LOAN AND SECURITY AGREEMENT
Dated as of August 3, 1999
Among
▇▇▇▇▇▇▇▇▇▇ GRAPHICS INTERNATIONAL, INC.,
▇▇▇▇▇▇▇▇▇▇ GRAPHICS, INC.,
▇▇▇▇▇▇▇▇▇▇ GRAPHICS REALTY, LLC,
BOSTON TOWNE PRESS, INC.,
▇▇▇▇▇▇▇▇▇▇ GRAPHICS DELAWARE, INC.,
CGII CALIFORNIA HOLDINGS, INC.,
MVP GRAPHICS, INC.,
SUPER PACK, INC. and
BENGAL GRAPHICS, INC.
as Borrowers,
THE LENDERS LISTED ON THE
SIGNATURE PAGES HEREOF,
SUMMIT BANK,
as Issuing Bank of the Letters of Credit,
and
SUMMIT BANK,
as Agent
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS......................................................................2
SECTION 1.1 Certain Defined Terms.............................................................2
SECTION 1.2 Accounting Terms.................................................................18
ARTICLE 2 THE LOANS............................................................................................18
SECTION 2.1 Commitment to Lend...............................................................18
SECTION 2.2 Term Loan........................................................................19
SECTION 2.3 The Revolving Credit.............................................................20
SECTION 2.4 Making the Advances under the Revolving Credit...................................20
SECTION 2.5 Revolving Credit Termination; Repayment of the Revolving Credit..................22
SECTION 2.6 The Acquisition Loan ............................................................22
SECTION 2.7 Making the Advances under the Acquisition Loan...................................22
SECTION 2.8 Acquisition Loan Termination; Automatic Conversion to Term Loan..................24
SECTION 2.9 The SAMLOC.......................................................................25
SECTION 2.10 Interest.........................................................................25
SECTION 2.11 Mandatory Prepayments; Reductions of the Commitments.............................26
SECTION 2.12 Prepayment Compensation..........................................................29
SECTION 2.13 Notes............................................................................30
SECTION 2.14 Fees.............................................................................30
SECTION 2.15 Place and Manner of Payments.....................................................31
SECTION 2.16 Computation of Interest and Commitment Fee.......................................32
SECTION 2.17 Late Charges; Default Rate.......................................................32
SECTION 2.18 Reimbursement to Lenders for Cost Increases Imposed by Law.......................32
SECTION 2.19 Reimbursement to Lenders for Increased Costs Due to Capital Adequacy
Requirements.....................................................................33
SECTION 2.20 Illegality.......................................................................34
SECTION 2.21 Special Provisions for LIBOR Tranches............................................34
SECTION 2.22 Availability of Rate Quotations..................................................35
SECTION 2.23 Letters of Credit................................................................35
SECTION 2.24 Letter of Credit Cash Collateral Account.........................................40
SECTION 2.25 Mitigation of Obligations; Replacement of Lenders in Certain Circumstances.......41
ARTICLE 3 COLLATERAL...........................................................................................41
SECTION 3.1 Security Interests...............................................................42
SECTION 3.2 Further Security.................................................................42
SECTION 3.3 Financing Statements; Certificates of Title......................................43
SECTION 3.4 Landlord's Waiver................................................................43
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TABLE OF CONTENTS
(continued)
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SECTION 3.5 Agent's Rights With Respect to Accounts, Chattel Paper, Instruments and
General Intangibles..............................................................43
SECTION 3.6 Places of Business; Location of Collateral.......................................44
SECTION 3.7 Accounts.........................................................................44
SECTION 3.8 Chattel Paper; Letters of Credit and Instruments.................................45
SECTION 3.9 Equipment and Inventory..........................................................45
SECTION 3.10 Expenses of Agent................................................................45
SECTION 3.11 Notices..........................................................................46
SECTION 3.12 Insurance; Discharge of Taxes, etc...............................................46
SECTION 3.13 Waiver and Release by Borrowers..................................................46
SECTION 3.14 Records and Reports..............................................................46
SECTION 3.15 Further Assurances...............................................................47
SECTION 3.16 Application of Proceeds of Collateral............................................47
SECTION 3.17 Continuing Collateral............................................................47
ARTICLE 4 CONDITIONS OF LENDING................................................................................47
SECTION 4.1 Conditions Precedent to Each Lender's Obligations................................47
SECTION 4.2 Additional Conditions Precedent..................................................51
SECTION 4.3 Conditions to Letters of Credit..................................................51
SECTION 4.4 Special Conditions for Acquisition Advances......................................52
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.......................................................................55
SECTION 5.1 Existence........................................................................55
SECTION 5.2 Authorization....................................................................55
SECTION 5.3 Validity of Documents............................................................55
SECTION 5.4 Financial Information............................................................56
SECTION 5.5 Litigation.......................................................................56
SECTION 5.6 Contingent Liabilities...........................................................56
SECTION 5.7 Taxes............................................................................56
SECTION 5.8 Liens............................................................................56
SECTION 5.9 Consents.........................................................................56
SECTION 5.10 ERISA............................................................................56
SECTION 5.11 Ownership of Stock; Subsidiaries and Affiliates; Fictitious Name.................57
SECTION 5.12 Licenses, Permits, etc...........................................................57
SECTION 5.13 Compliance with Laws Generally...................................................57
SECTION 5.14 Environmental Matters............................................................57
SECTION 5.15 Patents, etc.....................................................................58
SECTION 5.16 Regulation U, Etc................................................................58
SECTION 5.17 Labor Matters....................................................................58
SECTION 5.18 Outstanding Judgments or Orders..................................................58
SECTION 5.19 No Defaults on Other Agreements..................................................58
SECTION 5.20 Debt and Credit Arrangements.....................................................59
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TABLE OF CONTENTS
(continued)
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SECTION 5.21 Real Estate Owned and Leased.....................................................59
SECTION 5.22 Material Contracts...............................................................59
SECTION 5.23 Solvency.........................................................................59
SECTION 5.24 Ownership........................................................................60
SECTION 5.25 No Restrictions in Other Agreements..............................................60
SECTION 5.26 Full Disclosure..................................................................60
ARTICLE 6 COVENANTS............................................................................................60
SECTION 6.1 Use of Proceeds..................................................................60
SECTION 6.2 Financial Information............................................................60
SECTION 6.3 Insurance........................................................................62
SECTION 6.4 Liens............................................................................62
SECTION 6.5 Maximum Annual Capital Expenditures..............................................63
SECTION 6.6 Leverage Ratio...................................................................63
SECTION 6.7 Interest Coverage Ratio..........................................................64
SECTION 6.8 Fixed Charge Coverage Ratio......................................................64
SECTION 6.9 Minimum Net Worth................................................................64
SECTION 6.10 Fiscal Year......................................................................64
SECTION 6.11 Taxes............................................................................65
SECTION 6.12 Guarantees, etc..................................................................65
SECTION 6.13 Loans; Investments; Holding of Cash and Other Liquid Assets......................65
SECTION 6.14 Compliance with Laws.............................................................66
SECTION 6.15 Environmental Matters............................................................66
SECTION 6.16 Maintenance of Property..........................................................67
SECTION 6.17 Inspection by Lenders............................................................67
SECTION 6.18 Limitations on Borrowing.........................................................68
SECTION 6.19 Reports..........................................................................68
SECTION 6.20 ERISA............................................................................69
SECTION 6.21 Mergers, etc.....................................................................71
SECTION 6.22 Nature of Business...............................................................72
SECTION 6.23 Disposal of Assets...............................................................72
SECTION 6.24 Patents, etc.....................................................................72
SECTION 6.25 Dividends and Distributions; Changes in Capitalization...........................72
SECTION 6.26 Indemnification..................................................................72
SECTION 6.27 Licenses, Permits................................................................73
SECTION 6.28 RICO.............................................................................73
SECTION 6.29 Equity Interests.................................................................73
SECTION 6.30 Year 2000 Compliance.............................................................73
SECTION 6.31 Operating and Deposit Accounts...................................................74
SECTION 6.32 Material Amendments..............................................................74
SECTION 6.33 Transactions with Affiliates.....................................................74
SECTION 6.34 Representations and Warranties...................................................74
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(continued)
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ARTICLE 7 DEFAULT..............................................................................................74
SECTION 7.1 Events of Default................................................................74
SECTION 7.2 Remedies.........................................................................76
ARTICLE 8 AGENT................................................................................................77
SECTION 8.1 Appointment and Authorization....................................................78
SECTION 8.2 General Immunity.................................................................78
SECTION 8.3 Consultation with Professionals..................................................78
SECTION 8.4 Documents........................................................................78
SECTION 8.5 Rights as a Lender...............................................................78
SECTION 8.6 Responsibility of Agent..........................................................78
SECTION 8.7 Action by Agent..................................................................79
SECTION 8.8 Notices of Event of Default, Etc.................................................79
SECTION 8.9 Indemnification of Agents........................................................79
SECTION 8.10 Resignation of Agent.............................................................80
SECTION 8.11 Non-Reliance on Agent and other Lenders..........................................80
SECTION 8.12 Failure to Act...................................................................80
ARTICLE 9 ADDITIONAL PROVISIONS................................................................................81
SECTION 9.1 No Waiver, Cumulative Remedies...................................................81
SECTION 9.2 Notices..........................................................................81
SECTION 9.3 Set-off..........................................................................82
SECTION 9.4 Sharing of Payments..............................................................82
SECTION 9.5 Costs and Expenses...............................................................82
SECTION 9.6 Governing Law....................................................................83
SECTION 9.7 Survival of Agreements and Representations; JURY WAIVER; Consent to
Jurisdiction.....................................................................83
SECTION 9.8 Binding Effect...................................................................83
SECTION 9.9 Headings.........................................................................84
SECTION 9.10 Amendments.......................................................................84
SECTION 9.11 Usury............................................................................84
SECTION 9.12 Participations; Assignments......................................................85
SECTION 9.13 Joint and Several Obligations....................................................85
SECTION 9.14 Entire Agreement.................................................................85
SECTION 9.15 Counterparts.....................................................................86
SECTION 9.16 Severability.....................................................................86
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SCHEDULE OF EXHIBITS
Exhibit Subject
------- -------
1.1 Existing Letters of Credit
2.1 Pro Rata Shares; Commitments
2.4A Borrowing Notice Form
2.10B Conversion Notice Form
2.13A Revolving Credit Note Form
2.13B Term Loan Note Form
2.13C Acquisition Loan Note Form
2.13D SAMLOC Note Form
3.6 List of Locations
5.4 Financial Information
5.5 Litigation
5.6 Contingent Liabilities
5.10 ERISA Plans
5.11 Subsidiaries and Affiliates; Stock Ownership
5.15 Intellectual Property
5.20 Indebtedness
5.21 Real Estate
5.22 Material Contracts
6.2 Compliance Certificate
6.4 Liens
6.13 Investments
9.12 Assignment and Acceptance Agreement
LOAN AND SECURITY AGREEMENT dated as of August 3, 1999 among ▇▇▇▇▇▇▇▇▇▇
GRAPHICS INTERNATIONAL, INC., a New Jersey corporation ("Parent"); ▇▇▇▇▇▇▇▇▇▇
GRAPHICS, INC., a New Jersey corporation ("CGII"), ▇▇▇▇▇▇▇▇▇▇ GRAPHICS REALTY,
LLC ("Realty"), a New Jersey limited liability company, ▇▇▇▇▇▇▇▇▇▇ GRAPHICS
DELAWARE, INC. ("CGD"), a Delaware corporation, CGII CALIFORNIA HOLDINGS, INC.
("CGIIC"), a California corporation, MVP GRAPHICS, INC. ("MVP"), a California
corporation, SUPER PACK, INC. ("Super Pack"), a California corporation, BENGAL
GRAPHICS, INC. ("Bengal"), a New Jersey corporation, and BOSTON TOWNE PRESS,
INC., a New Jersey corporation ("BTP", and together with Parent, CGII, Realty,
Bengal, CGIIC, MVP, Super Pack and CGD and any other borrower hereafter becoming
a party hereto, "Borrowers"); SUMMIT BANK, a banking corporation of the State of
New Jersey ("Summit") and the other lenders referred to on the signature pages
hereto or otherwise parties hereto (Summit and such other lender signatories,
together with other lenders parties hereto from time to time pursuant to Section
9.12 below, and their successors and assigns, "Lenders"); Summit, as Issuing
Bank of Letters of Credit hereunder (Summit, in such capacity, and any successor
Issuing Bank shall be referred to hereinafter as "Issuing Bank"); and Summit, as
agent for Lenders and Issuing Bank (Summit, in such capacity, and any successor
Agent shall be referred to hereinafter as "Agent"). Capitalized terms used
herein have the meanings ascribed to them in Article I hereof.
BACKGROUND
Borrowers and Lenders desire to enter into this Agreement to establish (1)
a $19,000,000.00 revolving credit facility (the "Revolving Credit") and a
$1,000,000.00 line of credit (the "SAMLOC") each for the purpose of providing
working capital and financing capital expenditures and for general corporate
purposes, (2) a $30,000,000.00 acquisition revolving credit/term loan facility
(both before and after the Conversion Date, the "Acquisition Loan") for the
purpose of financing Permitted Acquisitions and (3) a $10,000,000.00 term loan
(the "Term Loan") for the purpose of refinancing certain existing Indebtedness
of Borrowers.
NOW, THEREFORE, in consideration of the premises and mutual promises herein
made, and in consideration of the representations, warranties, covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Account" has the meaning given to such term in the U.C.C. as in effect on
the date hereof.
"Acquisition Advance Request" means a request for an Acquisition Advance
submitted in accordance with Section 2.7 hereof, and meeting the requirements
therein set forth.
"Acquisition Advances" has the meaning given to such term in Section 2.6
hereof.
"Acquisition Base Rate Tranche" means each portion of any Acquisition
Advance or the Converted Loan, as the case may be, bearing interest at the
Adjusted Base Rate.
