Exhibit 10.19
EXECUTION COPY
FOURTH AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
WITH
WINCUP HOLDINGS, INC.
RADNOR CHEMICAL CORPORATION
STYROCHEM U.S., LTD.
RADNOR HOLDINGS CORPORATION
RADNOR DELAWARE, INC.
STYROCHEM DELAWARE, INC.
WINCUP TEXAS, LTD.
STYROCHEM GP, L.L.C.
STYROCHEM LP, L.L.C.
WINCUP GP, L.L.C.
AND
WINCUP LP, L.L.C.
(AS BORROWERS)
AND
THE LENDERS
December 26, 2001
TABLE OF CONTENTS
Page
I. DEFINITIONS..........................................................1
1.1. Accounting Terms............................................1
1.2. General Terms...............................................2
1.3. Uniform Commercial Code Terms..............................18
1.4. Certain Matters of Construction............................18
II. ADVANCES, PAYMENTS..................................................18
2.1. Revolving Advances.........................................18
2.2. Procedure for Borrowing....................................19
2.3. Disbursement of Advance Proceeds...........................21
2.4. INTENTIONALLY OMITTED......................................22
2.5. Maximum Advances...........................................22
2.6. Repayment of Advances......................................22
2.7. Repayment of Excess Advances...............................22
2.8. Statement of Account.......................................22
2.9. Letters of Credit..........................................23
2.10. Issuance of Letters of Credit..............................23
2.11. Requirements For Issuance of Letters of Credit.............24
2.12. Additional Payments........................................25
2.13. Manner of Borrowing and Payment............................26
2.14.
2.15. Use of Proceeds............................................29
2.16. Defaulting Lender..........................................29
III. INTEREST AND FEES...................................................30
3.1. Interest...................................................30
3.2. Letter of Credit Fees......................................30
3.3. Fees.......................................................31
3.4. Collateral Evaluation and Monitoring Fees..................32
3.5. Computation of Interest and Fees...........................32
3.6. Maximum Charges............................................32
3.7. Increased Costs............................................32
3.8. Basis For Determining Interest Rate Inadequate or Unfair...33
3.9. Capital Adequacy...........................................34
IV. COLLATERAL; GENERAL TERMS...........................................34
4.1. Acknowledgement and Grant of Security Interests............35
4.2. Perfection of Security Interest............................35
4.3. Disposition of Collateral..................................36
4.4 Preservation of Collateral.................................36
4.5. Ownership of Collateral....................................36
i
4.6. Defense of Agent's and Lender's Interests..................37
4.7. Books and Records..........................................37
4.8. Financial Disclosure.......................................38
4.9. Compliance with Laws.......................................38
4.10. Inspection of Premises.....................................38
4.11. Insurance..................................................38
4.12. Failure to Pay Insurance...................................39
4.13. Payment of Taxes...........................................40
4.14. Payment of Leasehold Obligations...........................40
4.15. Receivables................................................40
4.16. Inventory..................................................43
4.17. Intentionally Omitted......................................43
4.18. Exculpation of Liability...................................43
4.19. Environmental Matters......................................43
4.20. Financing Statements.......................................44
V. REPRESENTATIONS AND WARRANTIES......................................44
5.1. Authority..................................................44
5.2. Formation and Qualification................................45
5.3. Survival of Representations and Warranties.................45
5.4. Tax Returns................................................45
5.5. Financial Statements.......................................45
5.6. Corporate Name.............................................46
5.7. O.S.H.A. and Environmental Compliance......................46
5.8. Solvency: No Litigation, Violation, Indebtedness or Default47
5.9. Patents, Trademarks, Copyrights and Licenses...............48
5.10. Licenses and Permits.......................................48
5.11. Default of Indebtedness....................................49
5.12. No Default.................................................49
5.13. No Burdensome Restrictions.................................49
5.14. No Labor Disputes..........................................49
5.15. Margin Regulations.........................................49
5.16. Investment Company Act.....................................49
5.17. Disclosure.................................................50
5.18. Intentionally Omitted......................................50
5.19. Swaps......................................................50
5.20. Conflicting Agreements.....................................50
5.21. Application of Certain Laws and Regulations................50
5.22. Business and Property of Borrowers.........................50
5.23. Section 20 Subsidiaries....................................50
5.24. Acquisition................................................51
VI. AFFIRMATIVE COVENANTS...............................................51
6.1. Payment of Fees............................................51
6.2. Conduct of Business and Maintenance of Existence and Assets51
6.3. Violations.................................................51
ii
6.4. Government Receivables.....................................51
6.5. Fixed Charge Coverage......................................52
6.6. Net Worth..................................................52
6.7. Senior Notes and Second Senior Notes.......................52
6.8. Execution of Supplemental Instruments......................52
6.9. Payment of Indebtedness....................................52
6.10. Standards of Financial Statements..........................52
VII. NEGATIVE COVENANTS..................................................53
7.1. Merger, Consolidation, Acquisition and Sale of Assets......53
7.2. Creation of Liens..........................................54
7.3. Guarantees.................................................54
7.4. Investments................................................54
7.5. Loans......................................................55
7.6. Capital Expenditures.......................................55
7.7. Dividends: Distributions...................................55
7.8. Indebtedness...............................................56
7.9. Nature of Business.........................................56
7.10. Transactions with Affiliates...............................56
7.11. Leases.....................................................57
7.12. Subsidiaries...............................................57
7.13. Fiscal Year and Accounting Changes.........................57
7.14. Pledge of Credit...........................................57
7.15. Amendment of Certificate of Incorporation, Etc.............58
7.16. Compliance with ERISA......................................58
7.17. Senior Notes...............................................58
7.18. Second Senior Notes........................................58
7.19. Prepayment of Indebtedness.................................59
VIII. CONDITIONS PRECEDENT................................................59
8.1. Conditions to Initial Advances.............................59
8.2. Conditions to Each Advance.................................63
IX. INFORMATION.........................................................63
9.1. Disclosure of Material Matters.............................63
9.2. Schedules..................................................64
9.3. Intentionally Omitted......................................64
9.4. Litigation.................................................64
9.5. Material Occurrences.......................................64
9.6. Government Receivables.....................................65
9.7. Annual Financial Statements................................65
9.8. Quarterly Financial Statements.............................65
9.9. Monthly Financial Statements...............................66
9.10. Other Reports..............................................66
9.11. Additional Information.....................................66
9.12. Projected Operating Budget.................................66
iii
9.13. Intentionally Omitted......................................67
9.14. Notice of Suits, Adverse Events............................67
9.15. ERISA Notices and Requests.................................67
9.16. Additional Documents.......................................68
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT..........................70
11.1. Rights and Remedies........................................70
11.2. Agent's Discretion.........................................71
11.3. Setoff.....................................................71
11.4. Rights and Remedies not Exclusive..........................72
11.5. Actions in Concert.........................................72
XII. WAIVERS AND JUDICIAL PROCEEDINGS....................................72
12.1. Waiver of Notice...........................................72
12.2. Delay......................................................72
12.3. Jury Waiver................................................72
XIII. EFFECTIVE DATE AND TERMINATION......................................73
13.1. Term.......................................................73
13.2. Termination................................................73
XIV. REGARDING AGENT.....................................................73
14.1. Appointment................................................73
14.2. Nature of Duties...........................................74
14.3. Lack of Reliance on Agent and Resignation..................74
14.4. Certain Rights of Agent....................................75
14.5. Reliance...................................................75
14.6. Notice of Default..........................................76
14.7. Indemnification............................................76
14.8. Agent in its Individual Capacity...........................76
14.9. Delivery of Documents......................................76
14.10. Borrowers' Undertaking to Agent............................76
XV. MISCELLANEOUS.......................................................77
15.1. Governing Law..............................................77
15.2 Entire Understanding.......................................77
15.3 Successors and Assigns; Participations; New Lenders........80
15.4. Application of Payments....................................81
15.5. Indemnity..................................................81
15.6. Notice.....................................................82
15.7. Survival...................................................84
15.8. Severability...............................................84
15.9. Expenses...................................................84
15.10. Injunctive Relief..........................................84
15.11. Consequential Damages......................................85
15.12. Captions...................................................85
iv
15.13. Counterparts: Telecopied Signatures.......................85
15.14. Construction...............................................85
15.15. Currency Indemnity.........................................85
XVI. BORROWING AGENCY....................................................86
16.1. Borrowing Agency Provisions................................86
16.2. Waiver of Subrogation......................................87
16.3. Obligations Absolute.......................................87
16.4. Waiver.....................................................88
16.5. Recovery...................................................89
16.6. Liability Cumulative.......................................89
v
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.1 - Form of Amended, Restated and Consolidated Revolving Credit
Note
Exhibit 2.2(a) - Form of Notice of Borrowing
Exhibit 2.9 - Form of Letter of Credit and Security Agreement
Exhibit 5.5(b) - Financial Projections
Exhibit 7.12-A - Form of Joinder Agreement
Exhibit 7.12-B - Form of Guaranty (Corporate)
Exhibit 8.1(j) - Form of Officers' Certificate
Exhibit 15.3 - Form of Commitment Transfer Supplement
SCHEDULES
Schedule 1.2 - Permitted Encumbrances
Schedule 4.5 - Locations of Inventory
Schedule 4.15(c) - Location of Borrowers' Executive Offices
Schedule 4.20 - Financing Statements
Schedule 5.2(a) - Formation and Qualification
Schedule 5.2(b) - Subsidiaries
Schedule 5.4 - Federal Tax Identification Numbers
Schedule 5.6 - Corporate Names
Schedule 5.7 - Environmental Releases, Spills, etc.
Schedule 5.8(b) - Pending Litigation
Schedule 5.8(d) - Multiemployer Plans
Schedule 5.9 - Licenses, Trademarks, Patents, Copyrights, Source
Code Escrow Agreements
Schedule 5.10 - Licenses and Permits
Schedule 5.14 - Labor Disputes
Schedule 7.3 - Guarantees
Schedule 7.4 - Investments
Schedule 7.5 - Loans
vi
FOURTH AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
Fourth Amended and Restated Revolving Credit and Security Agreement
dated as of December 26, 2001 between WINCUP HOLDINGS, INC. ("WinCup"), RADNOR
CHEMICAL CORPORATION ("Radnor Chemical"), STYROCHEM U.S., LTD. ("StyroChem"),
RADNOR HOLDINGS CORPORATION ("Radnor"), RADNOR DELAWARE, INC. ("Radnor
Delaware"), STYROCHEM DELAWARE, INC. ("StyroChem Delaware"), WINCUP TEXAS, LTD.
("WinCup Texas"), STYROCHEM GP, L.L.C. ("StyroChem GP"), STYROCHEM LP, L.L.C.
("StyroChem LP"), WINCUP GP, L.L.C. ("WinCup GP") and WINCUP LP, L.L.C.
("WinCup LP") (WinCup, Radnor Chemical, StyroChem, Radnor, Radnor Delaware,
StyroChem Delaware, WinCup Texas, StyroChem GP, StyroChem LP, WinCup GP and
WinCup LP each, a "Borrower" and jointly and severally, the "Borrowers"), PNC
Bank, National Association and each of the other financial institutions which
are and such financial institutions which become a party hereto pursuant to
Section 15.3 (collectively, the "Lenders" and individually a "Lender") and PNC
Bank, National Association ("PNC"), as agent for the Lenders (in such capacity,
the "Agent").
BACKGROUND
----------
WinCup, Radnor Chemical, StyroChem, Radnor, Radnor Delaware, StyroChem
Delaware, WinCup Texas, certain other direct and indirect subsidiaries of
Radnor, Bank of America, N.A. and First Union National Bank entered into a Third
Amended and Restated Revolving Credit and Security Agreement dated as of
December 29,1999 (as the same may have been amended, modified or supplemented,
the "Existing Loan Agreement") and Bank of America, N.A. (the "Prior Agent")
resigned as Agent under the Existing Loan Agreement and has assigned all of its
rights, obligations and interests as Agent and as a Lender under the Existing
Loan Agreement to Agent and Lenders pursuant to an Assignment Agreement dated as
of the date hereof. By execution of this Agreement, WinCup, Radnor Chemical,
StyroChem, Radnor, Radnor Delaware, StyroChem Delaware, WinCup Texas, Agent and
Lenders wish to amend and restate the Existing Loan Agreement on the terms and
conditions hereinafter set forth.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrowers, Agent and Lenders hereby agree as follows:
I. DEFINITIONS.
-----------
1.1. ACCOUNTING TERMS.
----------------
As used in this Agreement or any certificate, report, note or other
document made or delivered pursuant to this Agreement, accounting terms not
defined in Section 1.2 or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not defined, shall have the
respective meanings given to them under GAAP; provided, however, whenever
-------- -------
such accounting terms are used for the purposes of determining compliance with
financial covenants in this Agreement, such accounting terms shall be defined
in accordance with GAAP applied in preparation of the audited financial
statements of Borrowers on a consolidated basis for the fiscal period ended
December 29, 2000.
1.2. GENERAL TERMS.
-------------
For purposes of this Agreement the following terms shall have the
following meanings:
"Advances" shall mean and include the Revolving Advances and Letters of
--------
Credit.
"Affiliate" of any Person shall mean (a) any Person (other than a
---------
Subsidiary) which, directly or indirectly) is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a partner,
shareholder, director or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 5% or more of the securities having ordinary voting power
for the election of directors of such Person, or (y) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agent" shall mean PNC, in its capacity as agent for the Lenders, or
-----
any successor agent designated pursuant to Section 14.3 hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
-------------------
to the higher of (i) the Base Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"Applicable Margin" for any period shall be determined by the Fixed
-----------------
Charge Coverage Ratio of Radnor on a Consolidated Basis calculated for the most
recent fiscal quarter with respect to the four fiscal quarters then ended which
shall be subject to adjustment from time to time as set forth in Section 3.1.
The Applicable Margin with respect to Eurodollar Rate Loans shall be the
percentage set forth below as corresponds to the applicable ratio set forth
below:
Fixed Charge Coverage Ratio Eurodollar
--------------------------- Rate Margin
-----------
Less than 1.5:1 2.50%
1.50:1 to 1.74:1 2.25%
1.75:1 or greater 2.00%
In the event of a Default or Event of Default hereunder, the Applicable
Margin shall be 2.50%.
"Authority" shall have the meaning set forth in Section 4.19(c).
---------
2
"Average Monthly Eurodollar Rate" shall mean, as to any one month
-------------------------------
Interest Period, the average one month LIBOR as published in the Wall Street
Journal over the course of such one month Interest Period.
"Bank" shall mean PNC Bank National Association or its successor.
----
"Base Rate" shall mean the base commercial lending rate of PNC as
---------
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section 4.15(h).
----------------
"Borrower" or "Borrowers" shall have the meaning set forth in the
-------- ---------
preamble to this Agreement and shall include all permitted successors and
assigns of such Persons.
"Borrowers on a consolidated basis" shall mean the consolidation in
---------------------------------
accordance with GAAP of the accounts or other items of Borrowers.
"Borrowing Agent" shall mean Radnor.
---------------
"Borrowing Base" shall have the meaning set forth in Section 2.1
--------------
hereof.
"Business Day" shall mean any day other than Saturday or Sunday or a
------------
legal holiday on which commercial banks are authorized or required by law to be
closed for business in East Brunswick, New Jersey and, if the applicable
Business Day relates to any Eurodollar Rate Loans, such day must also be a day
on which dealings are carried on in the London interbank market.
"CERCLA" shall mean the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
[double sect][double sect] 9601 et seq.
-- ---
"Canadian Receivables Advance Rate" shall have the meaning set forth in
---------------------------------
Section 2.1(a)(y)(ii) hereof.
"Change of Control" shall mean (a) the occurrence of any event (whether
-----------------
in one or more transactions) which results in a transfer of control of any
Borrower to a Person who is not an Original Owner or an Affiliate of an Original
Owner or (b) any merger or consolidation of or with any Borrower or sale or
transfer of all or substantially all of the property or assets of any Borrower
with or to a Person that is not a Borrower hereunder. For purposes of this
definition, "control of any Borrower" shall mean the power, direct or indirect,
(x) to vote 50% or more of the securities having ordinary voting power for the
election of directors of any Borrower or (y) to direct or cause the direction of
the management and policies of Borrower, by contract or otherwise.
3
"Change of Ownership" shall mean (a) any transfer (whether in one or
-------------------
more transactions) of ownership of 50% or more of the common stock of any
Borrower (including for the purposes of the calculation of percentage ownership,
any shares of common stock into which any capital stock of any Borrower held by
any Original Owner is convertible or for which any such shares of the capital
stock of any Borrower or of any other Person may be exchanged and any shares of
common stock issuable to its Parent upon exercise of any warrants, options or
similar rights which may at the time of calculation be held by such Original
Owners) to a Person who is neither (at the time of such transfer) an Original
Owner nor an Affiliate of an Original Owner or (b) any merger, consolidation or
sale of substantially all of the property or assets of any Borrower with or to a
Person that is not a Borrower hereunder.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
-------
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, any Borrower or any of its Affiliates.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
----------
(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
(d) all of each Borrower's right, title and interest in and to
(i) all merchandise returned or rejected by Customers, relating to or
securing any of the Receivables; (ii) all of each Borrower's rights
with respect to Inventory as a consignor, a consignee, an unpaid
vendor, mechanic, artisan, or other lienor, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase; (iii)
all additional amounts due to any Borrower from any Customer relating
to the Receivables; (iv) other property, including warranty claims,
relating to any goods securing this Agreement; (v) all of each
Borrower's contract rights, rights of payment which have been earned
under a contract right, instruments, documents, chattel paper,
warehouse receipts, deposit accounts, money and securities; and (vi) if
and when obtained by any Borrower, all real and personal property of
third parties in which such Borrower has been granted a lien or
security interest as security for the payment or enforcement of
Receivables;
4
(e) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers,
computer software (whether owned by any Borrower or in which it has an
interest), computer programs, tapes, disks and documents relating to
(a), (b), (c) or (d) of this Paragraph; and
(f) all proceeds and products of (a), (b), (c), (d) and (e) in
whatever form, including, but not limited to: cash, deposit accounts
(whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood and credit insurance),
Investment Property, negotiable instruments and other instruments for
the payment of money, chattel paper, security agreements, documents,
eminent domain proceeds, condemnation proceeds and tort claim proceeds.
"Commitment Percentage" of any Lender shall mean as to each Lender, the
---------------------
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(b)
hereof.
"Commitment Transfer Supplement" shall mean a document in the form of
------------------------------
Exhibit 15.3 hereto, properly completed and otherwise in form and substance
------------
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Consents" shall mean all filings and all licenses, permits, consents,
--------
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on a Borrower's
business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving Interest Rate
-------------
or the Default Rate.
"Controlled Group" shall mean all members of a controlled group of
----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to
--------
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which any Borrower is to deliver any personal property or perform
any services.
"Debt Payments" shall mean and include all cash actually expended to
-------------
make (a) total interest payments on any Indebtedness, plus, (b) scheduled
principal payments on all Indebtedness, plus, (c) taxes actually paid and not
accrued, excluding taxes paid and not accrued in connection with the sale of the
European Businesses.
5
"Default" shall mean an event which, with the giving of notice or
-------
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1 hereof.
------------
"Depository Accounts" shall have the meaning set forth in Section
-------------------
4.15(h) hereof.
"Determination Date" shall have the meaning set forth in Section 2.15
------------------
hereof.
"Documents" shall have the meaning set forth in Section 8.1(c) hereof.
---------
"Dollars" and the sign "$" shall mean lawful money of the United States
-------
of America.
"Domestic Rate Loan" shall mean any Advance that bears interest based
------------------
upon the Alternate Base Rate.
"EBITDA" shall mean Net Income plus interest expense, taxes,
------
depreciation and amortization deducted in calculating Net Income for such
period, determined in accordance with GAAP, excluding with respect to the sale
of the European businesses, (i) any gain or loss and (ii) any foreign currency
translation adjustments.
"Effective Date" shall mean December 26, 2001 or such other date as may
--------------
be agreed to by the parties hereto.
"Eligible Inventory" shall mean and include Inventory (including
------------------
in-transit Inventory provided that Advances against such in-transit Inventory do
not exceed $1,500,000 in the aggregate at any one time outstanding) excluding
work in process, with respect to each Borrower, valued at the lower of cost or
market value, determined on a first-in-first-out basis, which is not, in Agent's
opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole
discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem appropriate including, without limitation,
whether the Inventory is subject to a perfected, first priority security
interest in favor of Agent for the ratable benefit of the Lenders and whether
the Inventory conforms to all standards imposed by any governmental agency,
division or department thereof which has regulatory authority over such goods or
the use or sale thereof
"Eligible Canadian Receivables" shall mean and include, with respect to
-----------------------------
each Borrower, Receivables constituting Eligible Receivables (other than with
respect to the requirement under clause (f) in the definition of Eligible
Receivables), which arise out of a sale to a customer located in Canada
"Eligible Receivables" shall mean and include, with respect to each
--------------------
Borrower, each Receivable arising in the ordinary course of such entity's
business and which Agent, in its sole credit judgment, shall deem to be an
Eligible Receivable, based on such considerations as Agent may from time to time
deem appropriate. A Receivable shall not be deemed eligible unless such
6
Receivable is subject to Agent's first priority perfected security interest for
the ratable benefit of the Lenders and no other Lien other than Permitted
Encumbrances, and is evidenced by an invoice, xxxx of lading or other
documentary evidence satisfactory to Agent. In addition, no Receivable shall be
an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an
Affiliate of any Borrower or to a Person controlled by an Affiliate
of any Borrower;
(b) it is due or unpaid more than ninety (90) days after
the original invoice date;
(c) fifty percent (50%) or more of the Receivables
from the Customer are not deemed Eligible Receivables hereunder.
