agent.
Other Loan Documents. Evidence satisfactory to Agent that all
other Loan Documents are in full force and effect as of the Closing Date.
Security Interests and Code Filings. Except as received by
Agent pursuant to the Prior Credit Agreement, evidence satisfactory to Agent
that Agent (for the benefit of itself and Lenders) has a valid and perfected
first priority (other than to the extent otherwise permitted in accordance with
Section 6.7 of the Agreement) security interest in the Collateral.
Cash Management System; Blocked Account Agreements. Except as
received by Agent pursuant to the Prior Credit Agreement, evidence satisfactory
to Agent that, prior to the Closing Date, cash management systems, including
Blocked Account Agreements (amended as Agent may deem necessary) complying with
Annex C to the Agreement are currently maintained in the manner set forth in
such Annex C.
Mortgage Amendments. Amendments to the Mortgages, covering all
of the Real Estate (each, a "Mortgaged Property"), dated the Closing Date,
satisfactory in form and substance to Agent for recording in all places to the
extent necessary to maintain valid and enforceable first priority lien (subject
to Permitted Encumbrances) on each Mortgaged Property.
Insurance. Except as recently received by Agent pursuant to
the Prior Credit Agreement, updated certificates of insurance relating to the
insurance policies required by Section 5.5 of the Agreement, showing loss
payable and/or additional insured clauses or endorsements, in favor of Agent, on
behalf of Lenders.
Waivers. Except as received by Agent pursuant to the Prior
Credit Agreement, landlord waivers and consents, bailee letters and mortgagee
agreements in form and substance satisfactory to Agent and amended as Agent may
deem necessary, in each case as required pursuant to Section 5.11 of the
Agreement.
Fee Letter. A duly executed original of the GE Capital Fee
Letter.
Initial Borrowing Base Certificate. A duly executed Borrowing
Base Certificate most recently required to be delivered pursuant to the Prior
Credit Agreement.
Initial Notice of Revolving Credit Advance. A duly executed
Notice of Revolving Credit Advance, dated on or prior to the Closing Date, with
respect to the initial Revolving Credit Advance, if any, to be requested by
Borrower on the Closing Date.
Financial Statements and Collateral Reports. All Financial
Statements and Collateral Reports most recently required to be delivered
pursuant to the Prior Credit Agreement.
2
Officer's Certificate. A duly executed original of a
certificate of the chief executive officer or chief financial officer of
Borrower, dated the Closing Date, stating that since December 31, 1996, there
has been: (i) no Material Adverse Effect on the business, operations, financial
condition, prospects or projections of Borrower, the industries in which it
operates, the Collateral, or any of its Subsidiaries; (ii) no litigation has
commenced which, if successful, could have any such Material Adverse Effect or
could challenge any of the transactions contemplated by this Agreement and the
other Loan Documents; (iii) except as expressly permitted in accordance with the
Prior Credit Agreement, no dividends, distributions, payments, loans,
contributions, fees or other transfers of cash, property or other assets to any
stockholders or Affiliate of Borrower, including ARTRA or its employees,
directors, officers or Affiliates; and (iv) no material increase in liabilities,
liquidated or contingent, and no material decrease in assets of Borrower or any
of its Subsidiaries.
Charter and Good Standing. For Parent, Borrower and each of
its Subsidiaries, such Person's (a) certificate or articles of incorporation and
all amendments thereto, (b) good standing certificates (including verification
of tax status) in its state of incorporation and (c) good standing certificates
(including verification of tax status) and certificates of qualification to
conduct business in each jurisdiction where its ownership or lease of property
or the conduct of its business requires such qualification, each of the
foregoing dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized governmental entity.
Bylaws and Resolutions. For Parent, Borrower and each of its
Subsidiaries (a) such Person's bylaws, together with all amendments thereto, and
(b) resolutions of such Person's Board of Directors and, as required,
stockholders, approving and authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and the transactions to be
consummated in connection therewith, each of the foregoing certified as of the
Closing Date by such Person's corporate secretary or an assistant secretary as
being in full force and effect without any modification or amendment.