"Acquisition Consideration" means the sum of (without duplication) (A) cash
paid, (B) Indebtedness incurred or assumed, (C) guaranties given or incurred and
(D) the value of any other consideration given by a Borrower and any of its
Affiliates in connection with a Permitted Acquisition, including without
limitation, deferred payments and Earnouts, but excluding consideration in the
form of stock in Parent.
"Acquisition LIBOR Tranche" means each portion of any Acquisition Advance
or the Converted Loan, as the case may be, bearing interest at an Adjusted LIBO
Rate and sharing the same LIBOR Interest Period.
"Acquisition Loan" has the meaning given to such term in the Background
Section hereof.
"Acquisition Loan Limit" means $30,000,000.00, as the same may be reduced
in accordance with the terms of this Agreement.
"Acquisition Loan Notes" has the meaning given to such term in Section 2.13
hereof.
"Adjusted Base Rate" means a per annum rate equal to the Base Rate plus the
Applicable Margin. The Adjusted Base Rate shall change simultaneously with each
change in the Base Rate and with each change in the Applicable Margin.
2
"Adjusted LIBO Rate" means the LIBO Rate plus the Applicable Margin.
"Advance" means either a Revolving Credit Advance, an Acquisition Advance
or a SAMLOC Advance.
"Advance Request" means either a Revolving Credit Advance Request, an
Acquisition Advance Request or a SAMLOC Advance Request.
"Affiliate" of any Person (identified for purposes of this definition as
"Z") means any other Person who controls, is controlled by or is under common
control with Z.
"Agent" has the meaning given to such term in the introductory paragraph
hereof.
"Agreement" means this Loan and Security Agreement as amended, restated,
modified or extended from time to time.
"AL Commitment" has the meaning set forth in Section 2.1 hereof.
"Applicable Margin" means for Base Rate Tranches .75% per annum, and for
LIBOR Tranches 2.25% per annum, provided that from and after September 30, 1999,
"Applicable Margin" shall be calculated in accordance with the table and text
below:
--------------------------------------------- --------------------- --------------------
Funded Debt to EBITDA is: Applicable Margin Applicable Margin
for LIBOR Tranches for Base Rate
(per annum) Tranches
(per annum)
--------------------------------------------- --------------------- --------------------
Greater than or equal to 4.0 2.50% 1.00%
--------------------------------------------- --------------------- --------------------
Greater than or equal to 3.5 but less than 2.25% .75%
4.0
--------------------------------------------- --------------------- --------------------
Greater than or equal to 3.0 but less than 2.0% .50%
3.5
--------------------------------------------- --------------------- --------------------
Greater than or equal to 2.5 but less than 1.75% .25%
3.0
--------------------------------------------- --------------------- --------------------
Greater than or equal to 2.0 but less than 1.50% 0
2.5
--------------------------------------------- --------------------- --------------------
Greater than or equal to 1.5 but less than 1.25% 0
2.0
--------------------------------------------- --------------------- --------------------
Greater than or equal to 1.0 but less than 1.125% 0
1.5
--------------------------------------------- --------------------- --------------------
Less than 1.0 1.0% 0
--------------------------------------------- --------------------- --------------------
3
The calculation of the Applicable Margin pursuant to the above table shall be
made quarterly using, for the calculation of EBITDA, the four fiscal quarters
ended on or immediately prior to the date of calculation, based upon the
Consolidated financial statements of Borrowers and their Subsidiaries for such
period. In the event the Applicable Margin changes, such change shall become
effective, for the then outstanding principal balance of the Loans and all
advances thereafter made, as of the first day of the month immediately following
the month in which Borrowers' quarterly statements used in such calculation are
delivered to Agent. Notwithstanding the foregoing, if and when EBITDA calculated
on a rolling four quarter basis is zero or negative, the Applicable Margin shall
be 1.00% for Base Rate Tranches and 2.50% for LIBOR Tranches. If the Applicable
Margin increases pursuant to the foregoing and, pursuant to Section 2.17 hereof,
the Default Rate has gone into effect, "the interest rate then in effect" (as
used in Section 2.17 hereof) shall include the Applicable Margin as so
increased. The Applicable Margin, once reset, shall remain in effect for not
less than ninety (90) days.
"Assignment of Leases" has the meaning given to such term in Section 3.2
hereof.
"Base Rate" means, for each day, the higher of (A) the per annum index rate
established and announced from time to time by the entity which is the Agent as
its "base rate" or "prime rate" as in effect on such day, which rate is used by
the entity which is the Agent in establishing interest rates on some of its
commercial loans, and such term is not intended to imply that such base or prime
rate is, nor is such base or prime rate necessarily, the lowest rate of interest
charged by the entity which is the Agent on any type of commercial loans, and
(B) the Federal Funds Rate as in effect on such day plus one half of one percent
(.5%).
"Base Rate Tranche" means any Acquisition Base Rate Tranche, any Term Loan
Base Rate Tranche, any Revolving Credit Base Rate Tranche or any SAMLOC Base
Rate Tranche.
"Bengal" has the meaning given to such term in the introductory paragraph
hereof.
"Books and Records" means all books, records, tapes, information, data,
stored material, computer media, passwords, and access codes arising or related
to a Borrower's business.
"Borrowers" has the meaning given to such term in the introductory
paragraph hereof.
4
"BTP" has the meaning given to such term in the introductory paragraph
hereof.
"Business Day" means (A) for all purposes other than as covered by clause
(B) below, a day other than a Saturday, Sunday, or other day on which banks are
authorized or required to close under the laws of New Jersey or New York or
under Federal law and (B) with respect to all notices and determinations in
connection with, and payments of principal and interest on, LIBOR Tranches, any
day which is a Business Day described in clause (A) and which is also a day for
trading by and between banks in U.S. dollar deposits in the interbank eurodollar
market.
"Capital Expenditure" of any Person means, for any period, all expenditures
(whether paid in cash or accrued as liabilities during such period) of such
Person during such period which would be classified as capital expenditures in
accordance with GAAP (including, without limitation, expenditures for
maintenance and repairs which are capitalized, and Capitalized Leases to the
extent an asset is recorded in connection therewith in accordance with GAAP).
"Capitalized Lease" means at any time any lease which is, or should be,
capitalized on the balance sheet of the lessee at such time in accordance with
GAAP.
"Capitalized Lease Obligation" of any Person at any time shall mean the
aggregate amount which is, or should be, reported as a liability on the balance
sheet of such Person at such time as lessee under a Capitalized Lease in
accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended from time to time.
"CGD" has the meaning given to such term in the introductory paragraph
hereof
"CGII" has the meaning given to such term in the introductory paragraph
hereof.
"CGIIC" has the meaning given to such term in the introductory paragraph
hereof.
"Change of Control" means the occurrence of any of the following events:
(A) the acquisition by any Person (other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇), or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities Act of
1934, as amended) of greater than 25% of the outstanding shares of voting stock
of Parent, (B) during any 12-month period a majority of the current board of
directors of Parent cease to be members of such board of directors, other than
by reason of death, disability or voluntary retirement (unless such retirement
occurs in conjunction with the acquisition by any Person, or two or more Persons
acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the
5
Securities Act of 1934, as amended) of greater than 15% of the outstanding
voting stock of Parent) or (C) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇'▇ ownership of Parent falls
below 15%.
"Chattel Paper" has the meaning given to such term in the New Jersey
Uniform Commercial Code as in effect on the date hereof.
"Closing Date" means the date on which all of the conditions precedent set
forth in Sections 4.1 and 4.2 hereof are satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all property which serves or is intended to serve as
collateral for any of the Liabilities hereunder, under any of the other Loan
Documents and/or under any other agreement, document or instrument now or
hereafter entered into.
"Commitment" means, with respect to any Lender, such Lender's RC
Commitment, AL Commitment, SAMLOC Commitment and/or TL Commitment.
"Commitment Fee" has the meaning given to such term in Section 2.14 hereof.
"Consolidated" refers to the consolidation of the accounts of Borrowers and
their Subsidiaries in accordance with GAAP, including principles of
consolidation.
"Consolidating" refers to the separate accounts of Borrowers and their
Subsidiaries prepared in accordance with GAAP.
"Controlled Group" means all trades or businesses which control, are
controlled by or are under common control (as defined in ss.4001(b)(1) of ERISA)
with any Borrower or any Subsidiary of any Borrower.
"Contingent Liabilities" means all liabilities, including without
limitation any Earnout for which the conditions precedent for payment of such
Earnout have not been satisfied, that must in accordance with GAAP be classified
as contingent liabilities of Borrowers and their Subsidiaries on a Consolidated
basis.
"Conversion Date" means the earliest of (A) July 31, 2001, (B) the date on
which the outstanding Acquisition Advances are equal to or greater than the
Acquisition Loan Limit or (C) the date on which Lenders' obligations to make
Acquisition Advances are terminated in whole pursuant to the terms of this
Agreement.
"Converted Loan" has the meaning given to such term in Section 2.8 hereof.
"Converted Loan Maturity Date" means July 31, 2005.
6
"Credit Obligation" means any obligation for the payment of borrowed money
or the installment purchase price of property or on account of a lease of
property which, in accordance with GAAP, is or is required to be capitalized
which individually or in the aggregate exceeds $100,000.00, and shall also mean
any obligation under a guaranty or suretyship agreement covering obligations of
such type which individually or in the aggregate exceeds $100,000.00.
"Default" means the occurrence or non-occurrence of an event which but for
the giving of notice, the passage of time or both would constitute an Event of
Default.
"Default Rate" has the meaning given to such term in Section 2.17 hereof.
"Defined Benefit Pension Plan" means an employee benefit pension plan
(other than a Multiemployer Plan) covered by Title IV of ERISA as provided in
Section 4021 of ERISA.
"Defined Contribution Plan" means an individual account plan as defined in
ss.3(34) of ERISA.
"Document" has the meaning given to such term in the U.C.C. as in effect on
the date hereof.
"Domestic Subsidiary" means a Subsidiary organized under the laws of one of
the states or territories of the United States.
"Earnout" means a deferred portion of the purchase price payable in
connection with the acquisition by any Borrower, directly or indirectly, of the
capital stock or assets of a business, which is based upon the financial
performance of the acquired business following such acquisition.
"EBITDA" means, for any period, the net earnings of Borrowers and their
Subsidiaries on a Consolidated basis plus Interest Expense, income taxes,
depreciation and amortization of Borrowers and their Subsidiaries on a
Consolidated basis for such period.
"Effective Date" means, for each LIBOR Tranche, the date Borrowers
designate as the date on which a LIBOR Interest Period is to commence pursuant
to Article 2 hereof.
"Employee Benefit Plan" has the meaning given to such term in ss.3(3) of
ERISA.
"Environmental Law" means any federal, state, or local statute, law,
ordinance, regulation, rule, standard, permit or requirement, including but not
limited to those statutes, ordinances, laws, regulations, rules, standards,
permits and requirements promulgated under the laws of the United States of
America or any other nation,
7
concerning or relating to the generation, treatment, storage, transportation,
disposal and release into the environment, cleanup and remediation of any
"hazardous substance" as that term is defined in Section 101(14) of CERCLA.
"Equipment" has the meaning given to such term in the U.C.C. as in effect
on the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Reorganization" has the meaning given such term in ss.4241 of ERISA.
"Eurocurrency Reserve Requirement" means, for any LIBOR Tranche for any
LIBOR Interest Period relating thereto, the daily average of the stated maximum
rate (expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such
LIBOR Interest Period under Regulation D by a member bank of the Federal Reserve
System against "Eurocurrency liabilities" (as such term is used in Regulation D)
but without benefit of or credit for proration, exemptions, or offsets that
might otherwise be available to such member bank from time to time under
Regulation D. Without limiting the effect of the foregoing, the Eurocurrency
Reserve Requirement shall reflect any other reserves required to be maintained
by such member bank against (A) any category of liabilities which includes
deposits by reference to which the LIBOR Rate for LIBOR Tranches is to be
determined or (B) any category of extension of credit or other assets that
include LIBOR Tranches.
"Event of Default" has the meaning given to such term in Section 7.1
hereof.
"Excess Cash Flow" means, for any fiscal year, EBITDA of Borrowers and
their Domestic Subsidiaries for such fiscal year minus (A) capital expenditures
of Borrowers and their Subsidiaries paid from cash during such fiscal year and
otherwise permitted hereunder, as determined on a Consolidated basis for
Borrowers and their Subsidiaries, minus (B) cash taxes paid by Borrowers and
their Subsidiaries during such fiscal year as determined on a Consolidated basis
for Borrowers and their Subsidiaries, minus (C) debt service payments made by
Borrowers and their Subsidiaries from cash during such fiscal year as determined
on a Consolidated basis, minus (D) cash payments made under Capitalized Lease
Obligations during such fiscal year, minus (E) cash payments of Earnouts during
such fiscal year.
"Excess Cash Flow Payment Date" has the meaning given to such term in
Section 2.11(A) hereof.
"Existing Letters of Credit" means the Letters of Credit issued by Summit
prior to the date hereof and listed on Exhibit 1.1 attached hereto.
8
"Federal Funds Rate" means for each day, the rate per annum (rounded
upwards, if necessary to the nearest 1/100 of 1%) which is the weighted average
of the rates on overnight federal funds transactions arranged on such day by the
federal funds brokers, computed and released by the Federal Reserve Bank of New
York (or any successor).
"Final Repayment Date" means (A) with respect the Term Loan, the Term Loan
Maturity Date, (B) with respect the Revolving Credit and the SAMLOC, the
Termination Date and (C) with respect to the Acquisition Loan, the Converted
Loan Termination Date.
"First Mortgage Account" means that account maintained by Realty with
Summit into which were deposited the proceeds of the first mortgage loan with
respect to the Premises and into which there shall be deposited no other funds,
except for interest earned thereon.
"Fixed Charge Coverage Ratio" means the ratio of (A) (1) EBITDA plus base
rent payments on operating leases less (2) the amount of all cash Capital
Expenditures of Borrowers and their Subsidiaries on a Consolidated Basis,
excluding Capital Expenditures (i) up to $7,400,000.00 used to acquire the
Premises and up to $4,600,000.00 used to initially rehabilitate the Premises and
(ii) up to $3,000,000.00 incurred prior to December 31, 1999 by CGII to acquire
Equipment and other assets of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, to (B)
Fixed Charges, all as calculated on a rolling four quarter basis.