Such percentage may, in Agent's sole discretion, be increased or
decreased from time to time;
(d) any covenant, representation or warranty contained
in this Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent
to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial
part of its property or call a meeting of its creditors, (ii) admit in
writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing
for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, any petition which is filed against it in any involuntary
case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental
United States of America or Canada, unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable to Agent
in its sole discretion;
(g) the sale to the Customer is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any
other repurchase or return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection
of such Receivable is insecure or that such Receivable may not be paid
by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, any
state or any department, agency or instrumentality of any of them,
unless the applicable Borrower effectuates an assignment of its
right to payment of such Receivable to Agent pursuant to the
7
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section
3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise
-- --- -- ---
complied with other applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not
been shipped and delivered to and accepted by the Customer or the
services giving rise to such Receivable have not been performed by the
applicable Borrower and accepted by the Customer or the Receivable
otherwise does not represent a final sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such
Receivable exceeds such limit;
(l) the Receivable is subject to any offset, credit,
deduction, defense, dispute, or counterclaim to the extent of such
offset, deduction, defense, dispute or counterclaim, the Customer is
also a creditor or supplier of a Borrower or the Receivable is
contingent in any respect or for any reason;
(m) the applicable Borrower has made any agreement with a
Customer for any deduction therefrom, except for discounts or
allowances made in the ordinary course of business for prompt payment,
all of which discounts or allowances are reflected in the calculation
of the face value of each respective invoice related thereto;
(n) shipment of the merchandise or the rendition of
services has not been completed;
(o) any return, rejection or repossession of the
merchandise has occurred or the rendition of services has been
disputed;
(p) such Receivable is not payable to a Borrower; or
(q) such Receivable is not otherwise satisfactory to
Agent as determined in good faith by Agent in the exercise of its
discretion in a reasonable manner.
"Environmental Laws" shall mean all federal, state and local
------------------
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of such
---------
Borrower's goods (excluding Inventory) whether now owned or hereafter acquired
and wherever located including, without limitation, all equipment, machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
8
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
-----
as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate Loan" shall mean an Advance at anytime that bears
--------------------
interest based on the Eurodollar Rate.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
---------------
current Interest Period relating thereto the interest rate per annum determined
by PNC by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by PNC in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the average of the London interbank offered rates
for U.S. Dollars quoted by the British Bankers' Association as set forth on Dow
Xxxxx Markets Service (formerly known as Telrate) (or appropriate successor or,
if British Banker's Association or its successor ceases to provide such quotes,
a comparable replacement determined by PNC) display page 3750 (or such other
display page on the Dow Xxxxx Markets Service system as may replace display page
3750) two (2) Business Days prior to the first day of such Interest Period for
an amount comparable to such Eurodollar Rate Loan and having a borrowing date
and a maturity comparable to such Interest Period by (ii) a number equal to 1.00
minus the Reserve Percentage. The Eurodollar Rate may also be expressed by the
following formula:
Average of London interbank offered rates quoted by BBA as shown on
Eurodollar Rate = Dow Xxxxx Markets Service display page 3750
or appropriate successor
------------------------------------------------
1.00 - Reserve Percentage
"Event of Default" shall mean the occurrence and continuance of any of
----------------
the events set forth in Article X hereof
"Federal Funds Rate" shall mean, for any day, the weighted average of
------------------
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"Fixed Charge Coverage Ratio" for any period shall mean with respect to
---------------------------
any fiscal period the ratio of (a) EBITDA minus unfinanced capital expenditures
made during such period to (b) all Debt Payments during such period.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
--------------
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
9
"General Intangibles" shall mean and include as to each Borrower all of
-------------------
such Borrower's general intangibles, whether now owned or hereafter acquired
including, without limitation, all payment intangibles, choses in action, causes
of action, corporate or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, software, computer information, source codes, codes,
records, and registrations, licenses, franchises, customer lists, tax refunds,
tax refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to such Borrower to secure
payment of any of the Receivables by a Customer, all rights of indemnification
and all other intangible property of every kind and nature (other than
Receivables).
"Governmental Body" shall mean any nation or government, any state or
-----------------
other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Hazardous Discharge" shall have the meaning set forth in Section
-------------------
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
-------------------
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA or any other applicable
-- ---
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to regulation
----------------
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"Indebtedness" of a Person at a particular date shall mean all
------------
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"Indebtedness for Borrowed Money" of a person means at any time the sum
-------------------------------
at such time of (a) Indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c)
10
lease obligations of such Person with respect to capital leases, (d) all
liabilities secured by any Lien on any property owned by such Person, to the
extent attached to such Person's interest in such property, even though such
Person has not assumed or become personally liable for the payment thereof, (e)
obligations of third parties which are being guarantied or indemnified against
by such Person or which are secured by the property of such Person; (f) any
obligation of such Person or a member of Controlled Group to a Multiemployer
Plan; and (h) any obligations, liabilities or indebtedness, contingent or
otherwise, under or in connection with, any interest rate or currency swap
agreements, cap, floor, and collar agreements, currency spot, foreign exchange
and forward contracts and other similar agreements and arrangements; but
excluding trade and other accounts payable in the ordinary course of business.
"Indenture" shall mean the Indenture dated as of December 5, 1996
---------
between Radnor, as issuer, WinCup, Radnor Chemical Corporation f/k/a/ SP
Acquisition Co., Radnor Delaware, Radnor Management, Inc., StyroChem,
WinCup Texas, StyroChem GP, L.L.C., StyroChem LP, L.L.C., WinCup GP, L.L.C.,
WinCup LP, L.L.C., Radnor Management Delaware, Inc., StyroChem Delaware and
WinCup Europe Delaware, Inc. as guarantors and First Union National Bank, as
trustee, as amended through the date hereof.
"Ineligible Security" shall mean any security which may not be
-------------------
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"Interest Coverage" for any period shall mean the ratio of (1) EBITDA
-----------------
to (2) Total Interest.
"Interest Period" shall mean as to any Eurodollar Rate Loan, the period
---------------
provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Borrower all of such
---------
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description which are or might be
used or consumed in such Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in Section
----------------------
2.1(a)(y)(iii) hereof.
"Investment Property" shall mean and include as to each Borrower, all
-------------------
of such Borrower's now owned or hereafter acquired securities (whether
certificated or uncertificated), securities entitlements, securities accounts,
commodities contracts and commodities accounts.
11
"Lender" and "Lenders" shall have the meaning ascribed to such term in
------
the Preamble, each Purchasing Lender and shall include each person which is a
transferee, successor or assign of any Lender or any Purchasing Lender.
"Letters of Credit" shall have the meaning set forth in Section 2.9.
-----------------
"Letter of Credit Fees" shall mean the fees set forth in Section 3.2.
---------------------
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the condition, operations, assets, business or prospects of the applicable
Person or Persons, (b) any Borrower's ability to pay the Obligations in
accordance with the terms thereof, (c) the value of the Collateral, the Liens on
the Collateral or the priority of any such Lien, or (d) the practical
realization of the benefits of Agent's and each Lender's rights and remedies
under this Agreement and the Other Documents, all as determined by the Agent in
the good faith exercise of its sole and absolute discretion.
"Maximum Loan Amount" shall mean $35,000,000.
-------------------
"Monthly Advances" shall have the meaning set forth in Section 3.1
----------------
hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Sections 3(37) and 4001(a)(3) of ERISA.
"Net Income" shall mean net income, determined in accordance with GAAP.
----------
"Net Worth" shall mean, at a particular date, (a) the aggregate amount
---------
of all assets of Radnor on a Consolidated Basis as may be properly classified as
such in accordance with GAAP consistently applied less (b) the aggregate amount
of all liabilities of Radnor on a Consolidated Basis. Notwithstanding the
foregoing, foreign currency translation adjustments reducing the carrying value
of the net assets not in excess of $15,000,000 will be excluded from such
calculation of Net Worth.
"Note" shall mean the Revolving Credit Note.
----
"Obligations" shall mean and include any and all loans, advances,
-----------
debts, liabilities, obligations, fees, covenants and duties owing by Borrowers,
or any of them, to Lenders or Agent or to any other direct or indirect
subsidiary or affiliate of Agent or any Lender of any kind or
12
nature, present or future (including, without limitation, any interest accruing
thereon after maturity, or after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding relating
to any Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, whether arising under any agreement, instrument
or document, (including, without limitation, this Agreement and the Other
Documents) whether or not for the payment of money, whether arising by reason
of an extension of credit, opening of a letter of credit, loan, equipment lease
or guarantee, under any interest or currency swap, future, option or other
similar agreement, or in any other manner, whether arising out of overdrafts or
deposit or other accounts or electronic funds transfers (whether through
automated clearing houses or otherwise) or out of the Agent's or any Lenders
non-receipt of or inability to collect funds or otherwise not being made whole
in connection with depository transfer check or other similar arrangements,
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and all of any
Borrower's Indebtedness and/or liabilities under this Agreement, the Other
Documents or under any other agreement between Agent or Lenders and any
Borrower and any amendments, extensions, renewals or increases and all costs
and expenses of Agent and any Lender incurred in the documentation,
negotiation, modification, enforcement, collection or otherwise in connection
with any of the foregoing, including but not limited to reasonable attorneys'
fees and expenses and all obligations of any Borrower to Agent or Lenders to
perform acts or refrain from taking any action.
"Other Documents" shall mean the Note, the Questionnaire and any and
---------------
all other agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, letter of credit applications
and agreements and all other writings heretofore, now or hereafter executed
and/or delivered by any Borrower to Agent or any Lender in respect of the
transactions contemplated by this Agreement, as such documents may be amended,
restated or supplemented from time to time.
"Parent" shall mean with respect to any Person, a corporation or other
------
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the right by
-----------
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in form and substance satisfactory to such Lender.
"Payment Office" shall mean initially Xxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxx
--------------
Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and each Lender to be the
Payment Office.
13
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for the
----------------------
ratable benefit of the Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; provided, that, the Lien shall have no effect on the
-------- ----
priority of the Liens in favor of Agent for the ratable benefit of the Lenders
or the value of the assets in which Agent has such a Lien and a stay of
enforcement of any such Lien for the ratable benefit of the Lenders shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing; (d) deposits or
pledges to secure obligations under worker's compensation, social security or
similar laws, or under unemployment insurance; (e) deposits or pledges to secure
bid tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of any Borrower's business; (f) judgment
Liens that have been stayed or bonded and mechanics', worker's, materialmen's or
other like Liens arising in the ordinary course of any Borrower's business with
respect to obligations which are not due or which are being contested in good
faith by the applicable Borrower; (g) Liens placed upon fixed assets hereafter
acquired to secure a portion of the purchase price thereof, provided that (x)
any such lien shall not encumber any other property of any Borrower (other than
replacements and additions to the acquired fixed assets) and (y) the aggregate
amount of Indebtedness secured by such Liens incurred as a result of such
purchases during any fiscal year shall not exceed the amount provided for in
Section 7.6; and (g) Liens disclosed on Schedule 1.2.
------------
"Person" shall mean any individual, sole proprietorship, partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
----
Section 3(3) of ERISA, maintained for employees of a Borrower or any U.S. member
of the Controlled Group or any such Plan to which a Borrower or any U.S. member
of the Controlled Group is required to contribute on behalf of any of its
employees.
"Prepayment Date" shall have the meaning set forth in Section 13.1
---------------
hereof.
"Prior Agent" shall mean Bank of America, N.A.
-----------
"Projections" shall have the meaning set forth in Section 5.5(b)
-----------
hereof.
"Purchasing Lender" shall have the meaning set forth in Section 15.3
-----------------
hereof.
"Questionnaire" shall mean the Perfection Certificate and the responses
-------------
thereto provided by Borrowers and delivered to Agent and/or its counsel.
14
"Radnor" shall mean Radnor Holdings Corporation, a corporation
------
organized and existing under the laws of the State of Delaware.
"Radnor Chemical" shall mean Radnor Chemical Corporation, a corporation
---------------
organized and existing under the laws of the State of Delaware.
"Radnor Delaware" shall mean Radnor Delaware, Inc., a corporation
----------------
organized and existing under the laws of the State of Delaware.
"Radnor on a Consolidated Basis" shall mean the consolidation in
------------------------------
accordance with GAAP of the accounts or other items of Radnor and its
Subsidiaries.
"RCRA" shall mean the Resource Conservation and Recovery Act,
----
42 U.S.C. [sec][sec] 6901 et seq., as same may be amended from time to time.
-- ---
"Receivables" shall mean and include as to each Borrower all of such
-----------
Borrower's accounts, contract rights, instruments (including those evidencing
indebtedness among Borrowers and its Affiliates), documents, chattel paper
(including electronic chattel paper), general intangibles relating to accounts,
drafts and acceptances, credit card receivables, and all other forms of
obligations owing to such Borrower arising out of or in connection with the sale
or lease of Inventory or the rendition of services, all guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to the Agent for the
ratable benefit of the Lenders hereunder.
"Receivables Advance Rate" shall have the meaning set forth in Section
------------------------
2.1(a)(y)(i) hereof.
"Related Person" shall mean as to any Person, any other Person which,
--------------
together with such Person, is treated as a single employer under Section 414(c)
of the Code.
"Release" shall have the meaning set forth in Section 5.7(c)(i) hereof
-------
"Reportable Event" shall mean a reportable event described in Section
----------------
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty one
----------------
percent (51%) of the Advances or if no Advances are outstanding, fifty one
percent (51%) of the Commitment Percentages.
"Reserve Percentage" shall mean the maximum effective percentage in
------------------
effect on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding.
15
"Revolving Advances" shall mean Advances made other than Letters of
------------------
Credit.
"Revolving Credit Note" shall have the meaning set forth in Section
---------------------
2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per annum equal
-----------------------
to (a) the Alternate Base Rate with respect to Domestic Rate Loans or (b) the
sum of the Eurodollar Rate plus the Applicable Margin with respect to Eurodollar
Rate Loans.
"Second Indenture" shall mean the Indenture dated as of October 15,
----------------
1997 between Radnor, as issuer, WinCup, Radnor Chemical, StyroChem, Radnor
Management, Inc., Radnor Delaware, WinCup Texas, StyroChem GP, L.L.C.,
StyroChem LP, L.L.C., WinCup GP, L.L.C., WinCup LP, L.L.C., Radnor Management
Delaware, Inc., StyroChem Delaware and WinCup Europe Delaware, Inc. as
guarantors and First Union National Bank, as trustee.
"Second Senior Notes" shall mean the 10% Series B Senior Notes due 2003
-------------------
issued by Radnor pursuant to the Second Indenture and any notes issued in
exchange or substitution therefor.
"Senior Notes" shall mean the 10% Senior Notes due 2003 issued by
------------
Radnor pursuant to the Indenture and any notes issued in exchange or
substitution therefor.
"Settlement Date" shall mean the Effective Date and thereafter
---------------
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"StyroChem" shall mean StyroChem US, Ltd. formerly StyroChem
---------
International, Inc., a limited partnership organized and existing under the
laws of the State of Texas.
"StyroChem Delaware" shall mean StyroChem Delaware, Inc., a corporation
------------------
organized and existing under the laws of the State of Delaware.
"Subsidiary" shall mean a corporation or other entity of whose shares
----------
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Term" shall mean the Effective Date through December 31, 2004.
----
"Termination Event" shall mean (i) a Reportable Event with respect to
-----------------
any Plan or Multiemployer Plan; (ii) the withdrawal of either Borrower or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (v) any
16
event or condition (a) which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
either Borrower or any member of the Controlled Group from a Multiemployer
Plan.
"Total Interest" for any period shall mean the accrued and unpaid
--------------
interest obligations of Radnor on a Consolidated Basis with respect to its
outstanding Indebtedness during such period.
"Toxic Substance" shall mean and include any material present on any
---------------
real property owned by any Borrower or any leasehold interests of any Borrower
which has been shown to have significant adverse effect on human health or which
is subject to regulation under the Toxic Substances Control Act (TSCA), 15
U.S.C. [douable sect] 2601 et seq., applicable state law, or any other
-- ---
applicable Federal or state laws now in force or hereafter enacted relating to
toxic substances. "Toxic substance" includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Transferee" shall have the meaning set forth in Section 15.3(b)
----------
hereof.
"Treaty of European Union" shall mean the treaty of Rome of March 25,
------------------------
1957, as amended by the Single European Act of 1986 and the Maastricht Treaty
(which was signed at Maastricht on February 7, 1992, and came into force on
November 1, 1993), as amended from time to time.
"Undrawn Availability" "at a particular date shall mean an amount equal
--------------------
to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Loan Amount,
minus (b) the sum of (i) the outstanding amount of Advances plus (ii) allx
----- ----
amounts due and owing to Borrowers' trade creditors which are outstanding more
than 60 days beyond normal trade terms plus (iii) fees and expenses for which
----
Borrowers are liable hereunder but which have not been paid or charged to
Borrowers' Account.
"Week" shall mean the time period commencing with the opening of
----
business on a Wednesday and ending on the end of business on the following
Tuesday.
"WinCup" shall mean WinCup Holdings, Inc., a corporation organized and
------
existing under the laws of the State of Delaware.
"WinCup L.P." shall mean WinCup Holdings, L.P., a limited partnership
-----------
organized under the laws of the State of Delaware which was dissolved effective
July 7, 1997 pursuant to that certain Certificate of Dissolution dated August
25, 1997.
"WinCup Texas" shall mean WinCup Texas, Ltd., a limited partnership
------------
organized and existing under the laws of the State of Texas.
17
1.3. UNIFORM COMMERCIAL CODE TERMS.
-----------------------------
All terms used herein and defined in the Uniform Commercial Code as
adopted in the Commonwealth of Pennsylvania from time to time shall have the
meaning given therein unless otherwise defined herein. To the extent the
definition of any category or type of Collateral is expanded by any amendment,
modification or revision to the Uniform Commercial Code, such expanded
definition will apply automatically as of the date of such amendment,
modification or revision.
1.4. CERTAIN MATTERS OF CONSTRUCTION.
-------------------------------
The terms "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders.
Wherever appropriate in the context, terms used herein in the singular also
include the plural and vice versa. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements to which Agent is a
party, including, without limitation, references to any of the Other Documents
shall include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
II. ADVANCES, PAYMENTS
------------------
2.1. REVOLVING ADVANCES.
------------------
(a) Subject to the terms and conditions set forth in this
Agreement, including, without limitation, Section 2.1(b), each Lender,
severally and not jointly, agrees to make Revolving Advances to
Borrowers in accordance with the procedures provided for herein in an
aggregate amount outstanding at any time not greater than such Lender's
Commitment Percentage of the Borrowing Base (as defined below) minus
-----
the undrawn or unreimbursed amount of outstanding Letters of Credit
unless Borrowers have deposited with Agent cash collateral in such
amounts and in accordance with Section 3.2. For purposes hereof,
"Borrowing Base" shall mean the lesser of (x) the Maximum Loan Amount
or (y) the sum of:
(i) up to 85%, subject to the provisions of Section
2.1(b) hereof ("Receivables Advance Rate"), of Eligible
Receivables, plus
----
(ii) the lesser of (x) $1,000,000 or (y) up to 85%,
----------
subject to the provisions of 2.1(b) hereof ("Canadian
Receivables Advance Rate"), of Eligible Canadian Receivables,
plus
----
(iiiii) the lesser of (x) $20,000,000 or (y) up to 60%,
subject to the provisions of Section 2.1(b) hereof ("Inventory
Advance Rate"), of Eligible Inventory of Borrowers (the
Receivables Advance Rate, the Canadian
18
Receivables Advance Rate and the Inventory Advance Rate shall
be referred to, collectively, as the "Advance Rates"), minus
-----
(iv) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary.
The amount derived from the sum of Sections 2.1(a)(y)(i),
(ii), (iii) and (iv) at any time and from time to time shall be
referred to as the "Formula Amount". The Revolving Advances shall be
evidenced by one or more secured promissory notes (collectively, the
"Revolving Credit Note") substantially in the form attached hereto as
Exhibit 2.1(a).
(b) Discretionary Rights. The Advance Rates may be increased
--------------------
by the Agent, with the consent of the Required Lenders, or decreased by
the Agent, with the consent of the Required Lenders, at any time and
from time to time in the exercise of its reasonable discretion.
Borrowers consent to any such increases or decreases and acknowledge
that decreasing the Advance Rates or increasing the reserves may limit
or restrict Advances requested by any Borrower.
2.2. PROCEDURE FOR BORROWING.
-----------------------
(a) Borrowing Agent on behalf of any Borrower may notify Agent prior to
11:00 a.m. on a Business Day of a Borrower's request to incur by delivery of a
Notice of Borrowing, substantially in the form of Exhibit 2.2(a) attached
--------------
hereto, on that day, a Revolving Advance hereunder. Should any amount required
to be paid as interest hereunder, or as fees or other charges under this
Agreement or any other agreement with Agent or any Lender, or with respect to
any other Obligation, become due, same shall be deemed a request for a Revolving
Advance as of the date such payment is due, in the amount required to pay in
full such interest, fee, charge or Obligation under this Agreement or any other
agreement with Agent or any Lender, and such request shall be irrevocable. Any
request for a Revolving Advance shall be deemed reduced automatically and
without notice so as not to be in excess of, after giving effect to the
requested Revolving Advance, an amount which would cause the aggregate amount of
all Advances outstanding to be greater than the Borrowing Base.
(b) Notwithstanding the provisions of (a) above, in the event any
Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give
Agent at least three (3) Business Days' prior written notice, specifying (i) the
date of the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be in a minimum amount of $1,000,000.00 and in integral multiples
of $500,000.00 thereafter, and (iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two,
three or six months; provided, if an Interest Period would end on a day that is
--------
not a Business Day, it shall end on the next succeeding Business Day unless such
day falls in the next succeeding calendar month in which case the Interest
Period shall end on the next preceding Business Day. No Eurodollar Rate Loan
shall be made available to Borrower during the continuance of a Default or an
Event of Default. There shall not be outstanding more than seven (7) Eurodollar
Rate Loans, in the aggregate.
19
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on
the date such Eurodollar Rate Loan is made and shall end on such date as a
Borrower may elect as set forth in (b)(iii) above provided that:
(iv) no Interest Period shall end after the last day of the Term;
and
(v) any Interest Period which begins on a day for which there is
no numerically corresponding day in the calendar month during which
such Interest Period is to end, shall (subject to subsection (b) above)
end on the last day of such calendar month.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan or Domestic
Rate Loan convert any such loan into a loan of another type in the same
aggregate principal amount provided that any conversion of a Eurodollar Rate
Loan shall be made only on the last Business Day of the then current Interest
Period applicable to such Eurodollar Rate Loan. If Borrower desires to convert a
loan, Borrowing Agent shall give the Agent not less than three (3) Business
Days' prior written notice, specifying the date of such conversion, the loans to
be converted and if the conversion is from a Domestic Rate Loan to any other
type of loan, the duration of the first Interest Period therefor.