Incumbency Certificates. For Parent, Borrower and each of its
Subsidiaries, signature and incumbency certificates of the officers of each such
Person executing any of the Loan Documents, certified as of the Closing Date by
such Person's corporate secretary or an assistant secretary as being true,
accurate, correct and complete.
Opinions of Counsel. Duly executed originals of an opinion of
Xxxxxx, Xxxxxxxxx and Xxxxx, Ltd., General Counsel for Parent, Borrower and its
Subsidiaries, in form and substance satisfactory to Agent and its counsel, dated
the Closing Date, and accompanied by a letter addressed to such counsel from
Parent, Borrower and its Subsidiaries, authorizing and directing such counsel to
address its opinion to Agent, on behalf of Lenders, and to include in such
opinion an express statement to the effect that Agent and Lenders are authorized
to rely on such opinion.
Other Documents. Such other certificates, documents and
agreements respecting Borrower or any of its Subsidiaries, as Agent may request
in its sole discretion, including the GE Capital Fee Letter.
3
ANNEX E
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
RESPONSIBLE INDIVIDUAL
Telephone #
Name and Title Notice Address Telecopy #
Xxxxx Xxxxx / General Electric 000-000-0000
Bagcraft Account Manager Capital Corporation 000-000-0000
Commercial Finance, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
1
ANNEX F
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
ELIGIBLE ACCOUNTS
In determining whether an account constitutes an Eligible
Account, Agent shall not include any Account:
(a) which does not arise from the sale of goods or the
performance of services by Borrower in the ordinary course of its business;
(b) upon which (i) Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process;
(c) against which is asserted any defense, counterclaim,
setoff or dispute, but only to the full extent of such defense, counterclaim,
setoff or dispute;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise sold and
accepted by the Account Debtor obligated upon such Account;
(e) with respect to which an invoice, acceptable to Agent in
form and substance, has not been sent;
(f) that (i) is not owned by Borrower or (ii) is subject to
any right, claim, security interest or other interest of any other Person, other
than the Lien in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of Borrower or any Subsidiary thereof, or to any entity
which has any common officer or director with Borrower or any Subsidiary
thereof;
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, unless Agent, in
its sole discretion, has agreed to the contrary in writing and Borrower, if
necessary or desirable as determined by Agent, has complied with the Federal
Assignment of Claims Act of 1940, and any amendments thereto, with respect to
such obligation;
(i) that is the obligation of an Account Debtor located in a
foreign country, other than (i) Canada, provided, that, such obligation is
denominated entirely in United States dollars and is fully payable within the
United States or (ii) a foreign country, provided, that, such obligation is
backed by a letter of credit or other credit enhancement in form and substance
acceptable to Agent in its sole discretion and the same has been delivered to
Agent and, provided, further, that, if any
1
Default or Event of Default shall have occurred and be continuing, Borrower
shall notify the issuer of such letter of credit or other credit enhancement
that the same has been assigned to Agent, on behalf of Agent and Lenders, in
accordance with Section 5-116(2)(b) of the Code;
(j) that is the obligation of an Account Debtor to whom
Borrower or any Subsidiary thereof is liable for goods sold or services rendered
by the Account Debtor to Borrower or any Subsidiary thereof, but only to the
full extent of all such liabilities in the aggregate with respect to such
Account Debtor;
(k) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor is or may be conditional;
(l) that is in default; provided, further, that, without
limiting the generality of the foregoing, an Account shall be deemed in default
upon the occurrence of any of the following:
(i) the Account is not paid within the earlier of: sixty (60)
days past its due date or ninety (90) days past its original invoice
date;
(ii) if any Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) if any petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or any
other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the relief of
debtors;
(m) which is the obligation of an Account Debtor that has
failed to make a payment within sixty (60) days past the applicable due date on
fifty percent (50%) or more of the dollar amount of Accounts upon which such
Account Debtor is obligated (Borrower shall be entitled to notify Agent
regarding the circumstances of such payment failure, and, thereafter, Agent, in
its sole and absolute discretion, may choose to include all or a portion, if
any, of such account as an Eligible Account);
(n) which is due more than ninety (90) days from the date of
determination of eligibility thereof;
(o) which arises from any xxxx-and-hold or other sale of goods
which remain in Borrower's or any Subsidiary thereof's possession or under
Borrower's or any such Subsidiary's control, but only to the fullest extent of
that portion of such goods not actually billed and shipped at the time of
Agent's determination thereof;
(p) as to which Agent's interest, on behalf of itself and
Lenders, therein is not a first priority perfected security interest;
2
(q) as to which any of the representations or warranties
pertaining to Accounts set forth in the Agreement or any of the other Loan
Documents is untrue;
(r) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable discretion;
(s) to the extent such Account is evidenced by any note; or
(t) which is otherwise unacceptable to Agent in its sole
discretion.