"Fixed Charges" for any period means the sum of (A) Interest Expense for
such period, (B) the aggregate principal amount of all scheduled repayments of
Indebtedness (including the principal portion of rentals under Capitalized Lease
Obligations) by Borrowers and their Subsidiaries during such period on a
Consolidated basis, (C) cash taxes paid by Borrowers and their Subsidiaries
during such period on a Consolidated basis, (D) base rent payments on operating
leases by Borrowers and their Subsidiaries during such period and (E) cash
payments of Earnouts by Borrowers and their Subsidiaries during such period.
"Foreign Subsidiary" means a Subsidiary which is not a Domestic Subsidiary.
"Funded Debt" means for Borrowers and their Subsidiaries on a Consolidated
basis, without duplication, the sum of all Indebtedness minus the amount in the
First Mortgage Account.
"GAAP" means generally accepted accounting principles, applied in a
consistent manner.
"General Intangible" has the meaning given to such term in the U.C.C. as in
effect on the date hereof.
9
"Indebtedness" means for any Person:
(A) all obligations on account of money borrowed by, or credit extended to
or on behalf of, or for or on account of deposits with or advances to, such
Person, including without limitation, the Liabilities and any Subordinated Debt;
(B) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments;
(C) all obligations of such Person for the deferred purchase price of
property or services and all obligations under non-compete or similar agreements
incurred in connection with any such purchase and obligations for Earnouts to
the extent the conditions precedent for the payment of such Earnouts have been
satisfied;
(D) all obligations secured by a Lien on property owned by such Person
(whether or not assumed) provided, however, for purposes of determining the
amount of Indebtedness under this clause (D), the amount of any such
non-recourse Indebtedness shall be limited to the lesser of (1) the fair market
value of the asset subject to such Lien and (2) the amount of such Indebtedness;
(E) all obligations of such Person under Capitalized Leases (without regard
to any limitation of the rights and remedies of the holder of such Lien or the
lessor under such Capitalized Lease to repossession or sale of such property);
(F) the face amount of all letters of credit issued for the account of or
upon the request of such Person, including, without limitation, the Letters of
Credit and, without duplication, the unreimbursed amount of all drafts drawn
thereunder, and all other obligations of such Person associated with such
letters of credit or draws thereon;
(G) all obligations of such Person with respect to acceptances or similar
obligations issued for the account of such Person;
(H) all obligations of such Person (based on a marked to market
calculation) under any Interest Rate Hedging Agreement or any currency
protection agreement, currency future, option or swap or other currency hedge
agreement;
(I) all obligations of such Person with respect to preferred shares of
capital stock which are subject to mandatory redemption or retirement provisions
exercisable before the scheduled maturity of any of the Loans;
(J) all guaranties of such Person of obligations that would otherwise be
classified as "Indebtedness" hereunder; and
(K) all obligations of partnerships of which such Person is a general
partner.
10
Indebtedness shall not include (i) accounts payable to trade creditors arising
out of purchases of goods or services in the ordinary course of business,
provided that (1) such accounts payable are payable on usual and customary trade
terms, and (2) such accounts payable are not overdue by more than 90 days
according to the original terms of sale (or such longer period as the payee may
agree) except (if no foreclosure, distraint, levy, sale or similar proceeding
shall have been commenced) where such payments are being contested in good faith
subject to such reserves or other appropriate provisions as may be required by
GAAP; and (ii) letters of credit supporting existing Indebtedness listed on
Schedule 5.20 to the extent the underlying Indebtedness is already included in
the calculation of Indebtedness.
"Instrument" has the meaning given to such term in the U.C.C. as in effect
on the date hereof.
"Interest Coverage Ratio" means the ratio of (A) EBITDA to (B) Interest
Expense, all as calculated on a rolling four quarter basis.
"Interest Expense" means interest expense incurred by Borrowers and their
Subsidiaries on a Consolidated basis.
"Interest Period" means a LIBOR Interest Period or any period during which
the Interest Rate is the Adjusted Base Rate, as applicable.
"Interest Rate" means the Adjusted LIBO Rate, the Adjusted Base Rate or the
Default Rate, as applicable.
"Interest Rate Hedging Agreement" means any rate swap, cap or collar
agreement with a term of at least three years to which Borrowers are a party and
which is on terms and conditions satisfactory to Agent.
"Inventory" has the meaning given to such term in the U.C.C. as in effect
on the date hereof.
"Issuing Bank" has the meaning given to such term in the introductory
paragraph hereof.
"Lenders" has the meaning given to such term in the introductory paragraph
hereof.
"Letter of Credit" means one of the standby or documentary letters of
credit issued by Issuing Bank pursuant to Section 2.23 hereof or one of the
Existing Letters of Credit.
11
"Letter of Credit Cash Collateral Account" has the meaning given to such
term in Section 2.24 hereof.
"Letter of Credit Documents" means the documents and instruments required
by Issuing Bank to be executed by Borrowers in connection with the issuance of
Letters of Credit.
"Letter of Credit Fee" has the meaning given to such term in Section 2.23
hereof.
"Letter of Credit Liability" means, at any date of determination, the
amount of all unreimbursed draws under any Letters of Credit.
"Letter of Credit Limit" means the lesser of (A) $4,000,000.00 or (B) the
Revolving Credit Limit.
"Letter of Credit Obligations" means, at any date of determination, the sum
of the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding and the
Letter of Credit Liability. For purposes hereof, a Letter of Credit on which a
draw for the full amount available thereunder (a "Final Draw") has not been made
shall be deemed outstanding (to the extent of the amount then available for
draws thereunder) until the earlier of the date on which such Letter of Credit
is returned to Issuing Bank for cancellation without a Final Draw having been
made, or the expiration date thereof.
"Leverage Ratio" means, at any time, the ratio of (A) Consolidated
Indebtedness of Borrowers and their Subsidiaries to (B) EBITDA determined on a
rolling four quarter basis.
"Liabilities" has the meaning given to such term in Section 3.1 hereof.
"LIBOR Interest Period" means, for each LIBOR Tranche, a period of time,
beginning on an Effective Date, of one, two, three or six months in length (as
such periods are commonly used), selected by Borrowers by telephone or in
writing (and if by telephone, confirmed by Borrowers promptly thereafter in
writing), during which the Interest Rate is the Adjusted LIBOR Rate. If a LIBOR
Interest Period would otherwise end on a day that is not a Business Day, such
LIBOR Interest Period shall be extended to the next Business Day, unless such
Business Day would fall in the next calendar month, in which event such LIBOR
Interest Period shall end on the immediately preceding Business Day.
"LIBOR Tranche" means any Acquisition LIBOR Tranche, any Term Loan LIBOR
Tranche, any Revolving Credit LIBOR Tranche.
12
"LIBO Rate" means, for each LIBOR Tranche, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) determined by Agent
according to the following formula:
R = X
---
1-Y
where R = LIBO Rate
X = London Interbank Offered Rate for such
LIBOR Tranche for the applicable LIBOR
Interest Period
Y = Eurocurrency Reserve Requirement for such
LIBOR Tranche for the applicable LIBOR
Interest Period
"Lien" means any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement or title objection of any
nature whatsoever, including but not limited to any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security.
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Letter of Credit Documents, the SAMLOC Agreements and all other documents
executed and delivered in connection with the Loans.
"Loans" means the Term Loan, the Revolving Credit, the Acquisition Loan
(including the Converted Loan) and the SAMLOC.
"London Interbank Offered Rate" means, with respect to each day during each
LIBOR Interest Period pertaining to a LIBOR Tranche, the rate per annum
determined by the Agent to be the offered rate (rounded upwards to the nearest
1/100th of 1%) for U.S. dollar deposits with a term comparable to such Interest
Period that appears on the Telerate British Bankers Assoc. Interest Settlement
Rates Page (as defined below) at approximately 11:00 A.M., London time, on the
second full Business Day preceding the first day of such Interest Period;
provided, however, that if there shall at any time no longer exist a Telerate
British Bankers Assoc. Interest Settlement Rates Page, "London Interbank Offered
Rate" shall mean, with respect to each day during each LIBOR Interest Period
pertaining to a LIBOR Tranche, the rate per annum equal to the average rate
(rounded upwards, if necessary, to the nearest 1/100th of 1%) at which Agent
determines that U.S. dollars in an amount comparable to the applicable LIBOR
Tranche are being offered to prime banks at approximately 11:00 A.M., London
time, on the day which is two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period for settlement in
immediately available funds by leading banks in the London interbank market
selected by Agent. "Telerate British Bankers Assoc. Interest Settlement Rates
Page" shall mean the display designated as Dow ▇▇▇▇▇ Market Page 3750 (or such
other page as may replace such page for the
13
purpose of displaying the rates at which U.S. dollar deposits are offered by
leading banks in the London interbank deposit market).
"Mortgage" has the meaning given to such term in Section 3.2 hereof.
"Multiemployer Plan" has the meaning given to such term in ss.3(37) of
ERISA and regulations issued thereunder.
"MVP" has the meaning given to such term in the introductory paragraph
hereof.
"Net Worth" means the amount by which total Consolidated assets of
Borrowers and their Subsidiaries exceed the total Consolidated liabilities of
Borrowers and their Subsidiaries.
"Notes" means the Term Loan Notes, the Revolving Credit Notes, the
Acquisition Loan Notes and the SAMLOC Note.
"Parent" has the meaning given to such term in the introductory paragraph
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquisition" means an acquisition by Borrowers (A) satisfying
the conditions and requirements set forth in Section 4.4 hereof and financed in
whole or in part with the Acquisition Loan, or (B) otherwise approved in advance
by Required Lenders in writing.
"Permitted Liens" means the Liens described in Section 6.4 hereof.
"Person" means an individual, corporation, partnership, limited liability
company, trust, association or any other entity.
"Plan" means an Employee Benefit Plan or other plan maintained for
employees of any Borrower, or any Subsidiary of any Borrower, or any member of
its Controlled Group and covered by ERISA.
"Pledge Agreement" has the meaning given to such term in Section 3.2
hereof.
"Premises" means that certain real property commonly known as ▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
"Prohibited Transaction" means a transaction described in ss. 406 of ERISA
or Section 4975(c) of the Code, other than (a) a transaction for which a
statutory exception has been provided in ss. 408 of ERISA or Section 4975(d) of
the Code, or (b) a
14
transaction for which an administrative exemption has been granted pursuant to
ss. 408(a) of ERISA and Section 4975(c)(2) of the Code.
"Pro Rata Share" of a Lender means, (A) with respect to the aggregate of
all Loans, such Lender's pro rata percentage of the aggregate of all Loans and
the Letter of Credit Obligations as set forth on Exhibit 2.1 hereof, as such
percentage may be revised to recognize assignments, (B) with respect to the
Revolving Credit, such Lender's pro rata percentage of the Revolving Credit and
the Letters of Credit Obligations as set forth on Exhibit 2.1 hereof, as such
percentage may be revised to recognize assignments, (C) with respect to the
Acquisition Loan, such Lender's pro rata percentage of the Acquisition Loan as
set forth on Exhibit 2.1 hereof, as such percentage may be revised to recognize
assignments and (D) with respect to the SAMLOC, such Lender's pro rata
percentage of the SAMLOC as set forth on Exhibit 2.1 hereof as such percentage
may be revised to recognize assignments
"Purchaser" means a buyer of goods from a Borrower or a customer for whom
services have been rendered or materials furnished by a Borrower.
"RC Commitment" has the meaning given to such term in Section 2.1 hereof.
"Realty" has the meaning given to such term in the introductory paragraph
hereof.
"Recasted EBITDA" means historical EBITDA recasted to reflect elimination
of non-recurring expenses and eliminated expenses.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as amended or supplemented from time to time.
"Reimbursement Date" has the meaning given to such term in Section 2.23
hereof.
"Reportable Event" has the meaning given to such term in ss.4043(b) of
ERISA or regulations issued thereunder.
"Required Lenders" means (A) with respect to (1) whether an acquisition not
otherwise qualifying as a "Permitted Acquisition" should nonetheless constitute
a "Permitted Acquisition", or (2) whether to make an Acquisition Advance which
requires the approval of the Required Lenders to qualify as a Permitted
Acquisition, those Lenders which are then in compliance with their obligations
hereunder holding not less than 66% of the aggregate of all outstanding
Commitments held by such complying Lenders, (B) with respect to the issuance of
Letters of Credit to be used to support Earnouts, those Lenders which are then
in compliance with their obligations hereunder holding not less than 100% of the
aggregate of all outstanding Commitments held by such complying Lenders, and (C)
with respect to all other matters, those Lenders which
15
are then in compliance with their obligations hereunder holding not less than
51% of the aggregate of all outstanding Commitments held by such complying
Lenders.
"Revolving Credit" has the meaning given to such term in the Background
Section hereof.
"Revolving Credit Advance Request" means a request for a Revolving Credit
Advance submitted in accordance with Section 2.4 hereof, and meeting the
requirements therein set forth.
"Revolving Credit Advances" has the meaning given to such term in Section
2.3 hereof.
"Revolving Credit Base Rate Tranche" means each portion of any Revolving
Credit Advance bearing interest at the Adjusted Base Rate.
"Revolving Credit LIBOR Tranche" means each portion of any Revolving Credit
Advance bearing interest at an Adjusted LIBO Rate and sharing the same LIBOR
Interest Period.
"Revolving Credit Limit" means $19,000,000.00, as such sum may be reduced
from time to time in accordance with the terms hereof.
"Revolving Credit Notes" has the meaning given to such term in Section 2.13
hereof.
"SAMLOC" has the meaning given to such term in the Background Section
hereof.
"SAMLOC Advances" means the advances made by Summit to any Borrower
pursuant to Section 2.9 hereof.
"SAMLOC Advance Request" means a request for a SAMLOC Advance submitted in
accordance with Section 2.9 hereof, and meeting the requirements therein set
forth.