(e) Borrowers may prepay the Revolving Advances in accordance with the
provisions of Section 13.1 with accrued interest on the principal being prepaid
to the date of such repayment. In the event that any prepayment of a Eurodollar
Rate Loan is required or permitted on a date other than the last Business Day of
the then current Interest Period with respect thereto Borrowers shall indemnify
Agent and Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
any Lender may sustain or incur as a consequence of any prepayment or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including but not limited to, any interest payable by Agent or
any Lender to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.
20
(g) Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender (for purposes of
this subsection (g), the term "Lender" shall include any Lender and the office
or branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar
Rate Loans, the obligation of any Lender to make Eurodollar Rate Loans hereunder
shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate
Loans are then outstanding, promptly upon request from Agent, either pay all
such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into loans of another type. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not applicable to such Eurodollar
Rate Loan, Borrowers shall pay such Lender, upon such Lender's request, such
amount or amounts as may be necessary to compensate such Lender for any loss or
expense sustained or incurred by such Lender in respect of such Eurodollar Rate
Loan as a result of such payment or conversion, including (but not limited to)
any interest or other amounts payable by such Lender to lenders of funds
obtained by such Lender in order to make or maintain such Eurodollar Rate Loan.
A certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent to Borrowing Agent shall be conclusive absent
manifest error; provided, each Lender shall use its best efforts to minimize or
avoid any such additional payment.
(h) Anything in Section 2.2(b) to the contrary notwithstanding, any
Borrower may obtain a Eurodollar Rate Loan upon at least three (3) Business
Days' prior written notice for an Interest Period of one month with interest on
such Eurodollar Rate Loans to be charged at the Average Monthly Eurodollar Rate.
Borrowing Agent shall specifically provide in the prior written notice that
interest is to be charged at the Average Monthly Eurodollar Rate; otherwise,
interest shall be charged at the Eurodollar Rate for Eurodollar Rate Loans
having an Interest Period of one month.
2.3. DISBURSEMENT OF ADVANCE PROCEEDS.
--------------------------------
All Revolving Advances shall be disbursed from whichever office or
other place Agent may designate from time to time and, together with any and all
other Obligations of Borrowers to Agent or any of the Lenders, shall be charged
to the applicable Borrower's account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested on behalf of any Borrower or deemed
to have been requested by such Borrower under Section 2.2(a) hereof shall, with
respect to requested Revolving Advances to the extent the Lenders make such
Revolving Advances, be made available to such Borrower on the day so requested
by way of credit to such Borrower's operating account at the Bank, or such other
bank as Borrowing Agent may designate following notification to Agent, in
federal funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested, be disbursed to Agent to be applied to
the outstanding Obligations giving rise to such deemed request.
21
2.4. INTENTIONALLY OMITTED.
2.5. MAXIMUM ADVANCES.
----------------
The aggregate balance of Advances outstanding at any time shall not
exceed the lesser of (a) the Maximum Loan Amount or (b) the Formula Amount.
2.6. REPAYMENT OF ADVANCES.
---------------------
(a) The Advances shall be due and payable in full on the last day
of the Term subject to earlier prepayment as herein provided.
(b) Borrowers recognize that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit a Borrower's account
as of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of such Borrower's
Obligations one (1) Business Day after receipt by Agent of good funds with
respect to such items of payment. Agent is not, however, required to credit any
Borrower's account for the amount of any item of payment which is unsatisfactory
to Agent and Agent may charge such Borrower's account for the amount of any item
of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent at the
Payment Office not later than 1:00 P.M. New York Time on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging the applicable
Borrower's account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7. REPAYMENT OF EXCESS ADVANCES.
----------------------------
The aggregate balance of Advances outstanding at any time in
excess of the maximum amount of Advances permitted hereunder shall be
immediately due and payable without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has occurred.
2.8. STATEMENT OF ACCOUNT.
--------------------
Agent shall maintain, in accordance with its customary procedures, a
loan account in the name of each Borrower in which shall be recorded the date
and amount of each Advance made
22
by Lenders and the date and amount of each payment in respect thereof; provided,
--------
however, the failure by Agent to record the date and amount of any Advance shall
-------
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Lenders and each Borrower, during such month. The monthly statements shall be
deemed correct and binding upon Borrowers in the absence of manifest error and
shall constitute an account stated between Lenders and Borrowers unless Agent
receives a written statement of a Borrower's specific exceptions thereto within
thirty (30) days after such statement is received by Borrowing Agent. The
records of Agent with respect to the loan account shall be prima facie evidence
----- -----
of the amounts of Advances and other charges thereto and of payments applicable
thereto, absent manifest error.
2.9. LETTERS OF CREDIT.
-----------------
(a) Subject to the terms and conditions hereof, (i) Agent shall
issue or cause the issuance of standby and documentary letters of credit for the
Borrowers ("Letters of Credit") provided, however, that Agent will not be
-------- -------
required to issue or cause to be issued Letters of Credit to the extent that the
face amount of such Letters of Credit plus the Revolving Advances outstanding
----
(with the requested Letter of Credit being deemed to be outstanding for purposes
of this calculation) would exceed the Borrowing Base.
(b) The maximum amount of outstanding (i) Letters of Credit that
are standby letters of credit hereunder shall not exceed $5,000,000 in the
aggregate at any time, and (ii) Letters of Credit that are documentary letters
of credit hereunder shall not exceed $1,000,000 in the aggregate at any time.
Letters of Credit issued hereunder shall not have an original expiry date more
than one year from the date of issuance or extension, nor an expiry date,
whether as originally issued or by extension, extending beyond the end of the
Term.
(c) All disbursements or payments related to Letters of Credit
shall be deemed to be Revolving Advances and shall bear interest at
the Revolving Interest Rate for Domestic Rate Loans (unless and until
converted to a Eurodollar Rate Loan); and to the extent not drawn upon,
Letters of Credit that have not been drawn upon shall not bear
interest. Letters of Credit shall be subject to the terms and
conditions set forth in the Application and Agreement for Letter of
Credit attached hereto as Exhibit 2.9.
-----------
2.10. ISSUANCE OF LETTERS OF CREDIT.
-----------------------------
(a) Borrowing Agent on behalf of any Borrower may request Agent to
issue or cause the issuance of a Letter of Credit by delivering to Agent at the
Payment Office, Agent's standard form of Letter of Credit and Security Agreement
together with Bank's standard form of Letter of Credit Application
(collectively, the "Letter of Credit Application") completed to the satisfaction
of Agent; and, such other certificates, documents and other papers and
information as Agent may reasonably request. Borrowing Agent, on behalf of
Borrowers, also has the right to give instructions and make agreements with
respect to any application, any applicable letter of credit and security
agreement, any applicable letter of credit reimbursement agreement and/or any
other
23
applicable agreement, any letter of credit and the disposition of documents,
disposition of any unutilized funds, and to agree with Agent upon any amendment,
extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date not later than twelve (12) months
after such Letter of Credit's date of issuance and in no event later than the
last day of the Term. Each Letter of Credit Application and each Letter of
Credit shall be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500)
and any amendments or revision thereof and, to the extent not inconsistent
therewith, the laws of the Commonwealth of Pennsylvania.
(c) Agent shall use its reasonable efforts to notify Lenders of
the request by Borrowing Agent for a Letter of Credit hereunder.
(d) Agent shall have absolute discretion whether to accept any
draft. Without in any way limiting Agent's absolute discretion whether to accept
any draft, Borrowing Agent will not present for acceptance any draft, and Agent
will generally not accept any drafts (i) that arise out of transactions
involving the sale of goods by any Borrower not in the ordinary course of its
business, (ii) that involve a sale to an Affiliate of any Borrower and (iii)
that involve any purchase for which Agent has not received all related
documents, instruments and forms requested by Agent.
2.11. REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.
----------------------------------------------
(a) In connection with the issuance of any Letter of Credit,
(subject to the limitations of the Cross-Guaranty set forth in Section 17.1
hereof) Borrowers shall indemnify, save and hold Agent and each Lender harmless
from any loss, cost, expense or liability, including, without limitation,
payments made by Agent and any Lender, and expenses and reasonable attorneys'
fees incurred by Agent or any Lender arising out of, or in connection with, any
Letter of Credit to be issued or created for a Borrower. Borrowers shall be
bound by Agent's or any issuing or accepting bank's regulations and good faith
interpretations of any Letter of Credit issued or created for its account,
although this interpretation may be different from its own, and, neither Agent
nor any Lender, the bank which opened the Letter of Credit, nor any of its
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's or any Lender's or such correspondents' willful misconduct or
gross (not mere) negligence.
(b) Borrowing Agent shall authorize and direct any bank which
issues a Letter of Credit to name the applicable Borrower as the "Account Party"
therein and to deliver to Agent all instruments, documents, and other writings
and property received by the bank pursuant to the Letter of Credit and to accept
and rely upon Agent's instructions and agreements with respect to
24
all matters arising in connection with the Letter of Credit, the application
therefor or any acceptance therefor.
(c) In connection with all Letters of Credit issued or caused to
be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority, (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign such Borrower's name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct or gross (not mere)
negligence. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount equal
to the product of such Lender's Commitment Percentage times the aggregate amount
of all disbursements made with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the Borrowing Base minus the undrawn or
-----
unreimbursed amount of outstanding Letters of Credit issued on behalf of the
Borrowers, and such disbursement is not reimbursed by Borrowers within two (2)
Business Days, Agent shall promptly notify each Lender and upon Agent's demand
each Lender shall pay to Agent such Lender's proportionate share of such
unreimbursed disbursement together with such Lender's proportionate share of
Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from Borrowers of any amount
disbursed by Agent for which Agent had already been reimbursed by the Lenders,
Agent shall deliver to each of the Lenders that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be obligated to
issue Letters of Credit hereunder; (B) no Letter of Credit issued hereunder
remains outstanding and uncancelled or (C) all Persons (other than Borrowers)
have been fully reimbursed for all payments made under or relating to Letters of
Credit.
2.12. ADDITIONAL PAYMENTS.
-------------------
Any sums expended by Agent or any Lender due to any Borrower's failure
to perform or comply with its obligations under this Agreement or any Other
Document including, without limitation, any Borrower's obligations under
Sections 4.12 and 4.13 hereof, may be charged to such Borrower's account as a
Revolving Advance and added to the Obligations, provided Agent shall promptly
thereafter provide to Borrowing Agent a copy of documentation supporting such
charges.
25
2.13. MANNER OF BORROWING AND PAYMENT.
-------------------------------
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of the Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of the Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by Borrowers on account of
principal, interest and fees shall be made without set-off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00P.M., New York time, in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.13(a) and (b) hereof, commencing with the first Business Day
following the Effective Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrowers on account of Revolving Advances
shall be applied first to those Revolving Advances made by Agent. On or before
1:00 P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Effective Date, Agent and the Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week
(if any), then each Lender shall provide Agent with funds in an amount equal to
its Commitment Percentage of the difference between (w) such Revolving Advances
and (x) such repayments and (II) if the aggregate amount of repayments applied
to outstanding Revolving Advances during such Week exceeds the aggregate amount
of new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its Commitment Percentage of the
difference between (y) such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received
and Advances made during the Week immediately preceding such Settlement
Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
(d) If any Lender or any Transferee (a "benefited Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Advances, or shall provide such other Lender with the benefits of
any such Collateral, or the proceeds thereof as shall be
26
necessary to cause such benefited Lender to share the excess payment or benefits
of such Collateral or proceeds ratably with each of the Lenders; provided,
--------
however, that if all or any portion of such excess payment or benefits is
-------
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrowers a corresponding amount. Agent will promptly notify
Borrowing Agent of its receipt of any such notice from a Lender. If such amount
is made available to Agent on a date after a Settlement Date, such Lender shall
pay to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount
becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the domestic rate per annum then applicable to Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent's
-------- -------
right to such recovery shall not prejudice or otherwise adversely affect any
Borrower's rights (if any) against such Lender.
(f) Notwithstanding anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its Commitment
Percentage of any Advance or (y) notifies either Agent or Borrowers that it does
not intend to make available its Commitment Percentage of any Advance (if the
actual refusal would constitute a breach by such Lender of its obligations under
this Agreement) (each, a "Lender Default"), all rights and obligations hereunder
of such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.13(f) while such Lender Default remains in effect.
(i) Revolving Advances shall be allocated pro rata among
--- ----
Lenders (the "Non-Defaulting Lenders") which are not Defaulting Lenders
in accordance with their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any
--- ----
Revolving Advances required to be advanced by any Lender shall be
increased as a result of such Lender Default. Amounts received in
respect of principal of Advances shall be applied to reduce Advances of
each Lender pro rata based on the aggregate of the outstanding Advances
--- ----
of all Lenders at the time of such application; provided that, such
amount shall not be applied to any Advances of a
27
Defaulting Lender at any time when, and to the extent that, the
aggregate amount of Advances of any Lender that is not a Defaulting
Lender exceeds such Lender's Commitment Percentage of all Advances then
outstanding.
(ii) Lenders shall participate in Letters of Credit on the
basis of their respective pro rata shares, and no participation or
--- ----
reimbursement obligation of any Lender shall be increased as a result
of a failure of any Defaulting Lender to reimburse Agent with respect
to any amounts drawn on or otherwise payable with respect to any
Letters of Credit (the amount that any such Defaulting Lender has
failed to reimburse is hereinafter referred to as such Defaulting
Lender's "Unreimbursed Amount"). Until such Defaulting Lender has
reimbursed Agent for any Unreimbursed Amount owed by it, all payments
and other amounts received from any source with respect to the
Obligations or otherwise under or in connection with this Agreement
(including any letter of credit fees) which would otherwise be payable
to such Defaulting Lender will instead be paid to Agent for application
to such Unreimbursed Amount until such Unreimbursed Amount has been
paid in full. A Defaulting Lender shall not be entitled to receive any
portion of the letter of credit fees or any other fees payable in
connection with this Agreement, or any indemnity arising from its
agreement to make Revolving Advances and/or participate in Letters of
Credit hereunder.
(iii) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on
any matters relating to this Agreement or the Other Documents. All
amendments, waivers and other modifications of this Agreement and the
Other Documents may be made without regard to a Defaulting Lender and,
solely for purposes of the definition of "Required Lenders", a
Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(iv) Other than as expressly set forth in this Section
2.13(f), the rights and obligations of a Defaulting Lender (including
the obligation to indemnify Agent) and the other parties hereto shall
remain unchanged. Nothing in this Section 2.13(f) shall be deemed to
release any Defaulting Lender from its obligations under this Agreement
or the Other Documents, shall alter such obligations, shall operate as
a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which any Borrower, Agent or any Lender may have
against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(v) In the event a Defaulting Lender retroactively cures,
to the satisfaction of Agent, the breach which caused such Lender to
become a Defaulting Lender, such Defaulting Lender shall no longer be a
Defaulting Lender and shall be treated as a Lender under this
Agreement.
2.14. INTENTIONALLY OMITTED.
---------------------
28
2.15. USE OF PROCEEDS.
---------------
Borrowers shall apply the proceeds of Advances to (i) repay existing
indebtedness owed to Bank of America, N.A., (ii) pay fees and expenses relating
to this transaction, and (iii) to provide for their working capital needs and
other corporate purposes.
2.16. DEFAULTING LENDER.
-----------------
(a) Notwithstanding anything to the contrary contained
herein, in the event any Lender (x) has refused (which refusal constitutes a
breach by such Lender of its obligations under this Agreement) to make available
its portion of any Advance or (y) notifies either Agent or Borrowing Agent that
it does not intend to make available its portion of any Advance (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations hereunder of
such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.16 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that such Non-Defaulting Lender's Commitment
Percentage of all Advances then outstanding exceeds the aggregate amount of
Advances of any Non-Defaulting Lenders.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section
2.16, the rights and obligations of a Defaulting Lender (including the
obligation to indemnify Agent) and the other parties hereto shall remain
unchanged. Nothing in this Section 2.16 shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the Other
Documents, shall alter such obligations, shall operate as a waiver of any
default by such Defaulting Lender hereunder, or shall prejudice any rights which
any Borrower, Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.
29
(e) In the event a Defaulting Lender retroactively cures
to the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III INTEREST AND FEES.
-----------------
3.1. INTEREST.
--------
Interest on Advances shall be payable in arrears on the last day of
each month with respect to Domestic Rate Loans and, with respect to Eurodollar
Rate Loans, at the end of each Interest Period or, for Eurodollar Rate Loans
with an Interest Period in excess of three months, at the earlier of (a) the
last day of each three month period from the date of the commencement of such
Eurodollar Rate Loan or (b) the end of the Interest Period. Interest charges
shall be computed on the actual principal of Advances outstanding during the
month (the "Monthly Advances") at a rate per annum equal to the applicable
Contract Rate. Whenever, subsequent to the date of this Agreement, the Alternate
Base Rate is increased or decreased, the applicable Contract Rate with respect
to Domestic Rate Loans shall be similarly changed without notice or demand of
any kind by an amount equal to the amount of such change in the Alternate Base
Rate during the time such change or changes remain in effect. Upon and after the
occurrence of an Event of Default, and during the continuation thereof, the
Obligations shall bear interest at the applicable Revolving Interest Rate plus
two (2%) percent per annum (the "Default Rate"). So long as no Default or Event
of Default shall have occurred and be continuing, the Applicable Margin shall be
increased or decreased, as the case may be, as of the first day of each fiscal
quarter following the fiscal quarter reported upon in the financial statements
delivered pursuant to Sections 9.8 and 9.9 hereof, commencing with fiscal
quarter ending June 28, 2002 based upon the Fixed Charge Coverage Ratio with
respect to the four (4) fiscal quarters then ended as reported upon in the
applicable financial statements.
3.2. LETTER OF CREDIT FEES.
---------------------
Borrowers shall pay Agent (i) for the ratable benefit of the Lenders
for issuing or causing the issuance of a Standby Letter of Credit, a fee
computed at a rate per annum of one and three quarters percent (1.75%) on the
outstanding amount thereof from time to time, (ii) for the ratable benefit of
the Lenders for issuing or causing the issuance of a Documentary Letter of
Credit, a fee equal to one quarter percent (.25%) of the face amount thereof,
(iii) for its own account, a letter of credit fronting and negotiation fee of
..125% per annum on the maximum amount available to be drawn under each Letter of
Credit, payable upon the issuance of each such Letter of Credit, and (iv) Bank's
other customary charges payable in connection with Letters of Credit as in
effect from time to time (which charges shall be furnished to Borrowers by Agent
upon request). Such fees and charges shall be payable in the case of any Letter
of Credit, on its opening monthly thereafter in advance and upon each increase
in the outstanding amount thereof. Any such charge in effect at the time of a
particular transaction shall be the charge for that transaction, notwithstanding
any subsequent change in Bank's prevailing charges for that type of transaction.
All Letter of Credit Fees payable hereunder shall be deemed earned in full on
the
30
date when the same are due and payable hereunder and shall not be subject to
rebate or proration upon the termination of this Agreement for any reason.
Upon the occurrence and during the continuance of an Event of Default,
Borrowers will cause cash to be deposited and maintained in an account with
Agent, as cash collateral, in an amount equal to one hundred percent (100%) of
the outstanding Letters of Credit and each Borrower hereby irrevocably
authorizes Agent, in its discretion, on such Borrower's behalf and in such
Borrower's name, to open such an account and to make and maintain deposits
therein, or in an account opened by such Borrower, in the amounts required to
be made by such Borrower, out of the proceeds of Receivables or other
Collateral or out of any other funds of such Borrower coming into any Lender's
possession at any time. Agent will invest such cash collateral (less applicable
reserves) in such short-term money-market items as to which Agent and such
Borrower mutually agree and the net return on such investments shall be
available for withdrawal by Borrowers. Except as provided for in the
immediately preceding sentence, no Borrower may withdraw amounts credited to
any such account except upon payment and performance in full of all Obligations
and termination of this Agreement.
3.3. FEES.
----
(a) Facility Fee.
If, for any month during the Term, the average daily unpaid
balance of the Revolving Advances for each day of such month plus
----
outstanding Letters of Credit does not equal the Maximum Loan Amount
then Borrowers shall pay to Agent for the ratable benefit of the
Lenders a fee at a rate equal to three-eighths of one percent (.375%)
per annum on the amount by which the Maximum Loan Amount exceeds such
average daily unpaid balance plus outstanding Letters of Credit. Such
fee shall be payable to Agent in arrears on the last day of each month
and on the last day of the Term.
31
3.4. COLLATERAL EVALUATION AND MONITORING FEES.
-----------------------------------------
(a) Collateral Evaluation Fee. Borrower shall pay to Agent (for
-------------------------
the sole benefit of Agent) an collateral evaluation fee equal to $1,500 per
month payable on the first day of each month commencing on the first day of the
month following the Effective Date and on the first day of each month
thereafter during the Term. The collateral evaluation fee shall be deemed
earned in full on the date when same is due and payable hereunder and shall not
be subject to rebate or proration upon termination of this Agreement for any
reason.
(b) Collateral Monitoring Fee. Borrower shall pay to Agent (for
-------------------------
the sole benefit of Agent) on the first day of each month following any month
in which Agent performs any collateral monitoring - namely any field
examination, collateral analysis or other business analysis, the need for which
is to be determined by Agent and which monitoring is undertaken by Agent or for
Agent's benefit - a collateral monitoring fee in an amount equal to $750 per
day for each person performing such monitoring, plus all costs and disbursements
incurred by Agent in the performance of such examination or analysis.
3.5. COMPUTATION OF INTEREST AND FEES.
--------------------------------
Interest and fees hereunder shall be computed on the basis of a year
of 360 days and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the applicable Contract Rate during such
extension.
3.6. MAXIMUM CHARGES.
---------------
In no event whatsoever shall interest and other charges charged
hereunder exceed the highest rate permissible under law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that a court determines that Agent or any Lender has received
interest and other charges hereunder in excess of the highest rate permissible
hereto, such excess amount shall be first applied to any unpaid principal
balance owed by Borrowers, and if the then remaining excess amount is greater
than the previously unpaid principal balance, the Lenders shall promptly refund
such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.