3
ANNEX G
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
ELIGIBLE INVENTORY
In determining whether Inventory constitutes Eligible Inventory, Agent
shall not include Inventory which:
(a) is not owned by Borrower free and clear of all Liens and
rights of any other Person, except the Liens in favor of Agent, on behalf of
itself and Lenders, and encumbrances set forth in clause (v) or (vi) of the
definition of Permitted Encumbrances;
(b) except as set forth in clause (c) below with respect to
goods which are "in transit," is not located on premises owned, operated or
leased by Borrower;
(c) consists of goods which are "in transit", except to the
extent shipped (i) F.O.B. point of shipment and/or (ii) on vehicles owned by
Borrower or common carriers employed by, or subject to the direction of,
Borrower; provided, that, Borrower maintains (A) appropriate and adequate
casualty insurance with respect to goods shipped on such common carriers, in
form and with insurers recognized as adequate by Agent, together with
appropriate evidence showing loss payable clauses or endorsements in favor of
Agent, on behalf of Lenders, in form and substance satisfactory to Agent and (B)
adequate reserves on its books, in accordance with GAAP, with respect to all
amounts charged by, and all other fees and expenses associated with, such common
carriers;
(d) is covered by a negotiable document of title, unless such
document and evidence of acceptable insurance covering such Inventory has been
delivered to Agent;
(e) in Agent's reasonable credit judgement, is obsolete,
unsalable, shopworn, damaged or unfit for sale;
(f) consists of display items or shipping materials;
(g) consists of packing materials, but only to the full extent
that the same are (i) customized or specialized for or on behalf of Borrower or
(ii) not maintained in "full pallets" or are otherwise maintained in broken or
incomplete packages or sets;
(h) consists of goods which have been returned by the buyer;
(i) consists of discontinued or slow-moving items or finished
goods of substandard quality;
(j) is placed by Borrower on consignment;
(k) is not of a type held for sale in the ordinary course of
Borrower's business;
1
(l) as to which Agent's interest, on behalf of itself and
Lenders, therein is not a first priority perfected security interest;
(m) as to which any of the representations or warranties
pertaining to Inventory set forth in the Agreement or any of the other Loan
Documents is untrue;
(n) is located at a public warehouse, unless Agent has
received therefrom a copy of a duly executed bailee letter, in form and
substance acceptable to Agent in its sole discretion;
(o) consists of supplies or work-in-process;
(p) is otherwise unacceptable to Agent in its sole discretion.
In addition, Inventory located at an owned or leased location
shall be subject to the provisions set forth in Section 5.11 and 5.12 of the
Agreement.
2
ANNEX H
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Insurance Standards
1. Borrower shall, and shall cause each of its Subsidiaries
to, at its sole cost and expense, maintain "All Risk" physical damage insurance
on all real and personal property, including fire and extended coverage, boiler
and machinery coverage, flood, earthquake, liquids, theft, explosion, collapse
and all other hazards and risks ordinarily insured against by owners or users of
such properties in similar businesses. All policies of insurance on such
property shall contain an endorsement, in form and substance satisfactory to
Agent, showing loss payable to Agent as its interests appear.
2. Borrower shall, at its sole cost and expense, maintain
commercial general liability insurance on an "occurrence basis" (unless such
insurance cannot be reasonably obtained at commercially reasonable rates, in
which case such insurance shall be on a "claims made" basis) against claims for
personal injury, bodily injury and property damage with a minimum limit of
$1,000,000 per occurrence and $2,000,000 in the aggregate. Such coverage shall
include, but not be limited to, premises/operations, broad form contractual
liability, underground, explosion and collapse hazard, independent contractors,
broad form property coverage, products and completed operations liability.
