Exhibit 10.17
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AMENDED AND RESTATED CREDIT AGREEMENT
among
TUFCO, L.P.
as Borrower,
TUFCO TECHNOLOGIES, INC.,
as the Parent
JPMORGAN CHASE BANK,
as Agent,
and
the banks named herein
15 August 2002
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[JPMORGAN LOGO]
TABLE OF CONTENTS
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ARTICLE 1. Definitions...................................................................................2
Section 1.1. Definitions............................................................................2
Section 1.2. Other Definitional Provisions.........................................................16
Section 1.3. Accounting Terms and Determinations...................................................16
Section 1.4. Time of Day...........................................................................16
ARTICLE 2. Revolving Credit Facility....................................................................16
Section 2.1. Revolving Commitments.................................................................16
Section 2.2. Notes.................................................................................17
Section 2.3. Repayment of Revolving Loans..........................................................17
Section 2.4. Use of Proceeds.......................................................................17
Section 2.5. Revolving Commitment Fee..............................................................17
Section 2.6. Reduction or Termination of Revolving Commitments; Extension of Revolving
Commitments...........................................................................17
ARTICLE 3. Term Loan....................................................................................18
Section 3.1. Term Commitment.......................................................................18
Section 3.2. Notes.................................................................................18
Section 3.3. Repayment of Term Loan................................................................18
Section 3.4. Use of Proceeds.......................................................................18
ARTICLE 4. Letters of Credit............................................................................19
Section 4.1. Commitment to Issue Commercial L/Cs...................................................19
Section 4.2. Commitment to Issue Bond L/Cs.........................................................19
Section 4.3. Participation By Banks................................................................20
Section 4.4. Request Procedure.....................................................................20
Section 4.5. Letter of Credit Fees.................................................................20
Section 4.6. Funding of Drawings...................................................................21
Section 4.7. Reimbursements........................................................................21
Section 4.8. Reimbursement Obligations Absolute....................................................21
Section 4.9. Issuer Responsibility.................................................................22
ARTICLE 5. Interest and Fees............................................................................22
Section 5.1. Interest Rate.........................................................................22
Section 5.2. Determinations of Margins and Fees....................................................22
Section 5.3. Payment Dates.........................................................................24
Section 5.4. Default Interest......................................................................24
Section 5.5. Conversions and Continuations of Accounts.............................................24
Section 5.6. Computations..........................................................................24
ARTICLE 6. Administrative Matters.......................................................................24
Section 6.1. Borrowing Procedure...................................................................24
Section 6.2. Minimum Amounts.......................................................................25
Section 6.3. Certain Notices.......................................................................25
Section 6.4. Prepayments...........................................................................26
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Section 6.5. Method of Payment.....................................................................27
Section 6.6. Pro Rata Treatment....................................................................28
Section 6.7. Sharing of Payments...................................................................28
Section 6.8. Non-Receipt of Funds by the Agent.....................................................28
Section 6.9. Withholding Taxes.....................................................................29
Section 6.10. Withholding Tax Exemption.............................................................29
Section 6.11. Participation Obligations Absolute; Failure to Fund Participation.....................29
ARTICLE 7. Yield Protection and Illegality..............................................................30
Section 7.1. Additional Costs......................................................................30
Section 7.2. Limitation on Eurodollar Accounts.....................................................31
Section 7.3. Illegality............................................................................31
Section 7.4. Treatment of Affected Loans...........................................................32
Section 7.5. Compensation..........................................................................32
Section 7.6. Capital Adequacy......................................................................33
ARTICLE 8. Conditions Precedent.........................................................................33
Section 8.1. Initial Loan..........................................................................33
Section 8.2. All Extensions of Credit..............................................................35
Section 8.3. Term Loan.............................................................................35
Section 8.4. Bond L/Cs.............................................................................35
ARTICLE 9. Representations and Warranties...............................................................36
Section 9.1. Corporate Existence...................................................................36
Section 9.2. Financial Statements..................................................................37
Section 9.3. Corporate Action; No Breach...........................................................37
Section 9.4. Operation of Business.................................................................37
Section 9.5. Litigation and Judgments..............................................................37
Section 9.6. Rights in Properties; Liens...........................................................37
Section 9.7. Enforceability........................................................................38
Section 9.8. Approvals.............................................................................38
Section 9.9. Debt..................................................................................38
Section 9.10. Taxes.................................................................................38
Section 9.11. Margin Securities.....................................................................38
Section 9.12. ERISA.................................................................................38
Section 9.13. Disclosure............................................................................39
Section 9.14. Subsidiaries..........................................................................39
Section 9.15. Agreements............................................................................39
Section 9.16. Compliance with Laws..................................................................39
Section 9.17. Investment Company Act................................................................39
Section 9.18. Public Utility Holding Company Act....................................................39
Section 9.19. Environmental Matters.................................................................39
Section 9.20. Solvency..............................................................................40
Section 9.21. Benefit Received......................................................................40
ARTICLE 10. Positive Covenants...........................................................................40
Section 10.1. Reporting Requirements................................................................41
Section 10.2. Maintenance of Existence; Conduct of Business.........................................42
Section 10.3. Maintenance of Properties.............................................................42
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Section 10.4. Taxes and Claims......................................................................42
Section 10.5. Insurance.............................................................................43
Section 10.6. Inspection Rights.....................................................................43
Section 10.7. Keeping Books and Records.............................................................43
Section 10.8. Compliance with Laws..................................................................43
Section 10.9. Compliance with Agreements............................................................43
Section 10.10. Further Assurances and Collateral Matters.............................................43
Section 10.11. ERISA.................................................................................46
Section 10.12. Redemption of Bonds...................................................................46
ARTICLE 11. Negative Covenants...........................................................................46
Section 11.1. Debt..................................................................................46
Section 11.2. Limitation on Liens...................................................................47
Section 11.3. Mergers, Etc..........................................................................48
Section 11.4. Restrictions on Dividends and other Distributions.....................................49
Section 11.5. Investments...........................................................................49
Section 11.6. Limitation on Issuance of Capital Stock...............................................50
Section 11.7. Transactions With Affiliates..........................................................50
Section 11.8. Disposition of Assets.................................................................50
Section 11.9. Lines of Business.....................................................................51
Section 11.10. Sale and Leaseback....................................................................51
Section 11.11. Prepayment of Debt....................................................................51
Section 11.12. Tax Exempt Status of Bonds............................................................51
ARTICLE 12. Financial Covenants..........................................................................51
Section 12.1. Fixed Charge Coverage.................................................................51
Section 12.2. Working Capital.......................................................................53
Section 12.3. Capital Expenditures..................................................................54
ARTICLE 13. Default......................................................................................54
Section 13.1. Events of Default.....................................................................54
Section 13.2. Remedies..............................................................................56
Section 13.3. Performance by the Agent..............................................................57
Section 13.4. Setoff................................................................................57
Section 13.5. Continuance of Default................................................................58
Section 13.6. Cash Collateral.......................................................................58
ARTICLE 14. The Agent....................................................................................58
Section 14.1. Appointment, Powers and Immunities....................................................58
Section 14.2. Rights of Agent as a Bank.............................................................58
Section 14.3. Defaults..............................................................................59
Section 14.4. Indemnification.......................................................................59
Section 14.5. Independent Credit Decisions..........................................................59
Section 14.6. Several Commitments...................................................................60
Section 14.7. Successor Agent.......................................................................60
ARTICLE 15. Miscellaneous................................................................................60
Section 15.1. Expenses..............................................................................60
Section 15.2. Indemnification.......................................................................61
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Section 15.3. Limitation of Liability...............................................................61
Section 15.4. No Duty...............................................................................61
Section 15.5. No Fiduciary Relationship.............................................................62
Section 15.6. Equitable Relief......................................................................62
Section 15.7. No Waiver; Cumulative Remedies........................................................62
Section 15.8. Successors and Assigns................................................................62
Section 15.9. Survival..............................................................................65
Section 15.10. Entire Agreement; Amendment and Restatement...........................................65
Section 15.11. Waivers; Amendments...................................................................66
Section 15.12. Maximum Interest Rate.................................................................66
Section 15.13. Notices...............................................................................67
Section 15.14. Governing Law; Venue of Service of Process............................................67
Section 15.15. Counterparts..........................................................................68
Section 15.16. Severability..........................................................................68
Section 15.17. Headings..............................................................................68
Section 15.18. Non-Application of Chapter 346 of The Finance Code of Texas...........................68
Section 15.19. Construction..........................................................................68
Section 15.20. Independence of Covenants.............................................................68
Section 15.21. Waiver of Jury Trial..................................................................68
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
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"A" Revolving Note
"B" Term Note
"C" Master Guaranty
"D" Master Security Agreement
"E" Joinder Agreement
"F" Assignment and Acceptance
"G" Compliance Certificate
"H" Notice of Borrowing, Conversion, Continuation or Prepayment
"I" Borrowing Base Certificate
INDEX TO SCHEDULES
Schedule Description of Schedule
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1.1(a) Clipper Converting System Budget
1.1(b) Certain Entities
8.1(g) Real Property
9.14 List of Subsidiaries
9.19 Environmental Matters
11.1 Debt
11.2 Existing Liens
11.5 Existing Investments
Solo Page
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"), dated as of
August 15, 2002, is among TUFCO, L.P., a limited partnership duly organized and
validly existing under the laws of the State of Delaware (the "Borrower"), TUFCO
TECHNOLOGIES, INC., a corporation duly organized under the laws of the State of
Delaware ("Parent"), each of the banks or other lending institutions which is or
which may from time to time become a signatory hereto or any successor or
assignee thereof (individually, a "Bank" and, collectively, the "Banks") and
JPMORGAN CHASE BANK (who was formerly The Chase Manhattan Bank who was the
successor in interest by merger to Chase Bank of Texas, National Association),
individually as a Bank and as agent for itself and the other Banks (in its
capacity as agent, together with its successors in such capacity, the "Agent").
R E C I T A L S:
A. The Borrower, the Parent, First Union National Bank (now Wachovia Bank,
National Association), as agent for the banks named therein (the "Prior Agent")
and Chase Bank of Texas, National Association (now JPMorgan Chase Bank) entered
into that certain Credit Agreement dated August 28, 1998 (such agreement as
amended by that certain First Amendment to Credit Agreement dated as of December
18, 1998, that certain Second Amendment to Credit Agreement dated as of July 10,
2000, that certain Waiver and Third Amendment to Credit Agreement dated as of
May 15, 2001, that certain Waiver, Consent and Fourth Amendment dated as of
April 19, 2002, that certain Fifth Amendment to Credit Agreement dated as of May
22, 2002 and that certain Sixth Amendment to Credit Agreement dated as of July
29, 2002, the "Prior Credit Agreement").
B. In connection with certain industrial revenue bonds, First Union
National Bank (who is now Wachovia Bank, National Association) issued: (i) for
the account of the Borrower that certain letter of credit number SM408518C for
the benefit of Norwest Bank Wisconsin, National Association, as trustee, in the
face amount of One Million Seven Hundred Seventy-Five Thousand Eight Hundred
Ninety and 41/100 Dollars ($1,775,890.41) (which was issued under the Prior
Credit Agreement and is herein the "Existing Wisconsin L/C") and (ii) for the
account of Asset Holdings Corporation IX that certain letter of credit number
SM408118C for the benefit of Bank One Trust Company, NA (f/k/a Bank One
Wisconsin Trust Company, National Association), as trustee, in the face amount
of One Million Three Hundred Fifty-Six Thousand Five Hundred Twenty and 55/100
Dollars ($1,356,520.55) (the "Existing South Carolina L/C"). The Existing South
Carolina L/C was issued in connection with the financing used by Asset Holdings
Corporation IX to acquire and develop real property that was then leased to
Tufco, L.P. under that certain Lease and Development Agreement dated as of June
10, 1996, as amended.
C. Pursuant to that certain Assignment and Acceptance dated August 15,
2002: (i) Wachovia Bank National Association assigned to JPMorgan Chase Bank all
of its right, title and interest as a "bank" in and to the Prior Credit
Agreement and the Loan Documents defined therein; (ii) the Prior Agent assigned
to the Agent all of the Prior Agent's right, title and interest in, among other
things, the Prior Credit Agreement and the collateral documents executed in
connection therewith; (iii) the Prior Agent resigned as agent for the banks
named in the Prior Credit Agreement; and (iv) JPMorgan Chase Bank was appointed
the Agent as agent for the banks named in the Prior Credit Agreement.
D. The Borrower has requested that the Agent and the Banks agree to amend
the Prior Credit Agreement and the Agent and the Banks have agreed to do so upon
the terms and conditions set forth in this Agreement, which amends and restates
the Prior Credit Agreement in its entirety.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
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ARTICLE 1.
Definitions
Section 1.1. Definitions. As used in this Agreement, the following terms
have the following meanings:
"Account" means either a Base Rate Account or a Eurodollar Account.
"Acquiring Company" has the meaning set forth in Section 11.3 of this
Agreement.
"Additional Costs" has the meaning specified in Section 7.1.
"Additional Mortgaged Property" has the meaning set forth in Section 10.10
of this Agreement.
"Adjusted Eurodollar Rate" means, for any Eurodollar Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Agent to be equal to the Eurodollar
Rate for such Eurodollar Account for such Interest Period divided by 1 minus the
Reserve Requirement for such Eurodollar Account for such Interest Period.
"Adjustment Date" has the meaning specified in Section 5.2.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Agent.
"Affected Accounts" has the meaning set forth in Section 7.4 of this
Agreement.
"Affiliate" means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock of such Person; or (c) ten percent (10%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or indirectly, of
the power to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise; provided, however, in no event shall the Agent or any Bank be deemed
an Affiliate of the Borrower or any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of this
Agreement and when used to designate the issuer of any Letter of Credit, shall
include any Affiliate of JPMorgan Chase Bank with respect to any Letters of
Credit issued by such Affiliate.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Amended and Restated Master Security Agreement" means the security
agreement among the Borrower, the Parent, the Subsidiaries signatory thereto,
any Subsidiary or other entity who may become a party thereto pursuant to the
execution and delivery of a Joinder Agreement and the Agent, for the benefit of
itself and the other Secured Parties, in substantially in the form of Exhibit
"D", as the same may be amended or otherwise modified from time to time.
"Amortization Amount" has the meaning set forth in Section 3.3 of this
Agreement.
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"Applicable Lending Office" means for each Bank and each Type of Account,
the lending office of such Bank (or of an Affiliate of such Bank) designated for
such Account below its name on the signature pages hereof or such other office
of such Bank (or of an Affiliate of such Bank) as such Bank may from time to
time specify to the Borrower and the Agent as the office by which its Loans
subject to Accounts of such Type are to be made and maintained.
"Applicable Rate" has the meaning set forth in Section 5.1.
"Approved Fund" has the meaning set forth in Section 15.8 of this
Agreement.
"Asset Disposition" has the meaning set forth in Section 6.4 of this
Agreement.
"Assigning Bank" has the meaning set forth in Section 15.8 of this
Agreement.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its assignee and accepted by the Agent pursuant to Section
15.8, in substantially the form of Exhibit "F".
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Margin" has the meaning specified in Section 5.2.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in
effect on such day. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum then most recently publicly announced from time to time by
JPMorgan as its prime rate in effect at its Principal Office; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
effective. "Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as released on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so released for any day which is a Business Day, the arithmetic
average (rounded upwards to the next 1/100th of 1%), as determined by the Agent,
of the quotations for the day of such transactions received by the Agent from
three federal funds brokers of recognized standing selected by it. If for any
reason the Agent shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason, including the inability of the Agent to obtain
sufficient quotations in accordance with the terms thereof, the Base Rate shall
be determined without regard to clause (a) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively. The
Base Rate may not be any Bank's best or favored rate and the Banks may make
other Loans to other Persons at rates lower than the Base Rate.
"Base Rate Account" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"Bond Documents" means the trust indenture, loan agreement, remarking
agreement, offering memorandum, placement agent agreement, tender agent
agreement, participation agreement, security agreement, deed of trust, and
indemnity agreement executed and delivered to evidence and govern the Bonds and
all other documentation executed and delivered pursuant to or in connection
therewith as such
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indenture, memorandum, agreements and other documentation may be amended,
supplemented, or otherwise modified from time to time in accordance with their
respective terms.
"Bond L/Cs" " means the Initial Wisconsin L/C, the Initial South Carolina
L/C, the Wisconsin Bond L/C and the South Carolina Bond L/C.
"Bond L/C Liabilities" means, at any time, the aggregate amount available
for drawing under the Bond L/Cs and all unreimbursed drawings under the Bond
L/Cs.
"Bonds" means the Wisconsin Bonds and the South Carolina Bonds.
"Borrower" has the meaning set forth in the introductory paragraph of this
Agreement.
"Borrowing Base" means as of any day the sum of: (a) 85% of the aggregate
outstanding amount of Eligible Receivables, plus (b) 50% of Eligible Inventory,
each as set forth in the most recent Borrowing Base Certificate delivered to the
Agent and the Banks in accordance with Section 10.1; provided, however, at no
time shall more than 50% of the Borrowing Base be attributable to Eligible
Inventory.
"Borrowing Base Certificate" means a certificate in substantially the form
of Exhibit "I" properly completed and executed by a Responsible Party of the
Parent.
"Business Day" means (a) any day excluding Saturday, Sunday, and any day
which either is a legal holiday under the laws of the State of Texas or the
State of New York or is a day on which banking institutions located in the State
of Texas or the State of New York are closed, and (b), with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and notices
in connection with Loans subject to Eurodollar Accounts, any day which is a
Business Day described in clause (a) above and which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"CLO" has the meaning set forth in Section 15.8 of this Agreement.
"Calculation Period" has the meaning specified in Section 5.2.
"Capital Expenditures" means, for any period, all expenditures (calculated
on a gross basis, without reduction for proceeds from asset dispositions or any
other amount) of the Parent and the Subsidiaries which are classified as capital
expenditures in accordance with GAAP including all such expenditures associated
with Capital Lease Obligations.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Carryover Amount" has the meaning set forth in Section 12.3 of this
Agreement.
"Cash Flow" has the meaning set forth in Section 12.1 of this Agreement.
"Class" means, as to any Loan, whether such Loan is a Revolving Loan or
Term Loan and as to any Commitment, whether such Commitment is a Revolving
Commitment or a Term Commitment.
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"Clipper Converting System" means the PNC Clipper Wet Wipe Machine and
related equipment to be purchased and used in connection with the Borrower's new
and proposed contracts, the budget for which is more fully described on Schedule
1.1(a).
"Closing Date" means August 15, 2002.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means the property in which Liens have been granted pursuant
to the Amended and Restated Master Security Agreement and the Mortgages whether
such Liens are now existing or hereafter arise.
"Commercial L/C(s)" has the meaning specified in Section 4.1.
"Commercial L/C Liabilities" means, at any time, the aggregate amount
available for drawing under all outstanding Commercial L/Cs and all unreimbursed
drawings under Commercial L/Cs.
"Commitment Fee Rate" means the per annum rate determined in accordance
with Section 5.2.
"Commitment Percentage" means, as to any Bank, the percentage equivalent
of a fraction the numerator of which is the amount of the Commitments of such
Bank and the denominator of which is the aggregate amount of the Commitments of
all of the Banks provided that if one or all of the Commitments have expired,
been terminated or otherwise fully funded, then the "Commitment Percentage" of
each Bank is the percentage equivalent of a fraction, the numerator of which is
the sum of the Commitments of such Bank which are still in effect plus the
outstanding principal amount of the Loans of such Bank with respect to each
facility hereunder the Commitment for which has expired, been terminated or
fully funded and the denominator of which is the sum of the Commitments of all
Banks which are still in effect plus the aggregate of the outstanding principal
amount of all Loans of all Banks with respect to each facility hereunder the
Commitment for which has expired, been terminated or fully funded.
"Commitments" means, as to each Bank, such Bank's Revolving Commitment and
the Term Commitment.
"Compliance Certificate" means a certificate in substantially the form of
Exhibit "G" properly completed and executed by a Responsible Party of the
Parent.
"Consolidated Net Income" has the meaning specified in Section 12.1.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 5.5 of a Eurodollar Account as a Eurodollar
Account from one Interest Period to the next Interest Period.
"Contract Rate" has the meaning set forth in Section 15.12 of this
Agreement.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 5.5 or Article 7 of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person under conditional sale or other title retention
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agreements relating to property acquired by such Person; (d) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable of such Person arising in the ordinary course of business
that are not past due by more than ninety (90) days or that are past due by more
than ninety (90) days but are being contested in good faith by appropriate
proceedings diligently pursued; (e) all Capital Lease Obligations of such
Person; (f) all Debt or other obligations of others Guaranteed by such Person;
(g) all obligations secured by a Lien existing on property owned by such Person,
whether or not the obligations secured thereby have been assumed by such Person
or are non - recourse to the credit of such Person; (h) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds, and similar
instruments; (i) all liabilities of such Person in respect of all unfunded
vested benefits under any Plan; (j) all obligations of such Person in respect of
mandatory redemption or mandatory dividend rights on capital stock (or other
equity); (k) all obligations of such Person, contingent or otherwise, for the
payment of money under any noncompete, consulting, performance based or similar
agreement or any other similar arrangements providing for the deferred payment
of the purchase price for an asset or assets; (l) all obligations of such Person
under any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these (the amount of the obligations in respect of any agreement under this
clause (l) shall, at any time of determination and for all purposes under this
Agreement, be the maximum aggregate amount that such Person would be required to
pay if such agreement were terminated at such time giving effect to current
market conditions notwithstanding any contrary treatment in accordance with
GAAP); (m) all obligations of such Person under any Synthetic Lease; and (n) all
other amounts which are required to be reflected as a liability on the balance
sheet of a Person in accordance with GAAP, excluding trade accounts payable
excluded from Debt pursuant to clause (d) of this definition, accruals, deferred
credits and loss contingencies.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, or any
other amount payable by the Borrower under any Loan Document which is not paid
when due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of two percent (2%) plus the Applicable Rate for Base Rate
Accounts as in effect from time to time (provided, that if such amount in
default is principal of a Loan subject to a Eurodollar Account and the due date
is a day other than the last day of an Interest Period therefor, the "Default
Rate" for such principal shall be, for the period from and including the due
date and to but excluding the last day of the Interest Period therefor, two
percent (2%) plus the interest rate for such Loan for such Interest Period as
provided in Section 5.1 hereof, and, thereafter, the rate provided for above in
this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" has the meaning specified in Section 12.1.
"Eligible Inventory" means, as of any date of determination and without
duplication, the lower of the aggregate book value (based on a first-in-first
out basis) or fair market value of all raw materials and finished goods
inventory and all inventory of unpackaged but finished drop cloths, in each case
owned by the Parent or any of its Subsidiaries less appropriate reserves
determined in accordance with GAAP but excluding in any event: (i) inventory
which is (a) not subject to a perfected, first priority Lien in favor of the
Agent to secure the Obligations or (b) subject to any other Lien that is not
permitted hereunder;
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(ii) inventory which is not in good condition or fails to meet standards for
sale or use imposed by Governmental Authorities having regulatory authority over
such goods or has been returned or rejected for any reason; (iii) inventory that
in accordance with customary business practices and current market conditions is
obsolete or slow moving or which is not useable or salable at prices
approximating their cost in the ordinary course of the business; (iv) inventory
located outside of the United States; (v) inventory located at a location not
owned by the Parent or any of its Subsidiaries with respect to which the Agent
shall not have received a landlord's, warehousemen's, bailee's or appropriate
waiver satisfactory to the Agent; (vi) inventory which is leased or on
consignment; (vii) inventory not at a location of the Parent or a Subsidiary of
the Parent which has been disclosed to the Agent pursuant to this Agreement; and
(viii) inventory which fails to meet such other specifications and requirements
as may from time to time be established by the Agent in it reasonable
discretion, provided such exclusion based on this clause (viii) shall be
effective 30 days after the Agent has sent notice to the Borrower of such
exclusion.
"Eligible Receivables" means, as of date of determination and without
duplication, the aggregate book value of all accounts receivable, receivables,
and obligations for payment created or arising from the sale of inventory or the
rendering of services in the ordinary course of business (collectively, the
"Receivables"), owned by or owing to the Parent or any of its Subsidiaries, net
of contra account and net of allowances and reserves for doubtful or
uncollectible accounts and sales adjustments consistent with such Person's
internal policies and in any event in accordance with GAAP, but excluding in any
event:
(a) any Receivable which is (i) not subject to a perfected, first priority
Lien in favor of the Agent to secure the Obligations or (ii) subject to any
other Lien that is not permitted hereunder;
(b) Receivables which remain unpaid for more than 60 days past its due
date or 90 days after the date of the original invoice for such Receivable;
(c) 100% of the book value of all Receivables attributable to any single
account debtor if 20% or more of all the Receivables attributable to such
account are ineligible as a result of the operation of clause (b) of this
definition;
(d) Receivables owing from any single account debtor (other than any
entity listed on Schedule 1.1(b)) in excess of 10% of all Receivables;
(e) Receivables owing from any entity listed on Schedule 1.1(b), in any
individual case, in excess of 35% of all Receivables;
(f) the aggregate amount of all Receivables owing from the entities listed
on Schedule 1.1(b) which are in excess of 55% of all Receivables;
(g) Receivables evidenced by notes, chattel paper or other instruments,
unless such notes, chattel paper or instruments have been delivered to and are
in the possession of the Agent;
(h) Receivables owing by an account debtor which is subject to any
bankruptcy or insolvency proceeding of any kind or has done any of the
following: (i) made an assignment for the benefit of creditors; (ii) suspended
normal business operations; (iii) dissolved; (iv) liquidated; (iv) terminated
its existence; or (v) suffered a receiver or trustee appointed for any of its
assets or affairs;
(i) Receivables owing by an account debtor located outside of the United
States (unless payment for the goods shipped is secured by an irrevocable letter
of credit or credit insurance in a form and from an institution acceptable to
the Agent);
Page 7
(j) Receivables which are contingent or subject to offset,
deduction, counterclaim, dispute or other defense to payment, in each case to
the extent of such offset, deduction, counterclaim, dispute or other defense;
(k) Receivables for which any direct or indirect Subsidiary or any
Affiliate of the Parent or any Subsidiary is the account debtor;
(l) Receivables representing a sale to the government of the
United States or any agency or instrumentality thereof unless the Federal
Assignment of Claims Act has been complied with to the satisfaction of the Agent
with respect to the granting of a security interest in such Receivable, with or
other similar applicable law;
(m) Receivables not payable in Dollars; and
(n) Receivables which fail to meet such other specifications and
requirements as may from time to time be established by the Agent in its
reasonable discretion, provided such exclusion based on this clause (n) shall be
effective 30 days after the Agent has sent notice to the Borrower of such
exclusion.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses, (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order, or agreement with any Governmental Authority
or other Person, arising from environmental, health, or safety conditions or the
Release or threatened Release of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Eurodollar Account" means a portion of a Loan that bears interest at a
rate based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, with respect to any Eurodollar Account for any
Interest Period, the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such Eurodollar Account for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
Page 8
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Eurodollar Rate Margin" has the meaning specified in Section 5.2.
"Event of Default" has the meaning specified in Section 13.1.
"Excess Cash Flow" has the meaning specified in Section 6.4.
"Existing Deeds of Trust" has the meaning specified in Section 8.1(g).
"Existing South Carolina L/C" has the meaning set forth in the recitals
of this Agreement.
"Existing Wisconsin L/C" has the meaning set forth in the recitals of
this Agreement.
"Federal Funds Effective Rate" has the meaning specified in the
definition of Base Rate.
"Fiscal Quarters" means the four (4) periods falling in each Fiscal
Year, each such period three calendar months in duration with the first such
period in any Fiscal Year beginning on the first day of October and the last
such period in any Fiscal Year ending on the last day of September.
"Fiscal Year" means twelve (12) month period beginning on the first day
of October and ending on the last day of September of the following year.
"Fixed Charge Coverage Ratio" has the meaning set forth in Section 12.1
of this Agreement.
"Fixed Charges" has the meaning set forth in Section 12.1 of this
Agreement.
"Foreign Bank" means any Bank that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep - well, to purchase assets,
goods, securities or services, to take - or - pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt or
Page 9
other obligation of the payment thereof or to protect the obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning. The
amount of any Guarantee shall be equal to the amount of the obligations so
guaranteed or otherwise supported or, if not a fixed and determined amount, the
maximum amount so guaranteed.
"Guarantors" means Tufco Technologies, Inc. and any Subsidiary of Tufco
Technologies, Inc. other than the Borrower including, without limitation, Tufco
Tech, Inc., Technologies I, Inc., TUFCO, Inc., TFCO, Inc. and Foremost
Manufacturing Company, Inc.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"Indebtedness" has the meaning specified in Section 5.2.
"Indebtedness to EBITDA Ratio" means the ratio of Indebtedness to
EBITDA as determined and calculated in accordance with Section 5.2.
"Initial South Carolina L/C" has the meaning set forth in Section 4.2
of this Agreement.
"Initial Wisconsin L/C" has the meaning specified in Section 4.2 of
this Agreement.
"Interest Period" means with respect to any Eurodollar Accounts, each
period commencing on the date such Account is established or Converted from a
Base Rate Account or the last day of the next preceding Interest Period with
respect to such Eurodollar Account, and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as the
Borrower may select as provided in Section 5.5 or Section 6.1, except that each
such Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or if such succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day); (b) any Interest Period in existence under a Loan which would otherwise
extend beyond the Termination Date applicable to such Loan shall end on the
Termination Date applicable to such Loan; (c) no more than six (6) Interest
Periods shall be in effect at the same time; (d) no Interest Period for any
Eurodollar Account shall have a duration of less than one (1) month and, if the
Interest Period would otherwise be a shorter period, the related Eurodollar
Account shall not be available hereunder; and (e) no Interest Period in respect
of the Term Loan may extend beyond a principal repayment date thereof unless,
after giving effect thereto, the aggregate principal amount of the Term Loan
subject to Eurodollar Accounts having Interest Periods that end after such
principal payment date shall be equal to or less than such Loans to be
outstanding hereunder after such principal payment date.
"Joinder Agreement" means an agreement which has been or will be
executed by a Subsidiary as required hereby adding it as a party to the Master
Guaranty and the Amended and Restated Master Security Agreement, in
substantially the form of Exhibit "E".
"JPMorgan" means JPMorgan Chase Bank in its individual capacity and not
as Agent.
"Letters of Credit" means the Commercial L/Cs and the Bond L/Cs.
Page 10
"Letter of Credit Liabilities" means the Commercial L/C Liabilities and
the Bond L/C Liabilities.