3.7. INCREASED COSTS.
---------------
In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof or compliance by any Lender (for purposes of this Section 3.7, the term
"Lender" shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
32
(a) subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Eurodollar Rate Loan or change the basis
of taxation of payments to Agent or any Lender of principal, fees, interest or
any other amount payable hereunder or under any Other Documents (except for
changes in the rate of tax on the overall net income of Agent or any Lender by
the jurisdiction in which it maintains its principal office);
(b) change the currency of a country, impose, modify or hold
applicable any reserve, special deposit, assessment or similar requirement
against assets held by, or deposits in or for the account of, advances or loans
by, or other credit extended by, any office of Agent or any Lender, including
(without limitation) pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement, any Other
Documents or any Eurodollar Rate Loan; and the result of any of the foregoing
is to increase the cost to Agent or Lender of making, renewing or maintaining
its Advances hereunder by an amount that Agent or such Lender deems to be
material or to reduce the amount of any payment (whether of principal, interest
or otherwise) in respect of any of the Advances by an amount that Agent or such
Lender deems to be material, then, in any case Borrowers shall promptly pay
Agent or such Lender, upon its demand, such additional amount as will
compensate Agent or such Lender for such additional cost or such reduction, as
the case may be, provided that the foregoing shall not apply to increased costs
which are reflected in the Alternate Base Rate or the Eurodollar Rate, as the
case may be. Agent or such Lender shall certify the amount of such additional
cost or reduced amount to Borrowing Agent, and such certification shall be
conclusive absent manifest error.
3.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
--------------------------------------------------------
In the event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan;
Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request
for such borrowing shall be cancelled or made as an unaffected type of
Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which
was to have been converted to an affected type of Eurodollar Rate Loan shall be
continued as or converted into a
33
Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than
10:00 a.m. New York City time) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan,
and (iii) any outstanding affected Eurodollar Rate Loans shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later
than 10:00 a.m. New York City time) two (2) Business Days prior to the last
Business Day of the then current Interest Period applicable to such affected
Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar
Rate Loan, on the last Business Day of the then current Interest Period for
such affected Eurodollar Rate Loans. Until such notice has been withdrawn, the
Lenders shall have no obligation to make an affected type of Eurodollar Rate
Loan or maintain outstanding affected Eurodollar Rate Loans and no Borrower
shall have the right to convert a Domestic Rate Loan or an unaffected type of
Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.
3.9. CAPITAL ADEQUACY.
----------------
(a) In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Agent or any Lender (for purposes of this Section 3.9, the term
"Lender" shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on Agent or any Lender's
capital as a consequence of its obligations hereunder to a level below that
which Agent or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent's and each Lender's policies with
respect to capital adequacy) by an amount deemed by Agent or any Lender to be
material, then, from time to time, Borrowers shall pay upon demand to Agent or
such Lender such additional amount or amounts as will compensate Agent or such
Lender for such reduction. In determining such amount or amounts, Agent or such
Lender may use any reasonable averaging or attribution methods. The protection
of this Section 3.9 shall be available to Agent and each Lender regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be
conclusive absent manifest error.
IV. COLLATERAL; GENERAL TERMS.
-------------------------
THE PROVISIONS OF THIS ARTICLE IV CONTAIN THE GRANT OF POWERS OF
ATTORNEY BY EACH BORROWER (AS A GRANTOR FOR SUCH PURPOSE) COUPLED WITH AN
INTEREST FOR THE SOLE BENEFIT OF AGENT. THIS AGREEMENT, AND THE PROVISIONS OF
ARTICLE IV HEREOF, IS BEING EXECUTED IN CONNECTION
34
WITH A LOAN OR OTHER FINANCIAL TRANSACTION FOR BUSINESS PURPOSES AND NOT
PRIMARILY FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE AGENT, AS AGENT FOR
THE GRANTOR UNDER THE POWERS OF ATTORNEY, IS NOT A FIDUCIARY FOR THE GRANTOR.
THE AGENT, IN EXERCISING ANY OF ITS RIGHTS OR POWERS PURSUANT TO THE POWERS OF
ATTORNEY, MAY DO SO FOR THE SOLE BENEFIT OF AGENT AND NOT FOR THE GRANTOR. THE
PARTIES ACKNOWLEDGE AND AGREE THAT THE PROVISIONS OF TITLE 20 PA.C.S. CHAPTER
56, AS AMENDED (SPECIFICALLY INCLUDING, ACT 39 OF 1994) SHALL NOT BE APPLICABLE
TO THE POWERS OF ATTORNEY.
For the purpose of this Article IV, references herein to the "Agent"
shall be deemed to mean "the Agent, for the ratable benefit of the Lenders".
EACH BORROWER HAS NEVERTHELESS READ, UNDERSTANDS AND KNOWINGLY AND
VOLUNTARILY ACCEPTS AND AGREES TO SUCH PROVISIONS CONTAINING POWERS OF ATTORNEY
RECOGNIZING THAT CERTAIN IMPORTANT RIGHTS MAY BE RELINQUISHED IF ANY SUCH
POWERS ARE EXERCISED.
4.1. ACKNOWLEDGEMENT AND GRANT OF SECURITY INTERESTS.
-----------------------------------------------
(a) Each Borrower hereby acknowledges, confirms and agrees that
Agent for the ratable benefit of Lenders has and shall continue to have a lien
upon and security interest in all Collateral heretofore granted to Agent
pursuant to the Existing Loan Agreement to secure the Obligations and, to the
extent not otherwise granted thereunder or under the Other Documents or
otherwise granted to or held by Agent. Each Borrower hereby pledges and assigns
to Agent for the ratable benefit of Lenders and grants to Agent for the ratable
benefit of Lenders a continuing security interest to secure the Obligations, in
all of such Borrower's Collateral, wherever located, whether in any Borrower's
possession or in the possession and control of a third party for any Borrower's
or Agent's or any Lender's account. All of each Borrower's ledger sheets,
files, records, books of account, business papers and documents relating to the
Collateral shall, until delivered to or removed by Agent, be kept by such
Borrower in trust for Agent for the ratable benefit of Lenders.
(b) The liens and security interests of Agent for the ratable
benefit of Lenders in the Collateral shall be deemed to be continuously
perfected from the earliest date of the granting of such liens and security
interests, whether hereunder, under the Other Documents, or under the Existing
Loan Agreement.
4.2. PERFECTION OF SECURITY INTEREST.
-------------------------------
Each Borrower shall take all action that may be necessary or
desirable, or that Agent may request, so as at all times to maintain the
validity, perfection, enforceability and priority of Agent's security interest
for the ratable benefit of the Lenders in the Collateral or to enable Agent to
protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to (i) immediately discharging all Liens other than
Permitted Encumbrances, (ii)
35
obtaining landlords' or mortgagees' lien waivers, (iii) delivering to Agent,
endorsed or accompanied by such instruments of assignment as Agent may specify,
and stamping or marking, in such manner as Agent may specify, any and all
chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent,
and (v) executing and delivering financing statements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to the Required Lenders, relating to the creation, validity,
perfection, maintenance or continuation of Agent's security interest for the
ratable benefit of the Lenders under the Uniform Commercial Code or other
applicable law. Agent is hereby authorized to file financing statements
covering the Collateral without any Borrowers signature in accordance with the
Uniform Commercial Code as adopted in the Common wealth of Pennsylvania. All
charges, expenses and fees Agent may incur in doing any of the foregoing, and
any local taxes relating thereto, shall be paid to Agent for the ratable
benefit of the Lenders immediately upon demand.
4.3. DISPOSITION OF COLLATERAL.
-------------------------
Each Borrower will safeguard and protect all Collateral granted by
such Borrower for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except the sale of Inventory in the
ordinary course of business.
4.4 PRESERVATION OF COLLATERAL.
--------------------------
Following the occurrence and during the continuance of an Event of
Default, in addition to the rights and remedies set forth in Section 11.1
hereof, Agent: (a) may at any time take such steps as Agent deems necessary to
protect Agent's and Lenders' interest in and to preserve the Collateral,
including the hiring of such security guards or the placing of other security
protection measures as Agent may deem appropriate; (b) may employ and maintain
at any Borrower's premises a custodian who shall have full authority to do all
acts necessary to protect Agent's and Lenders' interests in the Collateral; (c)
may lease warehouse facilities to which Agent may move all or part of the
Collateral; (d) may use any Borrower's owned or leased lifts, hoists, trucks
and other facilities or equipment for handling or removing the Collateral; and
(e) shall have, and is hereby granted, a right of ingress and egress to the
places where the Collateral is located, and may proceed over and through any
Borrower's owned or leased property. Each Borrower shall cooperate fully with
all of Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may direct. All of Agent's expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be paid to the Agent immediately upon demand.
4.5. OWNERSHIP OF COLLATERAL.
-----------------------
With respect to the Collateral, at the time the Collateral becomes
subject to Agent's security interest for its benefit and for the ratable
benefit of the Lenders: (a) each Borrower shall be the sole owner of and fully
authorized and able to sell, transfer, pledge and/or grant a first security
interest in each and every item of the Collateral to Agent for its benefit and
for the
36
ratable benefit of the Lenders; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever;
(b) each document and agreement executed by each Borrower or delivered to Agent
or any Lender in connection with this Agreement shall be true and correct in
all respects; (c) all signatures and endorsements of each Borrower that appear
on such documents and agreements shall be genuine and each Borrower shall have
full capacity to execute same; and (d) each Borrower's Inventory shall be
located as set forth on Schedule 4.5 and shall not be removed from such
------------
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the ordinary course of business.
4.6. DEFENSE OF AGENT'S AND LENDER'S INTERESTS.
-----------------------------------------
Until (a) payment and performance in full of all of the Obligations,
and (b) termination of this Agreement, Agent's and Lenders' interests in the
Collateral shall continue in full force and effect. During such period no
Borrower shall, without Required Lenders' prior written consent, pledge, sell
(except Inventory in the ordinary course of business), assign, transfer, create
or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered
in any way except for Permitted Encumbrances, any part of such Borrower's
Collateral. Each Borrower shall defend Agent and Lenders' interests in such
Borrower's Collateral against any and all persons whatsoever. At any time
following the occurrence and during the continuance of an Event of Default and
a demand by Agent for payment of all Obligations, Agent shall have the right to
take possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including without limitation: labels, stationery,
documents, instruments and advertising materials. If Agent exercises this right
to take possession of the Collateral, each Borrower shall, upon demand,
assemble the Collateral provided by it in the best manner possible and make it
available to Agent at a place reasonably convenient to Agent. In addition, with
respect to all Collateral, Agent and the Lenders shall be entitled to all of
the rights and remedies set forth herein and further provided by the Uniform
Commercial Code or other applicable law. Each Borrower shall, and Agent may, at
its option, instruct all suppliers, carriers, forwarders, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest for its benefit and for the ratable benefit of
the Lenders to deliver same to Agent and/or subject to Agent's order and if
they shall come into any Borrower's possession, they, and each of them, shall
be held by Borrower in trust as Agent's trustee, and such Borrower, as the case
may be, will immediately deliver them to Agent in their original form together
with any necessary endorsement.
4.7. BOOKS AND RECORDS.
-----------------
Each Borrower (a) shall keep proper books of record and account in
which full, true and correct entries will be made of all dealings or
transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables as the case may be, advances
and investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of
37
properties), which should be set aside from such earnings in connection with
its business. All determinations pursuant to this subsection shall be made in
accordance with, or as required by, GAAP consistently applied in the opinion of
such independent public accountant as shall then be regularly engaged by
Borrowers.
4.8. FINANCIAL DISCLOSURE.
--------------------
Each Borrower hereby irrevocably authorizes and directs all
accountants and auditors employed by Borrowers at any time during the Term to
exhibit and deliver to Agent and each Lender copies of any Borrower's financial
statements, trial balances or other accounting records of any sort in the
accountant's or auditor's possession, and to disclose to Agent and each Lender
any information such accountants may have concerning any Borrower's financial
status and business operations. Each Borrower hereby authorizes all federal,
state and municipal authorities to furnish to Agent and each Lender copies of
reports or examinations relating to Borrowers, whether made by a Borrower or
otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from Borrowers, as the case may be, prior to
obtaining such information or materials from such accountants or such
authorities.
4.9. COMPLIANCE WITH LAWS.
--------------------
Each Borrower shall comply in all material respects with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to the Collateral or any part thereof or to the
operation of such Borrower's business the noncompliance with which could have a
Material Adverse Effect on such Borrower. Each Borrower may, however, contest
or dispute any acts, rules, regulations, orders and directions of those bodies
or officials in any reasonable manner, provided that any related lien is
inchoate or stayed and sufficient reserves are established to the reasonable
satisfaction of the Lenders to protect Agent's Lien on or security interest in
the Collateral. The Collateral at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the Collateral so that such insurance shall remain in full force and
effect.
4.10. INSPECTION OF PREMISES.
----------------------
At all reasonable times Agent and each Lender shall have full access
to and the right to audit, check, inspect and make abstracts and copies from
any Borrower's books, records, audits, correspondence and all other papers
relating to the Collateral and the operation of their respective businesses.
Agent, any Lender and their agents may enter upon any Borrower's premises at
any time during business hours and at any other reasonable time, and from time
to time without prior notice, for the purpose of inspecting the Collateral and
any and all records pertaining thereto and the operation of their respective
businesses.
4.11. INSURANCE.
---------
Each Borrower shall bear the full risk of any loss of any nature
whatsoever with respect to the Collateral. At Borrowers' own cost and expense
in amounts and with carriers acceptable
38
to Agent, each Borrower shall (a) keep all insurable properties and properties
in which it has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and
such other hazards, and for such amounts, as is customary in the case of
companies engaged in similar businesses including, without limitation, business
interruption insurance; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in similar businesses insuring against larceny,
embezzlement or other criminal misappropriation of insured's officers and
employees who may either singly or jointly with others at any time have access
to the assets or funds of Borrowers either directly or through authority to
draw upon such funds or to direct generally the disposition of such assets; (c)
maintain public and product liability insurance against claims for personal
injury, death or property damage suffered by others; (d) maintain all such
worker's compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which it is engaged in business; (e) furnish Agent
with (i) copies of all policies and evidence of the maintenance of such
policies by the renewal thereof at least thirty (30) days before any expiration
date, and (ii) appropriate loss payable endorsements in form and substance
satisfactory to Agent, naming Agent as a co-insured and loss payee as its
interests may appear with respect to all insurance coverage referred to in
clauses (a) and (b) above, and providing (A) that all proceeds thereunder in
excess of $100,000 shall be payable to Agent for the ratable benefit of the
Lenders, (B) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy, and (C) that such
policy and loss payable clauses may not be cancelled, amended or terminated
unless at least thirty (30) days' prior written notice is given to Agent. In
the event of any loss thereunder, the carriers named therein hereby are
directed by Agent or any Borrower to make payment for such loss in excess of
$100,000 to Agent and not to a Borrower and Agent jointly. If any insurance
losses are paid by check, draft or other instrument payable to a Borrower and
Agent jointly, Agent may endorse such Borrower's name thereon and do such other
things as Agent may deem advisable to reduce the same to cash. Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to
in clauses (a) and (b) above. All loss recoveries received by Agent upon any
such insurance related to Collateral may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine; provided, upon any
--------
Borrower's request such proceeds shall be disbursed to such Borrower for the
restoration of damaged property if such proceeds together with other amounts
provided by such Borrower are sufficient to fully restore such property to its
condition prior to the casualty loss. Any surplus shall be paid by Agent to
Borrowers or applied as may be otherwise required by law. Any deficiency
thereon shall be paid by Borrowers, to Agent, on demand.
4.12. FAILURE TO PAY INSURANCE.
------------------------
If any Borrower shall fail to obtain insurance as hereinabove
provided, or to keep the same in force, Agent, if Agent so elects, may obtain
such insurance and pay the premium therefor for such Borrower's account, and
charge such Borrower's account therefor and such expenses so paid shall be part
of the Obligations, provided Agent shall promptly thereafter provide to such
Borrower documentation supporting such charges.
39
4.13. PAYMENT OF TAXES.
----------------
Each Borrower will pay, when due, all taxes, assessments and other
Charges lawfully levied or assessed upon any Borrower or any of the Collateral
including, without limitation, real and personal property taxes, assessments
and charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes. If any tax by any governmental authority is or
may be imposed on or as a result of any transaction between any Borrower and
Agent or any Lender which Agent or any Lender may be required to withhold or
pay or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent's or
Lender's opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to such Borrower pay the taxes, assessments or other Charges and
Borrowers hereby indemnify and hold Agent and each Lender harmless in respect
thereof. The amount of any payment by Agent under this Section 4.13 shall be
charged to the applicable Borrower's accounts as a Revolving Advance and added
to the Obligations and, until a Borrower shall furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to Agent that due
provision for the payment thereof has been made), Agent may hold without
interest any balance standing to any Borrower's credit and Agent shall retain
its security interest in any and all Collateral held by Agent.
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS.
--------------------------------
Each Borrower shall at all times pay, when and as due, its rental
obligations under all leases under which it is a tenant, and shall otherwise
comply, in all material respects, with all other terms of such leases and keep
them in full force and effect and, at Agent's request, will provide evidence of
having done so.
4.15. RECEIVABLES.
-----------
(a) Nature of Receivables. Each of the Receivables shall
---------------------
be a bona fide and valid account representing a bona fide indebtedness incurred
by the Customer therein named, for a fixed sum as set forth in the invoice
relating thereto provided immaterial or unintentional invoice errors shall not
be deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of such Borrower, or work, labor or services
theretofore rendered by Borrower as of the date each Receivable is created. Same
shall be due and owing in accordance with such Borrower's standard terms of sale
without dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer of each
---------------------
Borrower, to the best of such Borrower's knowledge, as of the date each
Receivable is created, is and will be solvent and able to pay all Receivables on
which the Customer is obligated in full when due or with respect to such
Customers of such Borrower who are not solvent such Borrower has set up on its
books and in its financial records bad debt reserves adequate to cover such
Receivables.
(c) Locations of Borrower. Each Borrower's chief
---------------------
executive office and the office at which each maintains its books and records
pertaining to Receivables is the address set
40
forth on Schedule 4.15(c) hereto. Until written notice is given to Agent by
---------------
Borrowing Agent of any other office at which it keeps its records pertaining to
Receivables all such records shall be kept at such offices.
(d) Collection of Receivables. Until a Borrower's
-------------------------
authority to do so is terminated by Agent (which notice Agent may give at any
time following the occurrence of an Event of Default or a Default), such
Borrower will, at its sole cost and expense, but on Agent's behalf and for
Agent's account, collect as Agent's property and in trust for Agent all amounts
received on Receivables of such Borrower, and shall not commingle such
collections with its respective funds or use the same except to pay Obligations.
Each Borrower shall, upon request, deliver to Agent or the Blocked Account in
original form and on the date of receipt thereof, all checks, drafts, notes,
money orders, acceptances, cash and other evidences of Indebtedness received by
such Borrower.
(e) Notification of Assignment of Receivables. At any
-----------------------------------------
time, if Agent, in its sole discretion, believes that failure to send such
notice could impair Lenders rights in the Collateral or Agent's receipt of any
proceeds of the Collateral, or if Agent otherwise deems Lenders insecure or, at
any time after an Event of Default, Agent shall have the right to send notice of
the assignment of, and Agent's security interest in, the Receivables of the
Borrowers to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. After an Event of Default and after giving
such notice, Agent shall have the sole right to collect the Receivables, take
possession of the Collateral or both, for the ratable benefit of the Lenders, to
be applied to the Obligations. Agent's actual collection expenses, including,
but not limited to, stationery and postage, telephone and telegraph, secretarial
and clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrower's accounts and added to the Obligations.
(f) Power of Agent to Act on Borrowers' Behalf. Agent
------------------------------------------
shall have the right to receive, endorse, assign and/or deliver in the name of
Agent, or any Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Receivables and Borrower hereby waives notice
of presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as its respective attorney
with power (A) at any time following the occurrence and during the continuance
of an Event of Default hereunder: (i) to endorse its name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral of the Borrowers; (ii) to sign its name on any invoice or xxxx of
lading relating to any of the Receivables of the Borrowers, drafts against
Customers or assignments of Receivables of the Borrowers; (iii) to demand
payment of the Receivables; (iv) to enforce payment of the Receivables by legal
proceedings or otherwise; (v) to exercise all of its rights and remedies with
respect to the collection of the Receivables and any other Collateral; (vi) to
settle, adjust, compromise, extend or renew the Receivables of the Borrowers;
(vii) to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (viii) to prepare, file and sign its name on a proof of claim in
bankruptcy or similar document against any Customer; (ix) to prepare, file and
sign its name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables of the Borrowers; and (B) at
any time (i) to send verifications of Receivables of the Borrowers to any
41
Customer; (ii) to sign its name on all financing statements or any other
documents or instruments deemed necessary or appropriate by Agent to preserve,
protect, or perfect Agent's interest in the Collateral and to file same; (iii)
to do all other acts and things necessary to carry out this Agreement. All acts
of said attorney or designee are hereby ratified and approved, and said attorney
or designee shall not be liable for any acts of omission or commission nor for
any error of judgment or mistake of fact or of law, unless done maliciously or
with gross (not mere) negligence; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. Agent shall have the
right at any time following the occurrence and during the continuance of an
Event of Default, to change the address for delivery of mail addressed to any
Borrower to such address as Agent may designate.
(g) No Liability. Neither Agent nor any Lender shall,
------------
under any circumstances or in any event whatsoever, have any liability for any
error or omission or delay of any kind occurring in the settlement, collection
or payment of any of the Receivables or any instrument received in payment
thereof, or for any damage resulting therefrom. Following the occurrence and
during the continuance of an Event of Default Agent may, without notice or
consent from any Borrower, xxx upon or otherwise collect, extend the time of
payment of, compromise or settle for cash, credit or upon any terms any of the
Receivables or any other securities, instruments or insurance applicable thereto
and/or release any obligor thereof. Agent is authorized and empowered to accept
following the occurrence and during the continuance of an Event of Default the
return of the goods represented by any of the Receivables, without notice to or
consent by any Borrower, all without discharging or in any way affecting the
Obligations hereunder.
(h) Establishment of a Lockbox Account, Dominion Account.
----------------------------------------------------
All proceeds of Collateral shall, at the direction of Agent, be deposited by
Borrowers into a lockbox account, dominion account or such other "blocked
account" ("Blocked Accounts") as Agent may require pursuant to an arrangement
with such bank(s) as may be selected by Borrowers and be acceptable to Agent.