"SAMLOC Agreements" has the meaning given to such term in Section 2.9
hereof.
"SAMLOC Base Rate Tranche" means each portion of any SAMLOC Advance bearing
interest at the Adjusted Base Rate.
"SAMLOC Commitment" means, with respect to Summit only, $1,000,000.00.
16
"SAMLOC Termination Date" means the earlier of (A) the Termination Date or
(B) the date on which the SAMLOC is terminated pursuant to the SAMLOC
Agreements.
"SAMLOC Note" has the meaning given to such term in Section 2.13 hereof.
"Security Documents" means the Mortgage, the Assignment of Leases, the
Pledge Agreement, the Trademark Security Agreement, the financing statements
executed and delivered by Borrowers in connection therewith, and any other
document executed and delivered in connection with such documents.
"Subordinated Debt" means Indebtedness of any Borrower (including without
limitation obligations under noncompetition agreements, installment sale
agreements, capital leases, agreements to repay borrowed money and guarantees of
the foregoing) subordinated to repayment in full of the Liabilities on terms and
conditions acceptable to Required Lenders, including without limitation, the
subordinated debt identified on Exhibit 5.20 attached hereto.
"Subsidiary" of a Person means any corporation or other entity, more than
50% of the voting capital stock or other ownership interests of which is owned,
directly or indirectly, by such Person.
"Summit" has the meaning given to such term in the introductory paragraph
hereof.
"Super Pack" has the meaning given to such term in the introductory
paragraph hereof.
"Target" has the meaning given to such term in Section 4.4 hereof.
"Term Loan" has the meaning given to such term in the Background Section
hereof.
"Term Loan Base Rate Tranche" means each portion of the Term Loan bearing
interest at the Adjusted Base Rate.
"Term Loan LIBOR Tranche" means each portion of the Term Loan bearing
interest at an Adjusted LIBO Rate and sharing the same LIBOR Interest Period.
"Term Loan Maturity Date" means July 31, 2005.
"Term Loan Notes" has the meaning given to such term in Section 2.13
hereof.
17
"Termination Date" means the earlier of (A) July 31, 2004, or (B) the date
on which Lenders' obligations to make Revolving Credit Advances are terminated
in whole pursuant to the terms of this Agreement.
"TL Commitment" has the meaning given to such term in Section 2.1 hereof.
"Trademark Office" shall have the meaning given to such term in Section 3.2
hereof.
"Trademark Security Agreement" has the meaning given to such term in
Section 3.2 hereof.
"U.C.C." shall mean the Uniform Commercial Code as in effect in the State
of New Jersey.
"Unused Commitments" means, at any time, with respect to any Lender, (A)
with respect to such Lender's RC Commitment, such Lender's RC Commitment less
the product of (a) such Lender's Pro Rata Share of the Revolving Credit, and (b)
the sum of the outstanding principal under the Revolving Credit and the Letter
of Credit Obligations at such time, (B) with respect to such Lender's AL
Commitment, such Lender's AL Commitment less the product of (a) such Lender's
Pro Rata Share of the Acquisition Loan, and (b) the sum of the outstanding
principal under the Acquisition Loan at such time, and (C) with respect to such
Lender's SAMLOC Commitment, such Lender's SAMLOC Commitment less the product of
(a) such Lender's Pro Rata Share of the SAMLOC, and (b) the sum of the
outstanding principal under the SAMLOC at such time.
"Withdrawal Liability" has the meaning given such term in ss. 4201 of
ERISA.
"Working Capital" means current assets minus current liabilities minus
current maturities of long-term debt, without duplication, all as determined for
Borrowers and their Subsidiaries on a Consolidated basis in accordance with
GAAP.
SECTION 1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed, and all financial data submitted pursuant to this
Agreement shall be prepared, in accordance with GAAP.
ARTICLE 2
THE LOANS
SECTION 2.1 Commitment to Lend. Subject to the terms and conditions
hereinafter provided, each Lender agrees, for itself only, to (a) make on the
Closing Date its portion of the Term Loan in the principal amount set forth
opposite its name on
18
Exhibit 2.1 hereto (such respective portions relating to the Term Loan being the
"TL Commitment" of each Lender), (b) make its portion of Revolving Credit
Advances, from time to time during the period from the date hereof to and
including the Termination Date, provided that the aggregate outstanding
principal amount of each Lender's portion of the Revolving Credit Advances at
any time shall not exceed the amount set forth opposite such Lender's name under
the heading "Revolving Credit" on Exhibit 2.1 hereto (such respective amounts
relating to the Revolving Credit as the same may be permanently reduced in
accordance with this Agreement being the "RC Commitment" of each Lender) less
Letter of Credit Liabilities multiplied by such Lender's Pro Rata Share of the
Revolving Credit and (c) make its portion of Acquisition Advances, from time to
time during the period from the date hereof to and including the Conversion
Date, provided that the aggregate outstanding principal amount of each Lender's
portion of the Acquisition Advances at any time shall not exceed the amount set
forth opposite such Lender's name under the heading "Acquisition Loan" on
Exhibit 2.1 hereto (such respective amounts relating to the Acquisition Loan as
the same may be permanently reduced in accordance with this Agreement being the
"AL Commitment" of each Lender).
SECTION 2.2 Term Loan. Subject to the terms and conditions of this
Agreement including without limitation satisfaction of the conditions precedent
set forth in Sections 4.1 and 4.2 hereof, Lenders shall extend to Borrowers the
Term Loan. The Term Loan shall be advanced from all Lenders ratably according to
their respective TL Commitments on the Closing Date. Amounts made available
under the Term Loan which are repaid or prepaid by Borrowers under the Term Loan
shall not be available to Borrowers for reborrowing. The outstanding principal
amount of the Term Loan shall bear, and Borrowers shall pay, interest at the
rates and at the times set forth in Section 2.10 hereof. Borrowers shall repay
the principal balance of the Term Loan in consecutive quarterly installments, in
the amounts set forth in the table below, commencing on September 30, 2000, and
on the last Business Day of each December, March, June and September thereafter
through the Term Loan Maturity Date, on which date Borrowers shall repay in full
the unpaid principal amount of the Term Loan plus all accrued and unpaid
interest thereon and any other amount due and owing in connection therewith:
------------------------------------------- ------------------------------------------
Period Quarterly Principal Payment
------------------------------------------- ------------------------------------------
Closing Date through June 30, 2000 0
------------------------------------------- ------------------------------------------
September 30, 2000 through June 30, 2001 $375,000.00
------------------------------------------- ------------------------------------------
September 30, 2001 through June 30, 2004 $500,000.00
------------------------------------------- ------------------------------------------
September 30, 2004 through March 30, 2005 $625,000.00
------------------------------------------- ------------------------------------------
Term Loan Maturity Date all remaining unpaid principal, interest
and all other sums owing hereunder
------------------------------------------- ------------------------------------------
19
The quarterly payments set forth in the table above shall be adjusted pursuant
to Section 2.11(D) hereof each time (no more than once a year) an Excess Cash
Flow payment is made pursuant to Section 2.11(A) hereof.
SECTION 2.3 The Revolving Credit. Subject to the terms and conditions
hereinafter provided, including without limitation, satisfaction of the
conditions precedent contained in Sections 4.1 and 4.2 hereof, Lenders shall
extend to Borrowers the Revolving Credit, pursuant to which each Lender, for
itself only, shall advance to Borrowers, from time to time during the period
from the Closing Date to and including the Termination Date, its portion of such
sums as Borrowers may request, each advance to be, in the minimum amount of
$500,000.00 unless such advance is deemed made under Section 2.23(C) hereof
(each such advance, a "Revolving Credit Advance"), provided that (A) the
aggregate outstanding principal amount of each Lender's portion of the Revolving
Credit Advances plus such Lender's portion of Letter of Credit Obligations shall
not exceed the RC Commitment of such Lender, (B) the total outstanding principal
under the Revolving Credit plus the Letter of Credit Obligations at any one time
shall not exceed the Revolving Credit Limit, and (C) the Letter of Credit
Obligations at any one time shall not exceed the Letter of Credit Limit. Each
Revolving Credit Advance shall be from all Lenders ratably according to their
respective Pro Rata Shares of the Revolving Credit. If, at any time, the
aggregate amount of the Revolving Credit Advances outstanding at any time plus
the Letter of Credit Obligations exceeds the Revolving Credit Limit, then
Borrowers shall repay immediately the amount of such excess to Agent for Issuing
Bank and Lenders. If, at any time, the aggregate Letter of Credit Obligations
exceed the Letter of Credit Limit, Borrowers shall pledge to Agent for the
benefit of itself, Issuing Bank and Lenders cash collateral in an amount equal
to the amount by which such Letter of Credit Obligations exceed the Letter of
Credit Limit, which cash collateral shall be deposited and held in the Letter of
Credit Cash Collateral Account. Borrowers may borrow, repay and reborrow under
the Revolving Credit until the Termination Date subject to the terms and
conditions of this Agreement.
SECTION 2.4 Making the Advances under the Revolving Credit.
(A) Any requests for Revolving Credit Advances shall be submitted by the
Parent, which each Borrower hereby appoints as its agent for purposes of this
Agreement, to Agent in writing or by facsimile copy by, subject to Section
2.10(B) hereof, 11:00 a.m. of the Business Day before the day on which the
requested Revolving Credit Advance is to be made (subject to the notice
requirements of Section 2.10(B) hereof if such Revolving Credit Advance is to
consist of any LIBOR Tranche). Each such request shall be in the form of Exhibit
2.4(A) attached hereto and made a part hereof, and signed by the chief financial
officer or another officer of Parent previously authorized in writing and
stating the amount of the proposed Revolving Credit Advance. Parent shall
indicate on each Revolving Credit Advance Request whether the Revolving Credit
Advance is to be a Revolving Credit Base Rate Tranche and/or, if available
hereunder, a Revolving Credit LIBOR Tranche and the desired
20
LIBOR Interest Period, if applicable, and if both, the amount of each. Agent in
turn shall promptly notify each Lender of such proposed Revolving Credit
Advance.
(B) Each Revolving Credit Advance Request shall constitute a representation
by all Borrowers that at the time of and after giving effect to the Revolving
Credit Advance requested thereby: (1) no Event of Default or Default has
occurred and is continuing or will arise as a result of the requested Revolving
Credit Advance; (2) except for representations and warranties made as of a
specific date, the representations and warranties contained herein and in the
other Loan Documents are expressly reaffirmed and are correct in all material
respects as of the date of such Revolving Credit Advance Request and will be
correct as of the date on which such Revolving Credit Advance is to be made, (3)
the requested Revolving Credit Advance will be used for the purposes set forth
in the Background Section hereof; (4) all of the conditions precedent set forth
in Article 4 hereof have been and remain satisfied; and (5) the sum of the
outstanding Revolving Credit Advances plus the requested Revolving Credit
Advance plus the Letter of Credit Obligations will not exceed the Revolving
Credit Limit. Upon notice from Agent of the proposed Revolving Credit Advance,
each Lender shall wire transfer to Agent, at Agent's office in Princeton, New
Jersey, in immediately available funds, which funds shall be in U.S. Dollars,
prior to 2:00 p.m., New Jersey time, on the date of the proposed Revolving
Credit Advance, an amount equal to such Lender's Pro Rata Share of such
Revolving Credit Advance. Upon receipt of such funds by Agent and upon Agent's
determination that the applicable conditions set forth in Article 4 hereof have
been fulfilled, Agent will immediately remit the proceeds of any Revolving
Credit Advance to which Borrowers are entitled, by depositing the amount thereof
into an operating account which any Borrower may maintain with Agent or in such
other manner as Borrowers may reasonably request in the Revolving Credit Advance
Request. Agent shall have no obligation to make funds available to Borrowers in
excess of amounts received by it from Lenders. Borrowers shall hold Agent and
Lenders harmless from any liability for any loss resulting from Agent's and
Lenders' reliance on any writing or facsimile copy purportedly made by the chief
financial officer or any other officer of any Borrower authorized to make
Revolving Credit Advance Requests. Agent's books and records shall be deemed
conclusive evidence (absent manifest error) of whether or not a Revolving Credit
Advance Request was made and the terms thereof.
(C) Unless Agent shall have been notified by a Lender prior to the date any
Revolving Credit Advance is to be made that such Lender does not intend to make
its share of such requested Revolving Credit Advance available to Agent, Agent
may assume that such Lender has made such proceeds available to Agent on such
date, and Agent may, in reliance upon such assumption (but shall not be
obligated to), make available to Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to Agent by such Lender on
the date the Revolving Credit Advance is made, Agent shall be entitled to
recover such amount on demand from such Lender (or, if such Lender fails to pay
any such amount forthwith upon such demand, from Borrowers), together with
interest thereon in respect of each day during the period
21
commencing on the date such amount was made available to Borrowers and ending on
(but excluding) the date Agent recovers such amount from such Lender, at a rate
per annum equal to the Federal Funds Rate in effect from time to time, and from
Borrowers, at a rate per annum equal to the Adjusted Base Rate as in effect from
time to time or, with respect to LIBOR Tranches, at Adjusted LIBOR.
SECTION 2.5 Revolving Credit Termination; Repayment of the Revolving
Credit. Lenders shall have no obligation to fund Revolving Credit Advance
Requests received after the close of business on the Business Day before the
Termination Date. Borrowers shall pay interest on the outstanding principal
amount of the Revolving Credit Advances in accordance with Section 2.10 hereof.
On the Termination Date, Borrowers shall pay all outstanding principal, accrued
and unpaid interest and any other amount owing in connection with the Revolving
Credit.
SECTION 2.6 The Acquisition Loan. Subject to the terms and conditions
hereinafter provided, including without limitation, satisfaction of the
conditions precedent contained in Sections 4.1, 4.2 and 4.4 hereof, Lenders
shall extend to Borrowers the Acquisition Loan, pursuant to which each Lender,
for itself only, shall advance to Borrowers, from time to time during the period
from the Closing Date to and including the Conversion Date, its portion of such
sums as Borrower may request, each advance to be in the minimum amount of
$1,000,000.00 (each such advance, an "Acquisition Advance"), provided that (A)
the aggregate outstanding principal amount of each Lender's portion of the
Acquisition Advances shall not exceed the AL Commitment of such Lender and (B)
the total outstanding principal shall not exceed the Acquisition Loan Limit.