Borrower shall, at its sole cost and expense, maintain workers' compensation
insurance including employer's liability in the amount of $500,000 for each
accident, $500,000 disease-policy limit, and $500,000 disease-each employee.
3. Borrower shall, at its sole cost and expense, maintain
automobile liability insurance for all owned, non-owned or hired automobiles
against claims for personal injury, bodily injury and property damage with a
minimum combined single limit of $1,000,000 per occurrence.
4. Borrower shall, at its sole cost and expense, maintain
umbrella policies of insurance in form and substance substantially similar to
each of the umbrella policies which it maintains on the Closing Date, with, in
any event, a minimum combined limit of $25,000,000 in the aggregate.
5. All policies of insurance required to be maintained under
this Agreement shall (i) include Agent as an additional insured, (ii) contain a
30-day advance notice of alteration or cancellation, (iii) provide that no act
or default by Borrower, any Subsidiary or any other Person shall affect the
right of Agent to recover under such policy or policies of insurance in case of
loss or damage, (iv) be in form substantially similar to those in effect on the
Closing Date and be with insurers rated at least A by A.M. Best and (v) be in
not less than the amounts set forth herein.
1
ANNEX I
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS
Borrowers shall deliver or cause to be delivered to Agent or
to Agent and Lenders, as indicated, the following:
(a) To Agent and Lenders, within thirty (30) days after the
end of each Fiscal Month, consolidated and consolidating financial and other
information regarding Borrower and its Subsidiaries, certified by the chief
financial officer of Borrower, including (i) unaudited balance sheets as of the
close of such Fiscal Month and the related statements of income and cash flow
for that portion of the Fiscal Year ending as of the close of such Fiscal Month
and (ii) unaudited statements of income and cash flows for such Fiscal Month, in
each case setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the budget, all prepared
in accordance with GAAP (subject to normal year-end adjustments), except for the
absence of footnotes and except as otherwise disclosed therein in reasonable
detail, and accompanied by (A) a statement in reasonable detail showing the
calculations used in determining compliance with the financial covenants set
forth on Annex K and (B) the certification of the chief executive officer or
chief financial officer of Borrower that all of such financial and other
information is true, complete and correct and presents fairly in accordance with
GAAP (subject to normal year-end adjustments), except for the absence of
footnotes and except as otherwise disclosed therein in reasonable detail, the
financial position, results of operations and statements of cash flows of
Borrower and its Subsidiaries, on both a consolidated and consolidating basis,
as at the end of such Fiscal Month and for the period then ended, and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default.
In addition, Borrower shall deliver to Agent and Lenders,
within thirty (30) days after the end of each Fiscal Month, a management
discussion and analysis which includes a comparison to budget for that Fiscal
Month and a comparison of performance for that Fiscal Month to the corresponding
period in the prior year;
(b) To Agent and Lenders, within sixty (60) days after the end
of each Fiscal Year, an operating plan, approved by the Board of Directors of
Borrower, for such applicable Fiscal Year, which will include a complete
statement of the assumptions on which such plan is based, will include monthly
balance sheets and a monthly budget for such applicable Fiscal Year and will
integrate sales, gross profits, operating expenses, operating profit, cash flow
projections and borrowing availability projections all prepared on the same
basis as that on which operating results are reported, and plans for personnel,
capital expenditures (with a separate description for Capital Expenditures
constituting the acquisition cost of Equipment to be financed with proceeds of
Capital Expenditure Advances) and facilities; all of which shall be in detail
acceptable to Agent in its sole discretion;
1
(c) To Agent and Lenders, contemporaneously with ARTRA's
filing thereof with the Securities and Exchange Commission, audited financial
statements, for Borrower and its Subsidiaries, on a consolidated basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year and the figures contained in the budget, which financial
statements shall be prepared in accordance with GAAP, certified (only with
respect to the consolidated financial statements) without qualification, by an
independent certified public accounting firm of national standing or otherwise