Borrowers shall issue to any such bank, an irrevocable letter of instruction
directing said bank to transfer such funds so deposited to Agent, either to any
account maintained by Agent at said bank or by wire transfer to appropriate
account(s) of Agent. All funds deposited in such Blocked Account shall
immediately become the property of Agent and Borrowers shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Neither Agent nor any Lender assumes any responsibility for such
"blocked account" arrangement including, without limitation, any claim of accord
and satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) Adjustments. No Borrower will, without Agent's
-----------
consent, compromise or adjust any Receivables (or extend the time for payment
thereof) or accept any material returns of merchandise or grant any additional
discounts, allowances or credits thereon except for those
42
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of such Borrower, as the case may
be.
4.16. INVENTORY.
---------
All Inventory has been, and will be, produced by Borrowers in
compliance with the Federal Fair Labor Standards Act of 1938 (to the extent
applicable to such Borrower), as amended, and all rules, regulations and orders
thereunder.
4.17. INTENTIONALLY OMITTED.
---------------------
4.18. EXCULPATION OF LIABILITY.
------------------------
Nothing herein contained shall be construed to constitute Agent or any
Lender as any Borrower's agent for any purpose whatsoever, nor shall Agent or
any Lender be responsible or liable for any shortage, discrepancy, damage, loss
or destruction of any part of the Collateral wherever the same may be located
and regardless of the cause thereof, unless such shortage, discrepancy, damage,
loss or destruction results from the gross (not mere) negligence or willful
misconduct of Agent or Lenders. Neither Agent nor any Lender, whether by
anything herein or in any assignment or otherwise, assume any Borrower's
obligations under any contract or agreement assigned to Agent or such Lender,
and neither Agent nor any Lender shall be responsible in any way for the
performance by any Borrower of any of the terms and conditions thereof.
4.19. ENVIRONMENTAL MATTERS.
---------------------
(a) Borrowers will ensure that all real property owned or
occupied by Borrowers remains in compliance in all material respects with all
Environmental Laws and they will not place or permit to be placed any Hazardous
Substances on any such property except as not prohibited by applicable law or
appropriate governmental authorities.
(b) Borrowers will establish and maintain a system to
assure and monitor continued compliance with all applicable Environmental Laws
which system shall include periodic reviews of such compliance.
(c) Promptly upon the written request of Agent from time
to time, Borrowers shall provide Agent, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within any real
property owned or occupied by a Borrower. Any report or investigation of such
Hazardous Discharge proposed and acceptable to an appropriate Authority that is
charged to oversee the clean-up of such Hazardous Discharge (an "Authority")
shall be acceptable to Agent. If such estimates, individually or in the
aggregate, exceed $100,000, Agent shall have the right to require Borrowers to
post a bond,
43
letter of credit or other security reasonably satisfactory to Agent to secure
payment of these costs and expenses.
(d) Each Borrower shall defend and indemnify Agent and
the Lenders and hold Agent, the Lenders and their respective employees, agents,
directors and officers harmless from and against all loss, liability, damage and
expense, claims, costs, fines and penalties, including attorney's fees, suffered
or incurred by Agent or the Lenders under or on account of any Environmental
Laws, including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances,
whether or not the same originates or emerges from any real property owned or
occupied by such Borrower or any contiguous real estate, except to the extent
such loss, liability, damage and expense is attributable to any Hazardous
Discharge resulting from actions on the part of Agent or any Lender. Each
Borrower's obligations under this Section 4.19 shall arise upon the discovery of
the presence of any Hazardous Substances at any real property owned or occupied
by such Borrower, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers obligations and the indemnifications hereunder
shall survive the termination of this Agreement.
(e) For purposes of Sections 4.19 and 5.7, all references
to any real property owned or occupied by a Borrower shall be deemed to include
all of such Borrower's right, title and interest in and to its owned and leased
premises.
4.20. FINANCING STATEMENTS.
--------------------
Except as respects the financing statements filed by Agent and the
financing statements described on Schedule 4.20, no financing statement covering
-------------
any of the Collateral or any proceeds thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each Borrower represents and warrants as follows:
5.1. AUTHORITY.
---------
It has full power, authority and legal right to enter into this
Agreement and the Other Documents and perform its respective Obligations
hereunder and thereunder. The execution, delivery and performance hereof and of
the Other Documents (a) are within its respective corporate powers, have been
duly authorized, are not in contravention of law or the terms of any Borrower's
by-laws, certificate of incorporation or other applicable documents relating to
the formation or conduct of its respective business or of any material agreement
or undertaking to which it is a party or by which it is bound, and (b) will not
conflict with nor result in any breach in any of the provisions of or constitute
a default under or result in the creation of any Lien except Permitted
Encumbrances upon any of its respective assets under the provisions of any
44
agreement, charter document, instrument, by-law, or other instrument to which it
or its property is a party or by which it may be bound.
5.2. FORMATION AND QUALIFICATION.
---------------------------
(a) Each is duly formed and in good standing under the
laws of its state or other jurisdiction of incorporation or formation and is
qualified to do business and is in good standing in the states or other
jurisdictions listed on Schedule 5.2(a) which constitute all states in which
--------------
qualification and good standing are necessary for each to conduct its business
and own its property and where the failure to so qualify could have a Material
Adverse Effect. Each Borrower has delivered to Agent true and complete copies of
its certificate of incorporation and/or by-laws and each will promptly notify
Agent of any amendment or changes thereto.
(b) The only Subsidiaries of Borrowers are listed on
Schedule 5.2(b).
--------------
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
All representations and warranties of each Borrower contained in this
Agreement and the Other Documents shall be true at the time of the execution of
this Agreement and the Other Documents, and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.
5.4. TAX RETURNS.
-----------
Each Borrower's federal tax identification number is set forth on
Schedule 5.4. Borrowers have each filed all federal, state and local tax returns
------------
and other reports it is required by law to file and has paid all taxes,
assessments, fees and other governmental charges that are due and payable. The
provision for taxes on the books of Borrowers are adequate for all years not
closed by applicable statutes, and for its current fiscal year, and no Borrower
has any knowledge of any deficiency or additional assessment in connection
therewith not provided for on its books.
5.5. FINANCIAL STATEMENTS.
--------------------
(a) The balance sheet of Radnor on a Consolidated Basis
as of December 29, 2000 and the related statements of income, changes in
stockholder's equity, and changes in cash flow for the period ended on such
date, furnished to Agent and the Lenders on or prior to the Effective Date, are
accurate, complete and correct and fairly reflect in all material respects the
financial condition of Radnor on a Consolidated Basis as of December 29, 2000
and have been prepared in accordance with GAAP, consistently applied. Such
financial statements have been certified as accurate, complete and correct in
all material respects by the Chief Financial Officer of Radnor. All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared, in accordance with GAAP, except
as may be disclosed in such financial statements.
45
(b) The twelve-month cash flow projections of Radnor on a
Consolidated Basis, copies of which have been previously submitted to Agent and
the Lenders (the "Projections") were prepared by the Chief Financial Officer of
each Borrower, are based on underlying assumptions which provide a reasonable
basis for the projections contained therein and reflect such Borrower's judgment
based on present circumstances of the most likely set of conditions and course
of action for the projected period.
(c) The balance sheets of each Borrower as of September
28,2001, and the related statements of income, changes in stockholder's equity,
and changes in cash flow for the period ended on such date, which have been
delivered to Agent, have been prepared in accordance with GAAP, consistently
applied and present fairly in all material respects the financial position of
each Borrower at such date and the results of their operations for such period.
Since September 28, 2001 there has been no change in the condition, financial or
otherwise, of any Borrower as shown on the balance sheets as of such date,
except changes in the ordinary course of business, none of which individually or
in the aggregate has caused a Material Adverse Effect.
5.6. CORPORATE NAME.
--------------
No Borrower has been known by any other corporate name in the past five
years and does not sell Inventory under any other name except as set forth on
Schedule 5.6, nor has any Borrower been the surviving entity of a merger or
------------
consolidation or acquired all or substantially all of the assets of any Person
during the preceding five (5) years, except for (i) the dissolution of WinCup
L.P., (ii) the contribution of El Campo assets to WinCup Texas, (iii) the
transfer of Xxxxxx assets to WinCup Texas, and (iv) the acquisition of the
assets of Neste Oy's polystyrene business.
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
-------------------------------------
Except as disclosed in the Phase I and Phase II environmental reports
prepared by Dames & Xxxxx and Conestoga Rovers & Associates and delivered to
Agent on or before the Effective Date:
(a) Each Borrower has duly complied in all material
respects with, and the facilities, business, assets, property and leaseholds of
each are in compliance in all material respects with, the provisions of the
Federal Occupational Safety and Health Act, the Environmental Protection Act,
RCRA and all other Environmental Laws (to the extent applicable); there have
been no outstanding citations, notices or orders of material non-compliance
issued to a Borrower or relating to its business, assets, property, leaseholds
or equipment under any such laws, rules or regulations.
(b) Each Borrower has been issued all required federal,
state and local licenses, certificates or permits relating to all applicable
Environmental Laws.
46
(c) Except as set forth on Schedule 5.7, there are no
------------
visible signs of releases, spills, discharges, leaks or disposal (collectively
referred to as "Releases") of Hazardous Substances at, upon, under or within any
Borrower's premises; (i) there are no underground storage tanks or
polychlorinated biphenyls on any Borrower's premises; (ii) none of any
Borrower's premises have ever been used as a treatment, storage or disposal
facility of Hazardous Waste; and (iii) no Hazardous Substances are present on
any Borrower's premises, excepting such quantities as are handled in accordance
with all applicable manufacturer's instructions and governmental regulations and
in proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or its tenants.
5.8. SOLVENCY: NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
-----------------------------------------------------------
(a) Each Borrower is solvent, able to pay its respective
debts as they mature, has capital sufficient to carry on its respective business
and all businesses in which it is about to engage, and (i) as of the Effective
Date, the fair present saleable value of its assets, calculated on a going
concern basis, is in excess of the amount of its liabilities and (ii) subsequent
to the Effective Date, the fair saleable value of its assets (calculated on a
going concern basis) will be in excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b) or the Pro
--------------
Forma Financial Statements, no Borrower has (i) any pending or threatened
litigation, arbitration, actions or proceedings which involve the possibility of
having a Material Adverse Effect on such Borrower or on its ability to perform
this Agreement, and (ii) any liabilities nor indebtedness other than the
Obligations.
(c) No Borrower is in violation of any applicable
statute, regulation or ordinance in any respect which could have a Material
Adverse Effect on such Borrower and no Borrower is in violation of any order of
any court, governmental authority or arbitration board or tribunal which could
have a Material Adverse Effect on such Borrower.
(d) No Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on Schedule 5.8(d)
--------------
hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
---------------
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of
47
such Plan and no Borrower nor any member of the Controlled Group knows of any
facts or circumstances which would materially change the value of such assets
and accrued benefits and other liabilities, (vi) no Borrower nor any member of
the Controlled Group has breached any of the responsibilities, obligations or
duties imposed on it by ERISA with respect to any Plan, (vii) no Borrower nor
any member of a Controlled Group has incurred any liability for any excise tax
arising under Section 4972 or 4980B of the Code, and no fact exists which could
give rise to any such liability, (viii) no Borrower nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a "prohibited transaction" described in Section 406 of the ERISA or
Section 4975 of the Code nor taken any action which would constitute or result
in a Termination Event with respect to any such Plan which is subject to ERISA,
(ix) Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan, (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period contained in 29 CFR [double sect]2615.3 has not been waived, (xi)
no Borrower nor any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing for the
benefit of persons other than employees or former employees of Borrowers and
any member of the Controlled Group, and (xii) no Borrower nor any member of the
Controlled Group has withdrawn, completely or partially, from any Multiemployer
Plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980.
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES.
--------------------------------------------
All patents, patent applications, trademarks, trademark applications,
service marks, service xxxx applications, copyrights, copyright applications,
design rights, tradenames, assumed names, trade secrets and licenses owned or
utilized by any Borrower are set forth on Schedule 5.9, are valid and have been
------------
duly registered or filed with all appropriate governmental authorities and
constitute all of the intellectual property rights which are necessary for the
operation of its business; there is no objection to or pending challenge to the
validity of any such material patent, trademark, copyright, design rights
tradename, trade secret or license and Borrower is not aware of any grounds for
any challenge, except as set forth in Schedule 5.9 hereto. Each patent, patent
-----------
application, patent license, trademark, trademark application, trademark
license, service xxxx, service xxxx application, service xxxx license,
copyright, copyright application and copyright license owned or held by any
Borrower and all trade secrets used by any Borrower consist of original material
or property developed by such Borrower or was lawfully acquired by such Borrower
from the proper and lawful owner thereof Each of such items has been maintained
so as to preserve the value thereof from the date of creation or acquisition
thereof With respect to all software used by any Borrower, such Borrower is in
possession of all source and object codes related to each piece of software or
is the beneficiary of a source code escrow agreement, each such source code
escrow agreement being listed on Schedule 5.9 hereto.
-----------
5.10. LICENSES AND PERMITS.
--------------------
Except as set forth in Schedule 5.10, each Borrower (a) is in
-------------
compliance with and (b) has procured and is now in possession of, all material
licenses or permits required by any applicable
48
federal, state or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits could have a Material
Adverse Effect.
5.11. DEFAULT OF INDEBTEDNESS.
-----------------------
No Borrower is in default in the payment of the principal of or
interest on any Indebtedness or under any instrument or agreement under or
subject to which any Indebtedness has been issued and no event has occurred
under the provisions of any such instrument or agreement which with or without
the lapse of time or the giving of notice, or both, constitutes or would
constitute an event of default thereunder.
5.12. NO DEFAULT.
----------
No Borrower is in default in the payment or performance of any of its
material contractual obligations and no Default has occurred.
5.13. NO BURDENSOME RESTRICTIONS.
--------------------------
No Borrower is party to any contract or agreement the performance of
which could have a Material Adverse Effect. No Borrower has agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien which is not a Permitted Encumbrance.
5.14. NO LABOR DISPUTES.
-----------------
No Borrower is involved in any labor dispute; there are no strikes or
walkouts or union organization of any Borrower's employees threatened or in
existence and no labor contract is scheduled to expire during the Term other
than as set forth on Schedule 5.14 hereto.
-------------
5.15. MARGIN REGULATIONS.
------------------
No Borrower is engaged, nor will either of them engage, principally or
as one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U or Regulation G of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.
5.16. INVESTMENT COMPANY ACT.
----------------------
No Borrower is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is either
entity controlled by such a company.
49
5.17. DISCLOSURE.
----------
No representation or warranty made by any Borrower in this Agreement or
in any financial statement, report, certificate or any other document furnished
in connection herewith or therewith contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading.
5.18. INTENTIONALLY OMITTED.
---------------------
5.19. SWAPS.
-----
No Borrower is a party to, nor will it be a party to, any swap
agreement whereby such Borrower has agreed or will agree to swap interest rates
or currencies unless same provides that damages upon termination following an
event of default thereunder are payable on an unlimited "two-way basis" without
regard to fault on the part of either party.
5.20. CONFLICTING AGREEMENTS.
----------------------
No provision of any mortgage, indenture, contract, agreement, judgment,
decree or order binding on any Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained to, or would
in any way prevent the execution, delivery or performance of the terms of this
Agreement or the Other Documents.
5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS.
-------------------------------------------
No Borrower nor any Affiliate of any Borrower is subject to any
statute, rule or regulation which regulates the incurrence of any Indebtedness,
including without limitation, statutes or regulations relative to common or
interstate carriers or to the sale of electricity, gas, steam, water, telephone,
telegraph or other public utility services.
5.22. BUSINESS AND PROPERTY OF BORROWERS.
----------------------------------
Upon and after the Effective Date, Borrowers propose to engage
substantially in the business of (a) manufacturing and/or distributing
polystyrene beads, disposable products sold to or through the food service
industry and insulation and protective packaging products and (b) activities
necessary to conduct the foregoing. On the Effective Date, each Borrower will
own all the property and possess all of the rights and Consents necessary for
the conduct of its business.
5.23. SECTION 20 SUBSIDIARIES.
-----------------------
Borrowers do not intend to use and shall not use any portion of the
proceeds of the Advances, directly or indirectly, to purchase during the
underwriting period, or for 30 days thereafter, Ineligible Securities being
underwritten by a Section 20 Subsidiary.
50
5.24. ACQUISITION.
-----------
Each Borrower has acquired all of its assets and property in accordance
with all applicable statutes and laws, such property is free and clear of all
Liens other than Permitted Encumbrances.
VI. AFFIRMATIVE COVENANTS.
---------------------
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. PAYMENT OF FEES.
---------------
Pay to Agent on demand all usual and customary fees and expenses which
Agent incurs in connection with (a) the forwarding of Advance proceeds and (b)
the establishment and maintenance of any Blocked Accounts or Depository Accounts
as provided for in Section 4.15(h).
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS.
-----------------------------------------------------------
(a) Conduct continuously and operate actively its business according to
good business practices and maintain all of its properties useful or necessary
in its business in good working order and condition (reasonable wear and tear
excepted and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business; and (c) make all such reports and pay all
such franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States or any political
subdivision thereof.
6.3. VIOLATIONS.
Promptly notify Agent in writing of any violation of any law, statute,
regulation or ordinance of any Governmental Body, or of any agency thereof,
applicable to any Borrower which may have a Material Adverse Effect on any
Borrower.
6.4. GOVERNMENT RECEIVABLES.
----------------------
Take all steps necessary to protect Agent's and Lenders' interest in
the Collateral under the Federal Assignment of Claims Act or other applicable
state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any
51
arising out of contracts between any Borrower and the United States, any state
or any department, agency or instrumentality of any of them.
6.5. FIXED CHARGE COVERAGE RATIO FOR BORROWERS.
-----------------------------------------
Cause to be maintained a Fixed Charge Coverage Ratio for Borrowers to
be equal to or greater than 1.00 to 1.00 as at the end of each fiscal quarter
for the most recent four fiscal quarters then ended, beginning at the end of the
first quarter of 2002.
6.6. NET WORTH.
---------
Cause to be maintained a Net Worth at the end of each fiscal quarter in
an amount not less than $10,000,000.
6.7. SENIOR NOTES AND SECOND SENIOR NOTES.
------------------------------------
Shall, on or before September 1, 2003, deliver to Agent evidence that
Radnor has either (a) caused the holders of the Senior Notes and the Second
Senior Notes to extend the maturity date of the Senior Notes and Second Senior
Notes or (b) refinanced, on terms no less favorable to Lenders, the Senior Notes
and Second Senior Notes pursuant to satisfactory agreement(s) as reasonably
determined by Agent in its sole and absolute discretion.
6.8. EXECUTION OF SUPPLEMENTAL INSTRUMENTS.
-------------------------------------
Execute and deliver to Agent from time to time, upon demand, such
supplemental agreements, statements, assignments and transfers, or instructions
or documents relating to the Collateral, and such other instruments as Agent may
request, in order that the full intent of this Agreement may be carried into
effect.
6.9. PAYMENT OF INDEBTEDNESS.
-----------------------
Pay, discharge or otherwise satisfy at or before maturity (subject,
where applicable, to specified grace periods and, in the case of the trade
payables, to normal payment practices) all its material obligations and
liabilities of whatever nature, except when the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and each
Borrower shall have provided for such reserves as Agent may reasonably deem
proper and necessary, subject at all times to any applicable subordination
arrangement in favor of Agent and the Lenders.
6.10. STANDARDS OF FINANCIAL STATEMENTS.
---------------------------------
Cause all financial statements referred to in Sections 9.7, 9.8, 9.9,
9.10, 9.11 and 9.12 as to those to which GAAP is applicable to be complete and
correct in all material respects (subject, in the case of interim financial
statements, to normal year-end audit adjustments) and to be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the
52
periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).
6.11. LANDLORD WAIVERS; BAILEE LETTERS.
--------------------------------
Not later than sixty (60) days following the Effective Date, Borrowers
shall deliver either (a) acknowledgements from each landlord or bailee that
executed a landlord's waiver or bailee letter, respectively, in favor of Agent
acknowledging the continuing effectiveness of such landlord's waiver or bailee
letter or (b) assignments of such previously executed landlord's waivers and
bailee letters in favor of the Agent, in each case as reasonably required by the
Agent and in form and substance satisfactory to the Agent.
VII. NEGATIVE COVENANTS.
------------------
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
-----------------------------------------------------
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person (other than another Borrower) or
acquire all or a substantial portion of the assets or stock of any Person (other
than another Borrower) or permit any other Person (other than another Borrower)
to consolidate with or merge with it; provided, however, that the Borrowers
--------
shall be permitted after notice to Agent and Lenders to acquire (by merger or
otherwise, and notwithstanding the limitations set forth in Section 7.6 hereof)
all or substantially all of the assets or all or substantially all of the shares
of capital stock of a Person, provided that no such acquisition shall be
permitted hereunder unless (i) at the time of and after giving effect to such
acquisition, no Event of Default or Default shall have occurred and be
continuing and Undrawn Availability is not less than $5,000,000 after giving
effect to the assumption of debt and payments permitted in Subsection (ii)
below, (ii) the aggregate purchase price of all such acquisitions, inclusive of
assumed debt and obligations plus amounts expended pursuant to Section 7.12(b)
hereof shall not exceed $5,000,000 during any fiscal year, (iii) Agent shall
have a perfected first priority security interest in the Collateral of the
acquired entity; (iv) the potential acquisition target's board of directors has
consented to the sale and such sale is not otherwise a hostile acquisition; (v)
the potential acquisition target is in the same line of business as Borrowers;
(vi) the potential acquisition target is located in North America; and (vii)
such acquisition shall be effected through Borrowers and the Person acquired
shall be merged with or into a Borrower at the time of consummation of the
acquisition or become a Borrower hereunder subject to a joinder acceptable to
Agent in its sole discretion within thirty (30) days of the acquisition; and
(viii) no assets of the potential acquisition target's shall be included in the
Borrowing Base until the potential acquisition target has joined or become a
party hereto and the assets are acceptable to Agent in its sole discretion;
provided, that at no time shall the amount expended under this Section 7.1 when
taken together with the investments permitted under Section 7.4 (a), (b), (c),
(d) and (e), the loans or other extensions of credit permitted under
53
Section 7.5 (f) and the distributions permitted under Section 7.7 exceed in the
aggregate $15,000,000.