Each Acquisition Advance shall be from all Lenders ratably according to their
respective Pro Rata Shares of the Acquisition Loan. If the aggregate amount of
the Acquisition Advances outstanding at any time exceeds the Acquisition Loan
Limit, then Borrowers shall repay immediately the amount of such excess to Agent
for the benefit of Lenders. Acquisition Advances (including Acquisition Advances
converted into the Converted Loan) repaid or prepaid by Borrowers shall not be
available to Borrowers for reborrowing, except to the extent such prepayments
were made directly from the proceeds of the sale of common stock of Parent
otherwise permitted hereby prior to the Conversion Date.
SECTION 2.7 Making the Advances under the Acquisition Loan.
(A) Any requests for Acquisition Advances shall be submitted by Parent, as
agent for all Borrowers, to Agent in writing or by facsimile copy by 11:00 a.m.
no later than five (5) days before the day on which the requested Acquisition
Advance is to be made. Each such request shall be in the form of Exhibit 2.4(A)
attached hereto and made a part hereof, shall be signed by the chief financial
officer or another officer of Parent previously authorized in writing and
stating the amount of the proposed Acquisition Advance. Each Acquisition Advance
Request shall be accompanied by all of the documents and information required
under Section 4.4(D) hereof. Agent in turn shall promptly notify each Lender of
such proposed Acquisition Advance.
22
(B) Each Acquisition Advance Request shall constitute a representation by
all Borrowers that at the time of and after giving effect to the Acquisition
Advance requested thereby: (1) no Event of Default or Default has occurred and
is continuing; (2) except for representations and warranties made as of a
specific date, the representations and warranties contained herein and in the
other Loan Documents are expressly reaffirmed and are correct in all material
respects as of the date of such Acquisition Advance Request and will be correct
as of the date on which the requested Acquisition Advance is to be made; (3) the
requested Acquisition Advance will be used for the purposes set forth in the
Background Section hereof; (4) all of the conditions precedent set forth in
Sections 4.1, 4.2 and 4.4 hereof have been and remain satisfied and (5) the sum
of the outstanding principal amount of the Acquisition Advances plus the
Acquisition Advance being requested will not exceed the Acquisition Loan Limit.
Borrowers shall indicate on each Acquisition Advance Request whether the
Acquisition Advance is to be a Base Rate Tranche or, if available hereunder, a
LIBOR Tranche and the desired LIBOR Interest Period, if applicable. Borrowers
shall submit with each Acquisition Advance Request for acquisitions having
Acquisition Consideration exceeding $8,500,000.00 such supporting invoices,
contracts, purchase orders or other documentation as Agent may reasonably
request from time to time to support the foregoing representations. Upon notice
from Agent of the proposed Acquisition Advance, each Lender shall wire transfer
to Agent, at Agent's office in Princeton, New Jersey, in immediately available
funds, which funds shall be in U.S. Dollars, prior to 2:00 p.m., New Jersey
time, on the date of the proposed Acquisition Advance, an amount equal to such
Lender's Pro Rata Share of such Acquisition Advance. Upon receipt of such funds
by Agent and upon Agent's determination that the applicable conditions set forth
in Sections 4.1, 4.2 and 4.4 hereof have been fulfilled, Agent will immediately
remit the proceeds of any Acquisition Advance to which Borrowers are entitled,
by depositing the amount thereof into an operating account which any Borrower
may maintain with Agent or in such other manner as Borrowers may reasonably
request in the Acquisition Advance Request. Agent shall have no obligation to
make funds available to Borrowers in excess of amounts received by it from
Lenders. Borrowers shall hold Agent and Lenders harmless from any liability for
any loss resulting from Agent's and Lenders' reliance on any writing or
facsimile copy purportedly made by the chief financial officer or any other
officer of any Borrower authorized to make Acquisition Advance Requests. Agent's
books and records shall be deemed conclusive evidence (absent manifest error) of
whether or not an Acquisition Advance Request was made and the terms thereof.
(C) Unless Agent shall have been notified by a Lender prior to the date any
Acquisition Advance is to be made that such Lender does not intend to make its
share of such requested Acquisition Advance available to Agent, Agent may assume
that such Lender has made such proceeds available to Agent on such date, and
Agent may, in reliance upon such assumption (but shall not be obligated to),
make available to Borrowers a corresponding amount. If such corresponding amount
is not in fact made available to Agent by such Lender on the date the
Acquisition Advance is made, Agent shall be entitled to recover such amount on
demand from such Lender (or, if such
23
Lender fails to pay any such amount forthwith upon such demand, from Borrowers)
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to Borrowers and ending on
(but excluding) the date Agent recovers such amount from such Lender, at a rate
per annum equal to the Federal Funds Rate in effect from time to time, and from
Borrowers, at a rate per annum equal to the Adjusted Base Rate as in effect from
time to time or, with respect to LIBOR Tranches, at Adjusted LIBOR Rate.
SECTION 2.8 Acquisition Loan Termination; Automatic Conversion to Term
Loan. Lenders shall have no obligation to fund Acquisition Advance Requests
after 2:00 p.m. on the Conversion Date. On the Conversion Date, all outstanding
Acquisition Advances, if any, shall automatically be converted into a term loan
having a principal amount equal to the sum of the aggregate principal amount of
Acquisition Advances then outstanding (the Acquisition Loan, after the
Conversion Date, shall be referred to as the "Converted Loan") and the unused AL
Commitment shall terminate. The outstanding principal amount of the Converted
Loan shall continue to bear, and Borrowers shall continue to pay, interest at
the rates and at the times set forth in Section 2.10 hereof. Borrowers shall
repay the Acquisition Advances, including the principal balance of the Converted
Loan, if any, in consecutive quarterly installments, in amounts determined in
accordance with the table below, commencing on September 30, 2000 and on the
last Business Day of each calendar quarter thereafter and on the Converted Loan
Maturity Date. The final installment of the Converted Loan, due and payable on
the Converted Loan Maturity Date, shall include an amount equal to the then
outstanding principal balance of the Converted Loan, all accrued and unpaid
interest thereon and any fees and costs due in connection with the Converted
Loan.
------------------------------------------------- ---------------------------------------------------------
Period Quarterly Principal Payment
------------------------------------------------- ---------------------------------------------------------
Closing Date through June 30, 2000 0
------------------------------------------------- ---------------------------------------------------------
September 30, 2000 through June 30, 2001 If the aggregate outstanding Acquisition Advances as of
July 1, 2000 is equal to or greater than $600,000.00,
$150,000.00 each; or
If the aggregate outstanding Acquisition Advances as of
July 1, 2000 is less than $600,000.00, 25% of such
aggregate outstanding Acquisition Advances each.
------------------------------------------------- ---------------------------------------------------------
September 30, 2001 through June 30, 2002 Determined in accordance with the following formula:
QP = X-Y
---
4
where
QP = quarterly payment
X = aggregate outstanding Acquisition Advances as
of July 1, 2001
Y = sum of principal payments required to be
made during period commencing on September
30, 2002 and ending on the June 30, 2005
------------------------------------------------- ---------------------------------------------------------
September 30, 2002 through June 30, 2003 5.75% of the aggregate outstanding Acquisition Advances
as of July 1, 2001
------------------------------------------------- ---------------------------------------------------------
September 30, 2003 through June 30, 2004 7.5% of the aggregate outstanding Acquisition Advances
as of July 1, 2001
------------------------------------------------- ---------------------------------------------------------
September 30, 2004 through June 30, 2005 8.75% of the aggregate outstanding Acquisition Advances
as of July 1, 2001
------------------------------------------------- ---------------------------------------------------------
Converted Loan Maturity Date all remaining unpaid principal, interest and all other
sums owing hereunder
------------------------------------------------- ---------------------------------------------------------
24
The quarterly payments set forth in the table above shall be adjusted pursuant
to Section 2.11(D) hereof each time (no more than once a year) an Excess Cash
Flow payment is made pursuant to Section 2.11(A) hereof.
On the Converted Loan Maturity Date, Borrowers shall pay to Agent for the
benefit of the Lenders, the then outstanding principal of and accrued interest
on the Converted Loan together with any other amount owing hereunder or under
any of the other Loan Documents in connection with the Converted Loan. Borrowers
shall have no right to reborrow any portion of the Converted Loan once such
portion has been paid.
SECTION 2.9 The SAMLOC. Subject to the terms and conditions hereinafter
provided, including without limitation, satisfaction of the conditions precedent
contained in Sections 4.1 and 4.2 hereof, Summit shall extend to Borrowers the
SAMLOC, pursuant to which Summit, for itself only, shall advance to Borrowers,
from time to time during the period from the Closing Date to and including the
SAMLOC Termination Date, SAMLOC Advances, provided that the aggregate
outstanding principal amount of the SAMLOC Advance shall not exceed the SAMLOC
Commitment. If the aggregate amount of the SAMLOC Advances outstanding at any
time exceeds the SAMLOC Commitment, then Borrowers shall repay immediately the
amount of such excess to Summit for itself. Borrowers may borrow, repay and
reborrow under the SAMLOC until the SAMLOC Termination Date, subject to the
terms and conditions of this Agreement and the SAMLOC Agreements. SAMLOC
Advances shall be requested or deemed requested by Borrowers and made by Summit
in accordance with the SAMLOC Agreements. Borrowers shall pay interest on the
outstanding principal amount of the SAMLOC in accordance with Section 2.10
hereof. On the SAMLOC Termination Date, Borrowers shall pay all outstanding
principal, accrued and unpaid interest and any other amount owing in connection
with the SAMLOC. In connection with the SAMLOC, Borrowers shall establish a
Summit Asset Management Account, and shall execute and deliver such documents
and instruments as shall be required by Summit in connection therewith,
including but not limited to a Summit Asset Management Account Customer
Agreement and a Summit Asset Management Account Supplemental Agreement for Line
of Credit (collectively, the "SAMLOC Agreements").
SECTION 2.10 Interest.
(A) Base Rate Tranches. All outstanding principal under the Loans shall
bear interest at the Adjusted Base Rate except to the extent Borrowers elect to
have all or a portion thereof (other than SAMLOC Advances for which such
election shall not be available) converted to or advanced as LIBOR Tranches
subject to the
25
terms hereof, including the terms and conditions set forth in this Section 2.10.
Borrowers shall pay to Agent (and with respect to the SAMLOC, to Summit) for the
benefit of Lenders (and with respect to the SAMLOC, for the sole benefit of
Summit) interest at the Adjusted Base Rate in arrears on the unpaid principal
amount of each Base Rate Tranche, from the date on which such Base Rate Tranche
is advanced or converted from a LIBOR Tranche until such principal amount has
been repaid in full, or converted to a LIBOR Tranche, (1) monthly on the last
day of each month commencing July 31, 1999, (2) with respect to the Revolving
Credit Base Rate Tranches, if any, on the Termination Date, (3) with respect to
the Term Loan Base Rate Tranches, if any, on the Term Loan Maturity Date, (4)
with respect to the Acquisition Loan Base Rate Tranches, if any, on the
Converted Loan Maturity Date and (5) with respect to the SAMLOC Base Rate
Tranches, if any, on the SAMLOC Termination Date. The Adjusted Base Rate shall
change (a) simultaneously with each change in the Base Rate and (b) with each
change in the Applicable Margin in accordance with the definition thereof.
(B) Advances of or Conversions to LIBOR Tranches. By notifying Agent in
writing in the form of Exhibit 2.10B attached hereto and made a part hereof (and
Agent shall promptly notify each Lender) at least three Business Days prior to
an Effective Date (which may be the date of an Advance), Borrowers may convert
into a LIBOR Tranche any Base Rate Tranche (other than SAMLOC Base Rate
Tranches) or have any Advance (other than SAMLOC Advances) made as a LIBOR
Tranche, provided that there does not then exist any Default or Event of Default
and provided further that each such LIBOR Tranche shall be in a principal amount
of not less than $1,000,000.00 and provided further that, the proposed
conversion would not cause to be outstanding, at any one time, more than twelve
(12) LIBOR Tranches. At the end of the applicable LIBOR Interest Period, the
LIBOR Tranche will convert back to a Base Rate Tranche unless any Borrower
notifies Agent (which shall promptly notify each Lender) at least three Business
Days before the end of the existing LIBOR Interest Period (and provided that
there then exists no Default or Event of Default) that Borrowers are electing to
continue such LIBOR Tranche as a LIBOR Tranche and are selecting a new LIBOR
Interest Period.
(C) LIBOR Tranche. Borrower shall pay interest in arrears on the unpaid
principal amount of each LIBOR Tranche at the Adjusted LIBO Rate, (1) with
respect to any LIBOR Tranche having a LIBOR Interest Period longer than 3
months, on the 3 month anniversary of the first day of such LIBOR Interest
Period, (2) on the last day of the applicable LIBOR Interest Period, (3) with
respect to the Revolving Credit LIBOR Tranches, if any, on the Termination Date,
(4) with respect to the Term Loan LIBOR Tranches, if any, on the Term Loan
Maturity Date, and (5) with respect to the Acquisition LIBOR Tranches, if any,
on the Converted Loan Maturity Date.
SECTION 2.11 Mandatory Prepayments; Reductions of the Commitments.
(A) On or prior to April 30th of each fiscal year, commencing April 30,
2000, until the Liabilities are repaid in full, Borrowers shall deliver to each
Lender a
26
written statement calculating the Excess Cash Flow for the prior fiscal year. On
or before May 31st of each such year (the "Excess Cash Flow Payment Date"),
commencing May 31, 2000, Borrowers shall make a mandatory prepayment of
principal of the Loans in an amount equal to 75% of the Excess Cash Flow for
such prior fiscal year, provided however that, in the event the Leverage Ratio
is less than 1.5 as of the end of such prior fiscal year, the mandatory
prepayment shall be in an amount equal to 50% of the Excess Cash Flow for such
prior fiscal year, provided further however that, with respect to the payment
due May 31, 2000, only, Borrowers' mandatory prepayment shall be calculated
using the following formula: 75% times (1999 Excess Cash Flow - $1,000,000.00).