"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Amended and
Restated Master Security Agreement, the Master Guaranty, the Mortgages, the
documents executed pursuant to this Agreement under the Bond Documents in
connection with the Bond L/Cs and all other promissory notes, security
agreements, deeds of trust, assignments, guaranties, letters of credit, interest
rate protection agreements and other instruments, agreements, and other
documentation executed and delivered pursuant to or in connection with this
Agreement or the Prior Credit Agreement (only to the extent that such
documentation is contemplated by this Agreement to survive), as such
instruments, agreements, and other documentation may be amended or otherwise
modified.
"Loans" means the Revolving Loans and the Term Loan.
"Master Guaranty" means the guaranty of the Guarantors in favor of the
Agent and the other Secured Parties, in substantially the form of Exhibit "C",
as the same may be amended or otherwise modified from time to time.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, or properties of the
Borrower and the Subsidiaries taken as a whole or (b) a material adverse effect
on the validity, perfection, priority, or ability of the Agent to enforce the
Agent's Lien on the Collateral or of the ability of the Agent or any Bank to
enforce a material provision of the Loan Documents. In determining whether any
individual event could reasonably be expected to result in a Material Adverse
Effect, notwithstanding that such event does not itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events could reasonably be
expected to result in a Material Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the
maximum rate of nonusurious interest under applicable law that such Bank may
charge the Borrower. The Maximum Rate shall be calculated in a manner that takes
into account any and all fees, payments, and other charges contracted for,
charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to the Borrower at the time of such change in
the Maximum Rate. For purposes of determining the Maximum Rate under Texas law,
the applicable rate ceiling shall be the weekly ceiling described in, and
computed in accordance with, Chapter 303 of the Texas Finance Code.
"Mortgaged Property" means each parcel of real property owned by the
Borrower, the Parent or any Subsidiary described on Schedule 8.1(g).
"Mortgage Policies" has the meaning set forth in Section 10.10 of this
Agreement
"Mortgages" means the Existing Deeds of Trust and each other mortgage,
deed of trust, or other agreement executed by the Borrower, the Parent or any
Subsidiary which creates a Lien on the Borrower's, the Parent's or any such
Subsidiary's interests in real property in favor of the Agent for the benefit of
the Secured Parties, and all amendments or other modifications made thereto from
time to time, each of which shall be in form and substance reasonably
satisfactory to the Agent.
Page 11
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
six (6) years made or accrued an obligation to make contributions, and which is
covered by Title IV of ERISA.
"Net Proceeds" has the meaning set forth in Section 6.4 of this
Agreement.
"Notes" means the Revolving Notes and the Term Notes.
"Notice of Default" has the meaning set forth in Section 14.3 of this
Agreement.
"Obligated Party" means the Guarantors or any other Person (exclusive
of the Borrower) who is or becomes party to any agreement that guarantees or
secures payment and performance of the Obligations or any part thereof.
"Obligation" means all obligations, indebtedness, and liabilities of
the Borrower or any Obligated Party to the Agent and the Banks or any Affiliate
of the Agent or any Bank, or to any of the Agent, any Bank or any Affiliate of
the Agent or any Bank, arising pursuant to the following:
(i) any of the Loan Documents or the Bond L/Cs;
(ii) any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these entered into by the Agent or any Bank or any Affiliate
thereof with the Borrower or any Obligated Party; and
(iii) any deposit, lock box or cash or treasury management
arrangements entered into by any Bank or any Affiliate thereof with Borrower or
any Obligated Party, whether any of such obligations, indebtedness or
liabilities are now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several, including, without limitation, the obligation of the
Borrower to repay the Loans, interest on the Loans and all fees, costs, and
expenses (including attorneys' fees and expenses) provided for in the
documentation relating thereto.
"Outstanding Revolving Credit" means, at any time of determination, the
sum of (a) the aggregate amount of Revolving Loans then outstanding; plus (b)
the aggregate amount of Commercial L/C Liabilities (or when calculated with
respect to a Bank, including the Agent as a Bank, such Bank's participation or
other interest in such Commercial L/C Liabilities).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Parent" means Tufco Technologies, Inc.
"Participants" has the meaning specified in Section 15.8.
"Payment Date" has the meaning set forth in Section 4.5 of this
Agreement.
Page 12
"Payor" has the meaning set forth in Section 6.8 of this Agreement.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit plan (other than a Multiemployer
Plan) established or maintained by the Borrower or any ERISA Affiliate and to
which the Borrower or any ERISA Affiliate is making or accruing an obligation to
make contributions or has within any of the preceding six years made or accrued
an obligation to make contributions.
"Prior Agent" has the meaning specified in the recitals.
"Prior Credit Agreement" has the meaning specified in the recitals.
"Principal Office" means the principal office of the Agent, located 1
Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Prohibited Transaction" means any transaction set forth in Section 406
or 407 of ERISA or Section 4975(c)(1) of the Code for which there does not exist
a statutory or administrative exemption.
"Quarterly Payment Date" means the last day of January, April, July and
October of each year, the first of which shall be the first such day after the
date of this Agreement.
"Receivables" has the meaning specified in the definition of "Eligible
Receivable."
"Register" has the meaning set forth in Section 15.8 of this Agreement.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligations" means the obligation of the Borrower to
reimburse the Agent for any demand for payment or drawing under a Letter of
Credit.
"Related Parties" means, with respect to a Bank or the Agent, such
Bank's or the Agent's Affiliates and the respective directors, officers,
employees, agents and advisors of such Bank or the Agent and such Bank's or the
Agent's Affiliates.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
Page 13
"Released Parties" has the meaning set forth in Section 15.10 of this
Agreement.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre - remedial studies and investigations and post -
remedial monitoring and care.
"Required Banks" means any combination of Banks having, in the
aggregate, (a) sixty - six and two - thirds percent (66 2/3%) or more of the
Commitments, or (b) if the Term Commitment has expired, terminated or has
otherwise been fulfilled, sixty - six and two - thirds percent (66 2/3%) or more
of the Revolving Commitments and the aggregate outstanding principal amount of
the Term Loan or (c) if all Commitments have terminated, expired or otherwise
been fulfilled, sixty - six and two - thirds percent (66 2/3%) or more of the
outstanding principal amount of the Loans.
"Required Payment" has the meaning set forth in Section 6.8 of this
Agreement.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, excluding however, any such events where the thirty (30) day notice
requirement of Section 4043 of ERISA has been waived either by statute or by the
PBGC .
"Reserve Requirement" means, for any Eurodollar Account for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against any category of liabilities which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined or any
category of extensions of credit or other assets which include Eurodollar
Accounts.
"Responsible Party" means with respect to any Person, the president,
chief financial officer or chief accounting officer of such Person.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Bank on the signature pages hereto under the heading "Revolving Commitment"
or in the most recent Assignment and Acceptance executed by such Bank, as the
same may be reduced or terminated pursuant to Section 2.6 or Section 13.2. The
aggregate amount of the Revolving Commitments of all Banks on the Closing Date
equals Ten Million Dollars ($10,000,000).
"Revolving Loans" means, as to any Bank, the advances made by such Bank
pursuant to Section 2.1 and all advances made under Section 2.1 of the Prior
Credit Agreement which are outstanding on the Closing Date.
"Revolving Notes" means the promissory notes provided for by Section
2.2 and all amendments or other modifications thereof.
"Revolving Termination Date" means June 1, 2004, or such earlier date
on which the Revolving Commitments terminate as provided in this Agreement.
Page 14
"Secured Parties" means Agent, the Banks and each Affiliate of a Bank
who is owed any portion of the Obligations.
"Securities" has the meaning specified in Section 6.4(a)(iii)(c).
"South Carolina Bond L/C" has the meaning specified in Section 4.2(d).
"South Carolina Bonds" means the $1,500,000 Adjustable Rate Economic
Development Revenue Bonds, Series 1996 (Tufco Industries, Inc. Project) issued
by the South Carolina Jobs-Economic Development Authority.
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the
Parent or one or more of the Subsidiaries or by the Parent and one or more of
the Subsidiaries.
"Synthetic Lease" means any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
lease is required or is permitted to be classified and accounted for as an
operating lease under GAAP but which is intended by the parties thereto for tax,
bankruptcy, regulatory, commercial law, real estate law and all other purposes
as a financing arrangement.
"Term Commitment" means, as to each Bank and as of any date of
determination, the obligation of such Bank to make advances of funds under
Section 3.1 in an aggregate principal amount up to but not exceeding the amount
set forth opposite the name of such Bank on the signature pages hereto under the
heading "Term Commitment" or in the most recent Assignment and Acceptance
executed by such Bank, as the same may be terminated pursuant to Section 13.2.
The aggregate amount of the Term Commitments of all Banks on the Closing Date
equals Two Million Dollars ($2,000,000).
"Term Loan" means, as to any Bank, the advance made by such Bank
pursuant to Section 3.1 and such Bank's Commitment Percentage of the aggregate
amount equal to One Million Eight Hundred Sixty - Three Thousand Six Hundred
Thirty Dollars ($1,863,630) which is outstanding on the Closing Date under the
Prior Credit Agreement as the "Term Loan" thereunder.
"Term Maturity Date" means August 15, 2007, or such earlier date on
which the Term Loan is due in its entirety as provided in this Agreement.
"Term Note" means the promissory notes provided for by Section 3.2 and
all amendments and other modifications thereto.
"Termination Date" means, as applicable, the Term Maturity Date or the
Revolving Termination Date.
"Transferring Subsidiary" has the meaning set forth in Section 11.3 of
this Agreement.
"Type" means either type of Account (i.e., either a Base Rate Account
or Eurodollar Account).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Page 15
"Wisconsin Bond L/C" has the meaning specified in Section 4.2(c).
"Wisconsin Bonds" means the $2,500,000 Adjustable Rate Industrial
Development Revenue Bonds, Series 1992 (Tufco Project) issued by the Village of
Ashwaubenon, Wisconsin.
"Working Capital" has the meaning set forth in Section 12.2 of this
Agreement.
"Yearly Limit" has the meaning set forth in Section 12.3 of this
Agreement.
Section 1.2. Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3. Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 9.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in Section 9.2 hereof. To enable the ready and consistent
determination of compliance by the Parent with its obligations under this
Agreement, the Parent will not change the manner in which either the last day of
its Fiscal Year or the last days of the first three Fiscal Quarters of its
Fiscal Year is calculated. In the event any changes in accounting principles
required by GAAP or recommended by the Parent's certified public accountants and
implemented by the Parent occur and such changes result in a change in the
method of the calculation of financial covenants, standards, or terms under this
Agreement, then the Parent, the Agent, and the Banks agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such changes with the desired result that the criteria for
evaluating such covenants, standards, or terms shall be the same after such
changes as if such changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Agent, the Parent, and
the Banks, all financial covenants, standards, and terms in this Agreement shall
continue to be calculated or construed as if such changes had not occurred.
Section 1.4. Time of Day. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to Dallas, Texas time.
ARTICLE 2.
Revolving Credit Facility
Section 2.1. Revolving Commitments. Subject to the terms and conditions
of this Agreement, each Bank severally agrees to make one or more advances to
the Borrower from time to time from and including the Closing Date to but
excluding the Revolving Termination Date in an aggregate principal amount at any
time outstanding up to but not exceeding the amount of such Bank's Revolving
Commitment as then in effect; provided, however:
Page 16
(a) the Outstanding Revolving Credit applicable to a Bank
shall not at any time exceed such Bank's Revolving Commitment; and
(b) the Outstanding Revolving Credit shall not at any
time exceed the lesser of (i) the Borrowing Base or (ii) the aggregate Revolving
Commitments.
Subject to the foregoing limitations, and the other terms and provisions of this
Agreement, the Borrower may borrow, prepay, and reborrow hereunder the amount of
the Revolving Commitments and may establish Base Rate Accounts and Eurodollar
Accounts thereunder and, until the Revolving Termination Date, the Borrower may
Continue Eurodollar Accounts established under the Revolving Loans or Convert
Accounts established under the Revolving Loans of one Type into Accounts of the
other Type. Accounts of each Type under the Revolving Loan made by each Bank
shall be established and maintained at such Bank's Applicable Lending Office for
Revolving Loans of such Type.
Section 2.2. Notes. The Revolving Loans made by a Bank shall be
evidenced by one or more promissory notes of the Borrower in substantially the
form of Exhibit "A" hereto, payable to the order of such Bank in a principal
amount equal to its Revolving Commitment and otherwise duly completed.
Section 2.3. Repayment of Revolving Loans. The Borrower shall pay to
the Agent for the account of the Banks the outstanding principal amount of all
of the Revolving Loans on the Revolving Termination Date.
Section 2.4. Use of Proceeds. The proceeds of the Revolving Loans shall
be used by the Borrower for working capital, capital expenditures and other
general corporate purposes.
Section 2.5. Revolving Commitment Fee. The Borrower agrees to pay to
the Agent for the account of each Bank a commitment fee on the daily average
unused amount of such Bank's Revolving Commitment for the period from and
including the Closing Date to and including the Revolving Termination Date, at a
rate equal to the Commitment Fee Rate as determined in accordance with Section
5.2. For the purpose of calculating the commitment fee hereunder, the Revolving
Commitments shall be deemed utilized by all Outstanding Revolving Credit.
Accrued commitment fees under this Section 2.5 shall be payable in arrears on
each Quarterly Payment Date and on the Revolving Termination Date.
Section 2.6. Reduction or Termination of Revolving Commitments;
Extension of Revolving Commitments. The Borrower shall have the right to
terminate or reduce in part the unused portion of the Revolving Commitments at
any time and from time to time, provided that: (a) the Borrower shall give
notice of each such termination or reduction as provided in Section 6.3; and (b)
each partial reduction shall be in an aggregate amount at least equal to Two
Hundred Fifty Thousand ($250,000). The Revolving Commitments may not be
reinstated after they have been terminated or reduced. The Banks shall have no
obligation or commitment to extend the Revolving Termination Date, but during
January of each year that the Revolving Commitments are outstanding, at the
request of the Borrower, the Banks shall make a determination whether to extend
the Revolving Termination Date to a date one year from the then current
Revolving Termination Date. The Banks' determination as to the extension of the
Revolving Termination Date shall be made by all the Banks in their sole,
independent discretion and shall be effective only after an amendment to the
definition of Revolving Termination Date is executed by the Borrower, the Agent
and all the Banks. If the Banks fail to enter into an amendment to extend the
then current Revolving Termination Date, the Revolving Loans will be then due
and payable on such current Revolving Termination Date.
Page 17
ARTICLE 3.
Term Loan
Section 3.1. Term Commitment. The aggregate unpaid principal amount of
the "Term Loan" outstanding under the Prior Credit Agreement as of the Closing
Date is equal to One Million Eight Hundred Sixty - Three Thousand Six Hundred
Thirty Dollars ($1,863,630), which amount shall constitute a portion of the Term
Loan under this Agreement. Subject to the terms and conditions of this
Agreement, the additional amounts which shall make up the Term Loan will be
advanced under the Term Commitment as follows:
(a) on the Closing Date, the Banks shall make a single
advance in an aggregate amount for all Banks equal to One Million Five Hundred
Thousand Dollars ($1,500,000); and
(b) on or before October 30, 2002, the Banks shall make a
single advance in an aggregate amount for all Banks equal to Five Hundred
Thousand Dollars ($500,000).
Subject to the terms of this Agreement, the Borrower may establish Base Rate
Accounts or Eurodollar Accounts under the Term Loan and, until the Term Maturity
Date, the Borrower may Continue Eurodollar Accounts established under the Term
Loan or Convert Accounts established under the Term Loan of one Type into
Accounts of another Type. Accounts of each Type established under the Term Loan
made by each Bank shall be made and maintained at such Bank's Applicable Lending
Office for Accounts of such Type.
Section 3.2. Notes. The Term Loan made by a Bank shall be evidenced by
promissory notes of the Borrower in substantially the form of Exhibit "B",
payable to the order of such Bank in a principal amount equal to Three Million
Eight Hundred Sixty-Three Thousand Six Hundred Thirty Dollars ($3,863,630) and
otherwise duly completed.
Section 3.3. Repayment of Term Loan. The Borrower shall pay to the
Agent for the account of the Banks the outstanding principal amount of the Term
Loan in installments as follows:
(a) Nineteen (19) installments each in the principal
amount equal to the Amortization Amount and due and payable on each Quarterly
Payment Date commencing October 31, 2002 and continuing until and including
April 30, 2007; and
(b) one final installment due and payable on the Term
Maturity Date in an amount equal to all remaining unpaid principal outstanding
under the Term Loan.
The term "Amortization Amount" means either (i) One Hundred Ninety - Three
Thousand One Hundred Eighty - One and 50/100 Dollars ($193,181.50) or (ii) if
the Five Hundred Thousand Dollar ($500,000) advance under the Term Loan to be
made on or before October 30, 2002 under Section 3.1(b) is not made by October
31, 2002, One Hundred Sixty - Eight Thousand One Hundred Eighty - One and 50/100
Dollars ($168,181.50).
Section 3.4. Use of Proceeds. The proceeds of the amounts advanced
under the Term Commitment shall be used by the Borrower to purchase the Clipper
Converting System and to pay for the related design, engineering and
installation costs and expenses, the budget for which is more fully described on
Schedule 1.1(a).
Page 18
ARTICLE 4
Letters of Credit
Section 4.1 Commitment to Issue Commercial L/Cs. The Borrower may utilize
the Revolving Commitments by requesting that the Agent issue, and the Agent,
subject to the terms and conditions of this Agreement, shall issue, commercial
or documentary letters of credit for the Borrower's or one of the Subsidiaries'
account (such letters of credit, being hereinafter referred to as the
"Commercial L/Cs"; provided, however:
(a) the aggregate amount of outstanding Commercial L/C Liabilities
shall not at any time exceed Seven Hundred Fifty Thousand Dollars ($750,000);
(b) the Outstanding Revolving Credit shall not at any time exceed
the lesser of (i) the Borrowing Base or (ii) the aggregate Revolving
Commitments; and
(c) the Outstanding Revolving Credit applicable to a Bank shall not
at any time exceed such Bank's Revolving Commitment.
Section 4.2. Commitment to Issue Bond L/Cs. In addition to the Commercial
L/Cs that may be issued from time to time under Section 4.1, and subject to the
terms and conditions of this Agreement, the Agent shall issue the following:
(a) On the Closing Date, a letter of credit for the account of the
Borrower and the benefit of Wachovia Bank, National Association (as the issuer
of the Existing Wisconsin L/C) with an original face amount of One Million
Fourteen Thousand Seven Hundred Ninety-Four and 52/100 Dollars ($1,014,794.52)
and with an expiration date of May 15, 2003, which shall be payable in the event
of a drawing on the Existing Wisconsin L/C (such letter of credit to be issued
by the Agent, which must be in form and substance reasonably acceptable to the
Agent, herein the "Initial Wisconsin L/C");
(b) On the Closing Date, a letter of credit for the account of the
Borrower and the benefit of Wachovia Bank, National Association (as issuer of
the Existing South Carolina L/C) with an original face amount of One Million One
Hundred Thirteen Thousand Five Hundred Sixty-One and 64/100 Dollars
($1,113,561.64) and with an expiration date of December 15, 2002, which shall be
payable in the event of a drawing on the Existing South Carolina L/C (such
letter of credit to be issued by the Agent, which must be in form and substance
reasonably acceptable to the Agent, herein the "Initial South Carolina L/C");
(c) On or before May 15, 2003 and at the request of the Borrower, a
letter of credit, in substantially the same form as the Existing Wisconsin L/C,
for the account of the Borrower and the benefit of ▇▇▇▇▇ Fargo Minnesota
National Association (formerly known as Norwest Bank Wisconsin, National
Association) as trustee of the Wisconsin Bonds in the face amount not to exceed
the sum of (i) the principal amount outstanding of the Wisconsin Bonds as of the
Closing Date minus any redemptions of the Wisconsin Bonds made pursuant to
Section 10.12 or otherwise after the Closing Date but before the issuance of
this letter of credit plus (ii) an amount not to exceed the amount of interest
to accrue at twelve percent (12%) per annum on the outstanding Wisconsin Bonds
for forty-five (45) days and with an initial expiration date of June 1, 2004,
provided, however such expiration date shall automatically be extended to May 15
of the succeeding year (and be successively extended each year thereafter to,
but no later than, May 15, 2006) unless the Agent provides written notice to
▇▇▇▇▇ Fargo Minnesota National Association, on or before February 15 of the year
the letter of credit would otherwise expire, that the
Page 19
expiration date of the letter of credit shall not be so extended (such letter of
credit herein, the "Wisconsin Bond L/C"); and
(d) On or before December 15, 2002 and at the request of the
Borrower, a letter of credit, in substantially the same form as the Existing
South Carolina L/C, for the account of Asset Holdings Corporation IX and the
benefit of Bank One Trust Company, NA (f/k/a Bank One Wisconsin Trust Company,
National Association) as trustee of the South Carolina Bonds in the face amount
not to exceed the sum of (i) the principal amount outstanding of the South
Carolina Bonds as of the Closing Date minus any redemptions of the South
Carolina Bonds made pursuant to Section 10.12 or otherwise after the Closing
Date but before the issuance of this letter of credit plus (ii) an amount not to
exceed the amount of interest to accrue at ten percent (10%) per annum on the
outstanding South Carolina Bonds for forty-five (45) days and with an initial
expiration date of June 1, 2004, provided, however such expiration date shall
automatically be extended to December 15 of the succeeding year (and be
successively extended each year thereafter to, but no later than, December 15,
2011) unless the Agent provides written notice to Bank One Trust Company, NA, on
or before September 30 of the year the letter of credit would otherwise expire,
that the expiration date of the letter of credit shall not be so extended (such
letter of credit herein, the "South Carolina Bond L/C").
Section 4.3. Participation By Banks. Upon the date of issue of any Letter
of Credit, the Agent shall be deemed, without further action by any party
hereto, to have sold to each other Bank, and each other Bank shall be deemed,
without further action by any party hereto, to have purchased from the Agent a
participation to the extent of such Bank's Commitment Percentage in such Letter
of Credit and the related Letter of Credit Liabilities.
Section 4.4. Request Procedure. The Borrower shall give the Agent at least
three (3) Business Days irrevocable prior notice (effective upon receipt)
specifying the date of each Letter of Credit and the nature of the transactions
to be supported thereby. The Agent shall notify each other Bank of the contents
of the Letter of Credit and of such Bank's Commitment Percentage of the amount
of the proposed Letter of Credit in accordance with Section 6.6. Each Commercial
L/C shall have an expiration date that does not extend beyond the earlier of (i)
one (1) year from the date of its issuance, provided that any Commercial L/C may
provide for the renewal of the expiration date thereof for additional one - year
periods (which shall in no event extend the expiration date thereof beyond the
date provided for in the next clause (ii)) or (ii) a date which is thirty (30)
days prior to the Revolving Termination Date. Each Letter of Credit shall be
payable in Dollars, must (a) in the case of a Commercial L/C, support a
transaction entered into in the ordinary course of the Borrower's business and
(b) in the case of a Bond L/C, must be satisfactory in form and substance to the
Agent, and shall be issued pursuant to such documentation as the Agent may
require, including, without limitation, the Agent's standard form letter of
credit request and reimbursement agreement; provided, that, in the event of any
conflict between the terms of such agreement and the other Loan Documents, the
terms of the other Loan Documents shall control.
Section 4.5. Letter of Credit Fees. The Borrower will pay to the Agent for
the account of the Banks a letter of credit fee on the amount available for
drawings under each Letter of Credit, such letter of credit fee: (i) to be paid
in arrears on each Quarterly Payment Date following the date the Letter of
Credit is issued until the date of expiration or termination thereof (each such
date herein a "Payment Date") and (ii) to be calculated for the period from and
including the preceding Payment Date (or with respect to the first such payment,
from and including the date of issuance of the Letter of Credit) to and
excluding the earlier of the next Payment Date or the date of expiration or
termination of the Letter of Credit at a rate equal to the Eurodollar Rate
Margin. After receiving any payment of any fees under this Section 4.5
Page 20
attributable to a Letter of Credit, the Agent will promptly pay to each Bank
such Bank's Commitment Percentage of the amount of such fees so received.
Section 4.6. Funding of Drawings. Upon receipt from the beneficiary of any
Letter of Credit of any demand for payment or other drawing under such Letter of
Credit, the Agent shall promptly notify the Borrower and each Bank as to the
amount to be paid as a result of such demand or drawing and the respective
payment date. Not later than 12:30 p.m. on the applicable payment date, each
Bank will make available to the Agent, at the Principal Office, in immediately
available funds, an amount equal to such Bank's Commitment Percentage of the
amount to be paid as a result of a demand or drawing under the Letter of Credit
even if the conditions to a Loan under Article 8 hereof have not been satisfied.
In connection with any drawing relating to the Bonds that qualify as, with
respect to the Wisconsin Bonds, "Bank Bonds", or with respect to the South
Carolina Bonds, "Pledged Bonds" (in each case, as defined in the applicable
trust indenture), under either the Wisconsin Bond L/C or the South Carolina Bond
L/C, the Bonds with respect to which such drawing was made shall be deemed to
have been sold to the Agent for a price equal to the amount so drawn and such
Bonds shall be registered as directed by the Agent subject to and in accordance
with the terms of the applicable Bond Documents.
Section 4.7. Reimbursements. The Borrower shall be irrevocably and
unconditionally obligated to immediately reimburse the Agent for any amounts
paid by the Agent upon any demand for payment or drawing under any Letter of
Credit, without (except as specifically set forth in this Section 4.7)
presentment, demand, protest, or other formalities of any kind. All payments on
the Reimbursement Obligations shall be made: (i) if no Default has occurred or
the Agent otherwise elects, and only to the extent the Outstanding Revolving
Credit is less, the lesser of (a) the Borrowing Base or (b) the aggregate
Revolving Commitments, by Revolving Loans made automatically as Base Rate
Accounts in the amount equal to the lesser of (A) such Reimbursement Obligations
or (B) the difference of (x) the lesser of (1) the Borrowing Base or (2) the
aggregate Revolving Commitments minus (y) the Outstanding Revolving Credit or
(ii) if a Default has occurred and the Agent has not made the election under
clause (i), by the Borrower to the Agent at the Principal Office for the account
of the Agent in Dollars and in immediately available funds, without setoff,
deduction or counterclaim not later than 3:00 p.m. on the date of the
corresponding payment under such Letter of Credit; provided, that in the case of
this clause (ii) only, the Agent has provided notice to the Borrower prior to
12:00 noon on such day that such payment is due. In the event such notice is
received after 12:00 noon on a Business Day, such payment shall be due not later
than 3:00 p.m. on the next succeeding Business Day. The Agent will pay to each
Bank such Bank's Commitment Percentage of all amounts received from the Borrower
for application in payment, in whole or in part, to the Reimbursement Obligation
in respect of any Letter of Credit, but only to the extent such Bank has made
payment to the Agent in respect of such Letter of Credit pursuant to Section
4.6.
Section 4.8. Reimbursement Obligations Absolute. The Reimbursement
Obligations of the Borrower under this Agreement shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance
with the terms of the Loan Documents under all circumstances whatsoever and the
Borrower hereby waives any defense to the payment of the Reimbursement
Obligations based on any circumstance whatsoever, including without limitation,
in either case, the following circumstances: (i) any lack of validity or
enforceability of any Letter of Credit, any other Loan Document or any Bond
Document; (ii) any amendment or waiver of or any consent to or departure from
any Loan Document or any Bond Document; (iii) the existence of any claim, set -
off, counterclaim, defense or other rights which the Borrower, any Obligated
Party, or any other Person may have at any time against any beneficiary of any
Letter of Credit, the Agent, any Bank, or any other Person, whether in
connection with any Loan Document, any Bond Document or any unrelated
transaction; (iv) any statement, draft, or other documentation presented under
any Letter of Credit proving to be forged, fraudulent, invalid, or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
Page 21
or (v) any other circumstance whatsoever, whether or not similar to any of the
foregoing; provided that Reimbursement Obligations with respect to a Letter of
Credit may be subject to avoidance by the Borrower if the Borrower proves in a
final nonappealable judgment that it was damaged and that such damage arose
directly from the Agent's willful misconduct or gross negligence in determining
whether the documentation presented under the Letter of Credit in question
complied with the terms thereof.
Section 4.9. Issuer Responsibility. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit with respect to its
use of such Letter of Credit. Neither the Agent, any Bank nor any of their
respective officers or directors shall have any responsibility or liability to
the Borrower or any other Person for: (a) the failure of any draft to bear any
reference or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents apart from
drafts as required by the terms of any Letter of Credit, or the failure of any
Person to note the amount of any instrument on any Letter of Credit, each of
which requirements, if contained in any Letter of Credit itself, it is agreed
may be waived by the Agent; (b) errors, omissions, interruptions, or delays in
transmission or delivery of any messages; (c) the validity, sufficiency, or
genuineness of any draft or other document, or any endorsement(s) thereon, even
if any such draft, document or endorsement should in fact prove to be in any and
all respects invalid, insufficient, fraudulent, or forged or any statement
therein is untrue or inaccurate in any respect; or (d) any other circumstance
whatsoever in making or failing to make any payment under a Letter of Credit.
Notwithstanding the forgoing, the Borrower shall have a claim against the Agent,
and the Agent shall be liable to the Borrower, to the extent of any direct, but
not indirect, consequential or punitive, damages suffered by the Borrower which
the Borrower proves in a final nonappealable judgment were caused by (i) the
Agent's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit complied with the terms thereof or (ii) the
Agent's willful failure to pay under any Letter of Credit after presentation to
it of documentation strictly complying with the terms and conditions of such
Letter of Credit. The Agent may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
ARTICLE 5.
Interest and Fees
Section 5.1. Interest Rate. Subject to Section 15.12, the Borrower shall
pay to the Agent for the account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank for the period commencing on the date of
such Loan to but excluding the date such Loan is due, at a fluctuating rate per
annum equal to the Applicable Rate. The term "Applicable Rate" means (i) during
the period that such Loans or portions thereof are subject to a Base Rate
Account, the Base Rate plus the Base Margin and (ii) during the period that such
Loans or portions thereof are subject to a Eurodollar Account, the Adjusted
Eurodollar Rate plus the Eurodollar Rate Margin.
Section 5.2. Determinations of Margins and Fees. The margins identified in
Section 5.1 and the fees payable under Section 2.5 shall be defined and
determined as follows:
(a) "Base Margin" shall mean (i) during the period commencing on the
Closing Date and ending on but not including the first Adjustment Date (as
defined below), one half of one percent (0.50%) per annum and (ii) during each
period, from and including one Adjustment Date to but excluding the next
Adjustment Date (herein a "Calculation Period"), the percent per annum set forth
in the table below in this Section 5.2 under the heading "Base Margin" opposite
the Indebtedness to EBITDA Ratio
Page 22
which corresponds to the Indebtedness to EBITDA Ratio set forth in, and as
calculated in accordance with, the applicable Compliance Certificate.