(b) Sell, lease, transfer or otherwise dispose of all or
any material part of its properties or assets, except in the ordinary course of
its business and except for the sale of the European businesses.
7.2. CREATION OF LIENS.
-----------------
Create or suffer to exist any Lien or transfer upon or against any of
its property or assets now owned or hereafter acquired, except Permitted
Encumbrances.
7.3. GUARANTEES.
----------
Become liable upon the obligations of any Person by assumption,
endorsement or guaranty thereof or otherwise (other than to Lenders or to any
Affiliate of Lenders) except (a) as disclosed on Schedule 7.3, (b) the
------------
endorsement of checks in the ordinary course of business, (c) guarantees by any
one or more Borrowers of trade debt of any other Borrower and Indebtedness of
any other Borrower which is permitted to be incurred under Section 7.8 of this
Agreement, and (d) a line of credit for StyroChem Finland Oy not exceeding
5,000,000 Euros, and (e) other unsecured guaranties not to exceed a liability of
$5,000,000 in the aggregate at any one time.
7.4. INVESTMENTS.
-----------
Purchase or acquire obligations or stock of; or any other interest in,
any Person, except, if at the time of such investment, no Event of Default has
occurred or would occur and with respect to (a), (b), (c), (d) and (e) Undrawn
Availability is not less than $5,000,000 after giving effect to such payment,
Borrowers may make investments in: (a) obligations issued or guaranteed by the
United States of America or any agency thereof; (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating); (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency; (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof; (e) investments in one or more Subsidiaries, joint ventures or
other Affiliates in an aggregate sum not to exceed the sum of (i) 50% of
cumulative Net Income (excluding non-cash extraordinary items) since January 1,
2002 of Radnor on a Consolidated Basis less the amount of any distributions made
by Radnor pursuant to Section 7.7 plus (ii) $3,000,000; (f) investments by any
Borrower in any other Borrower; (g) investments by any non-borrower subsidiary
in any Borrower; (h) intercompany investments existing on the Effective Date and
listed on Schedule 7.4; and (i) investments representing the conversion of
intercompany debt of StyroChem Finland Oy into equity; provided, that at no time
--------
shall the aggregate outstanding balance of investments permitted under Section
7.4 (a), (b), (c), (d) and (e) hereof,
54
when taken together with the aggregate amounts permitted under Section 7.1, the
outstanding balance of loans permitted under Section 7.5 (f) and the amount of
distributions permitted under Section 7.7 exceed in the aggregate $15,000,000.
7.5. LOANS.
-----
Make advances, loans or extensions of credit to any Person, including
without limitation, any Parent, Subsidiary or Affiliate except, Borrowers may
make advances, loans or extensions of credit to any Person with respect to (a)
the extension of commercial trade credit in connection with the sale of
Inventory in the ordinary course of its business, (b) loans to its employees in
the ordinary course of business not to exceed the aggregate amount of $100,000
at any time outstanding; provided, the provisions of this subclause (b) shall
--------
not prohibit any loans to an irrevocable life insurance trust established by
Xxxxxxx X. Xxxxxxx ("Insurance Trust") for the purposes of paying annual
premiums on the life insurance policies owned by the Insurance Trust on the life
of Xxxxxxx X. Xxxxxxx in an aggregate amount not to exceed $700,000 outstanding
at any one time, (c) advances, loans or extensions of credit outstanding as of
the Effective Date and listed on Schedule 7.5, (d) loans made by any Borrower to
any other Borrower, (e) intercompany loans outstanding on the Effective Date
made in connection with the acquisition of the polystyrene business of Neste Oy
and any refinancing thereof, and (f) if at the time of such loan no Event of
Default has occurred or would occur and Undrawn Availability is not less than
$5,000,000 after giving effect to such loan, loans to Subsidiaries and
Affiliates of Borrowers; provided, that at no time shall the aggregate amount of
--------
advances, loans or extensions of credit permitted under this Section 7.5 (f)
exceed $10,000,000 (other than advances, loans and extensions of credit
outstanding as of the Effective Date and listed on Schedule 7.5); provided,
--------
further that, at no time shall the aggregate balance of advances, loans or
extensions of credit permitted under Sections 7.5 (f) when taken together with
the amounts permitted under Section 7.1, the investments permitted under Section
7.4 (a), (b), (c), (d) and (e) and the distributions permitted under Section 7.7
exceed in the aggregate $15,000,000.
7.6. CAPITAL EXPENDITURES.
--------------------
Purchase or make any expenditure for fixed or capital assets (including
capitalized leases) in an amount in excess of $12,000,000 during any fiscal year
with respect to Radnor on a Consolidated Basis.
7.7. DIVIDENDS: DISTRIBUTIONS.
------------------------
Declare, pay or make any dividend or distribution to any of its
shareholders or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any of its capital stock except, so long as
(a) notice of termination with regard to this Agreement shall not be outstanding
and (b) if Undrawn Availability is less than $5,000,000 the purpose for such
distribution shall be as set forth in writing to Lenders at least ten (10) days
prior to such distribution and such distribution shall in fact be used for any
of the following purposes: (i) any Borrower shall be permitted to make
distributions to any of its shareholders who are Borrowers hereunder to enable
Radnor to make its regularly scheduled payments of interest on the Senior
55
Notes and the Second Senior Notes if (x) the aggregate amount of such
distributions do not exceed the interest payments then required to be paid by
Radnor on the Senior Notes or the Second Senior Notes) as the case may be, and
(y) at the time of and after giving effect to any such distribution no Event of
Default has occurred or would occur; and (ii) any Borrower shall be permitted to
make distributions to any of its shareholders for any purpose if (x) at the time
of and after giving effect to such distribution no Event of Default has occurred
or would occur, (y) in the event that Borrowers have Revolving Advances
outstanding hereunder in excess of $2,000,000 at the time of such distribution,
after giving effect to such distribution Undrawn Availability is more than
$2,000,000 and (z) in the event such distribution is made by Radnor, after
giving effect to such distribution, the aggregate amount of all payments or
distributions made by Radnor during such fiscal year does not exceed 50% of Net
Income (excluding non-cash extraordinary items) for the immediately preceding
fiscal year less the amount by which investments made pursuant to Section 7.4(e)
exceed $3,000,000 and the Undrawn Availability is not less than $9,000,000;
provided, that at no time shall the aggregate balance of distributions permitted
--------
under this Section 7.7 when taken together with the amounts permitted under
Section 7.1, the investments permitted under Section 7.4 (a), (b), (c), (d) and
(e) and the loans permitted under Section 7.5 (f) exceed in the aggregate
$15,000,000.
7.8. INDEBTEDNESS.
------------
Create, incur, assume or suffer to exist any Indebtedness (exclusive of
trade debt) except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness
incurred for capital expenditures permitted under Section 7.6 hereof; (iii)
Indebtedness due under the guaranties issued in respect of the Senior Notes and
the Second Senior Notes; (iv) Indebtedness of any Borrower to any other Borrower
permitted under Section 7.5; and (v) Indebtedness in a maximum aggregate amount
outstanding not greater than $10,000,000 for all Borrowers. Notwithstanding the
foregoing, Borrowers may incur Indebtedness in excess of the foregoing amounts,
but not to exceed $10,000,000 for all Borrowers if, after giving pro forma
effect to the incurrence of such Indebtedness, Interest Coverage for each of the
four fiscal quarters most recently ended would equal or exceed 2.0 to 1.0 if
calculated as if such Indebtedness was outstanding for the entire four quarter
period.
7.9. NATURE OF BUSINESS.
------------------
Substantially change the nature of the business in which it is
presently engaged, nor except as specifically permitted hereby purchase or
invest, directly or indirectly, in any assets or property other than in the
ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10. TRANSACTIONS WITH AFFILIATES.
----------------------------
Except for investments permitted under Section 7.4, loans permitted
under Section 7.5, and dividends and distributions permitted under Section 7.7,
directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, any Affiliate, except
transactions disclosed in the ordinary course of business, on an
56
arm's-length basis on terms no less favorable than terms which would have been
obtainable from a Person other than an Affiliate provided, the provisions of
this Section 7.10 shall not prohibit any payments to Radnor Management, Inc.
("Management") in accordance with the provisions of the Management Services
Agreement dated as of December 18, 1996 among Management, Borrowers, StyroChem
US, Ltd. and StyroChem FSC, Ltd. ("Management Agreement") in an aggregate amount
not to exceed the actual Expenses under and as defined in the Management
Agreement.
7.11. LEASES.
------
Enter as lessee into any lease arrangement for real or personal
property (unless capitalized and permitted under Section 7.6 hereof) if after
giving effect thereto, aggregate annual rental payments for all leased property
would exceed $9,000,000 in any one fiscal year.
7.12. SUBSIDIARIES.
------------
(a) Form any Subsidiary unless (A) (i) such Subsidiary
either expressly joins in this Agreement as a borrower and at the sole election
of Agent either becomes jointly and severally liable for the Obligations
pursuant to the form of Joinder attached hereto as Exhibit 7.12-A or executes a
guaranty of the Obligations in the form attached hereto as Exhibit 7.12-B, each
in form satisfactory to Agent and (ii) Agent shall have received all documents,
including legal opinions, it may reasonably require to establish compliance with
each of the foregoing conditions or (B) such Subsidiary is formed pursuant to
the provisions of Section 7.4 hereof.
(b) Enter into any partnership, joint venture or similar
arrangement unless (i) at the time of and after giving effect to such
arrangement no Event of Default or Default shall have occurred and be continuing
and (ii) the aggregate amount invested therein plus amounts expended and
liabilities and obligations assumed pursuant to Section 7.1(a) hereof shall not
exceed $5,000,000 during any fiscal year.
7.13. FISCAL YEAR AND ACCOUNTING CHANGES.
----------------------------------
Change its fiscal year from the last Friday in December or make any
change (i) in accounting treatment and reporting practices except as required by
GAAP or (ii) in tax reporting treatment except as required by law.
7.14. PLEDGE OF CREDIT.
----------------
Now or hereafter pledge any Lender's credit on any purchases or for any
purpose whatsoever or use any portion of any Advance in or for any business
other than Borrower's business as conducted on the date of this Agreement.
57
7.15. AMENDMENT OF CERTIFICATE OF INCORPORATION, ETC.
----------------------------------------------
Amend, modify or waive any material term or material provision of its
Certificate of Incorporation, By-laws, the Senior Notes or the Second Senior
Notes.
7.16. COMPLIANCE WITH ERISA.
---------------------
(i) (x) Maintain, or permit any member of the Controlled Group to
maintain, or (y) become obligated to contribute, or permit any member of the
Controlled Group to become obligated to contribute, to any Plan, other than
those Plans disclosed on Schedule 5.8(d); (ii) engage, or permit any member of
--------------
the Controlled Group to engage, in any non-exempt "prohibited transaction", as
that term is defined in section 406 of ERISA and Section 4975 of the Code; (iii)
incur, or permit any member of the Controlled Group to incur, any "accumulated
funding deficiency", as that term is defined in Section 302 of ERISA or Section
412 of the Code; (iv) terminate, or permit any member of the Controlled Group to
terminate, any Plan where such event could result in any liability of any
Borrower or any member of the Controlled Group or the imposition of a lien on
the property of any Borrower or any member of the Controlled Group pursuant to
Section 4068 of ERISA; (v) assume, or permit any member of the Controlled Group
to assume, any obligation to contribute to any Multiemployer Plan not disclosed
on Schedule 5.8(d); (vi) incur, or permit any member of the Controlled Group to
--------------
incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly
to notify the Agent of the occurrence of any Termination Event; (viii) fail to
comply, or permit a member of the Controlled Group to fail to comply, with the
requirements of ERISA or the Code or other applicable laws in respect of any
Plan; (ix) fail to meet, or permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA or the Code or postpone or
delay or allow any member of the Controlled Group to postpone or delay any
funding requirement with respect of any Plan.
7.17. SENIOR NOTES.
------------
At any time, directly or indirectly, pay, prepay, repurchase, redeem,
retire or otherwise acquire, or make any payment on account of any principal of;
interest on or premium payable in connection with the repayment or redemption of
the Senior Notes, except that Radnor may (i) pay all regularly scheduled
payments of interest on the Senior Notes so long as no Event of Default has
occurred or would occur after giving effect to such payment and (ii) repurchase
Senior Notes so long as after giving effect to such repurchase Undrawn
Availability of the Borrowers under this Agreement is not less than $9,000,000.
7.18. SECOND SENIOR NOTES.
-------------------
At any time, directly or indirectly, pay, prepay, repurchase, redeem,
retire or otherwise acquire, or make any payment on account of any principal of;
interest on or premium payable in connection with the repayment or redemption of
the Second Senior Notes, except that Radnor may (i) pay all regularly scheduled
payments of interest on the Second Senior Notes so long as no Event of Default
has occurred or would occur after giving effect to such payment and
58
(ii) repurchase Second Senior Notes so long as after giving effect to such
repurchase Undrawn Availability of the Borrowers under this Agreement is not
less than $9,000,000.
7.19. PREPAYMENT OF INDEBTEDNESS.
--------------------------
At any time, directly or indirectly, prepay any Indebtedness (other
than to Agent and the Lenders and Indebtedness of any Borrower to any other
Borrower permitted hereunder), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of Borrower, except (a) Senior Notes and Second Senior
Notes in accordance with Section 7.17 or 7.18, (b) Indebtedness incurred for
capital expenditures permitted under Section 7.6 hereof, to the extent that such
prepayment is necessary in connection with the refinancing of such Indebtedness
and such Indebtedness is on similar terms, and (c) any other Indebtedness if
after giving effect to such prepayment Undrawn Availability of the Borrowers
under this Agreement is not less than $9,000,000.
VIII. CONDITIONS PRECEDENT.
--------------------
8.1. CONDITIONS TO INITIAL ADVANCES.
------------------------------
The agreement of Lenders to make the initial Advances requested to be
made on the Effective Date is subject to the satisfaction, or waiver by Required
Lenders, immediately prior to or concurrently with the making of such Advances,
of the following conditions precedent:
(a) Ratification Agreement. Agent shall have received a
----------------------
Ratification Agreement duly executed and delivered by Borrowers pursuant to
which Borrowers reaffirm and ratify certain ancillary documents delivered in
connection with the Existing Loan Agreement.
(b) Agreement; Note. Agent shall have received (i) this
---------------
Agreement duly executed and delivered by an authorized officer of Borrowers and
Lenders, (ii) the Note duly executed and delivered by an authorized officer of
Borrowers [and (iii) the Assignment of Financing and Security Agreements.]
(c) Filings, Registrations and Recordings. Each document
-------------------------------------
(including, without limitation, any Uniform Commercial Code financing statement
or assignments thereof) required by this Agreement, any related agreement or
under law or reasonably requested by the Agent to be filed, registered or
recorded in order to create, in favor of Agent for its benefit and for the
ratable benefit of the Lenders, a perfected security interest in or lien upon
the Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto;
(d) Proceedings of Borrowers. Agent shall have received a
------------------------
copy of the resolutions in form and substance reasonably satisfactory to Agent,
of the Board of Directors of
59
Borrowers, authorizing (i) the execution, delivery and performance of this
Agreement, the Note, any related agreements and all documents executed in
connection therewith (collectively the "Documents") and (ii) the granting by
Borrowers of the security interests in and liens upon the Collateral in each
case certified by the President of each Borrower as of the Effective Date; and,
such certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such certificate;
(e) Incumbency Certificates of Borrowers. Agent shall
------------------------------------
have received a certificate of the Secretary of each Borrower, dated the
Effective Date, as to the incumbency and signature of the officers of each
Borrower executing this Agreement, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such officer;
(f) Certificates. Agent shall have received a copy of the
------------
Articles or Certificate of Incorporation, and all amendments to the foregoing,
certified by the Secretary of State together with copies of the by-laws and
shareholders agreements of each Borrower, as applicable, certified as accurate
and complete by the general partner or secretary of each Borrower;
(g) Good Standing Certificates. Agent shall have received
--------------------------
good standing certificates for each Borrower dated not more than twenty (20)
days prior to the Effective Date, issued by the Secretary of State or other
appropriate official of each Borrower's jurisdiction of formation and each
jurisdiction where the conduct of a Borrower's business activities or the
ownership of its properties necessitates qualification;
(h) Legal Opinion. Agent shall have received the executed
-------------
legal opinions of Xxxxx Xxxxxx & Heckscher LLP and such other counsel as may be
required by the Lenders in form and substance satisfactory to the Lenders which
shall cover such matters incident to the transactions contemplated by this
Agreement, the Note, and related agreements as Agent may reasonably require and
Borrowers hereby authorize and direct such counsel to deliver such opinions to
Agent and the Lender;
(i) No Litigation. (i) No litigation, investigation or
-------------
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of the Agent, is
deemed material or (B) which if adversely determined, could, in the reasonable
opinion of the Agent, have a Material Adverse Effect on any Borrower; and (ii)
no injunction, writ, restraining order or other order of any nature materially
adverse to any Borrower or the conduct of its business shall have been issued by
any Governmental Body;
(j) Financial Condition Opinions. Agent shall have
-----------------------------
received an executed Officers' Certificate in the form of Exhibit 8.1(j);
--------------
60
(k) Collateral Examination. Agent and Lenders shall have
----------------------
completed a Collateral field audit, the results of which shall be satisfactory
in form and substance to the Agent and Lenders;
(l) Fees. Agent shall have received all fees payable to
----
Agent or to the Lenders on or prior to the Effective Date pursuant to Article
III hereof or pursuant to any fee letter with Agent;
(m) Blocked Accounts. Agent shall have received duly
----------------
executed agreements establishing the Blocked Accounts or Depository Accounts
with financial institutions acceptable to Agent for the collection or servicing
of the Receivables and proceeds of the Collateral;
(n) Intentionally Omitted.
(o) Payment Instructions. Agent shall have received
--------------------
written instructions from Borrowers directing the application of proceeds of the
initial Advances made pursuant to this Agreement;
(p) Consents. Agent shall have received any and all
--------
Consents necessary to permit the effectuation of the transactions contemplated
by this Agreement and the Other Documents; and Agent shall have received such
Consents and waivers of such third parties as might assert claims with respect
to the Collateral, as Agent and its counsel shall deem necessary;
(q) No Material Adverse Change. (i) since September 28,
--------------------------
2001 (a) no material adverse change shall have occurred in the condition,
financial or otherwise, operations, properties or prospects of any Borrower, (b)
no material damage or destruction shall have occurred to any of the Collateral
and no material depreciation in the value thereof, (c) no material adverse
deviation shall have occurred from the forecasts and projections previously
delivered to Agent and (d) no event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect on any Borrower shall
have occurred and (ii) no representations made or information supplied to Agent
or the Lenders shall have been proven to be inaccurate or misleading in any
material respect;
(r) Contract Review. Agent shall have had the opportunity
---------------
to review all material contracts of each Borrower including, without limitation,
leases, union contracts, labor contracts, vendor supply contracts, license
agreements and distributorship agreements and any such contracts and agreements
reviewed shall be satisfactory in all respects to Agent;
(s) Closing Certificate. Agent shall have received
-------------------
closing certificate signed by the Chief Financial Officer of Radnor dated as of
the date hereof, stating that (i) all representations and warranties made by
each Borrower as set forth in this Agreement and the Other Documents are true
and correct on and as of such date, (ii) Borrowers are on such date in
compliance with all the terms and provisions set forth in this Agreement and the
other Documents and (iii) on such date no Default or Event of Default has
occurred or is continuing;
61
(t) Borrowing Base. Agent and Lenders shall have received
--------------
evidence from Borrowers that the Borrowing Base is sufficient in value and
amount to support the Advances in the amounts requested by the Borrowers on the
Effective Date;
(u) Agreements. Agent and Lenders shall have received
----------
copies of all agreements evidencing the obligations of any Borrower with respect
to its Indebtedness for borrowed money, which agreements shall be in form and
substance satisfactory to Agent and shall set forth the conditions on which (i)
such Borrower may make and the holder(s) of such indebtedness may receive
payments with respect thereto and (ii) the holder(s) of such indebtedness may
accelerate such obligations, commence any action against or otherwise exercise
any rights or enforce any remedies against such Borrower, which conditions shall
be satisfactory in form and substance to Agent in its discretion.
(v) Undrawn Availability. After giving effect to the
---------------------
initial Advances hereunder, Borrower shall have Undrawn Availability of at
least $7,500,000;
(w) Sale of Thermisol Group. Successful completion of the
-----------------------
closing of the sale of Thermisol Group and receipt of proceeds of such sale
substantially as provided for in the pro forma projections provided to Agent.
(x) Other Documents. Agent shall have received the
----------------
executed Other Documents, each in form and substance satisfactory to Lenders;
(y) Insurance. Agent shall have received in form and
---------
substance satisfactory to Agent, certified copies of each Borrower's casualty
insurance policies evidencing coverage on all Collateral in such amounts, with
such carriers and covering such risks as is acceptable to Agent, together with
loss payable endorsements on Agent's standard form of loss payee endorsement
naming Agent as loss payee, and certified copies of each Borrower's liability
insurance policies, together with endorsements naming Agent as an additional or
co-insured;
(z) Leasehold Agreements. Agent shall have received
--------------------
landlord, mortgagee or warehouseman agreements satisfactory to Agent with
respect to all premises leased or owned by
any Borrower at which Inventory is located on or before the date required
pursuant to Section 6.11 hereof;
[(aa) Resignation and Assignment by Prior Agent. The Prior
-----------------------------------------
Agent shall have resigned as administrative agent under the Existing Loan
Agreement and shall have executed all necessary assignment agreements and
related documents, including but not limited to collateral assignment agreements
and assignment of UCC-1 financing statements in favor of PNC, as Agent for the
Lenders.]
62
8.2. CONDITIONS TO EACH ADVANCE.
--------------------------
The agreement of the Lenders to make any Advance requested to be made
on any date (including, without limitation, the initial Advance but excluding
any Revolving Advance deemed requested by Borrowing Agent in connection with a
disbursement relating to a Letter of Credit pursuant to Section 2.9(c) hereof),
is subject to the satisfaction of the following conditions precedent as of the
date such Advance is made:
(a) Representations and Warranties. Each of the
------------------------------
representations and warranties made by the Borrowers in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date
except as such representations and warranties are modified in a manner
consistent with this Agreement;
(b) No Default. No Event of Default or Default shall have
----------
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided, however that Lenders
-------- -------
in their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Advances.