acceptable to Agent, and accompanied by (i) a statement prepared in reasonable
detail showing the calculations used in determining compliance with each of the
financial covenants set forth on Annex K, (ii) a report from such accounting
firm to the effect that, in connection with their audit examination, nothing has
come to their attention to cause them to believe that a Default or Event of
Default has occurred (or specifying those Defaults and Events of Default that
they became aware of), (iii) a letter addressed to Agent, on behalf of itself
and Lenders, in form and substance reasonably satisfactory to Agent, signed by
such accounting firm acknowledging that Agent and Lenders are entitled to rely
upon such accounting firm's certification of such audited financial statements,
(iv) the annual letters to such accountants in connection with their audit
examination detailing contingent liabilities and material litigation matters and
(v) the certification of the chief executive officer or chief financial officer
of Borrower that all such financial statements are true, complete and correct
and present fairly in accordance with GAAP the financial position, results of
operations and statements of cash flows of Borrower and its Subsidiaries, on a
consolidated basis, as at the end of such year and for the period then ended,
and that there was no Default or Event of Default in existence as of such time
or, if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;
(d) To Agent and Lenders, within five (5) Business Days after
receipt thereof by Borrower, copies of all management letters, exception reports
or similar letters or reports, if any, received by Borrower from its independent
certified public accountants;
(e) To Agent and Lenders, as soon as practicable, and in any
event within five (5) Business Days after Borrower becomes aware of the
existence of any Default or Event of Default, or any development or other
information which could have or result in a Material Adverse Effect, telephonic
or telecopied notice specifying the nature of such Default or Event of Default
or development or information, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day; and
(f) To Agent and Lenders, as soon as reasonably practicable
after Agent's request therefor, such other financial and other information
respecting Borrower's or its Subsidiaries', businesses, financial condition or
prospects as Agent (or any Lender through Agent) shall request from time to time
with reasonable frequency (unless a Default or Event of Default shall have
occurred and be continuing, in which event Agent or Lenders may make requests at
any and all times).
2
ANNEX J
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered to Agent or
to Agent and Lenders, as indicated, the following:
(a) To Agent, upon its request, and in no event less
frequently than for each Fiscal Month received within fifteen (15) days after
the end of such Fiscal Month (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), a Borrowing
Base Certificate, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its sole discretion.
(b) To Agent, on a weekly basis, or daily as Agent may request
in its sole discretion (together with a copy of all or any part of such delivery
requested by any Lender in writing after the Closing Date), collateral reports,
including all additions and reductions (cash and non-cash) with respect to
Accounts, in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its sole discretion;
(c) To Agent, upon its request, and in no event less
frequently than fifteen (15) days after the last day of each Fiscal Month, and,
in the event, if any, that Borrowing Availability less the then outstanding
balance of the Revolving Credit Loan falls below $1,000,000, no less frequently
than fifteen (15) days after both the fifteen (15th) day and the last day of
each Fiscal Month, a summary of Inventory by location and type with a supporting
perpetual Inventory report, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its sole discretion;
(d) To Agent, within twenty (20) days of the end of each
Fiscal Month, (i) a monthly trial balance showing Accounts outstanding aged from
invoice due date as follows: current, 1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more, and (ii) a complete Inventory report in detail satisfactory
to Agent; in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its sole discretion;
(e) To Agent, at the time of delivery of each of the monthly
financial statements delivered pursuant to Annex I, a reconciliation of the
Accounts trial balance and month-end Inventory reports to Borrower's general
ledger and monthly financial statements delivered pursuant to such Annex I, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its sole discretion; and
(f) Such other reports, statements and reconciliations with
respect to the Borrowing Base or Collateral as Agent shall from time to time
request in its sole discretion.