(b) "Commitment Fee Rate" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the first
Adjustment Date, one half of one percent (0.50%) per annum and (ii) during each
Calculation Period, the percent per annum set forth in the table below under the
heading "Commitment Fee" opposite the Indebtedness to EBITDA Ratio which
corresponds to the Indebtedness to EBITDA Ratio set forth in, and as calculated
in accordance with, the applicable Compliance Certificate.
(c) "Eurodollar Rate Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the first
Adjustment Date, two percent (2.00%) per annum and (ii) during each Calculation
Period, the percent per annum set forth in the table below under the heading
Eurodollar Margin opposite the Indebtedness to EBITDA Ratio which corresponds to
the Indebtedness to EBITDA Ratio set forth in, and as calculated in accordance
with, the applicable Compliance Certificate.
Indebtedness to EBITDA Ratio Base Margin Commitment Fee Eurodollar Rate Margin
----------------------------- ----------- -------------- ----------------------
Greater than or equal to 3.00 2.00% 0.500% 3.50%
Greater than or equal to
2.50 but less than 3.00 1.50% 0.500% 3.00%
Greater than or equal to
2.00 but less than 2.50 1.00% 0.500% 2.50%
Greater than or equal to
1.50 but less than 2.00 0.50% 0.500% 2.00%
Less than 1.50 0.00% 0.375% 1.50%
Upon delivery of the Compliance Certificate pursuant to Section 10.1(c) in
connection with the financial statements of the Parent required to be delivered
pursuant to Section 10.1(b) at the end of each Fiscal Quarter commencing with
such Compliance Certificate delivered with respect to the Fiscal Quarter ending
on December 31, 2002, the Base Margin, the Eurodollar Rate Margin (for Interest
Periods commencing after the applicable Adjustment Date) and, the Commitment Fee
Rate shall automatically be adjusted in accordance with the Indebtedness to
EBITDA Ratio set forth therein and the table set forth above, such automatic
adjustment to take effect as of the first Business Day after the receipt by the
Agent of the related Compliance Certificate pursuant to Section 10.1(c) (each
such Business Day when such margins or fees change pursuant to this sentence or
the next following sentence, herein an "Adjustment Date"). If the Borrower fails
to deliver such Compliance Certificate which so sets forth the Indebtedness to
EBITDA Ratio within the period of time required by Section 10.1(c): (i) the Base
Margin shall automatically be adjusted to two percent (2.00%) per annum; (ii)
the Eurodollar Rate Margin (for Interest Periods commencing after the applicable
Adjustment Date) shall automatically be adjusted to three and one - half percent
(3.50%) per annum; and (iii) the Commitment Fee Rate shall automatically be
adjusted to one - half of one percent (0.50%), such automatic adjustments to
take effect as of the first Business Day after the last day on which the
Borrower was required to deliver the applicable Compliance Certificate in
accordance with Section 10.1(c) and to remain in effect until subsequently
adjusted in accordance herewith upon the delivery of a Compliance Certificate.
The phrase "Indebtedness to EBITDA Ratio" means the ratio, calculated as of the
last day of each Fiscal Quarter, of Indebtedness outstanding as of such day to
the EBITDA (as defined in Section 12.1) for the four (4) Fiscal Quarters then
ended. As used in this Section 5.2, "Indebtedness" means, at the time of
determination, without duplication, the sum of the following determined for
Parent and the Subsidiaries on a consolidated basis (without duplication): (a)
all obligations for borrowed money; (b) all obligations of such Person evidenced
by bonds, notes, debentures, or other similar instruments; (c) all Capital Lease
Obligations; (d) all unpaid and liquidated
Page 23
reimbursement obligations with respect to letter of credit and the face amount
of all undrawn, outstanding letters of credit (including without limitation, the
Letters of Credit, unless the Debt secured by any such letter of credit is
included in either clause (a) or (b) above or the following clause (e)); and (e)
all Debt arising under Synthetic Leases (including without limitation any
portion of the Debt secured by a Lien on the facility of Borrower which is
leased by Borrower and located in Manning, South Carolina, to the extent
Borrower is or may become obligated to pay such Debt).
Section 5.3. Payment Dates. Accrued interest on the Loans shall be due and
payable as follows: (i) in the case of Loans subject to Base Rate Accounts, on
each Quarterly Payment Date and on the applicable Termination Date; and (ii) in
the case of Loans subject to Eurodollar Accounts and with respect to each such
Account, on the last day of such Interest Period, the applicable Termination
Date and, if such Interest Period is six (6) months long, on the date ninety
(90) days from the start of such Interest Period.
Section 5.4. Default Interest. Notwithstanding the foregoing, the Borrower
will pay to the Agent for the account of each Bank interest at the applicable
Default Rate on any principal of any Loan made by such Bank, and (to the fullest
extent permitted by law) any other amount payable by the Borrower under any Loan
Document to or for the account of the Agent or such Bank, that is not paid in
full on the date due (whether at stated maturity, by acceleration, or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full. Interest payable at the Default
Rate shall be payable from time to time on demand.
Section 5.5. Conversions and Continuations of Accounts. Subject to Section
6.2, the Borrower shall have the right from time to time to Convert all or part
of any Base Rate Account in existence under a Loan into a Eurodollar Account
under the same Loan or to Continue Eurodollar Accounts in existence under a Loan
as Eurodollar Accounts under the same Loan; provided, that: (a) the Borrower
shall give the Agent notice of each such Conversion or Continuation as provided
in Section 6.3; (b) a Eurodollar Account may only be Converted on the last day
of the Interest Period therefor; and (c) except for Conversions into Base Rate
Accounts, no Conversions or Continuations shall be made while a Default has
occurred and is continuing.
Section 5.6. Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Eurodollar Accounts on the basis of a year of 360 days and the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which payable unless such calculation would
result in a usurious rate, in which case interest shall be calculated on the
basis of a year of 365 or 366 days, as the case may be; and (ii) with respect to
Base Rate Accounts (A) if based on the Prime Rate, on the basis of a year of 365
or 366 days, as the case may be and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable or (B) if based on the Federal Funds Effective Rate on the basis of a
year of 360 days and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable unless in
the case of clauses (i) or (ii) such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
ARTICLE 6.
Administrative Matters
Section 6.1. Borrowing Procedure. The Borrower shall give the Agent, and
the Agent will give the Banks, notice of each borrowing under any Commitment in
accordance with Section 6.3. Not
Page 24
later than 2:00 p.m. on the date specified for each borrowing under the
applicable Commitment each Bank will make available to the Agent the amount of
the Loan to be made by it on such date, at the Principal Office, in immediately
available funds, for the account of the Borrower. The amount so received by the
Agent shall, subject to the terms and conditions of this Agreement, be made
available to the Borrower by (a) depositing the same, in immediately available
funds, in an account of the Borrower (designated by the Borrower) maintained
with the Agent at the Principal Office or (b) wire transferring such funds to a
Person or Persons designated by the Borrower in writing.
Section 6.2. Minimum Amounts. Except for prepayments pursuant to Article
7, each borrowing under the Revolving Commitment and each prepayment of
principal of a Loan shall be in an amount at least equal to Two Hundred Fifty
Thousand Dollars ($250,000) or, in each case, any larger amounts in increments
of Fifty Thousand Dollars ($50,000). Except for Conversions pursuant to Article
7, each Eurodollar Account applicable to a Loan shall be in a minimum principal
amount of Two Hundred Fifty Thousand Dollars ($250,000) or any larger amounts in
increments of Fifty Thousand Dollars ($50,000).
Section 6.3. Certain Notices. Notices by the Borrower to the Agent of
terminations or reductions of Revolving Commitments, of borrowings and optional
prepayments of Loans, and of Conversions and Continuations of Accounts shall be
irrevocable and shall be effective only if received by the Agent not later than
12:30 p.m. (a) on the Business Day of the borrowing, prepayment or repayment of
Loans subject to Base Rate Accounts or of the Conversion into Base Rate Accounts
and (b) with respect to any other repayments, terminations, reductions,
borrowings, Conversions, Continuations, or prepayments, on the Business Day
which is the number of Business Days prior to the day of the relevant action
specified below:
Number of Business Days Prior
Action to Action
------ ---------
Termination or reduction of Commitments, optional prepayment of
Loans 5
Borrowing of Loans subject to Eurodollar Accounts, Conversions
into or Continuations as Eurodollar Accounts 3
Any notices of the type described in this Section 6.3 which are received by the
Agent after 12:30 p.m. on a Business Day shall be deemed to be received and
shall be effective on the next Business Day. Each such notice of termination or
reduction of the Revolving Commitments shall specify the amount of the Revolving
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation, or prepayment shall: (a) specify the Loans to be
borrowed or prepaid or the Accounts to be Converted or Continued; (b) the amount
(subject to Section 6.2 hereof) to be borrowed, Converted, Continued, or
prepaid; (c) in the case of a Conversion, the Type of Account to result from
such Conversion; (d) in the case of a borrowing the Type of Account or Accounts
to be applicable to such borrowing and the amounts thereof; (e) in the event a
Eurodollar Account is selected, the duration of the Interest Period therefor;
and (f) the date of borrowing, Conversion, Continuation, or prepayment (which
shall be a Business Day). Each notice of borrowing, Conversion, continuation, or
prepayment shall be substantially in the form of Exhibit "I" hereto. The Agent
shall notify the Banks of the contents of each such notice on the date of the
Agent's receipt of the same or, if received on or after 12:30 p.m. on a Business
Day, on the next Business Day. In the event the Borrower fails to select the
Type of Account applicable to a Loan, or the duration of any Interest Period for
any Eurodollar Account, within the time period and otherwise as provided in this
Section 6.3, such Account (if outstanding as a Eurodollar Account) will be
automatically Converted into a Base Rate Account on the last day of the
preceding Interest Period for such Account or (if outstanding as a Base Rate
Account) will remain as, or (if not then
Page 25
outstanding) will be made as, a Base Rate Account. The Borrower may not borrow
any Loans subject to a Eurodollar Account, Convert any Base Rate Accounts into
Eurodollar Accounts, or Continue any Eurodollar Account as a Eurodollar Account
if the Applicable Rate for such Eurodollar Accounts would exceed the Maximum
Rate or if a Default exists.
Section 6.4. Prepayments.
(a) Mandatory.
(i) Revolving Loans. If at any time the Outstanding Revolving
Credit exceeds the Borrowing Base, the Borrower shall, within one (1) Business
Day after the occurrence thereof prepay the Revolving Loans by the amount of the
excess together with any amount due under Section 7.5 or if no Revolving Loans
are outstanding and the Outstanding Revolving Credit exceeds the Borrowing Base,
immediately pledge to the Agent cash or cash equivalents in an amount equal to
the excess as security for the Obligations.
(ii) Term Loan.
(A) Prepayment from Excess Cash Flow. The Borrower
shall, within ninety (90) days after the end of each Fiscal Year, beginning with
the Fiscal Year ending September 30, 2003, prepay the Term Loan as of such date
in an aggregate amount equal to the lesser of (i) 50% of Excess Cash Flow (as
defined below) for such Fiscal Year or (ii) Seven Hundred Fifty Thousand Dollars
($750,000). For purposes of this Section 6.4(a)(ii)(A), "Excess Cash Flow"
means, for any Fiscal Year, the sum of: (i) EBITDA; minus (ii) cash taxes paid;
minus (iii) cash interest expense (including the interest portion of Capital
Lease Obligations); minus (iv) scheduled principal payments on Debt; minus (v)
Capital Expenditures (except Capital Expenditures financed with the Term Loan or
other Debt permitted by Section 11.1 other than the Revolving Loans); plus (vi)
any non-operating, nonrecurring, or extraordinary gains or revenue actually
received in cash to the extent excluded in determining Consolidated Net Income
or EBITDA.
(B) Prepayments from Asset Dispositions. The Borrower
shall, within five (5) days of receipt of Net Proceeds related to an Asset
Disposition prepay the Term Loan as of such date in an amount equal to the Net
Proceeds of such Asset Disposition. Notwithstanding the foregoing, the Borrower,
the Parent or any Subsidiary, as applicable, may retain proceeds otherwise
required to be delivered in accordance with the foregoing from an Asset
Disposition if: (1) no Default exists and (2) (x) if the Person disposing of the
asset in question reasonably expects the proceeds of such Asset Disposition to
be reinvested in productive assets then used or useable in its business within
ninety (90) days after receipt of such proceeds or (y) in case of proceeds
received due to loss, damage, destruction or condemnation, the Person, within
ninety (90) days after receipt of such proceeds, delivers to the Agent a plan,
acceptable to the Agent, to be used for rebuilding, repairing or replacing such
assets. For purposes of this Section 6.4(a)(ii)(B) the following terms shall
have the following meanings:
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any
assets of the Parent or any of the Subsidiaries other than (i) sales of
inventory in the ordinary course of business and (ii) sales of assets
permitted under either clause (b) or clause (c) of Section 11.8.
"Net Proceeds" means cash proceeds (including casualty insurance
proceeds paid with respect to damage to property) received by the Parent
or any of the Subsidiaries from any Asset Disposition (including payments
under notes or other debt securities received in connection with any Asset
Disposition and insurance proceeds and
Page 26
awards of condemnation), net of (a) the costs of such sale, lease,
transfer or other disposition (including professional fees and expenses
and taxes attributable to such sale, lease or transfer which are actually
expected to be paid) and (b) amounts applied to repayment of Debt (other
than the Obligations) secured by a Lien on the asset disposed.
(C) Prepayment from Securities Offerings. In the event
that the Parent or any Subsidiary issues any Securities (as defined below), no
later than the third (3rd) Business Day following the date of receipt of the
proceeds from any such issuance, the Borrower shall prepay the Term Loan in an
amount equal to fifty percent (50%) of the proceeds of such issuance, net of
underwriting discounts and commissions and other reasonable costs associated
therewith. For purposes of this Section 6.4(a)(ii)(C) the term "Securities"
means any stock, shares, options, warrants, voting trust certificates, or other
instruments evidencing an ownership interest or a right to acquire an ownership
interest in a Person or any bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured. This Section 6.4(a)(ii)(C) shall not apply
where an issuance of Securities is permitted under either Section 11.6 (i) or
Section 11.6(ii).
Each prepayment under Section 6.4(a) shall be accompanied with accrued and
unpaid interest on the amount prepaid to the date of prepayment and any amounts
payable under Section 7.5 and each prepayment under Section 6.4(a)(ii) shall be
applied to the installments of principal due under the Term Loan in the inverse
order of maturity.
(b) Optional. Subject to Section 6.2 and the provisions of this
clause (b), the Borrower may, at any time and from time to time without premium
or penalty upon prior notice to the Agent as specified in Section 6.3, prepay or
repay any Loan in full or in part. Any optional prepayment of the Term Loan
shall be accompanied with accrued interest on the amount prepaid to the date of
prepayment and any partial prepayments thereof shall be applied to the principal
installments due in the inverse order of maturity. Loans subject to a Eurodollar
Account may be prepaid or repaid only on the last day of the Interest Period
applicable thereto unless (i) the Borrower pays to the Agent for the account of
the applicable Banks any amounts due under Section 7.5 as a result of such
prepayment or repayment or (ii) after giving effect to such prepayment or
repayment the aggregate principal amount of the Eurodollar Accounts applicable
to the Loan being prepaid or repaid having Interest Periods that end after such
payment date shall be equal to or less than the principal amount of such Loan
after such prepayment or repayment.
Section 6.5. Method of Payment. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by the
Borrower or any Obligated Party under the Loan Documents shall be made to the
Agent at the Principal Office for the account of each Bank's Applicable Lending
Office in Dollars and in immediately available funds, without setoff, deduction,
or counterclaim, not later than 1:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower and
each Obligated Party shall, at the time of making each such payment, specify to
the Agent the sums payable under the Loan Documents to which such payment is to
be applied (and in the event that the Borrower fails to so specify, or if an
Event of Default has occurred and is continuing, the Agent may apply such
payment and any proceeds of any Collateral to the Obligations in such order and
manner as the Required Banks may elect in their sole discretion, subject to
Section 6.6 hereof). Each payment received by the Agent under any Loan Document
for the account of a Bank or other Secured Party shall be paid to such Bank or
other Secured Party by 3:00 p.m. on the date the payment is deemed made to the
Agent in immediately available funds, for the account, in the case of a Bank, of
such Bank's Applicable Lending Office. Whenever any payment under any Loan
Document shall be stated to be due on a day that is not a Business Day, such
payment may be made on the next
Page 27
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
Section 6.6. Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each Loan shall be made by the Banks, each payment of commitment
fees under Section 2.5 shall be made for the account of the Banks, and each
termination or reduction of the Revolving Commitments shall be applied to the
Revolving Commitments of the Banks, pro rata according to their respective
Commitment Percentages; (b) the making, Conversion, and Continuation of Accounts
of a particular Type (other than Conversions provided for by Section 7.4) shall
be made pro rata among the Banks holding Accounts of such Type according to
their respective Commitment Percentages; (c) each payment and prepayment of
principal of or interest on Loans or Reimbursement Obligations shall be made to
the Agent for the account of the Agent or the Banks holding such Loans or
participation interests in the Reimbursement Obligations, as applicable, pro
rata in accordance with the respective unpaid principal amounts of such Loans,
Reimbursement Obligations or participation interests held by such Banks; (d)
proceeds of Collateral shall be shared first, by each of the Agent and the Banks
pro rata in accordance with the respective unpaid amounts of the Obligations
then due the Agent and each such Bank and the respective aggregate amount
available for drawing under all outstanding Letters of Credit which Agent or
such Bank is obligated to fund until paid in full or fully cash collateralized
and then shall be shared with any other Secured Party pro rata in accordance
with the amount of the Obligations owed to each; and (e) the Banks (other than
the Agent) shall purchase from the Agent participations in the Letters of Credit
to the extent of their respective Commitment Percentages. If at any time
payment, in whole or in part, of any amount distributed by the Agent hereunder
is rescinded or must otherwise be restored or returned by the Agent as a
preference, fraudulent conveyance, or otherwise under any bankruptcy,
insolvency, or similar law, then each Person receiving any portion of such
amount agrees, upon demand, to return the portion of such amount it has received
to the Agent.
Section 6.7. Sharing of Payments. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through the Agent) through the exercise of any right of set -
off, banker's lien, counterclaim, or similar right, or otherwise, it shall
promptly purchase from the other Banks participations in the Obligations held by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment pro rata in accordance with the unpaid principal of and interest
on the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any Bank so
purchasing a participation in the Obligations held by the other Banks may
exercise all rights of set - off, banker's lien, counterclaim, or similar rights
with respect to such participation as fully as if such Bank were a direct holder
of Obligations in the amount of such participation. Nothing contained herein
shall require any Bank to exercise any such right or shall affect the right of
any Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower.
Section 6.8. Non - Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (the "Payor") prior to the date on
which such Bank is to make payment to the Agent hereunder or the Borrower is to
make a payment to the Agent for the account of one or more of the Banks, as the
case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, (a) the recipient of such payment shall, on demand, pay to the Agent the
amount made available to it together with interest thereon
Page 28
in respect of the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to the Federal Funds Effective Rate for such period and (b) the
Agent shall be entitled to offset against any and all sums to be paid to such
recipient, the amount calculated in accordance with the foregoing clause (a).
Section 6.9. Withholding Taxes. All payments by the Borrower of amounts
payable under any Loan Document shall be payable without deduction for or on
account of any present or future taxes, duties, or other charges levied or
imposed by the United States of America or by the government of any jurisdiction
outside the United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction with
respect to any such payments (but excluding any tax imposed on or measured by
the net income or profit of a Bank pursuant to the laws of the jurisdiction in
which it is organized or in which the principal office or Applicable Lending
Office of such Bank is located or any subdivision thereof or therein). If any
such taxes, duties, or other charges are so levied or imposed, the Borrower will
make additional payments in such amounts so that every net payment of amounts
payable by it under any Loan Document, after withholding or deduction for or on
account of any such present or future taxes, duties, or other charges, will not
be less than the amount provided for herein or therein, provided that the
Borrower may withhold to the extent required by law and shall have no obligation
to pay such additional amounts to any Bank to the extent that such taxes,
duties, or other charges are levied or imposed by reason of the failure or
inability of such Bank to comply with the provisions of Section 6.10. The
Borrower shall furnish promptly to the Agent for distribution to each affected
Bank, as the case may be, official receipts evidencing any such withholding or
reduction.
Section 6.10. Withholding Tax Exemption. Each Foreign Bank agrees that it
will deliver to the Borrower and the Agent two duly completed copies of the
appropriate United States Internal Revenue Service form, certifying that such
Bank is entitled to receive payments from the Borrower under any Loan Document
without deduction or withholding of any United States federal income taxes. Each
Foreign Bank which so delivers such form further undertakes to deliver to the
Borrower and the Agent two (2) additional copies of such form (or a successor
form) on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Foreign Bank is entitled to receive payments from the Borrower under any
Loan Document without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law, or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Foreign Bank from duly completing and delivering any
such form with respect to it and such Foreign Bank advises the Borrower and the
Agent that it is not capable of receiving such payments without any deduction or
withholding of United States federal income tax.
Section 6.11. Participation Obligations Absolute; Failure to Fund
Participation. The obligations of a Bank to fund its participation in the
Letters of Credit in accordance with the terms hereof shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of the Loan Documents under all circumstances whatsoever, including
without limitation, the following circumstances: (a) any lack of validity of any
Loan Document; (b) the occurrence of any Default; (c) the existence of any
claim, set - off, counterclaim, defenses or other rights which such Bank, the
Borrower, any Obligated Party, or any other Person may have; (d) the occurrence
of any event that has or could reasonably be expected to have a Material Adverse
Effect; (e) the failure of any condition to a Loan or the issuance of a Letter
of Credit under Article 8 hereof to be satisfied; (f) the fact that after giving
effect to the funding of the participation the Outstanding Revolving Credit may
exceed the Borrowing Base; or (g) any other circumstance whatsoever, whether or
not similar to any of the foregoing; provided that, the obligations of a Bank to
fund its participation in a Letters of Credit may be
Page 29
subject to avoidance by a Bank if such Bank proves in a final nonappealable
judgment that it was damaged and that such damage arose directly from the
Agent's willful misconduct or gross negligence in determining whether (i) the
conditions set forth in Article 8 hereof to the issuance of the Letter of Credit
in question were satisfied at the time of such issuance or (ii) the
documentation presented under the Letter of Credit in question complied with the
terms thereof. If a Bank fails to fund its participation in a Letter of Credit
as required hereby, such Bank shall, subject to the foregoing proviso, remain
obligated to pay to the Agent the amount it failed to fund on demand together
with interest thereon in respect of the period commencing on the date such
amount should have been funded until the date the amount was actually funded to
the Agent at a rate per annum equal to the Federal Funds Effective Rate for such
period and the Agent shall be entitled to offset against any and all sums to be
paid to such Bank hereunder the amount due the Agent under this sentence.
ARTICLE 7.
Yield Protection and Illegality
Section 7.1. Additional Costs.
(a) The Borrower shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
reasonable costs incurred by such Bank which such Bank determines are directly
attributable to its making or maintaining of any Loans subject to Eurodollar
Accounts hereunder or its obligation to make any of such Loans hereunder, or any
reduction in any amount receivable by such Bank hereunder in respect of any such
Loans or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any of such Loans
(other than franchise taxes and taxes imposed on the overall net income of such
Bank or its Applicable Lending Office for any of such Loans by the United States
of America or the jurisdiction in which such Bank has its Principal Office or
such Applicable Lending Office);
(ii) imposes or modifies any reserve (other than the Reserve
Requirement), special deposit, minimum capital, capital ratio, or similar
requirement relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Bank (including any
of such Loans or any deposits referred to in the definition of "Eurodollar Rate"
in Section 1.1 hereof); or
(iii) imposes any other condition affecting this Agreement or
the Notes or any of such extensions of credit or liabilities or commitments and
which results in additional cost or expense to the Bank.
Each Bank will notify the Borrower (with a copy to the Agent) of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to this Section 7.1(a) as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, and will
designate a different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Bank, violate any law,
rule, or regulation or be in any way disadvantageous to such Bank. Each Bank
will furnish the Borrower with a certificate setting forth the basis and the
amount of each request of such Bank for compensation under this Section 7.1(a).
If any Bank requests compensation from the Borrower under this subsection
Section 7.1(a), the Borrower may, by notice to such Bank (with a copy to the
Agent)
Page 30
suspend the obligation of such Bank to make Loans subject to Eurodollar Accounts
or Continue Eurodollar Accounts as Eurodollar Accounts or Convert Base Rate
Accounts into Eurodollar Accounts until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of Section 7.4
hereof shall be applicable with respect to such Eurodollar Accounts).
(b) Without limiting the effect of the foregoing provisions of this
Section 7.1, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on the
Loans subject to Eurodollar Accounts is determined as provided in this Agreement
or a category of extensions of credit or other assets of such Bank which
includes Loans subject to Eurodollar Accounts or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets which it
may hold, then, if such Bank so elects by notice to the Borrower (with a copy to
the Agent), the obligation of such Bank to make Loans subject to Eurodollar
Accounts or Continue Eurodollar Accounts as Eurodollar Accounts or Convert Base
Rate Accounts into Eurodollar Accounts hereunder shall be suspended until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 7.4 hereof shall be applicable).
(c) Determinations and allocations by any Bank for purposes of this
Section 7.1 of the effect of any Regulatory Change on its costs of maintaining
its obligation to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of the Loans, and of the additional amounts required
to compensate such Bank in respect of any Additional Costs, shall, absent
manifest error, be conclusive, provided that such determinations and allocations
are made on a reasonable basis.
Section 7.2. Limitation on Eurodollar Accounts. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Accounts under a
Loan for any Interest Period therefor:
(a) The Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof are not being provided in
the relative amounts or for the relative maturities for purposes of determining
the rate of interest for the Loans subject to such Eurodollar Accounts as
provided in this Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "Adjusted Eurodollar Rate" in Section 1.1 hereof on the
basis of which the rate of interest for such Loans for such Interest Period is
to be determined do not accurately reflect the cost to the Banks of making or
maintaining such Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Eurodollar Account and the relevant amounts or periods, and so long as
such condition remains in effect, the Banks shall be under no obligation to make
additional Loans subject to a Eurodollar Account or to Convert Base Rate
Accounts into Eurodollar Accounts and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Accounts,
either prepay the Loans subject to such Eurodollar Accounts or Convert such
Eurodollar Accounts into Base Rate Accounts in accordance with the terms of this
Agreement. Determinations made under this Section 7.2 shall be made on a
reasonable basis.
Section 7.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Loans subject to a Eurodollar
Account hereunder or (b) maintain Loans subject to a Eurodollar Account
hereunder, then such Bank shall promptly notify the Borrower (with a copy to the
Agent) thereof and such
Page 31
Bank's obligation to make or maintain Loans subject to a Eurodollar Account and
to Convert Base Rate Accounts into Eurodollar Accounts hereunder shall be
suspended until such time as such Bank may again make and maintain Loans subject
to a Eurodollar Account (in which case the provisions of Section 7.4 hereof
shall be applicable).
Section 7.4. Treatment of Affected Loans. If the Accounts applicable to a
Loan of any Bank (hereinafter called "Affected Accounts") are to be Converted
pursuant to Section 7.1 or Section 7.3 hereof, the Bank's Affected Accounts
shall be automatically Converted into Base Rate Accounts on the last day(s) of
the then current Interest Period(s) (or, in the case of a Conversion required by
Section 7.1(b) or Section 7.3 hereof, on such earlier date as such Bank may
specify to the Borrower with a copy to the Agent) and, unless and until such
Bank gives notice as provided below that the circumstances specified in Section
7.1 or Section 7.3 hereof which gave rise to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Accounts have been so Converted, all
payments and prepayments of principal which would otherwise be applied to such
Bank's Affected Accounts shall be applied instead to its Base Rate Accounts; and
(b) all Accounts which would otherwise be established or Continued by such Bank
as Eurodollar Accounts shall be made as or Converted into Base Rate Accounts and
all Accounts of such Bank which would otherwise be Converted into Eurodollar
Accounts shall be Converted instead into (or shall remain as) Base Rate
Accounts. If such Bank gives notice to the Borrower (with a copy to the Agent)
that the circumstances specified in Section 7.1 or Section 7.3 hereof which gave
rise to the Conversion of such Bank's Affected Accounts pursuant to this Section
7.4 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Accounts are
outstanding, such Bank's Base Rate Accounts shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Accounts to the extent necessary so that, after giving effect
thereto, all Accounts held by the Banks holding Eurodollar Accounts and by such
Bank are held pro rata (as to principal amounts, Types, and Interest Periods) in
accordance with their respective Commitment Percentages.
Section 7.5. Compensation. The Borrower shall pay to the Agent for the
account of each Bank, upon the request of such Bank, such amount or amounts as
shall be sufficient (in the reasonable opinion of such Bank) to compensate it
for any loss, cost, or expense incurred by it as a result of:
(a) Any payment or prepayment of a Loan subject to a Eurodollar
Account or Conversion of a Eurodollar Account for any reason (including, without
limitation, the acceleration of the outstanding Loans pursuant to Section
13.2(a)) on a date other than the last day of an Interest Period for the
applicable Eurodollar Account; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 8 to be
satisfied) to borrow or prepay a Loan subject to a Eurodollar Account, or
Convert a Base Rate Account to a Eurodollar Account on the date for such
borrowing, Conversion, or prepayment specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Account (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Account which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Account
provided for herein over (ii) the interest component of the amount such Bank
would have bid in the London interbank market for Dollar deposits of leading
banks and amounts comparable to such principal amount and with maturities
comparable to such period.
Page 32
Section 7.6. Capital Adequacy. If after the date hereof, any Bank shall
have determined that any Regulatory Change has or would have the effect of
reducing the rate of return on such Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated hereby
to a level below that which such Bank (or its parent) could have achieved but
for such adoption, implementation, change, or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within ten
(10) Business Days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its parent) for such reduction. A certificate of such
Bank claiming compensation under this Section 7.6 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive,
provided that the determination thereof is made on a reasonable basis. In
determining such amount or amounts, such Bank may use any reasonable averaging
and attribution methods. With respect to each demand by a Bank under this
Section 7.6, no Bank shall have the right to demand compensation for amounts
attributable to any reduction in such Bank's rate of return occurring at any
time before the date which is six (6) months prior to the date the Bank gives
such demand for compensation to the Borrower.