----------------
In the case of any Revolving Advances requested to be made or Letters
of Credit to be issued, after giving effect thereto, the aggregate of all
Advances outstanding shall not exceed the Borrowing Base.
Each request for an Advance by any Borrower hereunder shall constitute
a representation and warranty by each Borrower as of the date of such Advance
that the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION.
-----------
Each Borrower shall, until satisfaction in full of the Obligations and
the termination of this Agreement:
9.1. DISCLOSURE OF MATERIAL MATTERS.
------------------------------
Immediately upon learning thereof, report to Agent all matters
materially affecting the value, enforceability or collectibility of any portion
of the Collateral including, without limitation, any Borrower's reclamation or
repossession of, or the return to any Borrower of, a material amount of goods or
claims or disputes asserted by any Customer or other obligor.
63
9.2. SCHEDULES.
---------
Deliver to Agent and if requested, the Lenders, on or before the
fifteenth (15th) day of each month as and for the last business day of the
prior month a borrowing base certificate in such form as the Agent may
reasonably require, together with, if requested by the Agent, (a) accounts
receivable agings, (b) accounts payable schedules and (c) Inventory reports
for each Borrower. In addition, each Borrower will deliver to Agent at such
intervals as Agent may require: (i) confirmatory assignment schedules, (ii)
copies of Customer's invoices, (iii) evidence of shipment or delivery, and
(iv) such further schedules, documents and/or information regarding the
Collateral as Agent may require including, without limitation, trial balances
and test verifications. Agent shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section are to be in form satisfactory to
Agent and executed by each Borrower and delivered to Agent from time to time
solely for Agent's convenience in maintaining records of the Collateral, and
any Borrower's failure to deliver any of such items to Agent shall not affect,
terminate, modify or otherwise limit Agent's Lien with respect to the
Collateral.
9.3. INTENTIONALLY OMITTED.
---------------------
9.4. LITIGATION.
----------
Promptly notify Agent and Lenders in writing of any litigation, suit or
administrative proceeding affecting any Borrower, whether or not the claim is
covered by insurance, and of any suit or administrative proceeding, which may
have a Material Adverse Effect on any Borrower.
9.5. MATERIAL OCCURRENCES.
--------------------
Promptly notify Agent and Lenders in writing upon the occurrence of (a)
any Event of Default or Default; (b) any event of default or (c) any event which
with the giving of notice or lapse of time, or both, would constitute an event
of default under the Senior Notes; (d) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent or any
Lender fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any
Borrower as of the date of such statements; (e) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two plan years and
was not corrected as provided in Section 4971 of the Internal Revenue Code,
could subject Borrower to a tax imposed by Section 4971 of the Internal Revenue
Code; (f) each and every default by any Borrower which might result in the
acceleration of the maturity of any Indebtedness, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (g) any other development
in the business or affairs of any Borrower which might reasonably be expected to
be materially adverse; in each case describing the nature thereof and the action
such Borrower proposes to take with respect thereto.
64
9.6. GOVERNMENT RECEIVABLES.
----------------------
Notify Agent immediately if any of the Receivables arise out of
contracts between any Borrower and the United States, any state, or any
department, agency or instrumentality of any of them.
9.7. ANNUAL FINANCIAL STATEMENTS.
---------------------------
Furnish Agent and the Lenders within ninety (90) days after the end of
each fiscal year of Borrowers, financial statements of Radnor on a consolidated
and consolidating basis, including, but not limited to, statements of income and
stockholders' equity and cash flow from the beginning of the current fiscal year
to the end of such fiscal year and the balance sheet as at the end of such
fiscal year, all prepared in accordance with GAAP applied on a basis consistent
with prior practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm selected by
Borrower and satisfactory to Agent (the "Accountants"). The report of such
accounting firm shall be accompanied by a statement of such accounting firm
certifying that (i) they have caused this Agreement to be reviewed, (ii) in
making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default
or a Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.12 hereof. In addition, the reports shall be accompanied by
a certificate of each Borrower's Chief Financial Officer or Treasurer which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by such Borrower
with respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.12 hereof.
9.8. QUARTERLY FINANCIAL STATEMENTS.
------------------------------
Furnish Agent and Lenders within 45 days after the end of each fiscal
quarter, an unaudited balance sheet of Radnor on a Consolidated Basis and
unaudited statements of income and stockholders' equity and cash flow reflecting
results of operations from the beginning of the fiscal year to the end of such
quarter and for such quarter, prepared on a basis consistent with prior
practices and complete and correct in all material respects, subject to normal
year end adjustments. The reports shall be accompanied by a certificate of each
Borrower's Chief Financial Officer or Treasurer which shall state that, based on
an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by such Borrower with respect to such event
and, such certificate shall have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.12 hereof.
65
9.9. MONTHLY FINANCIAL STATEMENTS.
----------------------------
Furnish Agent and Lenders within thirty (30) days after the end of each
month, an unaudited balance sheet of Radnor on a consolidated and consolidating
basis and unaudited statements of income and stockholders' equity and cash flow
reflecting results of operations from the beginning of the fiscal year to the
end of such month and for such month, prepared on a basis consistent with prior
practices and complete and correct in all material respects, subject to normal
year end adjustments. The reports shall be accompanied by a certificate of each
Borrower's Chief Financial Officer or Treasurer which shall state that, based on
an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by such Borrower with respect to such event
and, such certificate shall have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.12 hereof.
9.10. OTHER REPORTS.
-------------
Furnish Agent and Lenders as soon as available, but in any event within
ten (10) days after the issuance thereof, (i) with copies of such financial
statements, reports and returns as Radnor shall send to its stockholders and
(ii) copies of all notices sent pursuant to the Senior Notes.
9.11. ADDITIONAL INFORMATION.
----------------------
Furnish Agent and Lenders with such additional information as Agent and
Lenders shall reasonably request in order to enable Agent and Lenders to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Note have been complied with by Borrowers including, without
limitation and without the necessity of any request by Agent or any Lender, (a)
copies of all environmental audits and reviews, (b) at least thirty (30) days
prior thereto, notice of any Borrower's opening of any new office or place of
business or any Borrower's closing of any existing office or place of business,
and (c) promptly upon learning thereof, notice of any labor dispute to which any
Borrower may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which
any Borrower is a party or by which any Borrower is bound.
9.12. PROJECTED OPERATING BUDGET.
--------------------------
Furnish Agent and Lenders, no later than thirty (30) days prior to the
beginning of each fiscal year commencing with fiscal year 2003, a month by month
projected operating budget and cash flow of Radnor on a Consolidated Basis for
such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by each Borrower's Chief Financial
Officer to the effect that such projections have been prepared on the basis of
sound financial planning
66
practice consistent with past budgets and financial statements and that such
officer has no reason to question the reasonableness of any material assumptions
on which such projections were prepared.
9.13. INTENTIONALLY OMITTED.
---------------------
9.14. NOTICE OF SUITS, ADVERSE EVENTS.
-------------------------------
Furnish Agent and Lenders with prompt notice of (i) any lapse or other
termination of any Consent issued to Borrowers by any Governmental Body or any
other Person that is material to the operation of any Borrower's business, (ii)
any refusal by any Governmental Body or any other Person to renew or extend any
such Consent; and (iii) copies of any periodic or special reports filed by any
Borrower with any Governmental Body or Person, if such reports indicate any
material change in the business, operations, affairs or condition of any
Borrower, or if copies thereof are requested by Agent or any Lender, and (iv)
copies of any material notices and other communications from any Governmental
Body or Person which specifically relate to any Borrower.
9.15. ERISA NOTICES AND REQUESTS.
--------------------------
Furnish Agent and Lenders with immediate written notice in the event
that (i) any Borrower or any member of the Controlled Group knows or has reason
to know that a Termination Event has occurred, together with a written statement
describing such Termination Event and the action, if any, which Borrower or
member of the Controlled Group has taken, is taking, or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, Department of Labor or PBGC with respect thereto, (ii)
Borrower, or any member of the Controlled Group knows or has reason to know that
a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Internal Revenue Code) has occurred together with a written statement describing
such transaction and the action which such Borrower or any member of the
Controlled Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by Borrower, or any member of the
Controlled Group with respect to such request, (iv) any increase in the
benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which such Borrower or any member
of the Controlled Group was not previously contributing shall occur, (v) any
Borrower or any member of the Controlled Group shall receive from the PBGC a
notice of intention to terminate a Plan or to have a trustee appointed to
administer a Plan, together with copies of each such notice, (vi) any Borrower
or any member of the Controlled Group shall receive any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Internal Revenue Code,
together with copies of each such letter; (vii) any Borrower or any member of
the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with copies of each such notice; (viii) any
Borrower or any member of the Controlled Group shall fail to make a required
installment or any other required payment under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment; (ix) any
Borrower or any
67
member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated) (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16. ADDITIONAL DOCUMENTS.
--------------------
Execute and deliver to Agent, upon request, such documents and
agreements as Agent may, from time to time, reasonably request to carry out the
purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
-----------------
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein or any Other Document when due;
10.2. any representation or warranty made or deemed made by any
Borrower in this Agreement or any related agreement or in any certificate,
document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information
when due or when requested, or (ii) permit the inspection of its books or
records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property;
10.5. (i) a failure or neglect of any Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.3,
4.7, 4.9, 4.13, 4.14, 4.19, 6.1, 6.2, 6.3, 6.4 and 6.7 hereof which is not cured
within thirty (30) days from the occurrence of such failure or neglect; or (ii)
failure or neglect of any Borrower to perform, keep or observe any other term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Borrower,
Agent and the Lenders after expiration of all applicable grace periods;
10.6. any judgment in excess of $300,000 is rendered against any
Borrower or judgment liens filed against any Borrower of judgments in excess of
$1,000,000 in the aggregate are rendered against all Borrowers for an amount
which within thirty (30) days of such rendering or filing is not either
satisfied, stayed or discharged of record;
68
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within forty five (45)
days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
10.8. any Borrower shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of
its present business;
10.9. any Subsidiary of any Borrower or any Guarantor, shall (i) apply
for, consent to or suffer the appointment of: or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within forty five (45) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. any change in the condition or affairs (financial or otherwise)
of any Borrower which in Agent's opinion impairs the Collateral or the ability
of any Borrower to perform its Obligations under this Agreement;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. an event of default has occurred and been declared under the
Senior Notes which default shall not have been cured or waived within any
applicable grace period;
10.13. a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which materially adversely affects
its condition, affairs or prospects (financial or otherwise) which default is
not cured within any applicable grace period;
10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Borrower, or if any Guarantor attempts to terminate, challenges the validity
of, or its liability under, any such Guaranty or similar agreement;
10.15. any Change of Ownership or Change of Control shall have
occurred;
69
10.16. any material provision of this Agreement shall, for any
reason, cease to be valid and binding on any Borrower, or Borrower shall so
claim in writing to Agent;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent, trademark or tradename of any
Borrower, the continuation of which is material to the continuation of any
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent
and such proceedings shall not be dismissed or discharged within sixty (60)
days, or (c) schedule or conduct a hearing on the renewal of any license,
permit, trademark, tradename or patent necessary for the continuation of any
Borrower's business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent; (ii) any
agreement which is necessary or material to the operation of any Borrower's
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such revocation
or termination, and such revocation or termination and non-replacement could
reasonably be expected to have a Material Adverse Effect on any Borrower;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body or the title and rights of any Borrower shall have become the
subject matter of litigation which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents;
10.19. Intentionally Omitted.
10.20. an event or condition specified in Sections 7.16 or 9.15
hereof shall occur or exist with respect to any Plan and, as a result of such
event or condition, together with all other such events or conditions, any
Borrower or any member of the Controlled Group shall incur, or in the opinion
of Lender be reasonably likely to incur, a liability to a Plan or the PBGC (or
both) which, in the reasonable judgment of the Required Lenders, could have a
Material Adverse Effect on any Borrower;
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
------------------------------------------
11.1. RIGHTS AND REMEDIES.
-------------------
Upon the occurrence of (i) an Event of Default pursuant to Section
10.7 all Obligations shall be immediately due and payable and this Agreement
and the obligation of Lenders to make Advances shall be deemed terminated; and,
(ii) any of the other Events of Default and at any time thereafter (such
default not having previously been cured), at the option of Required Lenders
all Obligations shall be immediately due and payable and the Lenders shall have
the right to terminate this Agreement and to terminate the obligation of
Lenders to make Advances. Upon the occurrence of any Event of Default, Agent
may, and at the direction of the Required Lenders shall, exercise any and all
other rights and remedies provided for herein, under the
70
Uniform Commercial Code and at law or equity generally, including, without
limitation, the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any Borrower's premises or other premises without legal
process and without incurring liability to any Borrower therefor, and Agent may
thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrowers to make the Collateral available to
Agent at a convenient place. With or without having the Collateral at the time
or place of sale, Agent may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms) either for cash, credit or future delivery, as
Agent may elect. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrowing Agent at least five (5) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by each Borrower. In connection
with the exercise of the foregoing remedies, Agent is granted permission to use
(a) all of each Borrower's trademarks, trade styles, trade names, patents,
patent applications, licenses, franchises and other proprietary rights which are
used in connection with Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods without cost to Agent. The proceeds realized from the sale of any
Collateral shall be applied as follows: first, to the reasonable costs, expenses
and attorneys' fees and expenses incurred by Agent for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second, to interest due upon any of the Obligations; and, third, to
the principal of the Obligations. If any deficiency shall arise, each Borrower
shall remain liable to Agent and the Lenders therefor.
11.2. AGENT'S DISCRETION.
------------------
Agent shall have the right in its sole discretion, but with the
consent of the Required Lenders to determine which rights, Liens, security
interests or remedies Agent may at any time pursue, relinquish, subordinate, or
modify or to take any other action with respect thereto and such determination
will not in any way modify or affect any of Agent's or Lenders' rights
hereunder.
11.3. SETOFF.
------
In addition to any other rights which Agent or any Lender may have
under applicable law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right to apply any of Borrowers' property
held by Agent and such Lender or by the Bank to reduce the Obligations.
71
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE.
---------------------------------
The enumeration of the foregoing rights and remedies is not intended
to be exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other right or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not alternative.
11.5. 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
Note (including, without limitation, exercising any right of set-off) without
first obtaining the prior written consent of Agent and Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Note shall be taken in concert and at the direction or with
the consent of the Agent.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
--------------------------------
12.1. WAIVER OF NOTICE.
----------------
Each Borrower each hereby waives notice of non-payment of any of the
Receivables, demand, presentment, protest and notice thereof with respect to
any and all instruments, notice of acceptance hereof, notice of loans or
advances made, credit extended, Collateral received or delivered) or any other
action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2. DELAY.
-----
No delay or omission on Agent's or any Lender's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any default.
12.3. JURY WAIVER.
-----------
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH
CLAIM,
72
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
------------------------------
13.1. TERM.
----
This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of each Borrower,
Agent and each Lender, shall become effective on the date hereof and shall
continue in full force and effect until the last day of the Term unless sooner
terminated as herein provided. Borrower may terminate this Agreement at any
time upon five (5) days' prior written notice upon payment in full of the
Obligations (the "Prepayment Date").
13.2. TERMINATION.
-----------
The termination of the Agreement shall not affect any Borrower's,
Agent's or any Lender's rights, or any of the Obligations having their
inception prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered
into, rights or interests created or Obligations have been fully disposed of,
concluded or liquidated. The security interests, Liens and rights granted to
Agent and the Lenders hereunder and the financing statements filed hereunder
shall continue in full force and effect, notwithstanding the termination of
this Agreement or the fact that Borrower's account may from time to time be
temporarily in a zero or credit position, until all of the Obligations of
Borrowers have been paid or performed in full after the termination of this
Agreement or Borrowers have furnished Agent and the Lenders with an
indemnification satisfactory to Agent and the Lenders with respect thereto.
Accordingly, each Borrower waives any rights which it may have under the Uniform
Commercial Code to demand the filing of termination statements with respect to
the Collateral, and Agent shall not be required to send such UCC termination
statements to Borrowers, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its terms and
all Obligations paid in full in immediately available funds. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations are paid or performed in
full.
XIV. REGARDING AGENT.
---------------
14.1. APPOINTMENT.
-----------
Each Lender hereby designates PNC to act as Agent for such Lender
under this Agreement and the Other Documents. Each Lender hereby irrevocably
authorizes Agent to take
73
such action on its behalf under the provisions of this Agreement and the Other
Documents and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto
and Agent shall hold all Collateral, payments of principal and interest, fees
(except the fees set forth in Sections 3.2(iii), 3.4(a) and 3.4(b) and in the
Fee Letter) charges and collections (without giving effect to any collection
days) received pursuant to this Agreement, for the ratable benefit of Lenders.
Agent may perform any of its duties hereunder by or through its agents or
employees. As to any matters not expressly provided for by this Agreement
(including without limitation, collection of the Note) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
-------- -------
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. NATURE OF DUTIES.
----------------
Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement and the Other Documents. Neither Agent nor any of
its officers, directors, employees or agents shall be (i) liable for any action
taken or omitted by them as such hereunder or in connection herewith, unless
caused by their gross negligence (but not mere negligence) or willful
misconduct, (ii) liable for any action taken or omitted by the Prior Agent or
any of its officers, directors, employees or agents, or (iii) responsible in
any manner for any recitals, statements, representations or warranties made by
any Borrower or any officer thereof contained in this Agreement, or in any of
the Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any of the Other Documents or for any failure of any Borrower to perform its
respective obligations hereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any of
the Other Documents, or to inspect the properties, books or records of any
Borrower. The duties of Agent as respects the Advances to any Borrower shall
be mechanical and administrative in nature; Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any Lender; and nothing
in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
except as expressly set forth herein.
14.3. LACK OF RELIANCE ON AGENT AND RESIGNATION.
-----------------------------------------
Independently and without reliance upon Agent or any other Lender,
each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Borrower in
connection with the making and the continuance of the Advances hereunder and
the taking or not taking of any action in connection herewith, and (ii) its own
74
appraisal of the creditworthiness of Borrowers. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before making of the Advances or at any time or
times thereafter except as shall be provided by Borrower pursuant to the terms
hereof. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of
the financial condition of each Borrower, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Note, the Other Documents or the financial
condition of each Borrower, or the existence of any Event of Default or any
Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowers and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and
duties of Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent. After any Agent's resignation as Agent, the provisions of
this Article XIV shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
14.4. CERTAIN RIGHTS OF AGENT.
-----------------------
If Agent shall request instructions from Lenders with respect to any
act or action (including failure to act) in connection with this Agreement or
any Other Document, Agent shall be entitled to refrain from such act or taking
such action unless and until Agent shall have received instructions from the
Required Lenders; and Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, Lenders shall not have any
right of action whatsoever against Agent as a result of its acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders.
14.5. RELIANCE.
--------
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, order or other document or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or entity, and, with respect to all
legal matters pertaining to this Agreement and the Other Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
75
14.6. NOTICE OF DEFAULT.
-----------------
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder or under the Other
Documents, unless Agent has received notice from a Lender or any Borrower
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be directed by the Required Lenders; provided, that, unless
-------- ----
and until Agent shall have received such directions, Agent may but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.
14.7. INDEMNIFICATION.
---------------
To the extent Agent is not reimbursed and indemnified by Borrowers,
each Lender will reimburse and indemnify Agent in proportion to its respective
portion of the Advances (or, if no Advances are outstanding, according to its
Commitment Percentage), 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 performing its duties hereunder, or in
any way relating to or arising out of this Agreement or any Other Document;
provided that, Lenders shall not be liable for any portion of such liabilities,
-------- ----
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's willful misconduct or gross
(not mere) negligence.
14.8. AGENT IN ITS INDIVIDUAL CAPACITY.
--------------------------------
With respect to the obligation of Agent to lend under this Agreement,
the Advances made by it shall have the same rights and powers hereunder as any
other Lender and as if it were not performing the duties as Agent specified
herein; and the term "Lender" or any similar term shall, unless the context
clearly otherwise indicates, include Agent in its individual capacity as a
Lender. Agent may engage in business with Borrowers as if it were not
performing the duties specified herein, and may accept fees and other
consideration from any Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
14.9. DELIVERY OF DOCUMENTS.
---------------------
To the extent Agent receives documents and information from any
Borrower pursuant to the terms of this Agreement, Agent will promptly furnish
such documents and information to Lenders.
14.10. BORROWERS' UNDERTAKING TO AGENT.
-------------------------------
Without prejudice to their respective obligations to the Lenders under
the other provisions of this Agreement, each Borrower hereby undertakes with
Agent to pay to Agent from
76
time to time on demand all amounts from time to time due and payable by it for
the account of Agent or the Lenders or any of them pursuant to this Agreement to
the extent not already paid. Any payment made pursuant to any such demand shall
pro tanto satisfy Borrowers' obligations to make payments for the account of the
--- -----
Lenders or the relevant one or more of them pursuant to this Agreement.
XV. MISCELLANEOUS.
-------------
15.1. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania applied to contracts to be
performed wholly within the Commonwealth of Pennsylvania. Any judicial
proceeding brought by or against any Borrower with respect to any of the
Obligations, this Agreement or any related agreement may be brought in any
court of competent jurisdiction in the Commonwealth of Pennsylvania, United
States of America, and, by execution and delivery of this Agreement, each
Borrower each accepts for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement. Each Borrower hereby waives personal service of
any and all process upon it and consents that all such service of process may
be made by registered mail (return receipt requested) directed to Borrowing
Agent at its address set forth in Section 15.6. Nothing herein shall affect the
right to serve process in any manner permitted by law or shall limit the right
of the Agent to bring proceedings against any Borrower in the courts
of any other jurisdiction. Each Borrower waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. Any
--------------------
judicial proceeding by any Borrower against the Agent or Lenders involving,
directly or indirectly, any matter or claim in any way arising out of: related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the County of Xxxxxxxxxx or
Philadelphia, Commonwealth of Pennsylvania.
15.2 ENTIRE UNDERSTANDING.
--------------------
(a) This Agreement and the documents executed
concurrently herewith contain the entire understanding between Borrowers, Agent
and each Lender and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have
no force and effect unless in writing, signed by each Borrower's, Agent's and
each Lender's respective officers. Neither this Agreement nor any portion or
provisions hereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged. Each Borrower acknowledges that it has been advised by counsel in
connection with the execution of this Agreement and Other Documents and is not
relying upon oral representations or statements inconsistent with the terms and
provisions of this Agreement.