(B) In addition to the mandatory prepayments set forth in (A) above,
Borrowers shall make a mandatory prepayment in an amount equal to the following
amounts:
(1) 100% of the net, after-tax proceeds of the sale or other
disposition of any material asset of any Borrower outside of the ordinary
course of business of such Borrower for aggregate consideration of at least
$250,000.00 less any reasonable costs and expenses of such sale owing to
Persons other than such Borrower or any of its Affiliates;
(2) 100% of the net, after-tax cash proceeds of any sale or issuance
of any capital stock or debt securities of any Borrower, excluding
issuances (i) pursuant to the exercise of stock options or under any
employee stock purchase or other compensatory plan, (ii) to Parent, or
(iii) used as consideration for a Permitted Acquisition;
(3) 100% of the net, after tax proceeds of any equity contributed by a
Person to the capital of any Borrower, excluding equity investments by a
Borrower in a Subsidiary of such Borrower; and
(4) 100% of all insurance proceeds exceeding $250,000.00 in the
aggregate and resulting from any casualty resulting in loss or damage to
any Borrower's property, less any such insurance proceeds used by Borrowers
to repair or replace such damaged property to the extent permitted by the
Loan Documents.
All mandatory prepayments required to be made pursuant to this Section 2.11(B)
shall be made within ten (10) days of the occurrence of the event triggering
such prepayment.
(C) Any prepayments received under Section 2.11 (A) or (B) hereof shall be
applied (1) (a) first against outstanding principal under the Term Loan (unless
Section 2.11(D) hereof applies), (b) then against outstanding principal under
the Acquisition Loan (unless Section 2.11(D) hereof applies), (c) then against
outstanding principal under the Revolving Credit and (d) then against
outstanding principal under the SAMLOC, and (2) after application of clause (1),
first against Base Rate Tranches
27
and LIBOR Tranches with LIBOR Interest Periods ending on the date of such
payment, if any, then in accordance with the following sentence. Any additional
amounts shall be held by Agent on behalf of Lenders in an interest bearing, cash
collateral account at Agent, with access thereto restricted to Agent, such
amounts to be applied to repayment of LIBOR Tranches as their LIBOR Interest
Periods expire. In the event that Borrowers intend to use, within six (6) months
after the sale or disposition of assets triggering a mandatory prepayment, all
or a portion of the proceeds referred to in subsection (B)(1) above to finance a
Permitted Acquisition or to finance replacement assets, Borrowers shall deliver
to Agent with such proceeds a certification to Agent and Lenders in form and
substance satisfactory to Agent stating such intention, identifying the amount
of such proceeds intended to be so used, describing such Permitted Acquisition
or replacement purchase in reasonable detail and attaching such documents
identified in Section 4.4 hereof respecting such Permitted Acquisition as may be
then available, whereupon the Agent shall deposit such portion of such proceeds
into an interest bearing cash collateral account at Agent, with access thereto
restricted to Agent, such amounts to be (i) disbursed within such six (6) month
period to Borrowers upon completion of such Permitted Acquisition or replacement
purchase and satisfaction of the conditions set forth in Section 4.4 hereof, or
(ii) if not disbursed to Borrowers within six (6) months as set forth in clause
(i), applied as a prepayment pursuant to the first two sentences of this
subsection (C). Except as set forth in Section 2.11(D) hereof, all prepayments
of any of the Loans (whether optional or mandatory and whether pursuant to this
Section 2.11 or otherwise) shall be applied against the last installment due and
shall not affect any otherwise scheduled payment under this Agreement and the
entire outstanding amount of the Loans shall continue to bear interest until
prepayment is actually applied.
(D) Notwithstanding clauses (C)(1)(a) and (C)(1)(b) above, any prepayments
received under Section 2.11(A) hereof shall first be applied against all future
principal payments in respect of the Term Loan and the Acquisition Loan
(including the Converted Loan) on a pro-rata basis in accordance with the
aggregate principal outstanding under the Term Loan and the Acquisition Loan
(including the Converted Loan) as of the relevant Excess Cash Flow Payment Date.
Notwithstanding the last sentence of Section 2.11(C) hereof, the portion of any
prepayments applied pursuant to the preceding sentence shall not be applied to
the last installment first, but, rather, against each succeeding installment pro
rata based on the ratio of the amount of such installment payment and the
outstanding principal amount of such Loan.
(E) The Commitments shall be permanently reduced by any prepayments
received under Section 2.11(A) and (B) hereof, excluding prepayments (1)
attributed to the RC Commitments or (2) of the Acquisition Advances if made
pursuant to the last sentence of Section 2.6 hereof.
28
SECTION 2.12 Prepayment Compensation.
(A) Borrowers may prepay without premium or penalty Base Rate Tranches in
whole or in part at any time and from time to time upon one Business Day's
notice to Agent (which shall deliver notice to Lenders).
(B) Borrowers agree not to prepay any LIBOR Tranche prior to the expiration
of its Interest Period unless otherwise expressly required hereunder or after
acceleration pursuant to the terms hereof. In the event that Borrowers (1)
prepay, pay, renew or convert any LIBOR Tranche prior to the expiration of its
Interest Period, whether in violation of the previous sentence, or with the
consent of Agent and Lenders, or after acceleration after an Event of Default or
otherwise in accordance with this Agreement, (2) fail to renew a LIBOR Tranche
after giving notice of intent to renew, or (3) fail to convert into a LIBOR
Tranche after giving notice of intent to convert, Borrowers shall pay to Agent
for the account of each Lender, upon the request of such Lender through Agent,
such amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost or expense which such Lender
reasonably determines is attributable to:
(1) any payment, prepayment, conversion or renewal of a LIBOR Tranche
made by Borrowers on a date other than the last day of an Interest Period
for such LIBOR Tranche (whether by reason of acceleration or otherwise); or
(2) any failure by Borrowers to borrow, convert into or renew a LIBOR
Tranche to be made, converted into or renewed by such Lender on the date
specified therefor pursuant to Borrowers' prior election.
Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (a) the amount of interest which
otherwise would have accrued on the principal amount so paid, prepaid,
converted or renewed or not borrowed, converted or renewed for the period
from and including the date of the event described in clause (1) or (2)
above to, but excluding, the last day of the then current Interest Period
for such LIBOR Tranche (or, with respect to the events described in clause
(2) above, for the Interest Period which would have commenced on the date
specified therefor in the relevant notice) at the applicable rate of
interest for such LIBOR Tranche provided for herein; over (b) the amount of
interest (as reasonably determined by each affected Lender) such Lender
would have bid to New York dealers of London interbank dollar deposits for
amounts comparable to such principal amount and maturities comparable to
such Interest Period. A Lender's determination of the amount so due, and a
description of the calculation thereof, shall be set forth in the request
for such amount or amounts; such determination and calculation shall be
conclusive absent manifest error or bad faith. THIS COVENANT SHALL SURVIVE
THE PAYMENT OF THE INDEBTEDNESS CREATED BY THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
THIS AGREEMENT.
29
SECTION 2.13 Notes. From and after the date of this Agreement, (A) the
joint and several obligation of Borrowers to repay the outstanding Revolving
Credit Advances shall be evidenced by promissory notes dated the date hereof,
each payable to the order of a Lender, in a principal amount equal to such
Lender's RC Commitment, and otherwise substantially in the form of Exhibit 2.13A
attached hereto (the "Revolving Credit Notes"); (B) the joint and several
obligation of Borrowers to repay the Term Loan shall be evidenced by promissory
notes dated the date hereof, each payable to the order of a Lender, in a
principal amount equal to such Lender's TL Commitment, and otherwise
substantially in the form of Exhibit 2.13B attached hereto (the "Term Loan
Notes"), (C) the joint and several obligation of Borrowers to repay the
outstanding Acquisition Advances (including those converted into the Converted
Loan) shall be evidenced by promissory notes dated the date hereof, each payable
to the order of a Lender, in a principal amount equal to such Lender's AL
Commitment, and otherwise substantially in the form of Exhibit 2.13C attached
hereto (the "Acquisition Loan Notes") and (D) the joint and several obligation
of Borrowers to repay the outstanding SAMLOC Advances shall be evidenced by a
promissory note dated the date hereof, payable to the order of Summit, in a
principal amount equal to the SAMLOC Commitment, and otherwise substantially in
the form of Exhibit 2.13D attached hereto (the "SAMLOC Note"). In the event that
any Lender assigns all or any portion of its interest in the Loans as permitted
under Section 9.12 hereof, Borrowers will execute and deliver replacement
Note(s) in the appropriate form attached as an exhibit hereto upon request of
the Agent.
SECTION 2.14 Fees.
(A) Borrowers shall pay to Agent, for the account of each Lender, a
commitment fee (the "Commitment Fee") equal to the product of (1) the average
daily amount of such Lender's Unused Commitments and (2) the percentages set
forth below, from the Closing Date to and including the Termination Date,
payable on September 30, 1999, for the period then ending and thereafter
quarterly in arrears on the last Business Day of each calendar quarter, and on
the Termination Date. The rate shall be 0.5% per annum, provided that after
September 30, 1999, the foregoing shall continue in effect unless otherwise
determined in accordance with the table and text below:
-----------------------------------------------------------------------------
Funded Debt to EBITDA is: Commitment Fee
(per annum)
-----------------------------------------------------------------------------
Greater than or equal to 2.5 .50%
-----------------------------------------------------------------------------
Greater than or equal to 1.5 but less than 2.5 .375%
-----------------------------------------------------------------------------
Greater than or equal to .5 but less than 1.5 .30%
-----------------------------------------------------------------------------
Less than .5 .25%
-----------------------------------------------------------------------------
The calculation of the Commitment Fee pursuant to the above table shall be made
quarterly using, for the calculation of EBITDA and the Unused Commitments, the
four
30
fiscal quarters ended on or immediately prior to the date of calculation, based
upon the Consolidated financial statements of Borrowers and their Subsidiaries
for the immediately preceding fiscal period. Notwithstanding the foregoing, if
and when EBITDA calculated on a rolling four quarter basis is zero or negative,
the Commitment Fee shall be .50%. In the event the Commitment Fee changes, such
change shall become effective as of the first day of the month immediately
following the month in which Borrowers' quarterly statements used in such
calculation are delivered to Agent, provided, however, if such financial
statements are delivered after the date on which such financial statements were
required to have been delivered, the change shall be deemed effective as of the
first day of the month immediately following the month in which such financial
statements were due to be delivered.
(B) Borrowers shall pay the Agent for its benefit and not for the ratable
benefit of the Lenders upon execution hereof and as otherwise specified in the
agent fee letter dated of even date herewith, the fees specified in such letter,
such fees to be deemed fully earned and non-refundable when due.
(C) Borrowers shall pay to the Issuing Bank such fees in connection with
the Letters of Credit as required by Section 2.23 hereof.
(D) Borrowers shall pay to the Agent, for the benefit of the Issuing Bank
and each Lender, the Letter of Credit Fee.
SECTION 2.15 Place and Manner of Payments. Borrowers agree to make all
payments on account of principal, interest, the Commitment Fee, the Letter of
Credit Fee or any other sums due under any of the Loan Documents, without setoff
or counterclaim to Agent at Agent's office located at its address specified in
Section 9.2 below, at or before 2:00 p.m., New Jersey time, on the date due, in
lawful money of the United States of America and in immediately available funds
provided that payments received after 2:00 p.m. will be deemed received on the
next Business Day. Agent shall remit to each Lender, subject to collection, its
ratable share of each such payment to which such Lender is entitled on the same
day as received if received before 2:00 p.m., New Jersey time, and otherwise on
the next Business Day. All payments received from Borrowers after an Event of
Default or, if prior to an Event of Default, not designated for application or
otherwise provided for in this Article 2, shall be applied in the following
order: (A) to the payment of the Commitment Fee, the Letter of Credit Fee, other
fees payable hereunder, and other costs and expenses then due and owing from
Borrowers, (B) to the payment of accrued and unpaid interest then due, (C) to
the payment of any amounts under the Loans which are due and to the Letter of
Credit Liability, if any, (D) as a payment against amounts outstanding under the
SAMLOC, (E) as a payment against amounts outstanding under the Revolving Credit,
(F) as a prepayment against principal amounts outstanding under the Acquisition
Loan, and (G) as a prepayment against principal amounts outstanding under the
Term Loan.
31
SECTION 2.16 Computation of Interest and Commitment Fee. Both before and
after the occurrence of an Event of Default, and before and after judgment, (A)
interest on Base Rate Tranches will be calculated on the basis of a year of 365
or 366 days, as the case may be, for the actual number of days elapsed, and (B)
the Commitment Fee, the Letter of Credit Fee and interest on all LIBOR Tranches
will be calculated on the basis of a year of 360 days for the actual number of
days elapsed.
SECTION 2.17 Late Charges; Default Rate.
(A) In the event that Borrowers fail to make any payment required hereunder
or under any of the other Loan Documents within ten (10) days of the date first
due, at the option of Agent, Borrowers shall pay to Agent for the benefit of
itself, Issuing Bank and Lenders a late charge equal to five percent (5%) of the
amount of such late payment as a late charge, not to exceed $1,000.00. Any late
charges assessed are immediately due and payable. Payments are deemed made on
the Business Day payment is received by Agent, provided that payments received
after 2:00 p.m. will be deemed received on the next Business Day. Each Borrower
authorizes Agent to charge any account maintained by any Borrower with Agent for
any late charge not otherwise paid by Borrowers.