ARTICLE 8.
Conditions Precedent
Section 8.1. Initial Loan. The effectiveness of this Agreement to amend
and restate the Prior Credit Agreement and obligation of each Bank to make its
initial Loan or to issue the Initial Wisconsin L/C, the Initial South Carolina
L/C or the initial Commercial L/C is subject to the condition precedent that the
Agent shall have received on or before the earlier of August 31, 2002 or the day
of any such Loan or Letter of Credit all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to the
Agent:
(a) Resolutions. Resolutions of the Board of Directors of each
Guarantor certified by its Secretary or an Assistant Secretary, which authorize
its execution, delivery, and performance of the Loan Documents to which it is or
is to be a party. Resolutions of the Board of Directors of Tufco Tech, Inc., as
managing general partner of the Borrower, certified by its Secretary or an
Assistant Secretary, which authorize its execution, delivery and performance, on
behalf of the Borrower, of the Loan Documents to which the Borrower is, or is to
be, a party.
(b) Incumbency Certificate. A certificate of incumbency certified by
the Secretary or an Assistant Secretary of the Borrower, each Guarantor, in each
case, certifying the name of each of such party's officers (i) who are
authorized to sign the Loan Documents on behalf of such party (including the
certificates contemplated herein) together with specimen signatures of each such
officers and (ii) who will, until replaced by other officers duly authorized for
that purpose, act as its representative for the purposes of signing
documentation and giving notices and other communications in connection with the
Loan Documents.
(c) Articles of Incorporation; Certificate of Limited Partnership.
The articles of incorporation of each Guarantor, in each case certified by the
Secretary of State of the state of its incorporation (or the other appropriate
governmental officials of its jurisdiction of organization) and dated a current
date. The Certificate of Limited Partnership of the Borrower certified by the
Secretary of State of Delaware and dated a current date.
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(d) Bylaws; Partnership Agreement. The bylaws of each Guarantor, in
each case certified by its Secretary or an Assistant Secretary. All partnership
agreements of the Borrower certified by Tufco Tech, Inc., as the managing
general partner of the Borrower.
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation or organization of the
Borrower, each Guarantor as to its existence and good standing and certificates
of the appropriate government officials of each jurisdiction in which the
Borrower and each Guarantor is required to qualify to do business and where
failure to so qualify could reasonably be expected to have a Material Adverse
Effect, as to the Borrower's, each Guarantor's qualification to do business and
good standing in such jurisdiction, all dated a current date.
(f) Notes. The Notes executed by the Borrower.
(g) Collateral Documents and Collateral. The Amended and Restated
Master Security Agreement executed by the Borrower and each of the Guarantors,
the Master Guaranty executed by each of the Guarantors, an assignment of the
existing deeds of trust or mortgages covering the real property identified on
Schedule 8.1(g), in form and substance satisfactory to the Agent, and such
modifications to such deeds of trust and mortgages as may be required by the
Agent to ensure that the Obligations are secured thereby on terms acceptable to
the Agent (collectively, the "Existing Deeds of Trust"); certificates
representing the capital stock of the Subsidiaries pledged pursuant to the
Amended and Restated Master Security Agreement together with undated stock
powers duly executed in blank; UCC, tax and judgment Lien search reports listing
all documentation on file against the Borrower and each Guarantor in each
jurisdiction in which the Borrower, any such Guarantor or any Collateral is
located, or organized or registered; and such other executed documentation as
the Agent may deem necessary to perfect or protect its Liens, including, without
limitation, financing statements under the UCC and other applicable
documentation under the laws of any jurisdiction with respect to the perfection
of Liens.
(h) Bond Documents. Duly executed copies of the Bond Documents.
(i) Termination or Assignment of Prior Liens. Duly executed UCC - 3
assignments or termination statements, mortgage releases, and such other
documentation as shall be necessary to terminate, release or assign to the Agent
all Liens other than those permitted by Section 11.2.
(j) Insurance Policies. Certificates of insurance summarizing the
insurance policies of the Parent and the Subsidiaries required by this Agreement
and reflecting the Agent as additional insured under such policies and as loss
payee with respect to all policies covering Collateral.
(k) Opinion of Counsel. Favorable opinion of legal counsel to the
Parent and the Subsidiaries, as to such matters as the Agent may request.
(l) Appraisals; Title Reports; Environmental Reports; Surveys.
Copies of the most recent appraisals, title insurance policies, environmental
reports and surveys (if any) that the Borrower has received relating to the real
property identified on Schedule 8.1(g);
(m) Fees and Expenses. Evidence that all fees (including all upfront
fees) and other amounts due and payable on the Closing Date to the Agent or any
Bank, including the costs and expenses (including attorneys' fees) referred to
in Section 15.1, to the extent incurred, shall have been paid in full by the
Borrower.
(n) Borrowing Base Certificate. An initial Borrowing Base
Certificate.
Page 34
(o) Prior Credit Agreement Assignment and Interest and Fees.
Evidence that: (i) Wachovia Bank, National Association shall have resigned as
the "Agent" under the Prior Credit Agreement and shall have assigned to JPMorgan
all of its right, title and interest in and to the Prior Credit Agreement and
the Loan Documents executed pursuant thereto; (ii) all interest periods under
the Prior Credit Agreement have been terminated; and (iii) all unpaid interest
and fees accrued under the Prior Credit Agreement through the Closing Date and
all other fees, expenses and other charges outstanding thereunder (including all
amounts due under Section 7.5 of the Prior Credit Agreement arising as a result
of the termination of all interest periods under the Prior Credit Agreement on
the Closing Date).
Section 8.2. All Extensions of Credit. The obligation of each Bank to make
any Loan (including the initial Loan) or the obligation of the Agent to issue
any Letter of Credit is subject to the following additional conditions
precedent:
(a) No Default. No Default shall have occurred and be continuing, or
would result from such Loan or Letter of Credit and the making of such Loan or
the issuing of such Letter of Credit shall not cause the Outstanding Revolving
Credit to exceed the Borrowing Base;
(b) Representations and Warranties. All of the representations and
warranties contained in Article 9 hereof and in the other Loan Documents shall
be true and correct on and as of the date of such extensions of credit with the
same force and effect as if such representations and warranties had been made on
and as of such date except to the extent that such representations and
warranties relate specifically to another date; and
(c) Additional Documentation. The Agent shall have received such
additional approvals, opinions, or documents as the Agent may reasonably
request.
Each notice of borrowing by the Borrower hereunder, and each request for the
issuance of a Letter of Credit, shall constitute a representation and warranty
by the Borrower that the conditions precedent set forth in Section 8.2(a) and
Section 8.2(b) have been satisfied (both as of the date of such notice and,
unless the Borrower otherwise notifies the Agent prior to the date of such
borrowing, as of the date of such borrowing or issuance of a Letter of Credit).
Section 8.3. Term Loan. The obligation of each Bank to advance the last
Five Hundred Thousand Dollars ($500,000) of the Term Commitment shall be subject
to the additional condition precedent that the Agent shall have been provided on
or before October 30, 2002 evidence satisfactory to the Agent that the Borrower
has been awarded a contract that is in an amount and nature satisfactory to the
Agent and more particularly described on Schedule 1.1(a).
Section 8.4. Bond L/Cs. The obligation of the Agent to issue either the
Wisconsin Bond L/C or the South Carolina Bond L/C shall be subject to the
satisfaction of the following additional conditions precedent on or before the
date such letter of credit is issued, each in form and substance satisfactory to
the Agent:
(a) With respect to the Wisconsin Bond L/C, receipt by the Agent of:
(i) any modifications to the Bond Documents relating to the Wisconsin Bonds as
the Agent may request necessary to effectuate the Wisconsin Bond L/C; (ii)
reasonable evidence that references to "Bank" and "Reimbursement Agreement" in
such Bond Documents relating to the Wisconsin Bonds shall mean JPMorgan and this
Agreement, respectively; and (iii) evidence that the Initial Wisconsin L/C and
the Existing Wisconsin L/C have been returned to the Agent or Wachovia Bank,
National Association, as applicable, and terminated simultaneously with the
issuance of the Wisconsin Bond L/C;
Page 35
(b) With respect to the South Carolina Bond L/C, receipt by the
Agent of: (i) any modifications to the Bond Documents relating to the South
Carolina Bonds as the Agent may request necessary to effectuate the South
▇▇▇▇▇▇▇▇ ▇▇▇▇ L/C; (ii) reasonable evidence that references to "Bank" and
"Reimbursement Agreement" in such Bond Documents relating to the South Carolina
Bonds shall mean JPMorgan and that agreement referred to in this clause (iii),
respectively; (iii) an assignment from Wachovia Bank, National Association of
their rights and interests to and under that certain Reimbursement Agreement
dated as of December 17, 1996 between Asset Holdings Corporation IX and Bank
One, Wisconsin (iv) an Amended and Restated Reimbursement Agreement between
Asset Holdings Corporation IX and the Agent duly executed; (v) an assignment
from Wachovia Bank, National Association of that certain Mortgage and Security
Agreement dated as of December 17, 1996 executed by Asset Holdings Corporation
IX; (vi) a First Modification to Mortgage and Security Agreement executed by
Asset Holdings Corporation IX and the Agent modifying the mortgage referred to
in clause (v); (vii) if that certain Lease and Development Agreement dated June
10, 1996 is still in existence, an assignment from Wachovia Bank, National
Association of that certain Amended and Restated Assignment of Lease and Rents
dated as of March 18, 1999 between Asset Holdings Corporation IX and First Union
National Bank (now Wachovia Bank, National Association); (viii) if that certain
Lease and Development Agreement dated June 10, 1996 is still in existence, a
First Amendment to Amended and Restated Assignment of Lease and Rents between
Asset Holdings Corporation IX and the Agent duly executed; (ix) if that certain
Lease and Development Agreement dated June 10, 1996 is still in existence, an
assignment from Wachovia Bank, National Association of that certain Amended and
Restated Subordination, Non-Disturbance and Attornment Agreement dated as of
March 18, 1999 between Asset Holdings Corporation IX and First Union National
Bank (now Wachovia Bank, National Association); (x) if that certain Lease and
Development Agreement dated June 10, 1996 is still in existence, a First
Amendment to Amended and Restated Subordination, Non-Disturbance and Attornment
Agreement between Asset Holdings Corporation IX and the Agent duly executed;
(xi) any consents or authorizations of Asset Holdings Corporation IX required to
modify any of the Bond Documents relating to the South Carolina Bonds that the
Agent may request; and (xii) evidence that the Initial South Carolina L/C and
the Existing South Carolina L/C have been returned to the Agent or Prior Agent,
as applicable, and terminated simultaneously with the issuance of the applicable
South Carolina Bond L/C;
(c) Receipt by the Agent of evidence that the Bonds to be supported
by the issuance of the applicable Letter of Credit are still outstanding in an
amount equal to the principal component of the face amount of the applicable
Letter of Credit to be issued; and
(d) Receipt by the Agent of evidence that all consents and approvals
required to be obtained in connection with the substitutions of the letters of
credit under the applicable Bond Documents have been obtained and that all other
conditions to the substitutions of the letters of credit under the applicable
Bond Documents have been satisfied.
ARTICLE 9.
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the Parent
and the Borrower each represents and warrants to the Agent and the Banks that:
Section 9.1. Corporate Existence. The Borrower and each Obligated Party
(a) is a corporation or other entity (as reflected on Schedule 9.14) duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and
Page 36
authority to own its assets and carry on its business as now being or as
proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. The Borrower and each Obligated Party has the
corporate power and authority to execute, deliver, and perform their respective
obligations under the Loan Documents and the Bond Documents to which it is or
may become a party.
Section 9.2. Financial Statements. The Parent has delivered to the Agent
and the Banks audited consolidated financial statements of the Parent and the
Subsidiaries as at and for the Fiscal Year ended September 30, 2001 and an
unaudited consolidated financial statement of the Parent and the Subsidiaries
for the Fiscal Quarter ending March 31, 2002. Such financial statements, have
been prepared in accordance with GAAP and present fairly, in all material
respects, on a consolidated basis, the financial condition of the Parent and the
Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither the Borrower
nor any of the Obligated Parties has any material contingent liabilities,
liabilities for taxes, unusual forward or long - term commitments, or unrealized
or anticipated losses from any unfavorable commitments except as referred to or
reflected in such financial statements. There has been no material adverse
change in the business, condition (financial or otherwise), operations, or
properties of the Parent and the Subsidiaries taken as a whole since the
effective date of the most recent financial statements referred to in this
Section 9.2.
Section 9.3. Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower and each Obligated Party of the Loan Documents and
the Bond Documents to which each is or may become a party and compliance with
the terms and provisions hereof and thereof have been duly authorized by all
requisite action on the part of the Borrower and each Obligated Party and do not
and will not (a) violate or conflict with, or result in a breach of, or require
any consent under (i) the articles of incorporation, bylaws or other governing
documents of the Borrower or any of the Obligated Parties, (ii) any applicable
law, rule, or regulation or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator or (iii) any material agreement or
instrument to which the Borrower or any Obligated Party is a party or by which
any of them or any of their property is bound or subject, or (b) constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any Lien (except as provided herein) upon any of the revenues or
assets of the Borrower or any Obligated Party.
Section 9.4. Operation of Business. The Borrower and each of the Obligated
Parties possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted except those that the
failure to so possess could not reasonably be expected to have a Material
Adverse Effect, and the Borrower and each of the Obligated Parties are not in
violation of any valid rights of others with respect to any of the foregoing
except violations that could not reasonably be expected to have a Material
Adverse Effect.
Section 9.5. Litigation and Judgments. As of the Closing Date, there is no
action, suit, investigation, or proceeding before or by any Governmental
Authority or arbitrator pending, or to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Obligated Party, that would, if
adversely determined, have a Material Adverse Effect. There are no outstanding
final judgments against the Borrower or any Obligated Party for the payment of
money in excess of Two Hundred Fifty Thousand Dollars ($250,000) for which a
stay of execution has not been procured and is continuing in effect.
Section 9.6. Rights in Properties; Liens. The Borrower and each Obligated
Party have good title to or valid leasehold interests in their respective
properties and assets, real and personal, including the
Page 37
properties, assets, and leasehold interests reflected in the financial
statements described in Section 9.2, and none of the properties, assets, or
leasehold interests of the Borrower or any Obligated Party is subject to any
Lien, except as permitted by Section 11.2.
Section 9.7. Enforceability. The Loan Documents and the Bond Documents to
which the Borrower or any Obligated Party is a party, when delivered, shall
constitute the legal, valid, and binding obligations of the Borrower or the
Obligated Party, as applicable, enforceable against the Borrower or the
applicable Obligated Party in accordance with their respective terms, except as
limited by bankruptcy, insolvency, or other laws of general application relating
to the enforcement of creditors' rights and general principles of equity.
Section 9.8. Approvals. All authorizations, approvals, and consents of,
and all filings or registrations with, any Governmental Authority or third party
necessary for the execution, delivery, or performance by the Borrower or any
Obligated Party of the Loan Documents and the Bond Documents to which each is or
may become a party or for the validity or enforceability thereof have been
obtained or made.
Section 9.9. Debt. The Borrower and the Obligated Parties have no Debt,
except as permitted by Section 11.1.
Section 9.10. Taxes. The Borrower and each Obligated Party have filed all
material tax returns (federal, state, and local) required to be filed, including
all income, franchise, employment, property, and sales tax returns, and have
paid all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable other than those being
contested in good faith by appropriate proceedings diligently pursued for which
adequate reserves have been established. The Borrower knows of no pending
investigation of the Borrower or any Obligated Party by any taxing authority or
of any pending but unassessed tax liability of the Borrower or any Obligated
Party.
Section 9.11. Margin Securities. Neither the Borrower nor any Obligated
Party is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U, or X of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Loan will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock.
Section 9.12. ERISA. The Borrower and each Obligated Party are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. Neither the Borrower nor any ERISA
Affiliate currently or in the last six years has participated in or contributed
to a Multiemployer Plan or a defined benefit plan within the meaning of Section
3(35) of ERISA. No notice of intent to terminate a Plan has been filed, nor has
any Plan been terminated. No circumstances exist which constitute grounds
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings. Neither
the Borrower nor any ERISA Affiliate has completely or partially withdrawn from
a Multiemployer Plan. The Borrower and each ERISA Affiliate have met their
minimum funding requirements under ERISA with respect to all of their Plans. The
present value of all vested benefits under each Plan do not exceed the fair
market value of all Plan assets allocable to such benefits, as determined on the
most recent valuation date of the Plan and in accordance with ERISA, by an
amount that will exceed One Hundred Thousand Dollars ($100,000).
Page 38
Section 9.13. Disclosure. All factual information furnished by or on
behalf of the Borrower in writing to the Agent or any Bank (including, without
limitation, all information contained in the Loan Documents) for purposes of or
in connection with this Agreement or the other Loan Documents, and all other
such factual information hereafter furnished by or on behalf of the Borrower to
the Agent or any Bank, will be true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information not misleading in
any material respect at such time in light of the circumstances under which such
information was provided.
Section 9.14. Subsidiaries. As of the Closing Date, the Parent has no
Subsidiaries other than those listed on Schedule 9.14 hereto. Schedule 9.14 sets
forth the organizational type of each Subsidiary listed thereon, the
jurisdiction of incorporation or organization of each such Subsidiary, the
percentage of the Parent's or a Subsidiary's ownership of the outstanding voting
stock (or other ownership interests) of each such Subsidiary and, the
authorized, issued, and outstanding capital stock (or other equity interests) of
each such Subsidiary. All of the outstanding capital stock (or other equity
interests) of each Subsidiary listed on Schedule 9.14 has been validly issued,
is fully paid, and is nonassessable. There are no outstanding subscriptions,
options, warrants, calls, or rights (including preemptive rights) to acquire,
and no outstanding securities or instruments convertible into, capital stock of
any of the Parent's Subsidiaries except as disclosed on Schedule 9.14.
Section 9.15. Agreements. Neither the Borrower nor any Obligated Party is
a party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction that
could reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any Obligated Party is in default in any respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument to which it is a party other
than defaults which will not have a Material Adverse Effect.
Section 9.16. Compliance with Laws. Neither the Borrower nor any Obligated
Party is in violation in any material respect of any law, rule, regulation,
order, or decree of any Governmental Authority or arbitrator.
Section 9.17. Investment Company Act. Neither the Borrower nor any
Obligated Party is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 9.18. Public Utility Holding Company Act. Neither the Borrower nor
any Obligated Party is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 9.19. Environmental Matters. Except as set forth on Schedule 9.19:
(a) The Borrower, each Obligated Party, and all of their respective
properties, assets, and operations are in material compliance with all
applicable Environmental Laws. The Borrower is not aware of, nor has the
Borrower received written notice of, any past, present, or future conditions,
events, activities, practices, or incidents which are reasonably likely to
interfere with or prevent the material compliance or continued material
compliance of the Borrower and the Obligated Parties with all Environmental
Laws;
(b) The Borrower and each Obligated Party have obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good
Page 39
standing and the Borrower and the Obligated Parties are in material compliance
with all of the terms and conditions of such permits;
(c) No Hazardous Materials have been used, generated, stored,
transported, disposed of on, or Released from any of the properties or assets of
the Borrower or any Obligated Party by the Borrower or any Obligated Party, and
to the knowledge of the Borrower, no Hazardous Materials are present at such
properties, except in material compliance with Environmental Laws. The use which
the Borrower and the Obligated Parties make and intend to make of their
respective properties and assets will not result in the use, generation,
storage, transportation, accumulation, disposal, or Release of any Hazardous
Material on, in, or from any of their properties or assets except in compliance
with Environmental Laws;
(d) Neither the Borrower nor any of the Obligated Parties nor any of
their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any Governmental Authority or other
Person or subject to any judicial or administrative proceeding with respect to
(i) failure to comply with Environmental Laws, (ii) Remedial Action, or (iii)
any Environmental Liabilities arising from a Release or threatened Release;
(e) Neither the Borrower nor any of the Obligated Parties owns or
operates a treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
regulations thereunder or any comparable provision of state law. The Borrower
and the Obligated Parties are in material compliance with all applicable
financial responsibility requirements of all Environmental Laws;
(f) Neither the Borrower nor any of the Obligated Parties has filed
or failed to file any notice required under applicable Environmental Law
reporting a Release; and
(g) No Lien arising under any Environmental Law is attached to any
property or revenues of the Borrower or the Obligated Parties.
Section 9.20. Solvency. The Borrower and each Obligated Party, both
individually and on a consolidated basis: (a) owns and will own assets the fair
saleable value of which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will be
required to pay probable liabilities of then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to it; (b) has capital that is not unreasonably small
in relation to its business as presently conducted; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
Section 9.21. Benefit Received. The Borrower and the Obligated Parties
will receive reasonably equivalent value in exchange for the obligations
incurred under the Loan Documents to which each is a party.
ARTICLE 10.
Positive Covenants
The Parent and the Borrower covenant and agree that, as long as the
Obligations or any part thereof are outstanding or any Bank has any Commitment
hereunder, they will perform and observe the following positive covenants:
Page 40
Section 10.1. Reporting Requirements. The Borrower will furnish to the
Agent and each Bank:
(a) Annual Financial Statements. As soon as available, and in any
event within ninety (90) days after the end of each Fiscal Year, beginning with
the Fiscal Year ending on September 30, 2002, a copy of the following financial
statements of the Parent and the Subsidiaries on an audited, consolidated basis,
and, if requested by the Agent, on an unaudited, consolidating basis: balance
sheets and statements of income, retained earnings, and cash flow as at the end
of such Fiscal Year and for the Fiscal Year then ended, in each case setting
forth in comparative form the figures for the preceding Fiscal Year, all in
reasonable detail. Each of the audited financial statements shall be certified
on an unqualified basis by independent certified public accountants of
recognized standing acceptable to the Agent, to the effect that such report has
been prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the end of each of the first three (3)
Fiscal Quarters of each Fiscal Year, a copy of an unaudited financial report of
the Parent and the Subsidiaries as of the end of such period and for the Fiscal
Quarter then ended containing, on a consolidated basis and, if requested by the
Agent, on a consolidating basis, a balance sheet and statements of income,
retained earnings, and cash flow, in each case setting forth in comparative form
the figures for the corresponding Fiscal Quarter of the preceding Fiscal Year,
all in reasonable detail certified by a Responsible Party of the Parent to have
been prepared in accordance with GAAP and to fairly present (subject to year -
end audit adjustments) the financial condition and results of operations of the
Parent and the Subsidiaries, on a consolidated basis, at the date and for the
periods indicated therein;
(c) Compliance Certificate. Within forty-five (45) days after the
end of each Fiscal Quarter, or with respect to the last Fiscal Quarter of each
Fiscal Year, within ninety (90) days of the end of such Fiscal Quarter, a
Compliance Certificate;
(d) Annual Projections. As soon as available and in any event within
forty-five (45) days after the beginning of each Fiscal Year, the Parent will
deliver its consolidated forecasted profit and loss statement for the current
Fiscal Year set forth on a Fiscal Quarter by Fiscal Quarter basis consistent
with the Parent's historical financial statements, together with appropriate
supporting details, a statement of underlying assumption and a proforma
projection of the Parent's compliance with the financial covenants in this
Agreement for the same period;
(e) Management Letters. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to the Parent or any of the
Subsidiaries by independent certified public accountants with respect to the
business, condition (financial or otherwise), operations, or properties of the
Parent or any of the Subsidiaries;
(f) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting the Borrower or any Obligated Party which, if determined
adversely to the Borrower or such Obligated Party, could reasonably be expected
to have a Material Adverse Effect;
(g) Notice of Default. As soon as possible and in any event within
five (5) Business Days after a Responsible Party of the Borrower or a
Responsible Party of any Obligated Party has knowledge of the occurrence of each
Default, a written notice setting forth the details of such Default and the
action that the Borrower has taken and proposes to take with respect thereto;
Page 41
(h) ERISA Reports. If requested by the Agent, promptly after the
filing or receipt thereof, copies of all reports, including annual reports, and
notices which the Borrower or any Obligated Party files with or receives from
the PBGC or the U.S. Department of Labor under ERISA; and as soon as possible
and in any event within five (5) Business Days after the Borrower or any
Obligated Party knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
the Borrower or any Obligated Party has instituted or will institute proceedings
under Title IV of ERISA to terminate any Plan, a certificate of a Responsible
Party of the Borrower setting forth the details as to such Reportable Event or
Prohibited Transaction or Plan termination and the action that the Borrower
proposes to take with respect thereto. The Borrower will provide to the Agent at
least thirty (30) days prior written notice before the Borrower or any ERISA
Affiliate incurs any liability with respect to a Multiemployer Plan or becomes
the sponsor of or obligated with respect to any defined benefit plan with the
meaning of Section 3(35) of ERISA;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to the Agent and the Banks pursuant to any
other clause of this Section 10.1;
(j) Notice of Material Adverse Effect. As soon as possible and in
any event within five (5) Business Days after a Responsible Party of the
Borrower or a Responsible Party of any Obligated Party has knowledge of the
occurrence thereof, written notice of any matter that could reasonably be
expected to have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of each
financial statement, report, notice or proxy statement sent by the Borrower or
any Obligated Party to its stockholders generally and one copy of each regular,
periodic, or special report, registration statement, or prospectus filed by the
Borrower or any Obligated Party with any securities exchange or the Securities
and Exchange Commission or any successor agency;
(l) Borrowing Base Certificate. As soon as available, and in any
event within thirty (30) days after the end of each calendar month, a completed
Borrowing Base Certificate calculating and certifying the Borrowing Base as of
the end of the immediately preceding month, signed on behalf of the Parent by a
Responsible Party of the Parent to be true and correct as of the date thereof;
and
(m) General Information. Promptly, such other information concerning
the Borrower or any Obligated Party as the Agent or any Bank may from time to
time reasonably request.
Section 10.2. Maintenance of Existence; Conduct of Business. The Parent
will, and will cause each of the Subsidiaries to, preserve and maintain (i) its
existence (except as permitted by Section 11.3) and (ii) all of its privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Parent will, and will
cause each of the Subsidiaries to, conduct its business in an orderly and
efficient manner in accordance with good business practices.
Section 10.3. Maintenance of Properties. The Parent will, and will cause
each of the Subsidiaries to, maintain, keep, and preserve all of its material
properties necessary in the conduct of its business in good working order and
condition (exclusive of ordinary wear, tear and casualty).
Section 10.4. Taxes and Claims. The Parent will, and will cause each of
the Subsidiaries to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all valid and
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its
Page 42
property; provided, however, that neither the Parent nor any of the Subsidiaries
shall be required to pay or discharge: (i) any tax, levy, assessment, or
governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves have been
established or (ii) any taxes, levies, assessments, or governmental charges
which, in any individual case or in the aggregate, would exceed Five Thousand
Dollars ($5,000).
Section 10.5. Insurance. The Parent will, and will cause each of the
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as are usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which each operates, provided that in
any event the Parent and the Borrower will maintain and cause each of the
Subsidiaries to maintain worker's compensation insurance (or alternate
comparable coverage as required by law), property insurance, comprehensive
general liability insurance and professional liability insurance reasonably
satisfactory to the Agent. Each general liability insurance policy shall name
the Agent as additional insured, each insurance policy covering Collateral shall
name the Agent as loss payee and shall provide that such policy will not be
canceled or materially changed without fifteen (15) days prior written notice to
the Agent.
Section 10.6. Inspection Rights. Upon prior notice and from time to time
during normal business hours, the Parent will, and will cause each of the
Subsidiaries to, permit representatives of the Agent to examine, copy, and make
extracts from its books and records, to visit and inspect its properties, and to
discuss its business, operations, and financial condition with its officers,
employees, and independent certified public accountants. When a Default exists,
the prior notice described in the first sentence of this Section 10.6 shall not
be required. The representatives of any Bank may accompany the Agent during any
examination, visit, inspection or discussions under this Section 10.6.
Section 10.7. Keeping Books and Records. The Parent will, and will cause
each of the Subsidiaries to, maintain proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 10.8. Compliance with Laws. The Parent will, and will cause each
of the Subsidiaries to, comply in all material respects with all applicable laws
(including, without limitation, all Environmental Laws and ERISA), rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator.
Section 10.9. Compliance with Agreements. The Parent will, and will cause
each of the Subsidiaries to, comply in all material respects with all
agreements, contracts, and instruments binding on it or affecting its properties
or business.
Section 10.10. Further Assurances and Collateral Matters.
(a) Further Assurance. The Parent will, and will cause each of the
Subsidiaries to, execute and deliver such further documentation and take such
further action as may be requested by the Agent to carry out the provisions and
purposes of the Loan Documents and the Bond Documents in favor of the Agent and
to create, preserve, and perfect the Liens of the Agent for the benefit of
itself and the Banks in the Collateral; provided that prior to the occurrence of
a Default, neither the Parent nor any Subsidiary shall be required to:
(i) obtain any Lien acknowledgments, control or agency
agreements from any institution holding a bank account identified pursuant to
the Amended and Restated Master Security Agreement;
Page 43
(ii) cause the Agent's Lien to be noted on any certificate of
title evidencing any equipment if, at the time of such notation or at the time
of acquisition, (i) such equipment is subject to a lease or (ii) such equipment,
in the aggregate, has a book value of less than One Hundred Thousand Dollars
($100,000) (the Parent represents to the Agent and the Banks that as of the
Closing Date the aggregate book value of such equipment is less than One Hundred
Thousand Dollars ($100,000));
(iii) obtain control over any commodity or security account,
any chattel paper or letter of credit right now or hereafter identified in or
pursuant to the Amended and Restated Master Security Agreement;
(iv) obtain waivers, subordinations or acknowledgments from
any third party who, individually, has possession or control of Collateral if
the aggregate book value of the Collateral in such third party's possession or
control is less than or equal to Thirty - Five Thousand Dollars ($35,000) (the
Parent represents to the Agent and the Banks that, as of the Closing Date, no
third party, individually, has possession or control of Collateral having an
aggregate book value greater than Thirty - Five Thousand Dollars ($35,000)); or
(v) obtain waivers, subordinations or acknowledgments from
third parties who have possession or control of Collateral if the aggregate book
value of such Collateral is less than or equal to One Hundred Thousand Dollars
($100,000) (the Parent represents to the Agent and the Banks that, as of the
Closing Date, the aggregate book value of the Collateral in possession or
control of third parties is less than One Hundred Thousand Dollars ($100,000)).
If a Default occurs and the Agent requests, then the Parent shall take
such action as the Agent may reasonably request to perfect and protect the Liens
of the Agent in any of the foregoing Collateral described in this clause (a).