77
(b) The Required Lenders, Agent with the consent in
writing of the Required Lenders, and each Borrower may, subject to the
provisions of this Section 15.2(b), from time to time enter into written
supplemental agreements to this Agreement, the Note or the Other Documents
executed by Borrowers, for the purpose of adding or deleting any provisions or
otherwise changing, varying or waiving in any manner the rights of the Lenders,
Agent or any Borrower thereunder or the conditions, provisions or terms thereof
or waiving any Event of Default thereunder, but only to the extent specified in
such written agreements; provided, however, that no such supplemental agreement
-------- -------
shall (x) amend Sections 6.5, 6.6 or 7.6 without the consent of 67% of the
Lenders or (y) without the consent of all the Lenders:
(i) increase or decrease the Commitment
Percentage of any Lender or the Maximum Loan Amount or the Advance Rates.
(ii) extend the maturity of any Note or the due
date for any amount payable hereunder, or decrease the rate of interest or
reduce any fee payable by Borrowers to Agent or Lenders pursuant to this
Agreement.
(iii) alter the definition of the term Required
Lenders or alter, amend or modify this Section 15.2(b).
(iv) release any Collateral during any calendar
year having an aggregate value in excess of $500,000.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if
after giving effect thereto the total of Revolving Advances outstanding
hereunder would exceed the Formula Amount for more than sixty (60) consecutive
Business Days or exceed one hundred and ten percent (110%) of the Formula
Amount.
Any such supplemental agreement shall apply equally to each of the Lenders and
shall be binding upon Borrowers, the Lenders and Agent and all future holders
of the Obligations. In the case of any waiver, Borrowers, Agent and the Lenders
shall be restored to their former positions and rights, and any Event of
Default waived shall be deemed to be cured and not continuing, but no waiver of
a specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed
to have consented to matter that was the subject of the request. In the event
that Agent requests the consent of a Lender pursuant to this Section 16.2 and
such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by the Agent (the
78
"Designated Lender"), for a price equal to the then outstanding principal amount
thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees shall be paid when collected from Borrowers. In the event PNC
elects to require any Lender to assign its interest to PNC or to the Designated
Lender, PNC will so notify such Lender in writing within forty five (45) days
following such Lender's denial, and such Lender will assign its interest to PNC
or the Designated Lender no later than five (5) days following receipt of such
notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC
or the Designated Lender, as appropriate, and Agent.
Notwithstanding (a) the existence of a Default or an Event of Default, (b) that
any of the other applicable conditions precedent set forth in Section 8.2
hereof have not been satisfied or (c) any other provision of this Loan
Agreement, Agent may at its discretion and without the consent of the Required
Lenders, voluntarily permit the outstanding Revolving Advances at any time to
exceed the Formula Amount by up to one hundred and ten percent (110%) of the
Formula Amount for up to thirty (30) consecutive Business Days. For purposes of
the preceding sentence, the discretion granted to Agent hereunder shall not
preclude involuntary overadvances that may result from time to time due to the
fact that the Formula Amount was unintentionally exceeded for any reason,
including, but not limited to, Collateral previously deemed to be either
"Eligible Receivables" or "Eligible Inventory", as applicable, becomes
ineligible, collections of Receivables applied to reduce outstanding Revolving
Advances are thereafter returned for insufficient funds [or overadvances are
made to protect or preserve the Collateral.] In the event Agent involuntarily
permits the outstanding Revolving Advances to exceed the [Formula Amount] [or
Overadvance Threshold Amount] by more than ten percent (10%), Agent shall use
its efforts to have Borrowers decrease such excess in as expeditious a manner
as is practicable under the circumstances and not inconsistent with the reason
for such excess. Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.
In addition to (and not in substitution of) the discretionary Revolving Advances
permitted above in this Section 16.2, the Agent is hereby authorized by the
Borrowers and the Lenders, from time to time in the Agent's sole discretion, (A)
after the occurrence and during the continuation of a Default or an Event of
Default, or (b) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to the Borrowers on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (a) to preserve
or protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (iii) to pay any other amount chargeable to the Borrowers pursuant to the
terms of this Agreement; provided, that at any time after giving effect to any
such Revolving Advances the outstanding Revolving Advances do not exceed one
hundred and ten percent (110%) of the Formula Amount.
79
15.3 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
---------------------------------------------------
(a) This Agreement shall be binding upon and inure to the
benefit of Borrowers, Agent, each Lender, all future holders of the
Note and their respective successors and assigns, except that no
Borrower may assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of Agent and Lenders
holding at least [seventy-six percent (76%)] of the Advances or if no
Advances are outstanding, [seventy-six percent (76%)] of the Commitment
Percentages.
(b) Each Borrower acknowledges that in the regular course
of commercial banking business one or more Lenders may at any time and
from time to time sell participating interests in the Advances to other
financial institutions (each such transferee or purchaser of a
participating interest, a "Transferee"), subject to the prior written
consent of Radnor which shall not be unreasonably withheld or delayed.
Each Transferee may exercise all rights of payment (including without
limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as
if such Transferee were the direct holder thereof provided that
Borrowers shall not be required to pay to any Transferee more than the
amount which it would have been required to pay to the Lender which
granted an interest in its Advances or other Obligations payable
hereunder to such Transferee had such Lender retained such interest in
the Advances hereunder or other Obligations payable hereunder and in no
event shall Borrowers be required to pay any such amount arising from
the same circumstances and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and such Transferee.
Each Borrower hereby grants to any Transferee a continuing security
interest in any deposits, moneys or other property actually or
constructively held by such Transferee as security for the Transferee's
interest in the Advances.
(c) Subject to the prior written consent of Radnor, which
shall not be unreasonable withheld or delayed, any Lender may with the
consent of Agent which shall not be unreasonably withheld or delayed
sell, assign or transfer all or any part of its rights under this
Agreement and the Other Documents to one or more additional banks or
financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), pursuant to a Commitment Transfer Supplement, executed by a
Purchasing Lender, the transferor Lender, and Agent and delivered to
Agent for recording provided no Purchasing Lender shall be sold an
aggregate commitment of less than $5,000,000. Upon such execution,
delivery, acceptance and recording, from and after the transfer
effective date determined pursuant to such Commitment Transfer
Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a
Commitment Percentage as set forth therein, and (ii) the transferor
Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation for
that purpose. Such Commitment Transfer Supplement shall be deemed to
80
amend this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing Lender and the resulting
adjustment of the Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the
Other Documents. Each Borrower hereby consent to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment
Percentages arising from the purchase by such Purchasing Lender of all
or a portion of the rights and obligations of such transferor Lender
under this Agreement and the Other Documents. Each Borrower shall
execute and deliver such further documents and do such further acts and
things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the
Advances owing to each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and
each Borrower, Agent and Lenders may treat each Person whose name is
recorded in the Register as the owner of the Advance recorded therein
for the purposes of this Agreement. The Register shall be available for
inspection by Borrowers, or any Lender at any reasonable time and from
time to time upon reasonable prior notice. Agent shall receive a fee in
the amount of $3,500 payable by the applicable Purchasing Lender upon
the effective date of each transfer or assignment to such Purchasing
Lender.
(e) Each Borrower authorizes each Lender to disclose to
any Transferee or Purchasing Lender and any prospective Transferee or
Purchasing Lender any and all financial information in such Lender's
possession concerning Borrowers which has been delivered to such Lender
by or on behalf of any Borrower pursuant to this Agreement or in
connection with such Lender's credit evaluation of Borrowers.
15.4. APPLICATION OF PAYMENTS.
-----------------------
Agent shall have the continuing and exclusive right to apply or reverse
and re-apply any payment and any and all proceeds of Collateral to any portion
of the Obligations. To the extent that any Borrower makes a payment or Agent or
any Lender receives any payment or proceeds of the Collateral for any Borrower's
benefit, which are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by Agent or such Lender.
15.5. INDEMNITY.
---------
Each Borrower shall indemnify Agent and each Lender and their officers,
employees and agents from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including,
81
without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against Agent or any Lender in any litigation,
proceeding or investigation instituted or conducted by any governmental agency
or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement, whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the willful misconduct or gross
(not mere) negligence of the party being indemnified.
15.6. NOTICE.
------
Any notice or request hereunder may be given to any Borrower or to
Agent or any Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. Any notice or request hereunder shall
be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, (d) telex or telegram, subsequently
confirmed by registered or certified mail, or (e) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice of change of address) with telephone communication to a duly
authorized officer of the recipient confirming its receipt as subsequently
confirmed by registered or certified mail. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier of actual receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage prepaid, or (c) upon actual
receipt thereof when sent by a recognized overnight delivery service or (d) upon
actual receipt thereof when sent by telecopier to the number set forth below
with telephone communication confirming receipt and subsequently confirmed by
registered, certified or overnight mail to the address set forth below, in each
case addressed to each party at its address set forth below or at such other
address as has been furnished in writing by a party to the other by like notice:
82
(A) If to Agent or PNC at:
PNC Bank, National Association
0000 Xxxxxx Xxxxxx
X0-X000-00-0
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to
(other than with respect
to matters relating solely
to fundings and payments):
Blank Rome Comisky & XxXxxxxx, LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, XX
Telephone: 000-000-0000
Facsimile: 215-569-5522
(B) If to a Lender other than Agent, as specified on the signature
pages hereof
(C) If to a Borrower: c/o Radnor Holdings Corporation
Three Radnor Corporate Center
Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
83
with a copy to: Xxxxx Xxxxxx & Heckscher LLP
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000
Attention: Xxxxxxx X. Xxxxxxx,
Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
15.7. SURVIVAL.
--------
The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9,
4.19(d), 14.7 and 15.5 shall survive termination of this Agreement and the Other
Documents and payment in full of the Obligations.
15.8. SEVERABILITY.
------------
If any part of this Agreement is contrary to, prohibited by, or deemed
invalid under applicable laws or regulations, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
15.9. EXPENSES.
--------
Borrowers shall pay all costs and expenses including, without
limitation, reasonable attorneys' fees and disbursements incurred by Agent, any
Lender and Agent on behalf of the Lenders (a) in all efforts made to enforce
payment of any Obligation or effect collection of any Collateral, or (b) in
connection with the entering into, modification, amendment, administration and
enforcement of this Agreement or any consents or waivers hereunder and all
related agreements documents and instruments, or (c) in instituting,
maintaining, preserving, enforcing and foreclosing on Agent's security interest
in or Lien on any of the Collateral, whether through judicial proceedings or
otherwise, or (d) in defending or prosecuting any actions or proceedings arising
out of or relating to Agent's or any Lender's transactions with any Borrower, or
(e) in connection with any advice given to Agent or any Lender with respect to
its rights and obligations under this Agreement and all related agreements.
15.10. INJUNCTIVE RELIEF.
-----------------
Each Borrower recognizes that, in the event any Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy at law may prove to be inadequate relief to Agent and the
Lenders; therefore, Agent and each Lender, if Agent or such Lender so requests,
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving that actual damages are not an adequate remedy.
84
15.11. CONSEQUENTIAL DAMAGES.
---------------------
Neither Agent nor Lenders nor any agent or attorney for any of them
shall be liable to any Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations.
15.12. CAPTIONS.
--------
The captions at various places in this Agreement are intended for
convenience only and do not constitute and shall not be interpreted as part of
this Agreement.
15.13. COUNTERPARTS: TELECOPIED SIGNATURES.
-----------------------------------
This Agreement may be executed in any number of and by different
parties hereto on separate counterparts, all of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same agreement. Any signature delivered by a party by facsimile transmission
shall be deemed to be an original signature hereto.
15.14. CONSTRUCTION.
------------
The parties acknowledge that each party and its counsel have reviewed
this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
15.15. CONFIDENTIALITY; SHARING INFORMATION.
------------------------------------
(a) Agent, each Lender and each Transferee shall hold as
confidential all non-public information obtained by Agent, such Lender or such
Transferee pursuant to the requirements of this Agreement in accordance with
Agent's, such Lender's and such Transferee's customary procedures for handling
confidential information of this nature; provided, however, Agent, each Lender
and each Transferee may disclose such confidential information (a) to its
examiners, affiliates, outside auditors, counsel and other professional
advisors, (b) to Agent, any Lender or upon written notice to Borrowers to any
prospective Transferees and Purchasing Lenders, and (c) as required or requested
by any Governmental Body or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Borrower of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Borrower other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
85
(b) Each Borrower acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to such Borrower or one or more of its Affiliates (in connection with
this Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Borrower hereby authorizes each Lender to
share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the confidentiality
obligations of Section 15.15 as if it were a Lender hereunder. Such
authorization and such confidentiality obligations shall survive the repayment
of the other Obligations and the termination of the Loan Agreement.
15.16. PUBLICITY.
---------
Each Borrower and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement entered into among
Borrowers, Agent and Lenders, including, without limitation, announcements which
are commonly known as tombstones, in such publications and to such selected
parties as Agent shall in its sole and absolute discretion deem appropriate.
XVI. BORROWING AGENCY
----------------
16.1. BORROWING AGENCY PROVISIONS.
---------------------------
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a
co-borrowing facility with a borrowing agent in the manner set forth in this
Agreement is solely as an accommodation to Borrowers and at their request.
Neither Agent nor any Lender shall incur liability to Borrowers as a result
thereof. To induce Agent and Lenders to do so and in consideration thereof, each
Borrower hereby indemnifies Agent and each Lender and holds Agent and each
Lender harmless from and against any and all liabilities, expenses, losses,
damages and claims of damage or injury asserted against Agent or any Lender by
any Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on
any request or instruction from Borrowing Agent or any other action taken by
Agent or any Lender with respect to this Section 15.1 except due to willful
misconduct or gross (not mere) negligence by the indemnified party.
86
(c) All Obligations shall be joint and several
obligations of the Borrowers, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation
and liability on the part of each Borrower shall in no way be affected by any
extensions, renewals and forbearance granted by Agent or any Lender to any other
Borrower, failure of Agent or any Lender to give any Borrower notice of
borrowing or any other notice, any failure of Agent or any Lender to pursue or
preserve its rights against any Borrower, the release by Agent or any Lender of
any Collateral now or thereafter acquired from any Borrower, and such agreement
by each Borrower to pay upon any notice issued pursuant thereto is unconditional
and unaffected by prior recourse by Agent or any Lender to the other Borrowers
or any Collateral for such Borrower's Obligations or the lack thereof.
16.2. WAIVER OF SUBROGATION.
---------------------
Each Borrower expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution of any other claim which
such Borrower may now or hereafter have against the other Borrowers or other
Person directly or contingently liable for the Obligations hereunder, or against
or with respect to the other Borrowers' property (including, without limitation,
any property which is Collateral for the Obligations), arising from the
existence or performance of this Agreement, until termination of this Agreement
and repayment in full of the Obligations.
16.3. OBLIGATIONS ABSOLUTE.
--------------------
The liability of each Borrower to Agent and Lenders hereunder shall not
be affected or impaired by any of the following: (a) the validity or
enforceability of the Obligations or any part thereof, or of the Note or other
instrument or document evidencing all or any part of the Obligations, (b) the
absence of any attempt to collect the Obligations from a Borrower or any other
guarantor or other action to enforce the same, (c) any acceptance of collateral
security, guarantors, accommodation parties or sureties for any or all
Obligations; (d) one or more extensions or renewals of Obligations (whether or
not for longer than the original period) or any modification of the interest
rates, fees, maturities or principal amount of, or other contractual terms
applicable to any Obligations; (e) any waiver or indulgence granted to a
Borrower, any delay or lack of diligence in the enforcement of Obligations, or
any failure to institute proceedings, file a claim, give any required notices or
otherwise protect any Obligations; (f) any full or partial release of;
compromise or settlement with, or agreement not to xxx a Borrower or any
guarantor or other person liable in respect of any Obligations; (g) any release,
surrender, cancellation or other discharge of any evidence of any of the
Obligations or the acceptance of any instrument in renewal or substitution
therefore; (h) any failure to obtain collateral security (including rights of
setoff) for any of the Obligations, or to obtain or maintain the proper or
sufficient creation and perfection thereof; or to establish the priority
thereof; or to preserve, protect, insure care for, exercise or enforce any
collateral security; (i) any collection, sale, lease or disposition of; or any
other foreclosure or enforcement of or realization on, any collateral security;
(j) any assignment, pledge or other transfer of any of the Obligations or any
evidence
87
thereof; (k) any manner, order or method of application of any payments or
credits upon any of the Obligations; (1) Agent's or any Lender's election, in
any case or proceedings under the Bankruptcy Code of the application of Section
111 (b)(2) thereof; (xiii) any borrowing or grant of a Lien by a Borrower as
debtor in possession under Section 364 of the Bankruptcy Code and (m) the
disallowance under the Bankruptcy Code of all or any portion of Agent's or such
Lender's claim for repayment of the Obligations. Each Borrower hereby waives any
and all legal and equitable defenses and discharges available to a surety
guarantor, or accommodation co-obligor.
Each Borrower hereby assumes responsibility for keeping itself informed
of the financial condition of the other Borrower, and any and all endorsers and
other guarantors of any agreement, instrument or document evidencing or security
all or any part of the Obligations and of all other circumstances bearing upon
the risk of nonpayment of the Obligations or any part thereof that diligent
inquiry would reveal, and each Borrower hereby agrees that neither Agent nor any
Lender shall have any duty to advise such Borrower of information regarding such
condition or any such circumstances. Each Borrower hereby acknowledges
familiarity with the other Borrower's financial condition and has not relied on
any statements by Agent or Lenders in obtaining such information. In the event
Agent or any Lender, in its sole discretion, undertakes at any time or from time
to time to provide any such information to a Borrower, it shall not be under any
obligation (i) to undertake any investigation with respect thereto, (ii) to
disclose any information which, pursuant to accepted or reasonable credit
practices, Agent wishes to maintain confidential or (iii) to make any other or
future disclosures of such information, or any other information, to such
Borrower.
16.4. WAIVER.
------
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, AGENT OR ANY LENDER MAY, AT
ITS SOLE ELECTION, PROCEED DIRECTLY WITHOUT NOTICE, AGAINST A BORROWER TO
COLLECT AND RECOVER ALL OR ANY PART OF THE OBLIGATIONS WITHOUT FIRST PROCEEDING
AGAINST THE OTHER BORROWER, ANY OTHER GUARANTOR, OR ANY COLLATERAL FOR THE
OBLIGATIONS.
EACH BORROWER ALSO WAIVES ALL SETOFFS AND COUNTERCLAIMS AND ALL
PRESENTMENTS, DEMANDS FOR PERFORMANCE, NOTICES OF NONPERFORMANCE, PROTESTS,
NOTICES OF PROTEST, NOTICES OF DISHONOR, AND NOTICES OF ACCEPTANCE OF THIS
GUARANTY. EACH BORROWER FURTHER WAIVES ALL NOTICES OF THE EXISTENCE, CREATION OR
INCURRING OF NEW OR ADDITIONAL INDEBTEDNESS, ARISING EITHER FROM ADDITIONAL
LOANS EXTENDED TO THE OTHER BORROWERS OR OTHERWISE, AND EXCEPT FOR NOTICES
EXPRESSLY REQUIRED HEREUNDER, ALSO WAIVES ALL NOTICES THAT THE PRINCIPAL AMOUNT,
OR ANY PORTION THEREOF, OR ANY INTEREST ON ANY AGREEMENT, INSTRUMENT OR DOCUMENT
EVIDENCING OR SECURING ALL OR ANY PART OF THE OBLIGATIONS IS DUE, NOTICES OF ANY
AND ALL PROCEEDINGS TO COLLECT FROM THE MAKER, ANY ENDORSER OR ANY OTHER
GUARANTOR OF ALL OR ANY PART OF THE OBLIGATIONS, OR FROM ANY OTHER
88
PERSON, AND TO THE EXTENT PERMITTED BY LAW, NOTICES OF EXCHANGE, SALE, SURRENDER
OR OTHER HANDLING OF ANY COLLATERAL GIVEN TO AGENT AND LENDERS TO SECURE PAYMENT
OF THE OBLIGATIONS.
16.5. RECOVERY.
--------
Each Borrower agrees that, to the extent that the other Borrower makes
a payment or payments to Agent or any Lender, or receives any proceeds of
Collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to such other Borrower, its estate, trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment or repayment, the Obligations or the
part thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred, and this cross guaranty shall
continue to be in existence and full force and effect, irrespective of whether
any evidence of the Obligations has been surrendered or canceled.
16.6. LIABILITY CUMULATIVE.
--------------------
The liability of the Borrowers under this Section 16 is in addition to
and shall be cumulative with all liabilities of each Borrower to Agent and
Lenders under this Agreement and the Other Documents to which such Borrower is a
party or in respect of any Obligations or obligation of the other Borrowers,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.
[Remainder of page left intentionally blank]
[Signatures on following pages]
89
Each of the parties has signed this Agreement as of the day and year
first above written.
BORROWERS: WINCUP HOLDINGS, INC.
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
RADNOR CHEMICAL CORPORATION
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
STYROCHEM U.S., LTD.
By: StyroChem GP, LLC, its General Partner
By: Radnor Chemical Corporation, its Sole Member
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
RADNOR HOLDINGS CORPORATION
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
RADNOR DELAWARE, INC.
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
STYROCHEM DELAWARE, INC.
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
[Signature page to Credit Agreement]
S-1
WINCUP TEXAS, LTD.
By: WinCup GP, LLC, its General Partner
By: WinCup Holdings, Inc., its Sole Member
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
STYROCHEM GP, L.L.C.
By: Radnor Chemical Corporation, its Sole Member
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
STYROCHEM LP, L.L.C.
By: Radnor Chemical Corporation, its Sole Member
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
WINCUP GP, L.L.C.
By: WinCup Holdings, Inc. its Sole Member
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
WINCUP LP, L.L.C.
By: WinCup Holdings, Inc. its Sole Member
By: /s/ X. Xxxxxxxxx Xxxxxxxx, Sr.
-------------------------------------------
X. Xxxxxxxxx Hastings, Sr. Vice President, Treasurer
2
PNC BANK, NATIONAL ASSOCIATION
as a Lender and as Agent
By: /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------------------
Xxxx X. Xxxxxxx, Xx., Vice President
Commitment Percentage: 100%
3
[Exhibits and Schedules Omitted]