(B) To the extent permitted by law, after the occurrence and during the
continuance of any Event of Default the interest rate then in effect on any Loan
shall, at the option of Agent or the Required Lenders, be increased by 2% (the
"Default Rate"), and each time the Interest Rate or Applicable Margin changes,
the Default Rate shall change simultaneously therewith. Borrowers acknowledge
that (1) such additional rate is a material inducement to Lenders to make the
Loans; (2) Lenders would not have made the Loans in the absence of the agreement
of Borrowers to pay such Default Rate; (3) such Default Rate represents
compensation for the increased risk to Lenders that the Loans or Advances will
not be repaid; and (4) such Default Rate is not a penalty and represents a
reasonable estimate of (a) the costs to Lenders and Agent in allocating their
resources (both personnel and financial) to the ongoing review, monitoring,
administration and collection of the Loans or Advances and (b) compensation to
Lenders for losses that are difficult to ascertain.
SECTION 2.18 Reimbursement to Lenders for Cost Increases Imposed by Law. If
any change in existing law or regulation, any new law, any change in regulatory
interpretation or any other factor having the force of law shall impose or
change any tax (other than taxes on income in general), reserve, insurance,
special deposit or similar requirements or charges with respect to funds
obtained by Issuing Bank or any Lender to make or maintain any of the Loans or
Advances during any Interest Period or issue, maintain or participate in any
Letter of Credit, or imposes any other condition, and the result is to increase
the cost to Issuing Bank or such Lender of obtaining or maintaining such funds
or to reduce the return to Issuing Bank or such Lender on the Loans or Advances
to which such Interest Period applies or in respect of any Letter of Credit,
then Issuing Bank or such Lender shall so notify Borrowers in writing,
certifying the amount of, and the computation thereof and reasons for such
increased costs or
32
reduced return (such certificate being conclusive), and Borrowers shall pay to
the Issuing Bank or such Lender within ten (10) days of such written request an
amount sufficient to compensate Issuing Bank or such Lender in full for such
increased costs or such reduced return. THIS COVENANT SHALL SURVIVE THE PAYMENT
OF THE INDEBTEDNESS CREATED BY THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT.
SECTION 2.19 Reimbursement to Lenders for Increased Costs Due to Capital
Adequacy Requirements. If any law or regulation or the interpretation thereof by
any court or administrative or governmental authority charged with the
administration thereof, or compliance by Issuing Bank or any Lender with any
request or directive (whether or not having the force of law) of any such
authority, applicable from time to time, shall (A) impose, modify, deem
applicable or result in the application of any capital maintenance, capital
ratio or similar requirements against loan commitments or other facilities made
by Issuing Bank or any Lender and the result thereof shall be to impose upon
Issuing Bank or any Lender a fee or a requirement to increase any capital
requirement applicable as a result of the making or maintenance of or
participation in -any Letter of Credit or of the Loans (which imposition of or
increase in capital requirements may be determined by Issuing Bank's or such
Lender's reasonable allocation of the aggregate of such capital impositions or
increases), or (B) subject Issuing Bank or any Lender to any tax, duty or other
charge with respect to any Letter of Credit, the Loans, the Notes, or its
obligation to make Advances, or participate in any Letter of Credit, or change
the basis of taxation of payments to such Lender of the principal of or interest
on the Loans or Advances or any other amounts due under this Agreement in
respect of any Letter of Credit or the Loans (except for changes in the rate of
tax on the overall net income of Issuing Bank or such Lender imposed by any
jurisdiction in which Issuing Bank or such Lender is obligated to pay taxes as
of the date hereof), then, upon demand from Issuing Bank or such Lender with
notice to Agent, Borrowers shall pay to Issuing Bank or such Lender within ten
(10) days of demand from Issuing Bank or such Lender from time to time as
specified by Issuing Bank or such Lender, such additional amounts or fees which
shall be sufficient to compensate Issuing Bank or such Lender for such
impositions of or increases in capital requirements or taxes from the date of
such change, together with interest on each such amount from the date demanded
until payment in full thereof at a rate equal to the Default Rate with respect
to amounts or fees not paid when due. Upon the occurrence of any event referred
to above, a certificate setting forth in reasonable detail the amounts necessary
to compensate Issuing Bank and such Lender, and the computation thereof, as a
result of an imposition of or increase in capital requirements or taxes
submitted by Issuing Bank or such Lender to Borrowers shall be conclusive,
absent manifest error or bad faith, as to the amount thereof. For purposes of
the application of this Section 2.19, and in calculating the amount necessary to
compensate Issuing Bank or any Lender for any imposition of or increase in
capital requirements or taxes hereunder, Issuing Bank or such Lender shall
determine the applicability of this provision and calculate the amount payable
to it hereunder in a manner consistent with
33
the manner in which it shall apply and calculate similar compensation payable to
it by other borrowers having provisions in their credit agreements comparable to
this Section 2.19. THIS COVENANT SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS
CREATED BY THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT.
SECTION 2.20 Illegality. Notwithstanding any other provision in this
Agreement, if the adoption of any applicable law, rule, or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank, or comparable agency shall make it unlawful or
impossible for such Lender to make any of the Loans or Advances, then upon
notice to Borrowers the obligation of such Lender to make such Loans or Advances
shall terminate; provided, however, if such Lender may legally make such Loans
or Advances as long as the interest borne thereon is calculated at Adjusted Base
Rate rather than at Adjusted LIBO Rate or such Loan or Advance is for a
different Interest Period, then, unless the Borrowers repay any such Loan or
withdraw their request for any such Advance, such Lender will make such Loans or
Advances at the Adjusted Base Rate, or for such permitted Interest Period, as
the case may be.
SECTION 2.21 Special Provisions for LIBOR Tranches.
(A) Unavailability of Funds and Indeterminate Interest Rates. If on or
before the date Lenders are to make any Advance consisting of a LIBOR Tranche or
on or before any Effective Date (1) any Lender determines in good faith that it
is unable to obtain funds at the LIBO Rate for the elected Interest Period for
any reason, including, but not limited to the unavailability of funds at such
rate, any change in existing law, any new law, the length of such Interest
Period, or otherwise, or (2) Agent determines in good faith that no adequate
means exist to determine the LIBO Rate for such Interest Period, then Agent
shall so notify Borrowers and Lenders on or before the Effective Date and
Borrowers shall have one Business Day after notice to withdraw their request for
a LIBOR Tranche, and if Borrowers fail to so withdraw their request, then, at
Agent's option, Borrowers shall be deemed to have requested a Base Rate Tranche
or shall be required to elect an Interest Period of a length for which Agent may
obtain funds at the rate the adjustment of which determines the LIBO Rate.
(B) Changes Affecting Ability to Maintain Funds. If, during any Interest
Period, any change in existing law, any new law, or any other factor beyond the
control of any Lender prevents such Lender in its good faith determination from
maintaining funds at the rate the adjustment of which determines the LIBO Rate
for such Interest Period and requires such Lender to cease so maintaining funds
prior to termination of such Interest Period, then on the date of such required
cessation, Borrowers shall be required to specify a different Interest Rate for
such Interest Period or, in the
34
alternative, to elect an Interest Period of a length for which all Lenders may
maintain funds at the rate the adjustment of which determines the LIBO Rate. In
addition, within five (5) days after Agent notifies Borrowers of such required
conversion, Borrowers shall reimburse each Lender (to the extent not otherwise
reimbursed pursuant to Section 2.12 hereof) for any loss or expense such Lender
has certified in writing to Borrowers that such Lender has incurred as a result
of any such required cessation.
(C) Ineligible Interest Periods. If, on any date Lenders are to make a
LIBOR Tranche or on any Effective Date, the period of time from such date or
such Effective Date to the Final Repayment Date is less than an Interest Period
which Borrowers could otherwise elect, Borrowers will elect a LIBOR Tranche
whose Interest Period will end on or before the Final Repayment Date, as
necessary. If an appropriate Interest Period is not available, then the
requested Loan or Advance shall bear interest at the Adjusted Base Rate.
(D) Discretion of Lenders as to Manner of Funding. Notwithstanding any
other provision of this Agreement, each Lender may fund or maintain its funding
of all or any part of the Loans or Advances in any legal manner it chooses and
such manner of funding shall not in any way relieve any Borrower of its
obligations.
SECTION 2.22 Availability of Rate Quotations. Notwithstanding anything
herein to the contrary, if Agent reasonably determines (which determination
shall be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition used to calculate the LIBO Rate are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest on a LIBOR Tranche as provided in this
Agreement, then Agent shall forthwith give notice thereof to Borrowers and
Lenders, whereupon until Agent notifies Borrowers and Lenders that the
circumstances giving rise to such suspension no longer exist, (A) the obligation
of Lenders to make LIBOR Tranches shall be suspended; and (B) Borrowers shall
repay in full the then outstanding principal amount of each LIBOR Tranche,
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Tranche by remitting sufficient funds
to Agent or by conversion to a Base Rate Tranche.
SECTION 2.23 Letters of Credit.
(A) Letters of Credit. In addition to requests that Lenders make Revolving
Credit Advances pursuant to Section 2.4 hereof, Borrowers may request, in
accordance with the provisions of this Section 2.23, that on and after the date
on which all of the conditions set forth in Sections 4.1, 4.2 and 4.3 hereof are
satisfied to that date which is thirty-one (31) days prior to the Termination
Date, Borrowers may request that Issuing Bank issue, and Issuing Bank shall
issue, subject to the terms and conditions hereof, Letters of Credit for the
account of Borrowers or any Borrower in an aggregate amount up to the Letter of
Credit Limit; provided, that (1) in no event shall any Letter of Credit have an
expiration date later than the Termination Date; (2) in no event shall any
Letter of Credit have an expiration date later than one (1) year from its issue
date, (3)
35
Borrowers shall not request any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Obligations would exceed the Letter of Credit
Limit or the Letter of Credit Obligations plus the aggregate outstanding
principal amount of all Revolving Credit Advances would exceed the Revolving
Credit Limit; (4) each Letter of Credit shall have a minimum face amount of
$50,000.00, (5) Borrowers shall not request any documentary Letter of Credit if,
after giving effect to such issuance, the portion of the Letter of Credit
Obligations arising from documentary Letters of Credit exceeds $1,000,000.00,
and (6) the Issuing Bank shall have no obligation to issue Letters of Credit to
secure Earnouts, without prior written consent of Required Lenders, which
consent may be withheld or given at Lenders' option. The issuance of any Letter
of Credit in accordance with the provisions of this Section 2.23 shall require
the satisfaction of each condition set forth in Sections 4.1, 4.2 and 4.3
hereof. Immediately upon the issuance of each Letter of Credit (other than the
Existing Letters of Credit) and, with respect to Existing Letters of Credit,
immediately upon the execution and delivery of this Agreement, each Lender shall
be deemed to have, and hereby agrees to have, irrevocably purchased from Issuing
Bank a participation in such Letters of Credit and all drawings thereunder in an
amount equal to the amount of such Letter of Credit multiplied by such Lender's
Pro Rata Share of the Revolving Credit.
(B) Notice of Issuance or Amendment. Whenever Borrowers desire the issuance
of a Letter of Credit or the amendment of a Letter of Credit, they shall deliver
to Issuing Bank a written notice no later than 11:00 A.M. at least three (3)
Business Days, or in each case such shorter period as may be agreed to by
Issuing Bank in any particular instance, in advance of the proposed date of
issuance, which notice shall specify (1) the proposed date of issuance (which
shall be a Business Day), (2) the face amount of such Letter of Credit, (3) the
expiration date of such Letter of Credit, (4) the purpose of such Letter of
Credit, and (5) the name and address of the beneficiary. On the proposed date of
issuance of any Letter of Credit, Issuing Bank shall determine to the best of
its knowledge whether the proposed Letter of Credit, when added to the then
outstanding Letter of Credit Obligations, would be within the Letter of Credit
Limit and, when added to the then outstanding Letter of Credit Obligations and
Revolving Credit Advances, would be within the Revolving Credit Limit. Unless
such criteria is satisfied, Issuing Bank shall not issue or cause to be issued
the requested Letter of Credit. Borrowers shall hold Issuing Bank harmless for
any miscalculations or other errors in making such determinations. In the event
that, upon issuance of such proposed Letter of Credit, the Letter of Credit
Limit is exceeded, Borrowers shall immediately establish with Agent, if not
already so established, and deposit into the Letter of Credit Cash Collateral
Account the amount of such excess. Prior to the date of issuance, Borrowers
shall deliver to Issuing Bank an executed application for such Letter of Credit
in the form customarily required by Issuing Bank for the issuance of letters of
credit and specify a precise description of the documents and the verbatim text
of any certificate to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of such Letter of Credit, would require
Issuing Bank to make payment under such Letter of Credit; provided, that Issuing
Bank, in its reasonable judgment, may require changes in any such documents
36
and certificates; and provided, further, that no Letter of Credit shall require
payment against a conforming draft to be made under such Letter of Credit on the
same Business Day that such draft is presented. In determining whether to pay
under any Letter of Credit, Issuing Bank shall be responsible only to determine
that the documents and certificates required to be delivered under that Letter
of Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit.