(b) Subsidiary Pledge. Upon the creation or acquisition of any
Subsidiary, the Parent shall cause such Subsidiary to execute and deliver a
Joinder Agreement and such other documentation as the Agent may request to cause
such Subsidiary to evidence, perfect, or otherwise implement the guaranty and
security for repayment of the Obligations contemplated by the Master Guaranty
and the Amended and Restated Master Security Agreement.
(c) Borrower Pledge of Subsidiary Stock. If any Subsidiary to the
Parent is created or acquired after the Closing Date, the Parent or the
applicable Subsidiary shall execute and deliver to the Agent an amendment to the
Amended and Restated Master Security Agreement, describing as collateral
thereunder the stock of or other ownership interests in the new Subsidiary as
collateral for the payment of the Obligations, and the Parent or the applicable
Subsidiary shall deliver the certificates representing such stock or other
interests to the Agent together with undated stock or other powers duly executed
in blank.
(d) Mortgages; Title Insurance; Surveys and Related Documentation.
(i) Title Insurance. Within sixty (60) days following a
request by the Agent which may be made at any time, the Borrower shall deliver
or cause to be delivered to the Agent lender's title insurance policies issued
by title insurers satisfactory to the Agent (the "Mortgage Policies") in form
and substance and in amounts satisfactory to the Agent assuring the Agent that
the Mortgages which cover properties owned in fee simple are valid and
enforceable first priority mortgage liens on the respective Mortgaged Property
or Additional Mortgaged Property, free and clear of all material defects and
encumbrances except as approved by the Agent, provided that the Borrower shall
not be required to deliver such Mortgage Policies unless the fair market value
of the property related to such Mortgage
Page 44
Policy is equal to or greater than Five Hundred Thousand Dollars ($500,000). The
Mortgage Policies shall be in form and substance satisfactory to the Agent and
shall include an endorsement insuring against the effect of future advances
under this Agreement, for mechanics' liens and for any other matter that the
Agent may request, and shall provide for affirmative insurance and such
reinsurance as the Agent may request. In the case of each leasehold constituting
Additional Mortgaged Property, the Agent shall have received simultaneous with
any Mortgage covering Additional Mortgage Property a copy of the underlying
lease, such estoppel letters, consents and waivers from the landlords and
non-disturbance agreements from any holders of mortgages or deeds of trust on
such real estate as may have been requested by the Agent, which letters shall be
in form and substance satisfactory to the Agent.
(ii) Additional Mortgaged Property. The Agent may from time to
time designate real property or leasehold interests of the Borrower, the Parent
or any Subsidiary (including without limitation or in addition, if permitted
under the Bond Documents, the interests of the Borrower, Parent or any
Subsidiary in the property located in Manning, South Carolina that as of the
Closing Date is owned by Asset Holdings Corporation IX) after the date hereof as
"Additional Mortgaged Property", in which case the Borrower or the Parent,
whichever applicable, shall, or shall cause the applicable Subsidiary, as
promptly as possible (and in any event within sixty (60) days after such
designation) deliver to the Agent a fully executed Mortgage, in form and
substance satisfactory to the Agent together with title insurance policies,
surveys, appraisals, environmental reports and other documentation required by
this Section 10.10, provided, however, that the Agent may only designate real
property or leasehold interests as Additional Mortgaged Property if the fair
market value of the real property or leasehold interest is equal to or greater
than Five Hundred Thousand Dollars ($500,000) except such limitation shall not
restrict the Agent, if permitted under the Bond Documents, from designating the
interests of the Borrower, Parent or any Subsidiary in the property located in
Manning, South Carolina that as of the Closing Date is owned by Asset Holdings
Corporation IX as Additional Mortgaged Property. The Borrower agrees that,
following the taking of the actions with respect to any Additional Mortgaged
Property required by the immediately preceding sentence, the Agent shall have a
valid and enforceable first priority mortgage on the respective Additional
Mortgaged Property, free and clear of all defects and encumbrances except as
permitted by Section 11.2.
(iii) Surveys. Within sixty (60) days after the Agent's
request, the Borrower shall deliver or cause to be delivered to the Agent
current surveys of each parcel of the Mortgaged Property or Additional Mortgaged
Property as the Agent may designate, such survey's to be certified by a licensed
surveyor meeting ALTA requirements. All such surveys shall be sufficient to
allow the issuer of the mortgage policy to issue a lender's policy.
(iv) Appraisals. If requested by the Agent or required by
applicable law, the Borrower shall deliver or cause to be delivered from time to
time to the Agent a current appraisal of each Mortgaged Property and each
Additional Mortgaged Property, such appraisals to be in form and substance
satisfactory to the Agent.
(v) Environmental Reports. If the Agent at any time has
reasonable basis to believe that there may be a material violation of any
Environmental Laws by, or any material liability arising thereunder of, the
Borrower, the Parent or any Subsidiary or related to any Mortgaged Property or
Additional Mortgaged Property or real property adjacent to any Mortgaged
Property or Additional Mortgaged Property, then the Borrower agrees, upon the
written request of the Agent to provide the Agent with such environmental
reports and assessments, certificates, engineering studies or other written
material or data as the Agent may reasonably require relating thereto. If the
Agent at any time has reasonable basis to believe that there may be a violation
of any Environmental Laws by, or any liability arising thereunder of, the
Borrower, the Parent or any Subsidiary or related to any real property owned,
leased or operated by the Borrower, the Parent or any Subsidiary (other than the
Mortgaged Property) or
Page 45
any property adjacent to such property which violation or liability is
reasonably likely to have a Material Adverse Effect, then the Borrower agrees,
upon the written request of the Agent to provide the Agent with such
environmental reports and assessments, certificates, engineering studies or
other written material or data as the Agent may require relating thereto.
(e) Environmental Remediation In the event that the Agent reasonably
determines from the environmental reports or information delivered pursuant to
clause (d)(v) of this Section 10.10 or pursuant to any other information, that
Remedial Action is necessary with respect to the Borrower, the Parent or any
Subsidiary or its property, the Borrower shall take such Remedial Action or
other action as the Agent may reasonably require to cure, or protect against,
any material violation or potential violation of any Environmental Laws or any
material actual or potential Environmental Liability.
Section 10.11. ERISA. The Parent will, and will cause each of the
Subsidiaries to, comply with all minimum funding requirements and all other
requirements of ERISA, if applicable, so as not to give rise to any liability
which will have a Material Adverse Effect.
Section 10.12. Redemption of Bonds.
(a) Wisconsin Bonds. The Parent will cause the Borrower to make
annual optional redemptions of the Wisconsin Bonds pursuant to section 4.01(d)
of that certain Trust Indenture dated as of May 1, 1992 between the Village of
Ashwaubenon and Norwest Bank Wisconsin, National Association (now known as ▇▇▇▇▇
Fargo Bank Minnesota, National Association), as trustee (as the same has been
amended and may be further amended, the "Wisconsin Indenture"), such annual
optional redemption in an amount equal to Two Hundred Fifty Thousand Dollars
($250,000) and made on the Interest Rate Adjustment Date (as defined in the
Wisconsin Indenture) nearest to but not later than one Business Day (as defined
in the Wisconsin Indenture) after May 1 of each year commencing May 1, 2003.
(b) South Carolina Bonds. The Parent will cause the Borrower to make
annual payments equal to Eighty Thousand Dollars ($80,000) to Asset Holdings
Corporation IX to be used by Asset Holdings Corporation IX to make annual
optional redemptions pursuant to section 4.01(c) of that certain Trust Indenture
dated as of December 1, 1996 between the South Carolina Jobs-Economic
Development Authority and Bank One Wisconsin Trust Company, National Association
(now known as Bank One Trust Company, NA), as trustee (as the same has been
amended and may be further amended, the "South Carolina Indenture"). Such annual
optional redemption in an amount equal to the amount of the payments made by the
Borrower and made on or before May 1 of each year commencing May 1, 2003.
ARTICLE 11.
Negative Covenants
The Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, they will
perform and observe the following negative covenants:
Section 11.1. Debt. The Parent will not, and will not permit any
Subsidiary to, incur, create, assume, or permit to exist any Debt, except:
Page 46
(a) Debt to the Agent and the Banks pursuant to the Loan Documents
and existing Debt described on Schedule 11.1;
(b) Intercompany Debt owed by any Subsidiary to the Parent or any
other Subsidiary; provided that (i) the obligations of each obligor of such Debt
must be subordinated in right of payment to any liability such obligor may have
for the Obligations from and after such time as any portion of the Obligations
shall become due and payable (whether at stated maturity, by acceleration or
otherwise), (ii) such Debt must be incurred in the ordinary course of business
and on terms customary for intercompany borrowings or must be made on such other
terms and provisions as the Agent may reasonably require, and (iii) the Parent
or its applicable Subsidiary shall have granted the Agent a Lien on its right,
title and interest in and to such Debt and all Liens securing the payment
thereof;
(c) Debt not to exceed Two Hundred Fifty Thousand Dollars ($250,000)
in the aggregate at any time outstanding secured by purchase money Liens
permitted by Section 11.2;
(d) Obligations to reimburse worker's compensation insurance
companies for claims paid by such companies on the Parent's or one of the
Subsidiaries' behalf in accordance with the policies issued to the Parent and
the Subsidiaries;
(e) Guaranties incurred in the ordinary course of business with
respect to surety and appeal bonds, performance and return - of - money bonds,
and other similar obligations not exceeding at any time outstanding Two Hundred
Fifty Thousand Dollars ($250,000) in aggregate liability;
(f) Debt arising in connection with any interest rate swap, cap,
collar or similar agreements entered into to enable Borrower to fix or limit its
actual interest expense;
(g) Debt arising under the terms of the Bond Documents; and
(h) Debts, other than the Debts specifically described in clauses
(a) through (g) of this Section 11.1, which in the aggregate do not exceed Five
Hundred Thousand Dollars ($500,000) at any time outstanding.
Section 11.2. Limitation on Liens. The Parent will not, and will not
permit any of the Subsidiaries to, incur, create, assume, or permit to exist any
Lien upon any of its property, assets, or revenues, whether now owned or
hereafter acquired, except the following, none of which shall encumber the
Collateral other than those Liens described in clauses (a), (b), (c), (d), (e),
(g) and (h):
(a) Existing Liens disclosed on Schedule 11.2 hereto and any
replacement, renewal or extension thereof that do not increase the outstanding
principal amount thereof or extend to any additional assets; provided, any Liens
granted under the Prior Credit Agreement will not be permitted after the Closing
Date unless they have been assigned to the Agent;
(b) Liens in favor of the Agent for the benefit of itself and the
other Secured Parties pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning restrictions,
or other restrictions on the use of real property that do not (individually or
in the aggregate) materially affect the value of the assets encumbered thereby
or materially impair the ability of the Parent or the Subsidiaries to use such
assets in their respective businesses, and none of which is violated in any
material respect by existing or proposed structures or land use;
Page 47
(d) Liens (other than Liens relating to Environmental Liabilities or
ERISA) for taxes, assessments, or other governmental charges that are not
delinquent or which are being contested in good faith and for which adequate
reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords, or other similar statutory Liens securing obligations that are not
yet due and are incurred in the ordinary course of business or which are being
contested in good faith and for which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure payments of
worker's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
and contracts (other than for payment of Debt);
(g) Liens for purchase money obligations and Capital Lease
Obligations; provided that: (i) the Debt secured by any such Lien is permitted
under Section 11.1; and (ii) any such Lien encumbers only the asset so
purchased;
(h) Liens related to any attachment or judgment not constituting an
Event of Default;
(i) Liens arising from filing UCC financing statements regarding
leases not prohibited by this Agreement;
(j) Liens, if any, in existence as of the Closing Date and in favor
of the South Carolina Jobs Economic Development Authority; and
(k) Liens in favor of Wachovia Bank National Association related to
cash or cash equivalents in an aggregate amount not to exceed One Hundred Fifty
Thousand Dollars ($150,000) pledged by the Borrower to Wachovia Bank National
Association to secure the obligations of the Borrower under any interest rate
protection agreement in existence as of the Closing Date and entered into by the
Borrower and Wachovia Bank National Association.
Neither the Parent nor any of the Subsidiaries shall enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or hereafter
acquired; provided that, in connection with the creation of purchase money
Liens, the Parent or any such Subsidiary may agree that it will not permit any
other Liens to encumber the asset subject to such purchase money Lien. Except as
provided herein, neither the Parent nor the Borrower will, and each will not
permit any of the Subsidiaries directly or indirectly to create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such companies to: (1) pay
dividends or make any other distribution on any of such company's capital stock
(or other equity interests) owned by the Parent or any of the Subsidiaries; (2)
subject to subordination provisions, pay any Debt owed to the Parent or any of
the Subsidiaries; (3) make loans or advances to the Parent or any of the
Subsidiaries; or (4) transfer any of its property or assets to the Parent or any
of the Subsidiaries.
Section 11.3. Mergers, Etc. The Parent will not, and will not permit any
of the Subsidiaries to, become a party to a merger or consolidation, or purchase
or otherwise acquire all or a substantial part of the business or assets of any
Person or any shares or other evidence of beneficial ownership of any Person, or
wind - up, dissolve, or liquidate itself; provided that, (a) the Parent and the
Subsidiaries may acquire assets or shares or other evidence of beneficial
ownership of a Person in accordance with the restrictions set forth in Section
11.5; (b) if no Default exists or would result, any Subsidiary (other than the
Borrower) may merge into or consolidate with the Borrower, the Parent or any
other Subsidiary if,
Page 48
with respect to a merger into a Subsidiary, the surviving Person is or becomes a
wholly owned Subsidiary directly owned by the Parent, assumes the obligations of
the applicable Subsidiary under the Loan Documents and is solvent as
contemplated under Section 9.20 hereunder after giving effect to such merger or
consolidation, and (c) the Parent or any wholly owned Subsidiary directly owned
by the Parent (the "Acquiring Company") may acquire all or substantially all of
the assets of any other Subsidiary (a "Transferring Subsidiary"), other than the
Borrower, if the Acquiring Company assumes all the Transferring Subsidiary's
liabilities (including without limitation, all liabilities of the Transferring
Subsidiary under the Loan Documents to which it is a party) and, following such
assignment and assumption, such Transferring Subsidiary may wind up, dissolve
and liquidate.
Section 11.4. Restrictions on Dividends and other Distributions. The
Parent will not, and will not permit any Subsidiary to, directly or indirectly
declare, order, pay, make or set apart any sum for (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
(or other equity interest) of the Parent or any Subsidiary now or hereafter
outstanding; (b) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock (or other equity interest) of the Parent or
any Subsidiary now or hereafter outstanding; or (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options, or other
rights to acquire shares of any class of stock (or other equity interest) of the
Parent or any Subsidiary now or hereafter outstanding; except that if no Default
exists or would result therefrom, Subsidiaries may make, declare and pay
dividends and make other distributions with respect to their capital stock (or
other equity interest) for the sole purpose of enabling the Parent to pay the
actual cash taxes of the Parent attributable to the earnings of the
Subsidiaries. For the avoidance of doubt, this Section shall not be deemed to
prohibit the Borrower from making payments at any time to pay the Parent's
expenses incurred in the ordinary course of the Parent's and the Borrower's
businesses and such payments may be made to the Parent or on behalf of the
Parent.
Section 11.5. Investments. The Parent will not, and will not permit any of
the Subsidiaries to, make or permit to remain outstanding any advance, loan,
other extension of credit, or capital contribution to or investment in any
Person, or purchase or own any stock, bonds, notes, debentures, or other
securities of any Person, or be or become a joint venturer with or partner of
any Person, except:
(a) readily marketable direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition;
(b) fully insured certificates of deposit with maturities of one
year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in excess
of Two Hundred Fifty Million Dollars ($250,000,000);
(c) commercial paper or bonds of a domestic issuer if at the time of
purchase such paper or bonds are rated in one of the two highest rating
categories of Standard and Poor's Corporation or ▇▇▇▇▇'▇ Investors Service,
Inc.;
(d) current trade and customer accounts receivable for services
rendered in the ordinary course of business;
(e) shares of any mutual fund registered under the Investment
Company Act of 1940, as amended, which invests solely in investment of the type
described in clauses (a) through (c) of this Section 11.5;
(f) advances to employees for business expenses incurred in the
ordinary course of business;
Page 49
(g) existing investments described on Schedule 11.5 hereto;
(h) loans, advances and other extensions of credit to Subsidiaries
made in accordance with the restrictions set forth in Section 11.1(b); provided
that, at the time any such loan, advance or other extension of credit is made,
no Default exists or would result therefrom;
(i) Guarantees permitted by Section 11.1; and
(j) in addition to advances made pursuant to clause (f) above, loans
to employees provided that the aggregate outstanding amount of all loans to
employees does not exceed Two Hundred Seventy Five Thousand Dollars ($275,000)
at any time outstanding.
For the avoidance of doubt, this Section shall not be deemed to prohibit the
Borrower from making payments at any time to pay the Parent's expenses incurred
in the ordinary course of the Parent's and the Borrower's businesses and such
payments may be made to the Parent or on behalf of the Parent.
Section 11.6. Limitation on Issuance of Capital Stock. The Parent will not
permit any Subsidiary to, at any time issue, sell, assign, or otherwise dispose
of (a) any of its capital stock (or other equity interests), (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock (or other equity interests), or (c) any option, warrant, or
other right to acquire any of its capital stock (or other equity interests);
provided, however, that the Parent or any Subsidiary may issue Securities in
connection with (i) any existing employee or director stock options or existing
employee or director stock option plans or (ii) any business acquisition that is
consented to by the Required Banks.
Section 11.7. Transactions With Affiliates. The Parent will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of the Parent or such Subsidiary, except: (a) in the
ordinary course of and pursuant to the reasonable requirements of the Parent's
or such Subsidiaries' business and upon fair and reasonable terms no less
favorable to the Parent or such Subsidiary than would be obtained in a
comparable arms - length transaction with a Person not an Affiliate of the
Parent or such Subsidiary; (b) management fees and indemnification payments paid
under the terms of that certain Amended and Restated Consulting Agreement dated
as of January 28, 1994, among Tufco Technologies, Inc., Tufco Industries, Inc.,
Executive Converting Corporation, Bradford Investment Partners, L.P. and
Bradford Ventures Ltd., as the same may be amended by the Parent's board of
directors; (c) fees and expenses paid to members of the Parent's Board of
Directors for their services as directors of the Parent in the ordinary course
of business; and (d) typical indemnification agreements (including those
contained in the bylaws) granted in favor of officers, directors and
shareholders protecting them from claims made in their capacities as such. For
the avoidance of doubt, this Section shall not be deemed to prohibit the
Borrower from making payments at any time to pay the Parent's expenses incurred
in the ordinary course of the Parent's and the Borrower's businesses and such
payments may be made to the Parent or on behalf of the Parent.
Section 11.8. Disposition of Assets. The Parent will not, and will not
permit any of the Subsidiaries to, sell, lease, assign, transfer, or otherwise
dispose of any of its assets, except (a) dispositions of inventory in the
ordinary course of business; (b) dispositions of unnecessary, obsolete or worn
out equipment, or other equipment that is replaced by equipment of equal or
greater value; (c) the sale, discount or transfer of delinquent notes or
accounts receivable in the ordinary course of business for purposes of
collection in accordance with past practices; and (d) if no Default exists or
would result therefrom, other dispositions of assets if the aggregate book value
of the assets disposed of does not
Page 50
exceed One Hundred Thousand Dollars ($100,000) in the aggregate during any
twelve (12) month period and the obligations under Section 6.4(a)(ii)(B) are
fulfilled.
Section 11.9. Lines of Business. The Parent will not, and will not permit
any of the Subsidiaries to, engage in any line or lines of business activity
other than the businesses in which they are engaged on the Closing Date and any
businesses which are similar or related to those currently engaged in by such
company.
Section 11.10. Sale and Leaseback. The Parent will not, and will not
permit any of the Subsidiaries to, enter into any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 11.11. Prepayment of Debt. Except for optional redemptions
required pursuant to Section 10.12, the Parent will not, and will not permit any
of the Subsidiaries to, prepay or optionally redeem any Debt other than the
Obligations or required prepayments or redemptions under the Bond Documents.
Section 11.12. Tax Exempt Status of Bonds. The Parent will not, and will
not permit the Subsidiaries to, take any action or omit to take any action with
respect to the proceeds of the sale of the Bonds, any earnings and profits from
the investment thereof, or any amounts expected to be used to pay (or pledged as
security for) principal thereof or interest thereon which if taken or omitted,
respectively, would result in constituting any Bond an "arbitrage bond" within
the meaning of Section 148 of the Code or otherwise adversely affect any
exemption from federal income tax of interest on any Bond under the Code.
ARTICLE 12.
Financial Covenants
The Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Parent will perform and observe the following financial covenants:
Section 12.1. Fixed Charge Coverage. As of the end of each Fiscal Quarter
falling in the periods set forth in the table below, the Parent shall not permit
the Fixed Charge Coverage Ratio to be less than the ratio set forth opposite the
applicable period in the table below:
Period Ratio
------ -----
Closing Date through 6/30/2003 1.10 to 1.00
7/1/2003 and thereafter 1.20 to 1.00
For purposes of this Section 12.1 the following terms shall have the following
meanings:
"Fixed Charge Coverage Ratio" means as of any Fiscal Quarter end,
the ratio of Cash Flow to Fixed Charges, both calculated for the four (4)
Fiscal Quarters then ended.
"Cash Flow" means, for any period, the total of the following for
the Parent and the Subsidiaries calculated on a consolidated basis without
duplication for such period:
Page 51
(A) EBITDA; plus (B) any expenses actually paid during such period under
Synthetic Leases to the extent deducted in determining Consolidated Net
Income or EBITDA and not added in determining EBITDA; minus (C) cash
income or franchise taxes actually paid during such period.
"Consolidated Net Income" means, for any period, the Parent's
consolidated net income (or loss) determined in conformity with GAAP (with
inventory being valued at the lower of (i) its fair market value or (ii)
its historical cost measured on a first - in, first - out basis), but
excluding to the extent included and without duplication:
(a) any extraordinary, nonrecurring or non-operating gain or
revenue;
(b) any extraordinary, nonrecurring or non-operating loss or
expense which is non-cash, provided, however, if the period being
calculated includes the Fiscal Quarter ended March 31, 2002, such
loss or expense attributable to the write down of the value of
assets in such quarter to the extent deducted in determining
Consolidated Net Income and not otherwise taken into account in the
calculation thereof shall not exceed an amount equal to the lesser
of (i) the amount actually attributable to the write down of the
value of assets realized in such quarter to the extent deducted in
determining Consolidated Net Income and not otherwise taken into
account in the calculation thereof or (ii) Three Hundred Eleven
Thousand Two Hundred Sixty-Three Dollars ($311,263);
(c) any gains or losses realized upon the sale or other
disposition of any capital stock or debt security of the Parent or
any Subsidiary;
(d) any gains or losses from the disposal of a discontinued
business;
(e) any net gains or losses arising from the extinguishment of
any debt of the Parent or any Subsidiary;
(f) any restoration to income of any contingency reserve
relating to any long term assets or long term liability, except to
the extent that provision for such reserve was made out of income
accrued during such period;
(g) the cumulative effect of any change in an accounting
principle on income of prior periods, provided, however, if the
period being calculated includes the Fiscal Quarter ended March 31,
2002, such exclusion shall not exceed the lesser of (i) the amount
attributable to the impairment of goodwill resulting from the
compliance with statement number 142 of the FASB and included in
Consolidated Net Income during the Calculation Period or (ii)
$4,851,591;
(h) any deferred credit representing the excess of equity in
any acquired company or assets at the date of acquisition over the
cost of the investment in such company or asset;
(i) the income from any sale of assets in which the book value
of such assets prior to their sale had been the book value inherited
by the Parent or Subsidiary from a transfer of such assets;
Page 52
(j) the income (or loss) of any Person (other than a
Subsidiary) in which the Parent or a Subsidiary has an ownership
interest; provided, however, that (i) Consolidated Net Income shall
include amounts in respect of the income of such Person when
actually received in cash by the Parent or Subsidiary in the form of
dividends or similar distributions and (ii) Consolidated Net Income
shall be reduced by the aggregate amount of all investments,
regardless of the form thereof, made by the Parent or Subsidiary in
such Person for the purpose of funding any deficit or loss of such
Person;
(k) any reduction in or addition to income tax expense
resulting from an increase or decrease in a deferred income tax
asset due to the anticipation of future income tax benefits;
(l) any reduction in or addition to income tax expense due to
the change in a statutory tax rate resulting in an increase or
decrease in a deferred income tax asset or in a deferred income tax
liability;
(m) any gains or losses attributable to returned surplus
assets of any pension - benefit plan or any pension credit
attributable to the excess of (i) the return on pension - plan
assets over (ii) the pension obligation's service cost and interest
cost;
(n) the income or loss of any Person acquired by the Parent or
a Subsidiary for any period prior to the date of such acquisition;
and
(o) the income from any sale of assets in which the accounting
basis of such assets had been the book value of any Person acquired
by the Parent or a Subsidiary prior to the date such Person became a
subsidiary or was merged into or consolidated with the Parent or
such Subsidiary.
"EBITDA" means, for any period, the total of the following
calculated for the Parent and the Subsidiaries without duplication on a
consolidated basis for such period: (a) Consolidated Net Income; plus (b)
any deduction for (or less any gain from) income or franchise taxes
included in determining Consolidated Net Income; plus (c) interest expense
(including the interest portion of Capital Lease Obligations) deducted in
determining Consolidated Net Income; plus (d) amortization and
depreciation expense deducted in determining Consolidated Net Income.
"Fixed Charges" means, for any period, the total of the following
for the Parent and the Subsidiaries calculated on a consolidated basis
without duplication: (a) cash interest expense (including the interest
portion of Capital Lease Obligations); plus (b) scheduled principal
payments on Debt; plus (c) Capital Expenditures (except Capital
Expenditures financed with the Term Loan or other Debt permitted by
Section 11.1); plus (d) any expenses actually paid during such period
under Synthetic Leases.
Section 12.2. Working Capital. The Parent will at all times maintain
Working Capital of no less than Six Million One Hundred Thousand Dollars
($6,100,000). The term "Working Capital" means, at any time, the sum of: (a)
consolidated current assets; minus (b) the sum of (i) consolidated current
liabilities, plus (ii) to the extent not already included in consolidated
current liabilities, the aggregate outstanding principal amount of the Revolving
Loans.
Page 53
Section 12.3. Capital Expenditures. The Parent shall not permit the
aggregate amount of Capital Expenditures for any Fiscal Year to exceed an amount
equal to the sum of the Yearly Limit plus the Carryover Amount; provided,
however, when determining compliance with this Section 12.3, if the Fiscal Year
ends: (i) September 30, 2002, then total expenditures during the Fiscal Year
ending September 30, 2002 to obtain and install the Clipper Converting System up
to an amount equal to Two Million Dollars ($2,000,000) shall not be included in
Capital Expenditures for such Fiscal Year, or (ii) September 30, 2003, then
total expenditures during the Fiscal Year ending September 30, 2003 to obtain
and install the Clipper Converting System up to an amount equal to the
difference between (x) Two Million Dollars ($2,000,000) minus (y) expenditures
during the Fiscal Year ending September 30, 2002 excluded from Capital
Expenditures pursuant to the preceding clause (i) shall not be included in
Capital Expenditures. Any expenditures in excess of Two Million Dollars
($2,000,000) in the aggregate to obtain and install the Clipper Converting
System may be expended under the applicable Yearly Limit. As used in this
Section 12.3, the following terms have the following meanings:
"Yearly Limit" means (a) for the Fiscal Year ended September 30,
2002, One Million Two Hundred Fifty Thousand Dollars ($1,250,000) and (b)
for the Fiscal Year ended September 30, 2003 and each Fiscal Year
thereafter, Two Million Dollars ($2,000,000).
"Carryover Amount" means an amount equal to the sum of (a) the
portion of the Yearly Limit from the immediately preceding Fiscal Year
which was not expended by the Parent or any of the Subsidiaries, on a
consolidated basis, in such preceding Fiscal Year plus (b) if, and only
if, the period being calculated includes a Fiscal Year which starts on or
after October 1, 2004, an amount equal to the lesser of (i) 50% of the
Excess Cash Flow from the immediately preceding Fiscal Year or (ii) Seven
Hundred Fifty Thousand Dollars ($750,000).
In calculating the Carryover Amount for any Fiscal Year, the Yearly Limit
applicable to the previous Fiscal Year shall be deemed to have been utilized
first by any Capital Expenditures made in such Fiscal Year.
ARTICLE 13.
Default
Section 13.1. Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) The Borrower shall fail to pay when due any principal, interest,
fees or other Obligations payable under any Loan Document or any part thereof.
(b) Any representation, warranty, or certification made or deemed
made by the Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with any Loan Document
shall be false, misleading, or erroneous in any material respect when made or
deemed to have been made; provided that if (a) at the time such representation,
warranty or certification was made, each of the Borrower and each Obligated
Party reasonably believed its accuracy and (b) the circumstances which resulted
in the inaccurate or misleading representation, warranty or certification are
capable of being remedied, then an Event of Default shall not occur herein on
account thereof until twenty (20) days after the earlier of (i) the date the
Borrower or any Obligated Party became aware of the inaccurate or
Page 54
misleading representation, warranty or certification or (ii) the date the Agent
or any Bank provides the Borrower with notice thereof.
(c) The Borrower or any Obligated Party shall fail to perform,
observe or comply with (i) any covenant, agreement, or term contained in Section
10.1(g), Section 10.2(i), Section 10.6, or Section 10.12, Article 11 or Article
12 of this Agreement or (ii) any covenant, agreement, or term contained in any
Loan Document relating to the creation, perfection or protection of the Liens
required to be granted to secure the obligation of any Borrower or Obligated
Party under the Loan Documents.
(d) The Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in any Loan
Document (other than covenants to pay the Obligations and the covenants
described in Section 13.1(c)) and such failure shall continue for a period of
twenty (20) days after the earlier of (i) the date the Agent or any Bank
provides the Borrower with notice thereof or (ii) the date the Borrower has
knowledge of such failure and should have, with the exercise of reasonable
diligence, notified the Agent thereof in accordance with Section 10.1(g).