1
ANNEX K
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP, consistently applied:
(a) EBITDA. Borrower and its Subsidiaries on a consolidated
basis shall have, measured for the trailing twelve (12) Fiscal Month
period ended on the last day of each Fiscal Quarter ending during each
calendar month set forth below, EBITDA equal to or greater than the
amounts set forth opposite each of such periods:
Calendar Month Xxxxxx
Xxxxx, 0000 $ 8,500,000
June, 1998 $ 8,500,000
September, 1998 $ 9,000,000
December, 1998 $ 9,000,000
March, 1999 $ 9,500,000
June, 1999 $ 9,500,000
September, 1999 $ 10,000,000
December, 1999 $ 10,000,000
March, 2000 $ 10,500,000
June, 2000 $ 10,500,000
September, 2000 $ 11,000,000
December, 2000 and each calendar $ 11,000,000
month thereafter
(b) EBITDA to Interest Expense. Borrower and its Subsidiaries
on a consolidated basis shall have, measured for the trailing twelve
(12) Fiscal Month period ended on the last day of each Fiscal Quarter
ending during each Fiscal Year set forth below, a ratio of (i) EBITDA
to (ii) Interest Expense equal to or greater than the ratios set forth
opposite each of such periods:
Fiscal Year Ratio
1998 2.80 to 1:00
1999 3.00 to 1:00
2000 and each Fiscal Year thereafter 3.20 to 1:00
(c) EBITDA to the sum of Fixed Charges and Capital
Expenditures. Borrower and its Subsidiaries on a consolidated basis
shall have, measured for the trailing twelve (12) Fiscal Month period
ended on the last day of each Fiscal Quarter, a ratio of (i) EBITDA to
1
(ii) the sum of (x) Fixed Charges and (y) Capital Expenditures equal to
or greater 1:00 to 1:00:
(d) Consolidated Tangible Net Worth. Borrower, its
Subsidiaries on a consolidated basis shall have, measured as of the end
of the trailing twelve (12) Fiscal Month period ended on the last day
of each Fiscal Quarter ending during each calendar month set forth
below, Tangible Net Worth equal to or greater than the amounts set
forth opposite each of such dates:
Calendar Month Amount
December, 1998 ($13,000,000)
March, 1999 ($11,000,000)
June, 1999 ($11,000,000)
September, 1999 ($ 9,000,000)
December, 1999 ($ 9,000,000)
March, 2000 ($ 7,000,000)
June, 2000 ($ 7,000,000)
September, 2000 ($ 7,000,000)
December, 2000 and each calendar ($ 5,000,000)
month thereafter
(e) Maximum Capital Expenditures. Borrower and its
Subsidiaries on a consolidated basis shall not make Capital
Expenditures that exceed in the aggregate the amount set forth opposite
each Fiscal Year set forth below:
Fiscal Year Amount
1998 $4,500,000
1999 and each Fiscal Year thereafter $3,000,000
(f) Notwithstanding anything contained in the Agreement or any
other Loan Document to the contrary, for purposes of calculating
compliance with (i) clauses (a), (b) and (c) above, in calculating
EBITDA for any period of determination there shall be included therein,
without duplication, non-cash ESOP, 401K and phantom stock expenses for
such period, as reflected on the books of Borrower in accordance with
GAAP, (ii) clauses (c) and (e) above, in calculating Capital
Expenditures for any period of determination there shall be excluded
therefrom Capital Expenditures made during such period pursuant to
Section 1.6(d) of the Agreement.
2
ANNEX L
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
NOTICE ADDRESSES*
(a) If to Borrower:
Bagcraft Corporation of America
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
With copies to:
Xxxxxx, Xxxxxxxxx and Xxxxx, Ltd.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
(b) If to Agent or GE Capital:
General Electric Capital Corporation
Commercial Finance, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Vice President, Portfolio
Telecopy No.: (000) 000-0000
With copies to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel - Commercial Finance
Telecopy No.: (000) 000-0000
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
1
ANNEX M
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
WIRE INSTRUCTIONS
Lender Instructions
GE Capital Bank: Bankers Trust Company
New York, New York
Acct.: 502 328 54
Ref.: General Electric Capital Corporation,
Commercial Finance Group
ABA: 021 001 033
1
ANNEX N
to
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
COMMITMENTS
Revolving Loan Term Loan A Capital Expenditure Term Loan B Term Loan C
Lender Commitment 1/ Commitment Loan Commitment 2/ Commitment Commitment
GE Capital $18,000,000 3/ $20,000,000 $3,000,000 $5,000,000 $7,500,000
-
----------- ----------- ---------- ---------- ---------
Total: $18,000,000 $20,000,000 $3,000,000 $5,000,000 $7,500,000
=========== =========== ========== ========== ==========
-----------------------------------------------
1/ Incudes $3,000,000 Letter of Credit subfacility
2/ Subfacility of Term Loan A
3/ Includes $3,000,000 Swing Line Commitment
1