(e) The Borrower or any Obligated Party shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator, or the like of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the United States
Bankruptcy Code (as now or hereafter in effect, the "Bankruptcy Code"), (iv)
institute any proceeding or file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding - up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code, (vi)
admit in writing its inability to, or be generally unable to pay its debts as
such debts become due, or (vii) take any corporate action for the purpose of
effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval, or consent of the Borrower or any Obligated Party, in any
court of competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement, or winding - up, or the composition or readjustment of
its debts, (ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator, or the like of the Borrower or any such Obligated Party or of all or
any substantial part of its property, or (iii) similar relief in respect of the
Borrower or any such Obligated Party under any law relating to bankruptcy,
insolvency, reorganization, winding - up, or composition or adjustment of debts,
and such proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of thirty (30) or more days, or an order
for relief against the Borrower or any Obligated Party shall be entered in an
involuntary case under the Bankruptcy Code.
(g) The Borrower or any Obligated Party shall fail to discharge
within a period of thirty (30) days after the commencement thereof any
attachment, sequestration, forfeiture, or similar proceeding or proceedings
involving an aggregate amount in excess of Two Hundred Fifty Thousand Dollars
($250,000) against any of its assets or properties.
(h) A final judgment or judgments for the payment of money in excess
of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate shall be
rendered by a court or courts against the Borrower or any Subsidiaries and the
same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within thirty
(30) days from the date of entry thereof, and the Borrower or the relevant
Obligated Party shall not, within said period of thirty (30) days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal.
Page 55
(i) The Borrower or any Obligated Party shall fail to pay when due
any principal of or interest on any Debt if the aggregate principal amount of
the affected Debt equals or exceeds Two Hundred Fifty Thousand Dollars
($250,000) (other than the Obligations), or the maturity of any such Debt shall
have been accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof or any event shall have occurred with
respect to any Debt in the aggregate principal amount equal to or in excess of
Two Hundred Fifty Thousand Dollars ($250,000) that permits (or, with the giving
of notice or lapse of time or both, would permit) any holder or holders of such
Debt or any Person acting on behalf of such holder or holders to accelerate the
maturity thereof or require any such prepayment.
(j) This Agreement shall cease to be in full force and effect or
shall be declared null and void or the validity or enforceability thereof shall
be contested or challenged by the Borrower or any Obligated Party or the
Borrower or any Obligated Party shall deny that it has any further liability or
obligation under any of the Loan Documents or Bond Documents, or any lien or
security interest created by the Loan Documents shall for any reason (other than
the negligence of the Agent or the release thereof in accordance with the Loan
Documents) cease to be a valid, first priority perfected security interest in
and lien upon any of the Collateral purported to be covered thereby.
(k) Any of the following events shall occur or exist with respect to
the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan or Multiemployer Plan; (ii) any Reportable Event with respect to any
Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by the PBGC
of any such proceedings; or (v) complete or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other events or conditions, if any,
have subjected or could reasonably be expected to subject the Borrower to any
tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or
otherwise (or any combination thereof) which in the aggregate exceed or could
reasonably be expected to exceed One Hundred Thousand Dollars ($100,000).
(l) Any Person or group (as defined in Section 13(d)(3) or 14(d)(2)
of the Exchange Act) shall become after the Closing Date the direct or indirect
beneficial owner (as defined in Rule 13d - 3 under the Exchange Act) of more
than 20% of the total voting power of all classes of capital stock then
outstanding of the Parent entitled (without regard to the occurrence of any
contingency) to vote in elections of directors of the Parent.
(m) The Agent shall reasonably determine that the Borrower's ability
to perform its obligations under this Agreement is materially impaired as a
result of: (i) any event of default under any Bond Document or (ii) any
representation or warranty made by the Borrower in any Bond Document having been
false, misleading, or erroneous in any material respect when made.
Section 13.2. Remedies. If any Event of Default shall occur and be
continuing, the Agent shall, if directed by Required Banks, do any one or more
of the following:
(a) Acceleration. By notice to the Borrower, declare all outstanding
principal of and accrued and unpaid interest on the Notes and all other amounts
payable by the Borrower under the Loan Documents immediately due and payable,
and the same shall thereupon become immediately due and payable, without further
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of
Page 56
intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(b) Termination of Commitments. Terminate the Commitments without
notice to the Borrower (however substantially contemporaneously with the
termination of the Commitments, the Agent agrees to promptly notify the Borrower
that the Commitments have been terminated, provided, that the failure to give
such notice shall not affect the validity of such termination).
(c) Judgment. Reduce any claim to judgment from a court of law.
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to
the Agent for the benefit of itself and the other Secured Parties to secure
payment and performance of the Obligations in accordance with the terms of the
Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by the
laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, (including any of the Bond Documents which rights include, without
limitation, the right to give notice of an Event of Default to the trustees of
the Bonds) by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under Section
13.1(e) or Section 13.1(f), the Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and unpaid
interest on the Notes and all other amounts payable by the Borrower under the
Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
Section 13.3. Performance by the Agent. If the Borrower or any Obligated
Party shall fail to perform any covenant or agreement in accordance with the
terms of the Loan Documents, the Agent may, at the direction of Required Banks,
perform or attempt to perform such covenant or agreement on behalf of the
Borrower or the applicable Obligated Party. In such event, the Borrower shall,
at the request of the Agent, promptly pay any amount reasonably expended by the
Agent or the Banks in connection with such performance or attempted performance
to the Agent at the Principal Office, together with interest thereon at the
applicable Default Rate from and including the date of such expenditure to but
excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that neither the Agent nor any Bank shall have
any liability or responsibility for the performance of any obligation of the
Borrower or any Obligated Party under any Loan Document.
Section 13.4. Setoff. If an Event of Default shall have occurred and be
continuing, each Secured Party is hereby authorized at any time and from time to
time, without notice to the Borrower or any Obligated Party (any such notice
being hereby expressly waived by the Borrower and each Obligated Party), to set
off and apply any and all deposits (general, time, demand, provisional, or
final) at any time held and other indebtedness at any time owing by such Secured
Party to or for the credit or the account of the Borrower or any Obligated Party
against any and all of the Obligations, irrespective of whether or not the Agent
or such Secured Party shall have made any demand under such Loan Documents and
although such Obligations may be unmatured. Each Secured Party agrees promptly
to notify the Borrower (with a copy to the Agent) after any such setoff and
application; provided, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights and remedies of each Secured
Party hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Secured Party may have.
Page 57
Section 13.5. Continuance of Default. For purposes of all Loan Documents,
a Default shall be deemed to have continued and exist until the Agent shall have
actually received evidence satisfactory to the Agent that such Default shall
have been remedied.
Section 13.6. Cash Collateral. If an Event of Default shall have occurred
and be continuing, the Borrower shall, if requested by the Agent or Required
Banks, pledge to the Agent as security for the Obligations (but excluding the
Obligations arising in connection with the Bond L/Cs) an amount in immediately
available funds equal to the then outstanding Commercial L/C Liabilities, such
funds to be held in a cash collateral account at the Agent without any right of
withdrawal by the Borrower.
ARTICLE 14.
The Agent
Section 14.1. Appointment, Powers and Immunities. Each Bank hereby
appoints and authorizes JPMorgan to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the Agent
by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto (and continues its appointment made under the
Prior Credit Agreement). Neither the Agent nor any of its Affiliates, officers,
directors, employees, attorneys, or agents shall be liable for any action taken
or omitted to be taken by any of them hereunder or otherwise in connection with
any Loan Document or any of the other Loan Documents except for its or their own
gross negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent: (i) may treat the payee of any Note as the holder
thereof until it receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Agent; (ii) shall have no
duties or responsibilities except those expressly set forth in the Loan
Documents, and shall not by reason of any Loan Document be a trustee or
fiduciary for any Secured Party; (iii) shall not be required to initiate any
litigation or collection proceedings under any Loan Document except to the
extent requested by Required Banks; (iv) shall not be responsible to the Secured
Parties for any recitals, statements, representations, or warranties contained
in any Loan Document, or any certificate or other documentation referred to or
provided for in, or received by any of them under, any Loan Document, or for the
value, validity, effectiveness, enforceability, or sufficiency of any Loan
Document or any other documentation referred to or provided for therein or for
any failure by any Person to perform any of its obligations thereunder; (v) may
consult with legal counsel, independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; and (vi) shall incur no liability under or in respect
of any Loan Document by acting upon any notice, consent, certificate, or other
instrument or writing believed by it to be genuine and signed or sent by the
proper party or parties. As to any matters not expressly provided for by any
Loan Document, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by
Required Banks, and such instructions of Required Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Secured Parties;
provided, however, that the Agent shall not be required to take any action which
exposes it to personal liability or which is contrary to any Loan Document or
applicable law.
Section 14.2. Rights of Agent as a Bank. With respect to its Commitments,
the Loans made by it and the Notes issued to it, JPMorgan (and any successor
acting as the Agent) in its capacity as a Bank hereunder shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not acting as the Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may (without having to account therefor
to any Secured Party) accept deposits from, lend money to, act as trustee under
indentures of, provide merchant banking services to, and generally engage in any
kind of banking, trust, or other business with the Borrower or any Obligated
Party, and any other Person who
Page 58
may do business with or own securities of the Borrower or any Obligated Party,
all as if it were not acting as the Agent and without any duty to account
therefor to the Secured Parties.
Section 14.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non - payment of principal
of or interest on the Loans or of commitment fees) unless the Agent has received
notice from a Bank or the Borrower specifying such Default and stating that such
notice is a "Notice of Default." In the event that the Agent receives such a
notice of the occurrence of a Default, the Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such non -
payment). The Agent shall (subject to Section 14.1) take such action with
respect to such Default as shall be directed by Required Banks, provided that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable and in the best
interest of the Secured Parties.
Section 14.4. Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY THE
AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTION 15.1 AND SECTION 15.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWER UNDER SECTION 15.1 AND SECTION 15.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE
AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THE PRIOR CREDIT AGREEMENT, ANY
OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT
UNDER OR IN RESPECT OF THE PRIOR CREDIT AGREEMENT OR ANY OF THE LOAN DOCUMENTS;
PROVIDED, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE
EXTENT CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE BANKS THAT THE
AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES),
AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT. WITHOUT
LIMITING ANY OTHER PROVISION OF THIS SECTION 14.4, EACH BANK AGREES TO REIMBURSE
THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS
OF THE COMMITMENTS PERCENTAGES) OF ANY AND ALL OUT - OF - POCKET EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES) INCURRED BY THE AGENT IN CONNECTION
WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION,
AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR
OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER,
THE PRIOR CREDIT AGREEMENT OR THE LOAN DOCUMENTS, TO THE EXTENT THAT THE AGENT
IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 14.5. Independent Credit Decisions. Each Bank agrees that it has
independently and without reliance on the Agent or any other Bank, and based on
such documentation and information as it has deemed appropriate, made its own
credit analysis of the Borrower and decision to enter into any Loan Document and
that it will, independently and without reliance upon the Agent or any other
Bank, and based upon such documents and information as it shall deem appropriate
at the time, continue to make its
Page 59
own analysis and decisions in taking or not taking action under any Loan
Document. Except as otherwise specifically set forth herein, the Agent shall not
be required to keep itself informed as to the performance or observance by the
Borrower or any Obligated Party of any Loan Document or to inspect the
properties or books of the Borrower or any Obligated Party. Except for notices,
reports, and other documents and information expressly required to be furnished
to the Banks by the Agent hereunder or under the other Loan Documents, the Agent
shall not have any duty or responsibility to provide any Secured Party with any
credit or other financial information concerning the affairs, financial
condition, or business of the Borrower or any Obligated Party (or any of their
Affiliates) which may come into the possession of the Agent or any of its
Affiliates.
Section 14.6. Several Commitments. The Commitments and other obligations
of the Banks under any Loan Document are several. The default by any Bank in
making a Loan in accordance with its Revolving Commitment shall not relieve the
other Banks of their obligations under any Loan Document. In the event of any
default by any Bank in making any Loan, each nondefaulting bank shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. No Bank shall be
responsible for any act or omission of any other Bank.
Section 14.7. Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving notice thereof to the Banks and the Borrower, and the Agent may be
removed at any time by Required Banks if it has breached its obligations under
the Loan Documents. Upon any such resignation or removal, Required Banks will
have the right to appoint a successor Agent with the Borrower's consent, which
shall not be unreasonably withheld. If no successor Agent shall have been so
appointed by Required Banks and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of resignation or
the Required Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or any State
thereof and having combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000). Upon the acceptance of its appointment as successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all rights, powers, privileges, immunities, contractual obligations, and duties
of the resigning or removed Agent, and the resigning or removed Agent shall be
discharged from its duties and obligations under the Loan Documents. After any
Agent's resignation or removal as Agent, the provisions of this Article 14 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was the Agent.
ARTICLE 15.
Miscellaneous
Section 15.1. Expenses. The Borrower hereby agrees to pay on demand: (a)
all costs and expenses of the Agent and the Banks arising in connection with the
preparation, negotiation, execution, and delivery of the Loan Documents and all
amendments or other modifications to the Loan Documents or the Bond Documents,
including, without limitation, the reasonable fees and expenses of legal counsel
for the Agent and the Banks; (b) all costs and expenses of the Agent and the
Banks in connection with any Default and the enforcement of any Loan Document or
Bond Document, including, without limitation, the fees and expenses of legal
counsel for the Agent and each of the Banks (including the allocated costs of in
house counsel); (c) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of any
Loan Document; (d) all costs, expenses, assessments, and other charges incurred
in connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by any Loan Document; and (e) all other
costs and expenses incurred by the Agent and the Banks in connection with any
Loan Document or Bond Document,
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including, without limitation, all costs, expenses, and other charges incurred
in connection with obtaining any audit, appraisal survey, environmental
assessment, title insurance or lien search in respect of the Collateral.
Section 15.2. Indemnification. THE BORROWER SHALL INDEMNIFY THE AGENT AND
EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST,
ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND
EXPENSES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY
ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,
ADMINISTRATION, OR ENFORCEMENT OF THE PRIOR CREDIT AGREEMENT OR ANY OF THE LOAN
DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE PRIOR CREDIT
AGREEMENT OR THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY OBLIGATED
PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN
THE PRIOR CREDIT AGREEMENT OR ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE,
RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS
MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS
OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; PROVIDED THAT
THE PERSON ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION 15.2 SHALL NOT BE
INDEMNIFIED FROM OR HELD HARMLESS AGAINST ANY LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, OR EXPENSES ARISING OUT OF
OR RESULTING FROM ITS GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS
OBLIGATIONS UNDER THE LOAN DOCUMENTS. WITHOUT LIMITING ANY PROVISION OF THE
PRIOR CREDIT AGREEMENT OR ANY LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR RESULTING
FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 15.3. Limitation of Liability. None of the Agent, any Bank, or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and the Borrower and, by the execution of the
Loan Documents to which it is a party, each Obligated Party, hereby waives,
releases, and agrees not to ▇▇▇ any of them upon, any claim for any special,
indirect, incidental, consequential, or punitive damages suffered or incurred by
the Borrower or any Obligated Party in connection with, arising out of, or in
any way related to any of the Loan Documents or Bond Documents, or any of the
transactions contemplated by any of the Loan Documents or Bond Documents.
Section 15.4. No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent or any Bank shall
have the right to act exclusively in the interest of the Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to the Borrower or any of the
Borrower's shareholders or any other Person.
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Section 15.5. No Fiduciary Relationship. The relationship between the
Borrower and the Obligated Parties on the one hand and the Agent and each Bank
on the other is solely that of debtor and creditor, and neither the Agent nor
any Bank has any fiduciary or other special relationship with the Borrower or
any Obligated Parties, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between the Borrower and the
Obligated Parties on the one hand and the Agent and each Bank on the other and
any Bank to be other than that of debtor and creditor.
Section 15.6. Equitable Relief. The Borrower recognizes that in the event
the Borrower or any Obligated Party fails to pay, perform, observe, or discharge
any or all of the obligations under the Loan Documents, any remedy at law may
prove to be inadequate relief to the Agent and the Banks. The Borrower therefore
agrees that the Agent and the Banks, if the Agent or the Required Banks so
request, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 15.7. No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Loan Document
or Bond Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any Loan Document or
Bond Document preclude any other or further exercise thereof or the exercise of
any other right, power, or privilege. The rights and remedies provided for in
the Loan Documents or the Bond Documents are cumulative and not exclusive of any
rights and remedies provided by law.
Section 15.8. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) neither the Borrower nor the Parent may assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Bank (and any attempted assignment or transfer by
the Borrower or the Parent without such consent shall be null and void) and (ii)
no Bank may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section 15.8. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants (to the extent provided in this Section 15.8(c)) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Agent and the
Banks, any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) (i) Subject to the conditions set forth in Section 15.8(b)(ii),
any Bank (the "Assigning Bank") may assign to one or more Persons (each an
"Assignee") all or a portion of its rights and obligations under this Agreement
and the other Loan Documents (including all or a portion of its Commitments and
the Loans at the time owing to it) with the prior written consent (such consent
not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Bank, an Affiliate of a Bank, an
Approved Fund (as defined below) or, if an Event of Default under Section
13.1(a), Section 13.1(e), or Section 13.1(f) has occurred and is continuing, any
other Assignee; and
(B) the Agent, provided that no consent of the Agent shall be
required for an assignment of any Commitment to an Assignee that is a Bank with
a Commitment immediately prior to giving effect to such assignment.
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(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Bank or an
Affiliate of a Bank or an assignment of the entire remaining amount of the
Assigning Bank's Commitments or Loans of any Class, the amount of the
Commitments or Loans of the Assigning Bank subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall not be less than Two Million Dollars
($2,000,000) unless each of the Borrower and the Agent otherwise consent,
provided that no such consent of the Borrower shall be required if an Event of
Default under Section 13.1(a), Section 13.1(e), or Section 13.1(f) has occurred
and is continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the Assigning Bank's rights and
obligations under this Agreement; provided that this Section 15.8(b)(ii)(B)
shall not be construed to prohibit the assignment of a proportionate part of all
the Assigning Bank's rights and obligations in respect of one Class of
Commitments or Loans;
(C) the parties to each assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance, together with the Notes subject to
such assignment, and a processing and recordation fee of Three Thousand Dollars
($3,000) payable by the Assigning Bank or Assignee (and not the Borrower),
provided, that such fee shall not be payable to the Agent if the Assigning Bank
is making an assignment to one of its Affiliates;
(D) the Assignee, if it shall not be a Bank, shall
deliver to the Agent an Administrative Questionnaire; and
(E) in the case of an assignment to a CLO (as defined
below), the Assigning Bank shall retain the sole right to approve any amendment,
modification or waiver of any provision of this Agreement, provided that the
Assignment and Acceptance between such Assigning Bank and such CLO may provide
that such Assigning Bank will not, without the consent of such CLO, agree to any
amendment, modification or waiver described in the first proviso to Section
15.11(b) that affects such CLO.
For the purposes of this Section 15.8(b), the terms "Approved Fund"
and "CLO" have the following meanings:
"Approved Fund" means (a) a CLO and (b) with respect to any Bank
that is a fund which invests in bank loans and similar extensions of credit, any
other fund that invests in bank loans and similar extensions of credit and is
managed by the same investment advisor as such Bank or by an Affiliate of such
investment advisor.
"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Bank or an Affiliate of such Bank.
(iii) Subject to acceptance and recording thereof pursuant to
Section 15.8(b)(v), from and after the effective date specified in each
Assignment and Acceptance the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Bank under this Agreement, and the Assigning
Bank thereunder shall, to the extent of the interest assigned by such Assignment
and Acceptance, be released
Page 63
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the Assigning Bank's rights and obligations under
this Agreement, such Assigning Bank shall cease to be a party hereto but shall
continue to be entitled to the benefits of Section 6.9, Article 7, Section 15.1
and Section 15.2). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 15.8
shall be treated for purposes of this Agreement as a sale by such Bank of a
participation in such rights and obligations in accordance with Section 15.8(c).
(iv) The Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Banks, and the Commitments of, and principal amount of the
Loans, each Bank pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the Borrower,
the Agent, the Bank that issues any Letter of Credit and the Banks may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Bank hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower,
the Bank that issues any Letter of Credit and any Bank, at any reasonable time
and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Acceptance executed by an Assigning Bank and an Assignee, the Assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Bank hereunder), the processing and recordation fee referred to in Section
15.8(b)(ii)(C) and any written consent to such assignment required by Section
15.8(b)(i), the Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this Section 15.8(b)(v).
(c) (i) Any Bank may, without the consent of the Borrower or the
Agent, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Bank's rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans
owing to it); provided that (A) such Bank's obligations under this Agreement
shall remain unchanged, (B) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under the Loan Documents. Any agreement or instrument pursuant to which a Bank
sells such a participation shall provide that such Bank shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of the Loan Documents; provided that such agreement or
instrument may provide that such Bank will not, without the consent of the
Participant, agree to any amendment, modification or waiver regarding any of the
following actions to the extent that it would affect the Participant: (1) any
increase of such Bank's Commitments, (2) any reduction of the principal amount
of, or interest to be paid on, the Loans or other Obligations of such Bank, (3)
any reduction of any commitment fee, or other amount payable to such Bank under
any Loan Document, (4) any postponement of any date for the payment of any
amount payable in respect of the Loans or other Obligations of such Bank, or (5)
the release of Borrower, any Obligated Party or any material portion of the
Collateral. Subject to Section 15.8(c)(ii), the Borrower agrees that each
Participant shall be entitled to the benefits of Section 6.9 and Article 7 to
the same extent as if it were a Bank and had acquired its interest by assignment
pursuant to Section 15.8(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 13.4 as though it were a Bank,
provided such Participant agrees to be subject to Section 6.7 as though it were
a Bank.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 6.9 and Article 7 than the applicable Bank would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with
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the Borrower's prior written consent. A Participant that would be a Foreign Bank
if it were a Bank shall not be entitled to the benefits of Section 6.9 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section 6.10
as though it were a Bank.
(d) Any Bank may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Bank, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section 15.8 shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Bank from any of its obligations hereunder
or substitute any such pledgee or assignee for such Bank as a party hereto.
(e) Any Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 15.8, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Parent or the Subsidiaries furnished to such Bank by
or on behalf of the Parent or the Subsidiaries.
Section 15.9. Survival. All representations and warranties made in any
Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by the Agent or any Bank or any closing
shall affect the representations and warranties or the right of the Agent or any
Bank to rely upon them. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the obligations of the Borrower under
Article 7 and Sections 15.1 and 15.2 shall survive repayment of the Notes and
termination of the Commitments.
Section 15.10. Entire Agreement; Amendment and Restatement. THIS
AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS (INCLUDING WITHOUT LIMITATION, THE PRIOR CREDIT
AGREEMENT), REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO. This Agreement amends and restates in its entirety the Prior Credit
Agreement. The execution of this Agreement, the Notes and the other Loan
Documents executed in connection herewith does not extinguish the indebtedness
outstanding in connection with the Prior Credit Agreement nor does it constitute
a novation with respect to such indebtedness. The Borrower, the Agent and the
Banks ratify and confirm each of the Loan Documents and Bond Documents entered
into prior to the Closing Date (but excluding the Prior Credit Agreement) and
agree that such Loan Documents and Bond Documents continue to be legal, valid,
binding and enforceable in accordance with their respective terms. Without
limiting the generality of the foregoing and notwithstanding any Loan Document
or Bond Document to the contrary, the Borrower, the Agent and the Banks agree
and acknowledge that the term "Credit Agreement" as used in each Loan Document
and the term "Reimbursement Agreement" as used in any Bond Documents or other
similar term referring to the reimbursement agreement of the issuer of the
letter of credit under the applicable Bond Documents relating to the South
Carolina Bonds, means, in each case, this Agreement. However, for all matters
arising prior to the effective date of this Agreement (including, without
limitation, the accrual and payment of interest and fees, and matters relating
to indemnification and compliance with financial covenants), the terms of the
Prior Credit Agreement (as unmodified by this Agreement) shall control and are
hereby ratified and confirmed. THE BORROWER REPRESENTS AND WARRANTS THAT TO THE
BEST OF ITS KNOWLEDGE AS OF THE CLOSING DATE THERE ARE NO
Page 65
CLAIMS OR OFFSETS AGAINST OR RIGHTS OF RECOUPMENT WITH RESPECT TO OR DEFENSES OR
COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE PRIOR CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH IT.
Section 15.11. Waivers; Amendments.
(a) No waiver of any provision of any Loan Document or consent to
any departure by the Borrower or any Obligated Party therefrom shall in any
event be effective unless the same shall be permitted by Section 15.11(b), and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Agent or any
Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders or, in the case of any other Loan Document, pursuant to an
agreement or agreements in writing entered into by the Agent and the Borrower or
the Obligated Party that are parties thereto, in each case with the consent of
the Required Lenders; provided that no such agreement shall: (i) increase the
Commitment of any Bank without the written consent of such Bank; (ii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, reduce the
amount of any Reimbursement Obligation or reduce any fees payable hereunder,
without the written consent of each Bank affected thereby; (iii) postpone the
scheduled date of payment of any Reimbursement Obligation, the principal amount
of any Loan, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment, without the written consent of each Bank
affected thereby, (iv) change Section 6.6 or Section 6.7 in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Bank, (v) change any of the provisions of this Section 15.11 or
the definition of "Required Lenders," "Secured Party," "Borrowing Base" or
"Obligation" (or any term defined therein) or any other provision of any Loan
Document specifying the number or percentage of Banks (or Banks of any Class)
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Bank (or each Bank of such Class, as the case may be), (vi) release any
Guarantor from its Guarantee under the Master Guaranty (except as expressly
provided in the Master Guaranty), or limit its liability in respect of such
Guarantee, without the written consent of each Bank, (vii) release any of the
Collateral, without the written consent of each Bank or (viii) change any
provisions of any Loan Document in a manner that by its terms adversely affects
the rights in respect of payments due to the Banks holding Loans of any Class
differently than those holding Loans of any other Class, without the written
consent of Banks holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent without the prior written consent of the Agent. A Secured Party who is not
a Bank or the Agent shall have no right to consent or agree to any amendment or
other modification to any of the Loan Documents and the Loan Documents may be
amended and otherwise modified without any such Secured Party's consent.
Section 15.12. Maximum Interest Rate.
(a) No interest rate specified in any Loan Document shall at any
time exceed the Maximum Rate. If at any time the interest rate (the "Contract
Rate") for any Obligation shall exceed the Maximum Rate, thereby causing the
interest accruing on such Obligation to be limited to the Maximum
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Rate, then any subsequent reduction in the Contract Rate for such Obligation
shall not reduce the rate of interest on such Obligation below the Maximum Rate
until the aggregate amount of interest accrued on such Obligation equals the
aggregate amount of interest which would have accrued on such Obligation if the
Contract Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the payment or
the collection of interest in excess of the maximum amount permitted by
applicable law. If any excess of interest in such respect is hereby provided
for, or shall be adjudicated to be so provided, in any Loan Document or
otherwise in connection with this loan transaction, the provisions of this
Section shall govern and prevail and neither the Borrower nor the sureties,
guarantors, successors, or assigns of the Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the event any Bank
ever receives, collects, or applies as interest any such sum, such amount which
would be in excess of the maximum amount permitted by applicable law shall be
applied as a payment and reduction of the principal of the Obligations, and, if
the principal of the Obligations has been paid in full, any remaining excess
shall forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, the Borrower and each Bank
shall, to the extent permitted by applicable law, (a) characterize any non -
principal payment as an expense, fee, or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations so that
interest for the entire term does not exceed the Maximum Rate.
Section 15.13. Notices. All notices and other communications provided for
in any Loan Document to which the Borrower or any Obligated Party is a party
shall be given or made in writing and telecopied, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof and, if to
an Obligated Party, at the address for notices for the Borrower, or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party given in accordance with this Section. Except as otherwise
provided in any Loan Document, all such communications shall be deemed to have
been duly given when transmitted by telecopy, subject to telephone confirmation
of receipt, or when personally delivered or, in the case of a mailed notice,
three (3) Business Days after being duly deposited in the mails, in each case
given or addressed as aforesaid; provided, however, notices to the Agent
pursuant to Section 6.3 shall not be effective until received by the Agent.
Section 15.14. Governing Law; Venue of Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. ANY ACTION OR
PROCEEDING AGAINST THE BORROWER UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT
MAY BE BROUGHT IN ANY STATE COURT LOCATED IN DALLAS, TEXAS OR ANY FEDERAL COURT
IN THE NORTHERN DISTRICT OF TEXAS. THE BORROWER HEREBY IRREVOCABLY (a) SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (b) WAIVES ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. THE BORROWER
AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 15.13 OF THIS AGREEMENT. NOTHING IN
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT THE RIGHT OF THE AGENT OR
ANY OTHER SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF THE AGENT OR ANY OTHER SECURED PARTY TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY
IN COURTS IN
Page 67
OTHER JURISDICTION. ANY ACTION OR PROCEEDING BY THE BORROWER AGAINST THE AGENT
OR ANY OTHER SECURED PARTY SHALL BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS,
TEXAS.
Section 15.15. Counterparts. This Agreement may be executed in one or more
counterparts and on telecopy counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 15.16. Severability. Any provision of any Loan Document held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of any Loan Document and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 15.17. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 15.18. Non-Application of Chapter 346 of The Finance Code of
Texas. The provisions of Chapter 346 of The Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 15.19. Construction. The Borrower, each Obligated Party (by its
execution of the Loan Documents to which its is a party), the Agent, and each
Bank acknowledges that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review the Loan Documents
with its legal counsel and that the Loan Documents shall be construed as if
jointly drafted by the parties thereto.
Section 15.20. Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.
Section 15.21. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
Page 68
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
BORROWER AND PARENT:
TUFCO, L.P.
By: Tufco Tech, Inc.,
its Managing General Partner
By:
-------------------------------------
Name:
--------------------------------
Authorized Officer for the
General Partner
TUFCO TECHNOLOGIES, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address for Notices to Borrower and Parent:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Dechert
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇ ▇▇▇▇▇, Esq.
Bradford Ventures, Ltd
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ 69
AGENT:
JPMORGAN CHASE BANK, individually as a Bank and
Revolving Commitment: as the Agent
$10,000,000
By:
---------------------------------------------
Term Commitment: D. ▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
$2,000,000
Address for Notices and Lending Office for Base
Rate Accounts and Eurodollar Accounts:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 70
EXHIBIT "C"
TO
TUFCO, L.P.
AMENDED AND RESTATED
CREDIT AGREEMENT
Master Guaranty
Cover Page
AMENDED AND RESTATED MASTER GUARANTY AGREEMENT
THIS AMENDED AND RESTATED MASTER GUARANTY AGREEMENT (this "Guaranty
Agreement") dated as of August 15, 2002, is executed and delivered by each of
the undersigned parties (each, together with any party hereafter added as a
"Guarantor" hereto pursuant to a Joinder Agreement, individually a "Guarantor"
and collectively the "Guarantors") to JPMorgan Chase Bank, as agent for the
Secured Parties (the "Agent")
WHEREAS, TUFCO, L.P., a Delaware limited partnership (the "Borrower"),
entered into that certain Credit Agreement dated August 28, 1998, among the
Borrower, Tufco Technologies, Inc. (the "Parent"), Chase Bank of Texas, National
Association (now JPMorgan Chase Bank) and First Union National Bank (now
Wachovia Bank National Association), as agent for the banks named therein (the
"Prior Agent") (such agreement as the same had been amended, being hereinafter
referred to as the "Prior Credit Agreement");
WHEREAS, as a condition to the Prior Credit Agreement, the Guarantors
executed and delivered that certain Guaranty Agreement dated August 28, 1998 in
favor of the Prior Agent (the "Prior Guaranty Agreement");
WHEREAS, pursuant to that certain Assignment and Acceptance dated August
15, 2002: (i) the Prior Agent assigned to the Agent all of the Prior Agent's
rights, title and interest in, among other things, the Prior Credit Agreement
and the Prior Guaranty Agreement, (ii) the Prior Agent resigned as agent for the
banks named in the Prior Credit Agreement and (iii) JPMorgan Chase Bank was
appointed as agent for the banks named in the Prior Credit Agreement;
WHEREAS, the Borrower is entering into that certain Amended and Restated
Credit Agreement dated August 15, 2002, among the Borrower, the Parent, the
Agent and the Banks which amends and restates the Prior Credit Agreement in its
entirety but does not extinguish the indebtedness outstanding thereunder (such
agreement, as it may hereafter be amended or otherwise modified from time to
time, being hereafter referred to as the "Credit Agreement", and capitalized
terms not otherwise defined herein shall have the same meaning as set forth in
the Credit Agreement);
WHEREAS, the execution of this Guaranty Agreement is a condition to the
effectiveness of, and to the Agent's and each Bank's obligations under, the
Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each of the undersigned parties and any party
hereafter added as a "Guarantor" hereto pursuant to a Joinder Agreement, hereby
irrevocably and unconditionally guarantees to the Agent and the Banks the full
and prompt payment and performance of the Guaranteed Indebtedness (hereinafter
defined), this Guaranty Agreement being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all of the
"Obligations", as defined in the Credit Agreement, of the Borrower and shall
include any and all post-petition interest and expenses (including attorneys'
fees) whether or not allowed under any bankruptcy, insolvency, or other similar
law; provided that, the Guaranteed Indebtedness shall be limited, with respect
to each Guarantor, to an aggregate amount equal to the largest amount that would
not render such Guarantor's obligations hereunder subject to avoidance under
Section 544 or 548 of the United States Bankruptcy Code or under any applicable
state law relating to fraudulent transfers or conveyances.
2. Each Guarantor under this Guaranty Agreement, and each guarantor under
other guaranties, if any, relating to the Credit Agreement (the "Related
Guaranties") which contain a
Page 1
contribution provision similar to that set forth in this paragraph 2, together
desire to allocate among themselves (collectively, the "Contributing
Guarantors"), in a fair and equitable manner, their obligations arising under
this Guaranty Agreement and the Related Guaranties. Accordingly, in the event
any payment or distribution is made by a Guarantor under this Guaranty Agreement
or a guarantor under a Related Guaranty (a "Funding Guarantor") that exceeds its
Fair Share (as defined below), that Funding Guarantor shall be entitled to a
contribution from each of the other Contributing Guarantors in the amount of
such other Contributing Guarantor's Fair Share Shortfall (as defined below),
with the result that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share. "Fair
Share" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Contributing Guarantor to (y) the
aggregate of the Adjusted Maximum Amounts with respect to all Contributing
Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or
before such date by all Funding Guarantors under this Guaranty Agreement and the
Related Guaranties in respect of the obligations guarantied. "Fair Share
Shortfall" means, with respect to a Contributing Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Contributing
Guarantor over the Aggregate Payments of such Contributing Guarantor. "Adjusted
Maximum Amount" means, with respect to a Contributing Guarantor as of any date
of determination, the maximum aggregate amount of the obligations of such
Contributing Guarantor under this Guaranty Agreement and the Related Guaranties,
in each case determined in accordance with the provisions hereof and thereof;
provided that, solely for purposes of calculating the "Adjusted Maximum Amount"
with respect to any Contributing Guarantor for purposes of this paragraph 2, the
assets or liabilities arising by virtue of any rights to or obligations of
contribution hereunder or under any similar provision contained in a Related
Guaranty shall not be considered as assets or liabilities of such Contributing
Guarantor. "Aggregate Payments" means, with respect to a Contributing Guarantor
as of any date of determination, the aggregate amount of all payments and
distributions made on or before such date by such Contributing Guarantor in
respect of this Guaranty Agreement and the Related Guaranties (including,
without limitation, in respect of this paragraph 2 or any similar provision
contained in a Related Guaranty). The amounts payable as contributions hereunder
and under similar provisions in the Related Guaranties shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Contributing Guarantors of their
obligations as set forth in this paragraph 2 or any similar provision contained
in a Related Guaranty shall not be construed in any way to limit the liability
of any Contributing Guarantor hereunder or under a Related Guaranty. Each
Contributing Guarantor under a Related Guaranty is a third party beneficiary to
the contribution agreement set forth in this paragraph 2.
3. This instrument shall be an absolute, continuing, irrevocable and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and each Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No set
- off, counterclaim, recoupment, reduction, or diminution of any obligation, or
any defense of any kind or nature which the Borrower may have against the Agent,
any Secured Party or any other party, or which any Guarantor may have against
the Borrower, the Agent, any Secured Party or any other party, shall be
available to, or shall be asserted by, any Guarantor against the Agent, any
Secured Party or any subsequent holder of the Guaranteed Indebtedness or any
part thereof or against payment of the Guaranteed Indebtedness or any part
thereof.
4. If a Guarantor becomes liable for any indebtedness owing by the
Borrower to the Agent or any Secured Party by endorsement or otherwise, other
than under this Guaranty Agreement, such liability shall not be in any manner
impaired or affected hereby, and the rights of the Agent and the Secured Parties
hereunder shall be cumulative of any and all other rights that the Agent and the
Secured Parties may ever have against such Guarantor. The exercise by the Agent
and the Secured Parties of any
Page 2
right or remedy hereunder or under any other instrument, or at law or in equity,
shall not preclude the concurrent or subsequent exercise of any other right or
remedy.
5. In the event of default by the Borrower in payment or performance of
the Guaranteed Indebtedness, or any part thereof, when such Guaranteed
Indebtedness becomes due, whether by its terms, by acceleration, or otherwise
(after expiration of any applicable grace or cure period afforded to the
Borrower in writing, if any), the Guarantors shall, jointly and severally,
promptly pay the amount due thereon to the Agent, without notice or demand, in
lawful currency of the United States of America, and it shall not be necessary
for the Agent or any Secured Party, in order to enforce such payment by any
Guarantor, first to institute suit or exhaust its remedies against the Borrower
or others liable on such Guaranteed Indebtedness, or to enforce any rights
against any collateral which shall ever have been given to secure such
Guaranteed Indebtedness. In the event such payment is made by a Guarantor, then
such Guarantor shall be subrogated to the rights then held by the Agent and any
Secured Party with respect to the Guaranteed Indebtedness to the extent to which
the Guaranteed Indebtedness was discharged by such Guarantor and, in addition,
upon payment by such Guarantor of any sums to the Agent and any Secured Party
hereunder, all rights of such Guarantor against the Borrower, any other
guarantor or any Collateral arising as a result therefrom by way of right of
subrogation, reimbursement, or otherwise shall in all respects be subordinate
and junior in right of payment to the prior indefeasible payment in full of the
Guaranteed Indebtedness.
6. If acceleration of the time for payment of any amount payable by the
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of the Borrower, all such amounts otherwise
subject to acceleration under the terms of the Guaranteed Indebtedness shall
nonetheless be payable by the Guarantors hereunder forthwith on demand by the
Agent or any Secured Party to the extent permitted by applicable law.
7. Each Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of any Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of any Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of the Borrower, or the dissolution, insolvency, or
bankruptcy of the Borrower, any Guarantor, or any other party at any time liable
for the payment of any or all of the Guaranteed Indebtedness; (d) any renewal,
extension, modification, waiver, amendment, or rearrangement of any or all of
the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or compromise
that may be granted or given by the Agent or any Secured Party to the Borrower,
any Guarantor, or any other party ever liable for any or all of the Guaranteed
Indebtedness; (f) any neglect, delay, omission, failure, or refusal of the Agent
or any Secured Party to take or prosecute any action for the collection of any
of the Guaranteed Indebtedness or to foreclose or take or prosecute any action
in connection with any instrument, document, or agreement evidencing, securing,
or otherwise relating to any or all of the Guaranteed Indebtedness; (g) the
unenforceability or invalidity of any or all of the Guaranteed Indebtedness or
of any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Guaranteed Indebtedness; (h) any payment by the
Borrower or any other party to the Agent or any Secured Party is held to
constitute a preference under applicable bankruptcy or insolvency law or if for
any other reason the Agent or any Secured Party is required to refund any
payment or pay the amount thereof to someone else; (i) the settlement or
compromise of any of the Guaranteed Indebtedness; (j) the non - perfection of
any security interest or lien securing any or all of the Guaranteed
Indebtedness; (k) any impairment of any
Page 3
collateral securing any or all of the Guaranteed Indebtedness; (l) the failure
of the Agent or any Secured Party to sell any collateral securing any or all of
the Guaranteed Indebtedness in a commercially reasonable manner or as otherwise
required by law; (m) any change in the corporate existence, structure, or
ownership of the Borrower; or (n) any other circumstance which might otherwise
constitute a defense available to, or discharge of, the Borrower or any
Guarantor (other than payment of the Guaranteed Indebtedness).
8. Each Guarantor represents and warrants to the Agent and the Banks as
follows:
(a) All representations and warranties in the Credit Agreement
relating to it are true and correct as of the date hereof and on each date the
representations and warranties hereunder are restated pursuant to any of the
Loan Documents with the same force and effect as if such representations and
warranties had been made on and as of such date except to the extent that such
representations and warranties relate specifically to another date or to the
extent that a fact, event or circumstance has occurred that makes such
representation or warranty untrue but which is not prohibited to occur or exist
(or which does not cause an Event of Default) under the Loan Documents.
(b) It has, independently and without reliance upon the Agent or any
Secured Party and based upon such documents and information as it has deemed
appropriate, made its own analysis and decision to enter into the Loan Documents
to which it is a party.
(c) It has adequate means to obtain from the Borrower on a
continuing basis information concerning the financial condition and assets of
the Borrower and it is not relying upon the Agent or any Secured Party to
provide (and neither the Agent nor any Secured Party shall have any duty to
provide) any such information to it either now or in the future.
(d) The value of the consideration received and to be received by
each Guarantor as a result of the Borrower's and the Banks' entering into the
Credit Agreement and each Guarantor's executing and delivering this Guaranty
Agreement is reasonably worth at least as much as the liability and obligation
of each Guarantor hereunder, and such liability and obligation and the Credit
Agreement have benefited and may reasonably be expected to benefit each
Guarantor directly or indirectly.
9. Each Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Bank has any commitment
under the Credit Agreement, it will comply with all covenants set forth in the
Credit Agreement specifically applicable to it.
10. When an Event of Default exists, the Agent and each Secured Party
shall have the right to set - off and apply against this Guaranty Agreement or
the Guaranteed Indebtedness or both, at any time and without notice to any
Guarantor, any and all deposits (general or special, time or demand, provisional
or final, but excluding any account established by a Guarantor as a fiduciary
for another party) or other sums at any time credited by or owing from the Agent
and the Secured Parties to any Guarantor whether or not the Guaranteed
Indebtedness is then due and irrespective of whether or not the Agent or any
Secured Party shall have made any demand under this Guaranty Agreement. Each
Secured Party agrees promptly to notify the Borrower (with a copy to the Agent)
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
and remedies of the Agent and the Secured Parties hereunder are in addition to
other rights and remedies (including, without limitation, other rights of set -
off) which the Agent or any Secured Party may have.
11. (a) Each Guarantor hereby agrees that the Subordinated Indebtedness
(as defined below) shall be subordinate and junior in right of payment to the
prior payment in full of all Guaranteed Indebtedness as herein provided. The
Subordinated Indebtedness shall not be payable, and no payment of
Page 4
principal, interest or other amounts on account thereof, and no property or
guarantee of any nature to secure or pay the Subordinated Indebtedness shall be
made or given, directly or indirectly by or on behalf of any Debtor (hereafter
defined) or received, accepted, retained or applied by any Guarantor unless and
until the Guaranteed Indebtedness shall have been paid in full in cash; except
that prior to the occurrence and continuance of an Event of Default, a Guarantor
shall have the right to receive payments on the Subordinated Indebtedness made
in the ordinary course of business. After the occurrence and during the
continuance of an Event of Default, no payments may be made or given, directly
or indirectly, by or on behalf of any Debtor or received, accepted, retained or
applied by any Guarantor unless and until the Guaranteed Indebtedness shall have
been paid in full in cash. If any sums shall be paid to a Guarantor by any
Debtor or any other Person on account of the Subordinated Indebtedness when such
payment is not permitted hereunder, such sums shall be held in trust by such
Guarantor for the benefit of the Agent and the Secured Parties and shall
forthwith be paid to the Agent without affecting the liability of any Guarantor
under this Guaranty Agreement and may be applied by the Agent against the
Guaranteed Indebtedness in accordance with the Credit Agreement. Upon the
request of the Agent, a Guarantor shall execute, deliver, and endorse to the
Agent such documentation as the Agent may request to perfect, preserve, and
enforce its rights hereunder. For purposes of this Guaranty Agreement and with
respect to a Guarantor, the term "Subordinated Indebtedness" means all
indebtedness, liabilities, and obligations of the Borrower or any Obligated
Party other than such Guarantor (the Borrower and such Obligated Parties herein
the "Debtors") to such Guarantor, whether such indebtedness, liabilities, and
obligations now exist or are hereafter incurred or arise, or are direct,
indirect, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such indebtedness, liabilities, or
obligations are evidenced by a note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such indebtedness,
obligations, or liabilities may, at their inception, have been, or may hereafter
be created, or the manner in which they have been or may hereafter be acquired
by such Guarantor.
(b) Each Guarantor agrees that any and all Liens (including any
judgment liens), upon any Debtor's assets securing payment of any Subordinated
Indebtedness shall be and remain inferior and subordinate to any and all Liens
upon any Debtor's assets securing payment of the Guaranteed Indebtedness or any
part thereof, regardless of whether such Liens in favor of a Guarantor, the
Agent or any Secured Party presently exist or are hereafter created or attached.
Without the prior written consent of the Agent, no Guarantor shall (i) file suit
against any Debtor or exercise or enforce any other creditor's right it may have
against any Debtor, or (ii) foreclose, repossess, sequester, or otherwise take
steps or institute any action or proceedings (judicial or otherwise, including
without limitation the commencement of, or joinder in, any liquidation,
bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce
any obligations of any Debtor to such Guarantor or any Liens held by such
Guarantor on assets of any Debtor.
(c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving any
Debtor as debtor, the Agent shall have the right to prove and vote any claim
under the Subordinated Indebtedness and to receive directly from the receiver,
trustee or other court custodian all dividends, distributions, and payments made
in respect of the Subordinated Indebtedness until the Guaranteed Indebtedness
has been paid in full in cash. The Agent may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in accordance
with the Credit Agreement.
(d) Each Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
Page 5
12. Except for modifications made pursuant to the execution and delivery
of a Joinder Agreement (which needs to be signed only by the party thereto), no
amendment or waiver of any provision of this Guaranty Agreement or consent to
any departure by any Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by the Agent and the Required Banks
except as otherwise provided in the Credit Agreement. No failure on the part of
the Agent or any Secured Party to exercise, and no delay in exercising, any
right, power, or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
13. To the extent permitted by law, any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by the
Borrower or others (including any Guarantor), with respect to any of the
Guaranteed Indebtedness shall, if the statute of limitations in favor of a
Guarantor against the Agent or any Secured Party shall have commenced to run,
toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute
of limitations.
14. This Guaranty Agreement is for the benefit of the Agent and the
Secured Parties and their successors and assigns, and in the event of an
assignment of the Guaranteed Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the indebtedness so assigned,
may be transferred with such indebtedness. This Guaranty Agreement is binding
not only on each Guarantor, but on each Guarantor's successors and assigns.
15. Each Guarantor recognizes that the Agent and the Banks are relying
upon this Guaranty Agreement and the undertakings of each Guarantor hereunder
and under the other Loan Documents to which each is a party in making extensions
of credit to the Borrower under the Credit Agreement and further recognizes that
the execution and delivery of this Guaranty Agreement and the other Loan
Documents to which each Guarantor is a party is a material inducement to the
Agent and the Banks in entering into the Credit Agreement and continuing to
extend credit thereunder. Each Guarantor hereby acknowledges that there are no
conditions to the full effectiveness of this Guaranty Agreement or any other
Loan Document to which it is a party.
16. Any notice or demand to any Guarantor under or in connection with this
Guaranty Agreement or any other Loan Document to which it is a party shall be
deemed effective if given to the Guarantor, care of the Borrower in accordance
with the notice provisions in the Credit Agreement.
17. The Guarantors shall, jointly and severally, pay on demand all
reasonable attorneys' fees and all other reasonable costs and expenses incurred
by the Agent and the Secured Party in connection with the administration,
enforcement, or collection of this Guaranty Agreement.
18. Each Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by the Borrower of additional indebtedness,
and all other notices and demands with respect to the Guaranteed Indebtedness
and this Guaranty Agreement.
19. The Credit Agreement, and all of the terms thereof, are incorporated
herein by reference, the same as if stated verbatim herein, and each Guarantor
agrees that the Agent and the Banks may exercise any and all rights granted to
any of them under the Credit Agreement and the other Loan Documents without
affecting the validity or enforceability of this Guaranty Agreement.
Page 6
20. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF EACH
GUARANTOR, THE AGENT AND THE BANKS WITH RESPECT TO EACH GUARANTOR'S GUARANTY OF
THE GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS (INCLUDING, WITHOUT LIMITATION, THE PRIOR GUARANTY AGREEMENT),
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY EACH GUARANTOR,
THE AGENT AND THE SECURED PARTIES AS A FINAL AND COMPLETE EXPRESSION OF THE
TERMS OF THE GUARANTY AGREEMENT, AND NO COURSE OF DEALING AMONG ANY GUARANTOR,
THE AGENT AND THE SECURED PARTIES, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES,
AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO
CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT.
THERE ARE NO ORAL AGREEMENTS AMONG ANY GUARANTOR, THE AGENT AND THE SECURED
PARTIES. THIS GUARANTY AGREEMENT AMENDS AND RESTATES IN ITS ENTIRETY THE PRIOR
GUARANTY AGREEMENT. THE EXECUTION OF THIS GUARANTY AGREEMENT AND THE OTHER LOAN
DOCUMENTS EXECUTED IN CONNECTION HEREWITH DO NOT EXTINGUISH, DISCHARGE OR
SATISFY THE INDEBTEDNESS GUARANTEED BY THE PRIOR GUARANTY AGREEMENT, WHICH
INDEBTEDNESS GUARANTEED IS CONTINUED HEREBY.
21. This Guaranty Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas (without regard to the conflicts
of law provisions thereof) and applicable laws of the United States of America.
Page 7
EXECUTED as of the day and year first written above.
GUARANTORS:
TUFCO TECHNOLOGIES, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
TUFCO TECH, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
TECHNOLOGIES I, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
TUFCO, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
TFCO, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
FOREMOST MANUFACTURING COMPANY, INC.
By:
---------------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Page 8
EXHIBIT "D"
TO
TUFCO, L.P.
AMENDED AND RESTATED
CREDIT AGREEMENT
Master Security Agreement
Cover Page
AMENDED AND RESTATED MASTER SECURITY AGREEMENT
THIS AMENDED AND RESTATED MASTER SECURITY AGREEMENT (the "Agreement")
dated as of August 15, 2002, is among Tufco, L.P., a Delaware limited
partnership (the "Borrower"), Tufco Technologies, Inc., a Delaware corporation
(the "Parent"), each of the undersigned Subsidiaries and any Subsidiary or other
entity who may become a party hereto pursuant to the execution and delivery of a
Joinder Agreement (each a "Subsidiary Loan Party") (the Borrower, the Parent and
each Subsidiary Loan Party, herein referred to as a "Debtor" and collectively
the "Debtors") and JPMorgan Chase Bank, as agent for the Secured Parties (the
"Agent").
R E C I T A L S:
A. The Borrower, the Parent, First Union National Bank (who is now
Wachovia Bank, National Association), as agent for the banks named therein (the
"Prior Agent"), and Chase Bank of Texas, National Association (now know as
JPMorgan Chase Bank) entered into that certain Credit Agreement dated August 28,
1998 (as amended, the "Prior Credit Agreement").
B. As a condition to the Prior Credit Agreement: (i) the Borrower and the
Prior Agent entered into that certain Security Agreement dated August 28, 1998
(the "Prior Borrower Security Agreement") and (ii) the Parent and the
Subsidiaries signatory thereto entered into that certain Guarantor Security
Agreement dated August 28, 1998 (the "Prior Guarantor Security Agreement" and
the Prior Borrower Security Agreement and the Prior Guarantor Security Agreement
herein, the "Prior Security Agreements").
C. Pursuant to that certain Assignment and Acceptance dated August 15,
2002 and that certain Assignment of Liens dated August 15, 2002: (i) Wachovia
Bank, National Association (formerly First Union National Bank) both as the
Prior Agent and individually as a bank assigned to JPMorgan Chase Bank all of
its right, title and interest in, among other things, the Prior Credit Agreement
and the Prior Security Agreements; (ii) the Prior Agent resigned as agent for
the banks named in the Prior Credit Agreement; and (iii) JPMorgan Chase Bank was
appointed agent under the Prior Credit Agreement.
D. The Borrower, the Parent, the banks parties thereto (the "Banks") and
JPMorgan Chase Bank (as assignee of Wachovia Bank, National Association),
individually as a bank and as the agent for the Banks are entering into that
certain Amended and Restated Credit Agreement dated August 15, 2002, which
amends and restates the Prior Credit Agreement in its entirety but does not
extinguish the indebtedness outstanding thereunder (such agreement, as it may be
amended or otherwise modified from time to time, herein the "Credit Agreement").
The Agent and the Banks have conditioned the effectiveness of, and their
obligations under, the Credit Agreement and the making of the extensions of
credit thereunder upon the execution and delivery of this Agreement by the
Debtors which consolidates, amends and restates the Prior Security Agreements in
their entirety but does not extinguish the liens and security interests created
thereunder, which liens and security interests are continued hereby.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Agent and the Banks to extend
credit under the Credit Agreement, the parties hereto hereby agree as follows:
Page 1
ARTICLE 1.
Definitions
Section 1.1. Definitions. As used in this Agreement, the following terms
have the following meanings:
"Collateral" has the meaning specified in Section 2.1.
"Copyright License" means, with respect to a Debtor, any written
agreement now or hereafter in existence granting to the Debtor any right
to use any Copyright including the agreements identified for such Debtor
on Schedule 3.4.
"Copyrights" means, with respect to a Debtor, all of the following:
(a) all copyrights, works protectable by copyright, copyright
registrations and copyright applications of the Debtor, including those
identified for such Debtor on Schedule 3.4; (b) all renewals, extensions
and modifications thereof; (c) all income, royalties, damages, profits and
payments relating to or payable under any of the foregoing; (d) the right
to ▇▇▇ for past, present or future infringements of any of the foregoing;
and (e) all other rights and benefits relating to any of the foregoing
throughout the world.
"Copyright Security Agreement" means, with respect to a Debtor, a
security agreement in a form satisfactory to the Agent pursuant to which
the Debtor grants to the Agent, for the benefit of the Banks, a first
priority security interest in the Copyrights and the Copyright Licenses
for purposes of recording such security interest with any copyright office
of a governmental unit.
"Foreign Subsidiary" has the meaning specified in Section 2.1.
"Intellectual Property" means the Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks and Trademark Licenses.
"Joinder Agreement" means a Joinder Agreement in substantially the
form of Exhibit E to the Credit Agreement.
"Obligations" means, with respect to each Debtor, all "Obligations"
(as such term is defined in the Credit Agreement) of such Debtor,
including, all reasonable fees, costs and expenses (including attorneys'
fees): (a) of retaking, holding and preparing its Collateral for sale; (b)
arising in connection with the sale thereof; and (c) arising from the
enforcement of any other right or remedy provided hereunder; provided that
with respect to each Debtor, the obligations secured by this Agreement
shall be limited, with respect to each Debtor, to an aggregate amount
equal to the largest amount that would not render such Debtor's
obligations hereunder and under the other Loan Documents subject to
avoidance under Section 544 or 548 of the United States Bankruptcy Code or
under any applicable state law relating to fraudulent transfers or
conveyances.
"Patent License" means, with respect to a Debtor, any written
agreement now or hereafter in existence granting to the Debtor any right
to use any invention on which a Patent is in existence including the
agreements identified for such Debtor on Schedule 3.4.
Page 2
"Patent Security Agreement" means, with respect to a Debtor, a
security agreement in a form satisfactory to the Agent pursuant to which
the Debtor grants to the Agent, for the benefit of the Banks, a first
priority security interest in the Patents and the Patent Licenses for
purposes of recording such security interest with any patent office of a
governmental unit.
"Patents" means, with respect to a Debtor, all of the following: (a)
all patents, patent applications and patentable inventions of the Debtor,
including those identified for such Debtor on Schedule 3.4, and all of the
inventions and improvements described and claimed therein; (b) all
continuations, divisions, renewals, extensions, modifications,
substitutions, continuations-in-part or reissues of any of the foregoing;
(c) all income, royalties, profits, damages, awards and payments relating
to or payable under any of the foregoing; (d) the right to ▇▇▇ for past,
present and future infringements of any of the foregoing; and (e) all
other rights and benefits relating to any of the foregoing throughout the
world.
"Pledged Shares" means, with respect to a Debtor, the shares
evidencing the capital stock, partnership interest, membership interests
and other ownership interests identified for such Debtor on Schedule
2.1(b) or Schedule 2.1(c) attached hereto or on Schedule 1 to an amendment
to this Agreement in the form of Exhibit A.
"Pledged Bonds" means any of the Bonds purchased with the proceeds
of any Letter of Credit.
"Trademark License" means, with respect to a Debtor, any written
agreement now or hereafter in existence granting to the Debtor any right
to use any Trademark, including the agreements identified for such Debtor
on Schedule 3.4.
"Trademarks" means, with respect to a Debtor, all of the following:
(a) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos,
other business identifiers, prints and labels on which any of the
foregoing appear, all registrations and recordings thereof and all
applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any state thereof or
any other country or any political subdivision thereof, including those
identified for such Debtor on Schedule 3.4; (b) all reissues, extensions
and renewals thereof; (c) all income, royalties, damages and payments now
or hereafter relating to or payable under any of the foregoing, including
damages or payments for past or future infringements of any of the
foregoing; (d) the right to ▇▇▇ for past, present and future infringements
of any of the foregoing; (e) all rights corresponding to any of the
foregoing throughout the world; and (f) all goodwill associated with and
symbolized by any of the foregoing.
"Trademark Security Agreement" means, with respect to a Debtor, a
security agreement in a form satisfactory to the Agent which the Debtor
grants to the Agent, for the benefit of the Banks, a first priority
security interest in the Trademarks and the Trademark Licenses for
purposes of recording such security interest with the trademark office of
any governmental unit.
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Page 3
Section 1.2. Other Definitional Provisions. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Any definition of or reference to any agreement or other
documentation herein shall be construed as referring to such agreement or
documentation as from time to time the same may be amended or otherwise
modified. References to "Sections," "subsections," "Exhibits" and "Schedules"
shall be to Sections, subsections, Exhibits and Schedules, respectively, of this
Agreement unless otherwise specifically provided. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. All references to statutes and regulations shall include any
amendments of the same and any successor statutes and regulations. Terms used
herein, which are defined in the UCC, unless otherwise defined herein or in the
Credit Agreement, shall have the meanings determined in accordance with the UCC.
ARTICLE 2.
Security Interest
Section 2.1. Security Interest. As security for the prompt payment and
performance in full when due of its Obligations (whether at stated maturity, by
acceleration or otherwise), each Debtor hereby pledges and assigns to the Agent,
and grants to the Agent a continuing security interest (and continues the
pledges, liens, assignments and security interests created under the Prior
Security Agreement) in, all of the Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively with respect to any Debtor or all Debtors, as the context
requires, the "Collateral"):
(a) all accounts, money, documents, chattel paper (including the
chattel paper described on Schedule 2.1), instruments (including or in addition,
the promissory notes described on Schedule 2.1), the commercial tort claims
described on Schedule 2.1(a), deposit accounts (including the deposit accounts
identified on Schedule 3.2), general intangibles (including or in addition all
supporting obligations, all Intellectual Property and all right, title and
interest in and to any of the Pledged Bonds), all letters of credit (including
the letters of credit described on Schedule 2.1), all other letter of credit
rights and all products and proceeds of any of the foregoing; and
(b) all investment property, including or in addition to, the
following:
(i) all the capital stock, partnership interests, membership
interests and other ownership interests issued by, and all other ownership
interest in, the Persons described on Schedule 2.1(b) and all Subsidiaries (that
are not Foreign Subsidiaries) hereafter created or acquired and owned by the
Debtor, including the capital stock or other ownership interests described on
Schedule 2.1(b);
(ii) all the capital stock, partnership interests, membership
interests or other ownership interests specifically described on Schedule 2.1(c)
(the issuers of such stock or other interests and any other Subsidiary organized
under the laws of a jurisdiction outside of the United States of America herein
the "Foreign Subsidiaries") and so much of Debtor's right, title and interest in
any other capital stock or other ownership interests in the Foreign
Subsidiaries, whether now owned or hereafter acquired, as is necessary so that
not more than and not less than sixty - six and two thirds percent (66-2/3%) of
the capital stock or other ownership interest in each such Foreign Subsidiary is
pledged in total hereunder;
Page 4
(iii) the commodity and security accounts described in
Schedule 3.2; and
(iv) all products and proceeds of the foregoing; and
(c) all equipment, fixtures, inventory and other goods and all
accessions thereto and all products and proceeds thereof.
Section 2.2. Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein: (a) each Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (b) the exercise by the Agent of any of
its rights or remedies hereunder shall not release any Debtor from any of its
duties or obligations under such documentation; (c) the Agent shall not have any
obligation under any of such documentation included in the Collateral by reason
of this Agreement; and (d) the Agent shall not be obligated to perform any of
the obligations of any Debtor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
ARTICLE 3.
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement and the
Credit Agreement, each Debtor represents and warrants to the Agent and the Banks
that:
Section 3.1. Location of Equipment, Fixtures and Inventory; Third Parties
in Possession. As of the date hereof, all of its equipment, fixtures and
inventory are located at the places specified in Schedule 3.1 for such Debtor.
Schedule 3.1 correctly identifies whether each location is leased or owned and
the landlords or mortgagees, if any, of such locations identified in Schedule
3.1. Except for the Persons identified on Schedule 3.1 and Schedule 3.2 who hold
Collateral in the capacity designated thereon and any other Person hereafter
identified pursuant to Section 4.3, no Person other than the Debtor has
possession or control of any of its Collateral except as permitted in the Credit
Agreement. None of its Collateral other than property acquired by such Debtor
within the last four months has been located in any location within the past
four completed calendar months prior to the date hereof other than as set forth
on Schedule 3.1 for such Debtor. Attached as Schedule 3.1(a) is a complete and
correct description of all real property on which any of its fixtures are
located as of the date hereof. Attached as Schedule 3.1(b) is a complete and
correct description of all the following as of the date hereof: (i) all
equipment for which a certificate of title has been issued, (ii) all vessels
documented under Chapter ▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code (the Ship Mortgage
Act) or for which an application for documentation is pending and (iii) all
aircraft.
Section 3.2. Deposit, Commodity and Securities Accounts. As of the date
hereof, Schedule 3.2 correctly identifies all deposit, commodity and securities
accounts owned by Debtor and the institutions holding such accounts and all
lockbox agreements it has entered into with the institutions reflected thereon.
No Person other than Debtor or the Agent, if applicable, has control over any
investment property or any deposit accounts.
Section 3.3. Office Locations; Fictitious Names; Predecessor Companies;
Tax and Organizational Identification Numbers. As of the date hereof, its chief
executive office and jurisdiction of organization are located at the place or
places identified for it on Schedule 3.1 or pursuant to Section 4.4. Within the
last four completed calendar months prior to the date hereof it has not had any
other chief executive office or jurisdiction of organization except as disclosed
on Schedule 3.1.
Page 5
Schedule 3.1 also sets forth as of the date hereof all other places where it
keeps its books and records and all other locations where it has a place of
business. It does not do business and has not done business during the past five
completed calendar years prior to the date hereof under any name, trade-name or
fictitious business name except as disclosed on Schedule 3.3. Schedule 3.3 sets
forth an accurate list of all names of all of its predecessor companies
including the names of any entities it acquired (by stock purchase, asset
purchase, merger or otherwise) and the chief executive office and jurisdiction
of organization of each such predecessor company and each jurisdiction in which
any Collateral purchased from such companies was located at the time of
purchase. For purposes of the foregoing, a "predecessor company" shall mean,
with respect to a Debtor, any entity whose assets or equity interests are
acquired by the Debtor or who was merged with or into the Debtor within the last
four months prior to the date hereof. It is a registered organization and its
United States Federal Income Tax identification number and organizational
identification number are each identified on Schedule 3.3 or pursuant to Section
4.4.
Section 3.4. Delivery of Collateral. Except as provided by Section 4.2, it
has delivered to the Agent all Collateral the possession of which is necessary
to perfect the security interest of Agent therein and subject to Section
10.10(a)(ii) of the Credit Agreement all certificates of title evidencing its
equipment.
Section 3.5. Intellectual Property. All of its Intellectual Property that
is registered with or for which an application for registration has been filed
with any governmental unit as of the date hereof is identified on Schedule 3.4,
and such information is true, correct and complete.
Section 3.6. Chattel Paper and Letters of Credit. As of the date hereof,
all of its chattel paper and letters of credit are described on Schedule 2.1. No
Person has possession or control of any of its chattel paper, letters of credit
or letter of credit rights except as disclosed pursuant to Section 3.1.
Section 3.7. Disclosure on Other Schedules. As of the date hereof: (i)
Schedule 2.1 correctly and completely identifies all promissory notes and other
instruments (other than checks received in the ordinary course of business)
owned by it; (ii) Schedule 2.1(a) correctly and completely identifies all of its
commercial tort claims, (iii) Schedule 2.1(b) and Schedule 2.1(c) correctly and
completely identify all of its Subsidiaries and the ownership interests issued
by each such Subsidiary and owned by such Debtor (or with respect to each of its
Foreign Subsidiary, 66 - 2/3% of such ownership interests).
ARTICLE 4.
Covenants
Each Debtor covenants and agrees with the Agent that until its Obligations
are paid and performed in full, all commitments under the Credit Agreement have
expired or have been terminated and no letter of credit issued thereunder
remains outstanding:
Section 4.1. Accounts; Modifications. It shall, in accordance with its
customary business practices, endeavor to collect or cause to be collected, as
and when due, any and all amounts owing under its accounts and payment
intangibles. It shall not when a Default exists: (a) grant any extension of time
for any payment with respect to any of its accounts or payment intangibles
beyond 120 days after such payment's due date; (b) compromise, compound, or
settle any of its accounts or payment intangibles for less than the full amount
thereof; (c) release, in whole or in part, any Person liable for payment of any
of its accounts or payment intangibles; (d) allow any credit or discount for
payment with respect to any of its accounts or payment intangibles other than
trade or other customary discounts granted in the ordinary
Page 6
course of business; or (e) release any Lien, guaranty or other supporting
obligation securing any of its accounts or payment intangibles unless the
amounts secured thereby have been paid.
Section 4.2. Further Assurances; Exceptions to Perfection. At any time and
from time to time, upon the request of the Agent, and at its sole expense, it
shall, subject to Section 10.10 of the Credit Agreement, promptly execute and
deliver all such further documentation and take such further action as the Agent
may reasonably deem necessary or appropriate to preserve, perfect and protect
its security interest in the Collateral and carry out the provisions and
purposes of this Agreement and to enable the Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Collateral. In
furtherance of the foregoing, each Debtor hereby authorizes the Agent to file,
in the offices of the appropriate governmental unit or units, financing
statements naming it as debtor and the Agent as secured party, and describing
the collateral as "all personal property," in each case as Agent may deem
appropriate.
(a) Specific Required Actions.
Without limiting the generality of the foregoing provisions of this
Section 4.2 and subject to Section 10.10 of the Credit Agreement, it shall:
(i) take such action as the Agent may request to permit the
Agent to have control over any investment property, any deposit account, letter
of credit rights or chattel paper;
(ii) deliver to the Agent all chattel paper, instruments,
negotiable documents and letters of credit and any other Collateral the
possession of which is necessary to perfect the security interest therein, duly
endorsed and/or accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Agent;
(iii) deliver any and all certificates of title, applications
for title or similar evidence of ownership of equipment and cause Agent to be
named as lienholder thereon;
(iv) execute and deliver a Copyright Security Agreement, a
Patent Security Agreement and/or Trademark Security Agreement as applicable,
describing all its Intellectual Property now owned or hereafter acquired or
execute and deliver amendments to such documents to the extent they have been
executed and delivered in connection with the Prior Security Agreements, such
amendment to be in form and substance satisfactory to the Agent; and
(v) execute and deliver to the Agent such other documentation
as the Agent may reasonably require to perfect, protect and maintain the
validity, effectiveness and priority of the Liens intended to be created by this
Agreement.
(b) Exceptions to Perfection. Notwithstanding the foregoing however,
if no Default exists:
(i) a Debtor may retain for collection in the ordinary course
of business checks representing proceeds of accounts received in the ordinary
course of business;
(ii) a Debtor may retain any letters of credit and money
received or held in the ordinary course of business;
(iii) a Debtor may retain and utilize in the ordinary course
of business all dividends and interest paid in respect to any of the Pledged
Shares or any other investment property;
Page 7
(iv) subject to Section 4.6, a Debtor may retain any documents
received and further negotiated in the ordinary course of business; and
(v) a Debtor shall not be required to take the actions to
perfect or protect the Agent's security interest which are not required under
Section 10.10 of the Credit Agreement nor take any action under the laws of any
jurisdiction other than the United States of America or any jurisdiction located
therein to create, perfect or protect the security interest of the Agent in the
equity interest of the Foreign Subsidiaries pledged pursuant hereto or in any
Intellectual Property registered outside the Untied States of America.
If a Default occurs and the Agent requests, then the Debtors shall take such
action as the Agent may reasonably request to perfect and protect the security
interests of the Agent in all of the Collateral including any of the
requirements described in clause (v) or Section 10.10 of the Credit Agreement
and including the following actions: (i) the delivery to the Agent of all
Collateral the possession of which is necessary to perfect the security interest
of the Agent therein; (ii) instructing all account debtors to make payment on
accounts any other Collateral to a post office box or boxes or to a deposit
account under the control and in the name of the Agent (each Debtor agrees that
if any proceeds of any Collateral (including payments made in respect of
accounts or payment intangibles) shall be received by it while a Default exists,
it shall promptly deliver such proceeds to the Agent with any necessary
endorsements, and until such proceeds are delivered to the Agent, such proceeds
shall be held in trust by it for the benefit of the Agent and shall not be
commingled with any other funds or property of it) and (iii) any other of the
actions described in clause (v) or Section 10.10 of the Credit Agreement.
Section 4.3. Third Parties in Possession of Collateral. Except as
otherwise permitted by Section 4.2 and subject to Section 10.10 of the Credit
Agreement, Debtor shall not permit any third Person (including any warehouseman,
bailee, agent, consignee or processor) to hold any Collateral, unless it shall:
(a) notify such third Person of the security interests created hereby; (b)
instruct such Person to hold all such Collateral for Agent's account subject to
Agent's instructions; and (c) subject to Section 4.2, take all other actions the
Agent reasonably deems necessary to perfect and protect its and the Debtor's
interests in such Collateral pursuant to the requirements of the UCC of the
applicable jurisdiction where the warehouseman, bailee, consignee, agent,
processor or other third Person is located (including the filing of a financing
statement in the proper jurisdiction naming the applicable third Person as
debtor and it as secured party and notifying the third Person's secured lenders
of its interest in such Collateral before the third Person receives possession
of the Collateral in question).
Section 4.4. Corporate Changes. It shall not change its name, jurisdiction
of organization, or corporate structure in any manner that might make any
financing statement filed in connection with this Agreement seriously misleading
or its United States Federal Tax identification number or organizational
identification number unless it shall have given the Agent thirty (30) days
prior written notice thereof and shall have taken all action reasonably deemed
necessary or desirable by the Agent to protect its security interest in the
Collateral with the priority required by the Credit Agreement.
Section 4.5. Equipment, Fixtures and Inventory. It shall keep its
equipment, fixtures and inventory at (or in transit to) any of its locations
specified on Schedule 3.1 hereto or, upon thirty (30) days prior written notice
to the Agent, at such other places within the United States of America where all
action required to perfect and protect the Agent's security interest in such
Collateral with the priority required by the Credit Agreement shall have been
taken. Subject to Section 10.10 of the Credit Agreement, it shall notify the
Agent if it acquires after the date hereof any equipment for which a certificate
of title has been issued, any vessel subject to the Ship Mortgage Act of 1920 or
any aircraft and
Page 8
shall take all action reasonably deemed necessary or desirable by the Agent to
create, perfect and protect its interest in such Collateral with the priority
required by the Credit Agreement.
Section 4.6. Warehouse Receipts Non-Negotiable. It agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued in
respect of any portion of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be negotiable unless such warehouse receipt or
receipt in the nature thereof is delivered to the Agent.
Section 4.7. Voting Rights; Distributions, etc. So long as no Event of
Default exists it shall be entitled to exercise any and all voting and other
consensual rights (including the right to give consents, waivers and
notifications) pertaining to any of the Pledged Shares or any other investment
property; provided, however, that no vote shall be cast or consent, waiver or
ratification given or action taken without the prior written consent of the
Agent which would be inconsistent with or violate any provision of this
Agreement or any other Loan Document.
Section 4.8. Additional Investment Property and Instruments. It agrees
that it will: (a) not permit any issuer of any of the Pledged Shares to issue
any shares of stock, or any other equity, partnership, membership or other
ownership interest, any notes or other securities or instruments in addition to
or in substitution for any of the Collateral unless permitted by the Credit
Agreement; (b) pledge hereunder, immediately upon its acquisition thereof, any
and all such shares of stock or other equity, partnership, membership and other
ownership interests, notes or other securities or instruments (including any of
the same received from a Subsidiary created or acquired after the date hereof;
provided that a Debtor shall not be required to pledge more than 66 - 2/3% of
the ownership interests issued by any Subsidiary organized under the laws of a
jurisdiction outside the United States of America), and (c) promptly (and in any
event within three (3) Business Days) deliver to the Agent an amendment hereto,
duly executed by it, in substantially the form of Exhibit A (an "Amendment"), in
respect of such shares of stock, other ownership interests, notes or other
securities or instruments, together with all certificates, notes or other
instruments representing or evidencing the same. It hereby (a) authorizes the
Agent to attach each Amendment to this Agreement, and (b) agrees that all such
shares of stock and other ownership interests, notes or other securities or
instruments listed on any Amendment delivered to the Agent shall for all
purposes hereunder constitute Collateral.
Section 4.9. Intellectual Property Covenants. If it obtains any new
Intellectual Property or rights thereto or becomes entitled to the benefit of
any Intellectual Property, it shall give to the Agent prompt written notice
thereof, and shall execute and deliver, in form and substance satisfactory to
the Agent, a Copyright Security Agreement, Patent Security Agreement or
Trademark Security Agreement, as applicable, describing any such new
Intellectual Property. It shall: (a) prosecute diligently any copyright, patent,
trademark or license application at any time pending which is necessary for the
conduct of its business; (b) make application on all new copyrights, patents and
trademarks as it may reasonably deem appropriate; (c) preserve and maintain all
rights in the Intellectual Property that is necessary for the conduct of its
business; and (d) use commercially reasonable efforts to obtain any consents,
waivers or agreements necessary to enable the Agent to exercise its remedies
with respect to the Intellectual Property. It shall not abandon any pending
copyright, patent or trademark application, or Copyright, Patent, Trademark or
any other Intellectual Property which is necessary for the conduct of its
business without the prior written consent of the Agent. It shall not amend or
otherwise modify any Trademark License, Copyright License or Patent License
except to the extent that such amendment or modification would not have a
material adverse effect on the value of the Collateral or the ability of the
Agent to exercise any of its remedies.
Section 4.10. Deposit, Commodity and Security Accounts. It shall not open
any new deposit, commodity or security account or otherwise utilize any such
account other than the accounts identified on
Page 9
Schedule 3.2 unless it shall have given the Agent thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
the Agent to cause its security interest therein to be perfected with priority
required by the Credit Agreement. When no Default exists, it may make purchases
and sales of investment property in accordance with the restrictions on
investment set out in the Credit Agreement and may make withdrawals from its
deposit accounts. When a Default exists, it shall not be authorized to make
purchases and sales of the investment property, shall not be authorized to make
any withdrawals from any deposit account and it shall take such steps as Agent
may reasonably request to give Agent control over all investment property and
deposit accounts. It will not give any party except the Agent control over any
investment property or deposit account.
Section 4.11. Chattel Paper and Letters of Credit. It will not give any
party except the Agent control over any letter of credit right or electronic
chattel paper. It will not create any chattel paper without placing a legend on
the chattel paper acceptable to the Agent indicating that the Agent has a
security interest in the chattel paper.
Section 4.12. Commercial Tort Claims. It will amend Schedule 2.1(a) hereto
and otherwise grant to the Agent a security interest in any commercial tort
claim that arises after the date hereof that relates to or arises out of the
Collateral or the conduct of its business in relation thereto.
Section 4.13. Transfers; Liens. It shall not sell, lease, transfer or
otherwise dispose of any of its Collateral or any right, title or interest
therein and shall not permit any of its Collateral to become subject to any
Lien, except in each case as permitted by the Credit Agreement.
ARTICLE 5.
Rights of the Agent
Section 5.1. POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS THE AGENT AND ANY OFFICER OR AGENT THEREOF, WITH FULL POWER OF
SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE
POWER AND AUTHORITY IN THE NAME OF SUCH DEBTOR OR IN ITS OWN NAME, TO TAKE, ANY
AND ALL ACTIONS AND TO EXECUTE ANY AND ALL DOCUMENTATION WHICH THE AGENT AT ANY
TIME WHEN AN EVENT OF DEFAULT EXISTS AND FROM TIME TO TIME DURING the EXISTENCE
of AN EVENT OF DEFAULT DEEMS NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES
OF THIS AGREEMENT OR THE PRIOR SECURITY AGREEMENTS AND, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, IT HEREBY GIVES THE AGENT THE POWER AND RIGHT ON
ITS BEHALF AND IN AGENT'S OWN NAME TO DO ANY OF THE FOLLOWING WHEN AN EVENT OF
DEFAULT EXISTS, WITH NOTICE TO BORROWER BUT WITHOUT THE CONSENT OF ANY DEBTOR:
(a) to demand, ▇▇▇ for, collect or receive, in the applicable
Debtor's name or in the Agent's own name, any money or property at any time
payable or receivable on account of or in exchange for any of the Collateral
and, in connection therewith, endorse checks, notes, drafts, acceptances, money
orders, documents or any other instruments for the payment of money under the
Collateral or any policy of insurance;
(b) to pay or discharge taxes, Liens or other encumbrances levied or
placed on or threatened against the Collateral;
Page 10
(c) to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Agent and to
receive, open, and dispose of mail addressed to the Debtor;
(d) (i) to direct account debtors and any other parties obligated on
the Collateral to make payment of any and all monies due and to become due
thereunder directly to, or otherwise render performance to or for the benefit
of, the Agent or as the Agent shall direct; (ii) to receive payment of and
receipt for any and all monies, claims and other amounts due and to become due
at any time in respect of or arising out of any Collateral; (iii) to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, proxies, stock powers,
verifications and notices in connection with the Collateral; (iv) to commence
and prosecute any suit, action or proceeding at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral (including any Liens or any
supporting obligation securing or supporting the payment thereof); (v) to defend
any suit, action or proceeding brought against it with respect to any
Collateral; (vi) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges or
releases as the Agent may deem appropriate; (vii) to exchange any of the
Collateral for other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in connection
therewith, deposit any of the Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms as the
Agent may determine; (viii) to add or release any guarantor, endorser, surety or
other party to any of the Collateral; (ix) to renew, extend or otherwise change
the terms and conditions of any of the Collateral; (x) to grant or issue any
exclusive or nonexclusive license under or with respect to any of the
Intellectual Property (subject to the rights of third parties under pre-existing
licenses); (xi) to endorse its name on all applications and other documentation
necessary or desirable in order for the Agent to use any of the Intellectual
Property; (xii) to make, settle, compromise or adjust any claims under or
pertaining to any of the Collateral (including claims under any policy of
insurance); and (xiii) to sell, transfer, pledge, convey, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Agent were the absolute owner thereof for all purposes,
and to do, at the Agent's option and the Debtors' expense, at any time, or from
time to time, all acts and things which the Agent deems necessary to protect,
preserve, maintain, or realize upon the Collateral and the Agent's security
interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.10.
The Agent shall be under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or implicitly granted to
the Agent in this Agreement, and shall not be liable for any failure to do so or
any delay in doing so. Neither the Agent nor any Person designated by the Agent
shall be liable for any act or omission or for any error of judgment or any
mistake of fact or law, except any of the same resulting from its or their gross
negligence or willful misconduct. This power of attorney is conferred on the
Agent solely to protect, preserve, maintain and realize upon its security
interest in the Collateral. The Agent shall not be responsible for any decline
in the value of the Collateral and shall not be required to take any steps to
preserve rights against prior parties or to protect, preserve or maintain any
Lien or supporting obligation given to secure the Collateral.
Section 5.2. Possession; Reasonable Care. The Agent may, from time to
time, in its sole discretion, appoint one or more agents to hold physical
custody, for the account of the Agent, of any or all of the Collateral that the
Agent has a right to possess. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Agent accords its own property, it being understood that the Agent
shall not have any responsibility for: (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral,
Page 11
whether or not the Agent has or is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against any parties with
respect to any Collateral.
ARTICLE 6.
Default
Section 6.1. Rights and Remedies. If an Event of Default exists, the Agent
shall have the following rights and remedies:
(a) In addition to all other rights and remedies granted to the
Agent in this Agreement (including those set forth in Article 5 hereof) or in
any other Loan Document or by applicable law, the Agent shall have all of the
rights and remedies of a secured party under the UCC (whether or not the UCC
applies to the affected Collateral). Without limiting the generality of the
foregoing, the Agent may: (i) without demand or notice to any Debtor, collect,
receive or take possession of the Collateral or any part thereof and for that
purpose the Agent may enter upon any premises on which the Collateral is located
and remove the Collateral therefrom or render it inoperable and in the event the
Agent seeks to take possession of any or all of the Collateral by judicial
process, each Debtor hereby irrevocably waives any bonds and any surety or
security relating thereto that may be required by applicable law as an incident
to such possession, and waives any demand for possession prior to the
commencement of any such suit or action; (ii) apply the balance of Debtor's
deposit account held at the Agent to Debtor's Obligation; (iii) instruct any
bank holding any Debtor's deposit accounts to pay the balance of such deposit
account to or for the benefit of the Agent; and/or (iv) sell, lease or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels at public
or private sale or sales, at the Agent's offices or elsewhere, for cash, on
credit or for future delivery, on an "as is" and "with all faults" basis, with a
disclaimer of all warranties (including warranties of title, possession, quiet
enjoyment and the like and all warranties of merchantability and fitness) and
upon such other terms as the Agent may deem commercially reasonable or otherwise
as may be permitted by law. Neither the Agent nor any Secured Party shall have
any obligation to clean - up or otherwise prepare the Collateral for sale if the
Agent determines that it is not beneficial to do so or if its costs to do so
outweigh the benefits expected to be received thereby. The Agent shall have the
right at any public sale or sales, and, to the extent permitted by applicable
law, at any private sale or sales, to bid (which bid may be, in whole or in
part, in the form of cancellation of indebtedness) and become a purchaser of the
Collateral or any part thereof. Upon the request of the Agent, each Debtor shall
within ten (10) days (or within such longer number of days as the Agent may
approve): (i) assemble its Collateral and (ii) make it available to the Agent at
any place or places designated by the Agent that are reasonably convenient to it
and the Agent. Each Debtor agrees that the Agent shall not be obligated to give
more than ten (10) days prior written notice of the time and place of any public
sale or of the time after which any private sale may take place and that such
notice shall constitute reasonable notice of such matters; provided that no such
notice shall be required with respect to any Collateral that is perishable, that
threatens to decline speedily in value or is a type customarily sold on the
recognized market. The Agent shall not be obligated to make any sale of
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of Collateral may have been given. The Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. Each Debtor shall be liable for all
reasonable expenses of retaking, holding, preparing for sale or the like, and
all reasonable attorneys' fees, legal expenses and other costs and expenses
incurred by the Agent in connection with the collection of its Obligations and
the enforcement of the Agent's rights under this Agreement and arising as a
result hereof. Each Debtor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral applied to its
Obligations are insufficient to pay
Page 12
its Obligations in full. The Agent may apply the Collateral against the
Obligations as provided in the Credit Agreement and when applying the Collateral
against the Obligations, unless otherwise provided in the Credit Agreement, any
Obligations which are purchase money obligations or represent proceeds of loans
utilized to acquire the Collateral shall be deemed to be paid last. Each Debtor
waives all rights of marshalling, valuation and appraisal in respect of the
Collateral. Any proceeds received or held by the Agent in respect of any sale
of, collection from or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent as collateral for, and
then or at any time thereafter applied in whole or in part by the Agent against,
the Obligations in the order permitted by the Credit Agreement. Any surplus of
such proceeds and interest accrued thereon, if any, held by the Agent and
remaining after payment in full of all the Obligations and the termination of
all commitments and letters of credit under the Credit Agreement shall be
promptly paid over to the Debtor entitled thereto or to whomsoever may be
lawfully entitled to receive such surplus. The Agent shall have no obligation to
invest or otherwise pay interest on any amounts held by it in connection with or
pursuant to this Agreement, unless it has otherwise agreed to do so.
(b) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the Agent's
nominee or nominees.
(c) The Agent may exercise any and all of the rights and remedies of
any Debtor under or in respect of the Collateral, including any and all rights
to demand or otherwise require payment of any amount under, or performance of
any provision of, any of the Collateral and any and all voting rights and
corporate powers in respect of the Collateral. Each Debtor shall execute and
deliver (or cause to be executed and delivered) to the Agent all such proxies
and other documentation as the Agent may reasonably request for the purpose of
enabling the Agent to exercise the voting and other rights which it is entitled
to exercise pursuant to this clause (c) and to receive the dividends, interest
and other amounts which it is entitled to receive hereunder.
(d) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(e) On any sale of the Collateral, the Agent is hereby authorized to
comply with any limitation or restriction with which compliance is necessary, in
the view of the Agent's counsel, in order to avoid any violation of applicable
law or in order to obtain any required approval of the purchaser or purchasers
by any applicable governmental unit. Such compliance will not be considered to
adversely affect the commercial reasonableness of any sale of any Collateral.
(f) For purposes of enabling the Agent to exercise its rights and
remedies under this Section 6.1 and enabling the Agent and its successors and
assigns to enjoy the full benefits of the Collateral in each case as the Agent
shall be entitled to exercise its rights and remedies under this Section 6.1,
each Debtor hereby grants to the Agent an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to it) to use,
assign, license or sublicense any of its Intellectual Property, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and all computer programs used for the completion or
printout thereof and further including in such license such rights of quality
control and inspection as are reasonably necessary to prevent the Trademarks
included in such license from claims of invalidation. This license shall also
inure to the benefit of all successors, assigns and transferees of the Agent.
(g) If the Agent sells any of the Collateral of a Debtor on credit,
such Debtor will be credited only with payments actually made by the purchaser,
received by the Agent and applied to the
Page 13
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, the Agent may resell the Collateral and the applicable Debtor shall
be credited with the proceeds of the sale.
Section 6.2. Private Sales. Each Debtor recognizes that the Agent may be
unable to effect a public sale of any or all of the Collateral by reason of
certain prohibitions contained in the laws of any jurisdiction outside the
United States or in the Securities Act of 1933, as amended from time to time
(the "Securities Act") and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent permitted
by law, be deemed to have been made in a commercially reasonable manner. Neither
the Agent nor any Secured Party shall be under any obligation to delay a sale of
any of the Collateral for the period of time necessary to permit the issuer of
such securities to register such securities under the laws of any jurisdiction
outside the United States, under the Securities Act or under any applicable
state securities laws, even if such issuer would agree to do so. Each Debtor
further agrees to do or cause to be done, to the extent that it may do so under
applicable law, all such other reasonable acts and things as may be necessary to
make such sales or resales of any portion or all of the Collateral valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts, arbitrators or
governmental units, domestic or foreign, having jurisdiction over any such sale
or sales, all at the Debtors' expense.
ARTICLE 7.
Miscellaneous
Section 7.1. No Waiver; Cumulative Remedies. No failure on the part of the
Agent to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement are cumulative and not exclusive of any rights
and remedies provided by law.
Section 7.2. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each Debtor, the Agent, the Secured Parties and
respective successors and assigns, except that no Debtor may assign any of its
rights or obligations under this Agreement without the prior written consent of
the Banks and the Agent may not appoint a successor Agent except in accordance
with the Credit Agreement.
Section 7.3. ENTIRE AGREEMENT; AMENDMENT AND RESTATEMENT; AMENDMENTS. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS
(INCLUDING WITHOUT LIMITATION, THE PRIOR SECURITY AGREEMENTS), REPRESENTATIONS
AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. This
Agreement consolidates, amends and restates in their entireties the Prior
Security Agreements. The execution of this
Page 14
Agreement and the other Loan Documents executed in connection herewith do not
extinguish the liens and security interests created by the Prior Security
Agreements, which liens and security interests are continued hereby
uninterrupted, without change to the priority thereof. Except as contemplated by
the execution and delivery of a Joinder Agreement or an Amendment (which only
needs to be signed by the party thereto), the provisions of this Agreement may
be amended or waived only by an instrument in writing signed by the parties
hereto and the Required Banks.
Section 7.4. Notices. All notices and other communications provided for in
this Agreement shall be given or made in accordance with the Credit Agreement
and if to any Debtor, at the address for notices of the Borrower set forth
therein.
Section 7.5. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas (without regard to
the conflicts of law provisions thereof) and the applicable laws of the United
States of America.
Section 7.6. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7. Survival of Representations and Warranties. All
representations, warranties and certifications made in this Agreement or in any
documentation delivered pursuant hereto shall survive the execution and delivery
of this Agreement, and no investigation by the Agent shall affect the
representations, warranties and certifications or the right of the Agent or any
Secured Party to rely upon them.
Section 7.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 7.9. Severability. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.10. Termination; Release of Pledged Bonds. If all of the
Obligations shall have been paid and performed in full, all commitments of the
Agent and the Banks shall have expired or terminated and no letters of credit
under the Credit Agreement shall remain outstanding, the Agent shall, upon the
written request, execute and deliver to Debtors proper documentation
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to each Debtor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Agent and has not previously been sold or
otherwise applied pursuant to this Agreement. The Agent also agrees to release
the security interest created herein in any Pledged Bonds that are successfully
remarketed under the terms of the applicable Bond Documents.
Section 7.11. Obligations Absolute. All rights and remedies of the Agent
hereunder, and all obligations of each Debtor hereunder, shall be absolute and
unconditional irrespective of: (a) any lack of validity or enforceability of any
of the Loan Documents; (b) any change in the time, manner, or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any of the Loan
Documents; (c) any exchange, release, or nonperfection of any Collateral, or any
release or amendment or waiver of or consent to any departure from any guarantee
or other supporting obligation, for all or any of the Obligations; or (d) any
other
Page 15
circumstance that might otherwise constitute a defense available to, or a
discharge of, a third party pledgor or surety.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
AGENT:
JPMORGAN CHASE BANK,
as Agent for the Banks
By:
-------------------------------------------
D. ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
DEBTORS:
TUFCO, L.P.
By: Tufco Tech, Inc.,
its Managing General Partner
By:
---------------------------------------
Name:
---------------------------------
Authorized Officer for the
General Partner
TUFCO TECHNOLOGIES, INC.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
TUFCO TECH, INC.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
TECHNOLOGIES I, INC.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
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TUFCO, INC.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
TFCO, INC.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
FOREMOST MANUFACTURING COMPANY, INC.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
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