(C) Payment of Amounts Drawn Under Letters of Credit. In the event of any
request for drawing under any Letter of Credit by the beneficiary thereof,
Issuing Bank shall immediately notify Borrowers, Agent and Lenders, and
Borrowers shall reimburse Issuing Bank on the day on which such drawing is
honored by paying to Issuing Bank immediately available funds in an amount equal
to the amount of such drawing as provided below; provided that (1) if sufficient
funds are then in the Letter of Credit Cash Collateral Account to reimburse
Issuing Bank in full for the amount of such drawing, Agent shall immediately
withdraw such amount necessary to reimburse Issuing Bank from the Letter of
Credit Cash Collateral Account, (2) if the funds then in the Letter of Credit
Cash Collateral Account are insufficient to reimburse Issuing Bank in full for
the amount of such drawing, Agent shall withdraw all of the funds in the Letter
of Credit Cash Collateral Account to reimburse Issuing Bank and the unreimbursed
balance of such drawing shall be reimbursed in accordance with clause (3) below,
and (3) if there are no funds or insufficient funds then in the Letter of Credit
Cash Collateral Account then (a) unless Borrowers shall have notified Agent
prior to 11:00 a.m., New Jersey time, on the date of such drawing that Borrowers
intend to reimburse Issuing Bank for the amount of such drawing with funds other
than the proceeds of the Revolving Credit Advances, Borrowers shall be deemed to
have given notice to Agent requesting Lenders to make a Revolving Credit Advance
which shall bear interest at the Adjusted Base Rate on the day on which such
drawing is honored (the "Reimbursement Date") in an aggregate amount equal to
the amount of such drawing less the amount, if any, withdrawn from the Letter of
Credit Cash Collateral Account pursuant to clause (2) above, and (b) Lenders
shall, on the Reimbursement Date (whether or not the conditions set forth in
Section 4.2 hereof are satisfied) make a Revolving Credit Advance, which shall
bear interest at the Adjusted Base Rate, in an aggregate amount equal to the
amount of such drawing less the amount, if any, withdrawn from the Letter of
Credit Cash Collateral Account pursuant to clause (2) above, the proceeds of
which shall be applied directly by Agent to reimburse Issuing Bank for such
drawing; and provided, further, that if for any reason the proceeds of such
Revolving Credit Advance are not received by Issuing Bank on the Reimbursement
Date in an aggregate amount equal to the amount of such drawing, Issuing Bank
shall notify Borrowers and Borrowers shall reimburse Issuing Bank on the day
immediately following the Reimbursement Date, in same day funds, in an amount
equal to the excess of the amount of such drawing over the aggregate amount of
such Revolving Credit Advance, if any, which are so received plus accrued
interest on such amount at the rate set forth in Section 2.23(D) hereof less the
amount, if any, withdrawn by Agent and paid to Issuing Bank pursuant to clause
(2) above.
37
(D) Compensation. Borrowers agree to pay the following amounts to Agent and
Issuing Bank:
(1) With respect to each Letter of Credit issued by Issuing Bank
(including without limitation the Existing Letters of Credit), Borrowers
shall pay to Agent for the account of each Lender a letter of credit fee
(the "Letter of Credit Fee") calculated at a rate per annum equal to the
then existing Applicable Margin component of Adjusted LIBOR on the face
amount of all Letters of Credit then outstanding for the portion of the
year each such Letter of Credit has been outstanding, payable on December
31, 1999 for the period then ending and thereafter quarterly in arrears on
the last day of each calendar quarter, and on the Termination Date. After
an Event of Default, the Letter of Credit Fee shall increase by 2%. In the
event the Letter of Credit Fee changes, such changes shall become
effective, for all Letters of Credit then outstanding and thereafter
issued, as of the first day of the month immediately following the month in
which Borrowers' quarterly statements used in such calculation are
delivered to Lenders, except that (a) the Letter of Credit Fee, once reset,
shall remain in effect for not less than ninety (90) days and (b) if the
Letter of Credit Fee is increased as a result of an Event of Default, such
increase shall take effect immediately.
(2) With respect to each Letter of Credit issued by Issuing Bank, a
fronting fee of one-quarter percent (1/4%) of the maximum amount available
to be drawn under such Letter of Credit payable on issuance to Issuing Bank
for its own account and not for the account of Lenders;
(3) With respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by Issuing Bank in respect
of each such drawing from the date of the drawing to the date such amount
is reimbursed by Borrowers (including any such reimbursement out of the
Letter of Credit Cash Collateral Account) at a rate equal to the Default
Rate applicable to Base Rate Tranches; and
(4) With respect to the issuance, amendment, transfer, administration
or cancellation of each Letter of Credit and each drawing made thereunder,
documentary and processing charges in accordance with Issuing Bank's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer, administration, cancellation or drawing, as the case
may be, or as otherwise agreed to by Issuing Bank, for the sole account of
the Issuing Bank.
(E) Obligations Absolute. The obligation of Borrowers to reimburse Issuing
Bank for drawings made under the Letters of Credit issued by Issuing Bank shall
be unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances including, without
limitation, the following circumstances and neither Issuing Bank nor any Lender
nor Agent shall be liable as a result of any of the following circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
38
(2) the existence of any claim, set-off, defense or other right which
any Borrower may have at any time against a beneficiary or any transferee
of any Letter of Credit (or any persons or entities for whom any such
transferee may be acting), Summit, any Lenders or any other Person, whether
in connection with this Agreement, the transactions contemplated herein or
any unrelated transaction;
(3) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) payment by Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit; provided, that such
payment is not made in bad faith or as a result of willful misconduct;
(5) any breach of this Agreement or any document delivered in
connection herewith by any party hereto or thereto; or
(6) the fact that an Event of Default or Default shall have occurred
and be continuing.
(F) Indemnification; Nature of Issuing Bank's Duties. In addition to
amounts payable as elsewhere provided in this Section 2.23, Borrowers hereby
agree to protect, indemnify and save harmless Issuing Bank, Agent and Lenders
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which Issuing
Bank, Agent or any Lender may incur or be subject to as a consequence, direct or
indirect, of (1) the issuance of any Letter of Credit, or (2) the failure of
Issuing Bank to honor a drawing under any Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority. Without limiting the
foregoing, Issuing Bank shall have no obligation to ascertain whether the stated
purpose of any requested Letter of Credit is permitted by this Agreement and
Issuing Bank, Agent and Lenders shall not be liable for any Borrower's use of a
Letter of Credit issued pursuant to the terms hereof in violation of Borrowers'
covenants contained herein.
As among Borrowers on one hand and Issuing Bank and Lenders on the other
hand, Borrowers assume all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by Issuing Bank by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the foregoing,
Issuing Bank and Lenders shall not be responsible for: (1) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (2) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in
39
whole or in part, which may prove to be invalid or ineffective for any reason;
(3) failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit, unless (a) such
failure is material and substantive, and (b) Issuing Bank's payment on such
Letter of Credit constitutes gross negligence or willful misconduct; (4) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(5) errors in interpretation of technical terms; (6) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (7) the misapplication by
the beneficiary of any Letter of Credit; or (8) any consequences arising from
causes beyond the control of Issuing Bank. None of the above shall affect,
impair, or prevent the vesting of any of Issuing Bank's or any Lender's rights
or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by Issuing Bank
under or in connection with the Letters of Credit issued by it or the related
certificates, if (i) taken or omitted in good faith and (ii) substantially in
accordance with the terms thereof, shall not put Issuing Bank or any Lenders
under any resulting liability to Borrowers.
It is expressly understood and agreed that the obligations of Issuing Bank
hereunder are only those expressly set forth in this Agreement and that Issuing
Bank shall be entitled to assume that no Event of Default and no Default has
occurred and is continuing unless Issuing Bank has actual knowledge of such fact
or has received notice from a Borrower that such Borrower considers that an
Event of Default or Default has occurred and is continuing and specifying the
nature thereof.
SECTION 2.24 Letter of Credit Cash Collateral Account. Cash collateral
pledged by Borrowers pursuant to this Agreement shall be maintained in an
interest-bearing deposit account of Borrowers to be established with Agent at
the time such cash collateral is first created, over which Agent shall have sole
control (the "Letter of Credit Cash Collateral Account"). Borrowers hereby
grant, bargain, convey and set over to Agent for the benefit of Lenders and
Issuing Bank a security interest in and lien upon the Letter of Credit Cash
Collateral Account and all cash and any other assets at any time hereafter
contained therein as security for the payment and performance of all of the
Liabilities. Borrowers shall take such action and execute and deliver such
documents, including financing statements, as Agent may determine necessary or
desirable to further the security interest hereby created. Provided there does
not then exist an Event of Default or Default, if at any time the funds held in
the Letter of Credit Cash Collateral Account exceed the sum of the then existing
Letter of Credit Liability plus the amount of any yet to be issued Letters of
Credit then subject to a request by a Borrower under Section 2.23 hereof, Agent
shall remit such excess to Borrowers. After the occurrence of an Event of
Default and/or acceleration of the Loans as set forth in Section 7.2 hereof, or
if Borrowers shall have failed to pay all amounts which have come due on or
prior to such applicable due date, Agent shall apply all funds held in the
Letter of Credit Cash Collateral Account in the manner provided in Section 2.15
hereof.
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On the Termination Date, all monies in the Letter of Credit Cash Collateral
Account in excess of the amount required to repay the Liabilities and any other
amount then owing hereunder shall be returned to Borrowers.
SECTION 2.25 Mitigation of Obligations; Replacement of Lenders in Certain
Circumstances.
(A) If any Lender requests compensation under Section 2.18, 2.19 or 2.21
hereof, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its advances hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment:
(1) would eliminate or reduce amounts payable by Borrowers pursuant to such
Sections in the future and (2) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender.
(B) If an event specified in Section 2.18, 2.19 or 2.21 hereof occurs and
as a result the LIBOR Tranches cannot be maintained as LIBOR Tranches (in the
case of Section 2.21 hereof) or additional payments are required to be made by
Borrowers (in the case of Section 2.18 or 2.19 hereof), and the occurrence
affects fewer than all Lenders (each an "affected Lender"), then Borrowers may
(but shall not be obligated to), at their sole expense and effort, upon notice
to such affected Lender and Agent, require such affected Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.12 hereof) all of its interests, rights, duties and
obligations under this Agreement and the other Loan Documents to one or more
other lenders (selected by Borrowers and reasonably acceptable to Agent) who
shall assume such duties and obligations hereunder (which assignee may be a
Lender, if a Lender accepts such assignment); provided that (1) Borrowers shall
have received the prior written consent of Agent (which consent shall not be
unreasonably withheld), (2) such affected Lender shall have received payment of
an amount equal to the outstanding principal of its advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal, accrued interest and
fees) or Borrowers (in the case of all other amounts), and (3) Borrowers or such
assignee pays the fee required under Section 9.12 hereof. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling
Borrowers to require such assignment and delegation cease to apply. Until such
assignment and delegation shall actually occur, the provisions of Sections 2.18,
2.19 and 2.21 hereof shall continue to apply, and on and after the effective
date of such assignment and delegation, each affected Lender shall retain the
benefits of Sections 2.18, 2.19, 6.15, 6.26 and 9.5 hereof in respect of the
period prior to such effective date.
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ARTICLE 3
COLLATERAL
SECTION 3.1 Security Interests. As security for the performance of this
Agreement and/or of the other Loan Documents, the payment of principal and
interest under the Loans and the payment of all other liabilities of Borrowers
to Agent, Issuing Bank and Lenders (including without limitation to Summit in
connection with the SAMLOC), whether absolute or contingent, matured or
unmatured, direct or indirect, sole, joint, several, or joint and several,
similar or dissimilar, related or unrelated to the Loan Documents, due or to
become due or heretofore or hereafter contracted or acquired, including, without
limitation, obligations of any Borrower as surety under any guaranty or
suretyship agreement given or to be given by Borrower to Lenders for the debt of
others and obligations of any Borrower related to any Interest Rate Hedging
Agreement or any currency protection agreement, currency future, option or swap
or other currency hedge agreements between any Borrower and any Lender (the
"Liabilities"), each Borrower hereby grants, pledges, and assigns to Agent, as
agent for the benefit of itself, the Issuing Bank and Lenders, a security
interest in all assets of such Borrower or any of them now owned or hereafter
acquired including, without limitation, (A) all Accounts, Chattel Paper,
Equipment (whether or not constituting fixtures), Documents, Instruments,
General Intangibles (including, but not limited to, any and all interests in
trademarks, service marks, patents, licenses, permits, copyrights, contracts and
agreements), including without limitation each Borrower's rights under all
present and future authorizations, permits and licenses issued or granted to
such Borrower by any other governmental agency, whether federal, state or local
for the ownership and operation of its business, and all proceeds of sale
thereof, (B) all Inventory of each Borrower held for sale or lease or to be
furnished under contracts of service, (C) all Books and Records, (D) the Letter
of Credit Cash Collateral Account and any account maintained by any Borrower
with Agent or any Affiliate of Agent or any Lender or any Affiliate of any
Lender and all cash held therein, and (E) all proceeds and products of the
foregoing, including casualty insurance thereon, now owned or hereafter acquired
by any Borrower.
SECTION 3.2 Further Security. As further security for payment of the
Liabilities: (A) Realty shall execute and deliver a mortgage and security
agreement granting to Agent for the benefit of itself, Issuing Bank and Lenders
a second priority mortgage lien on the Premises (the "Mortgage"), (B) Realty
shall execute and deliver an assignment of leases in favor of Agent for the
benefit of itself, Issuing Bank and Lenders (the "Assignment of Leases"),
pursuant to which Realty will grant to Agent for the benefit of itself, Issuing
Bank and Lenders a lien on and security interest in all Realty's leasehold
interests in the Premises, (C) Borrowers shall execute and deliver a pledge
agreement (the "Pledge Agreement") in favor of Agent for the benefit of itself,
Issuing Bank and Lenders, pursuant to which Borrowers will grant to Agent for
the benefit of itself, Issuing Bank and Lenders a lien on and security interest
in (i) 100% of the capital stock, membership interests, partnership interests or
other equity ownership interests in each Domestic Subsidiary of each Borrower,
whether now existing or hereafter created or acquired, (ii) 66% of the capital
stock, membership interests or partnership interests or other equity ownership
interests of each Foreign Subsidiary of each Borrower (excluding any Foreign
Subsidiary of any Foreign Subsidiary), whether
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now existing or hereafter created or acquired, and (iii) obligations owed by one
Borrower to a Subsidiary of a Borrower, whether now existing or hereafter
created; (D) Borrowers shall deliver to Agent original stock certificates and
instruments representing the property pledged pursuant to the Pledge Agreement,
together with powers executed in blank; (E) Borrowers shall deliver executed
UCC-1 financing statements as to such pledge in form and substance as required
by Agent, and (F) Borrowers shall execute and deliver a Trademark Collateral
Security Agreement (the "Trademark Security Agreement") in favor of Agent, for
the benefit of itself, Issuing Bank and Lenders, pursuant to which each Borrower
shall grant to Agent for the benefit of itself, Issuing Bank and Lenders a
security interest in any and all interests of such Borrower in any trade names,
trademarks and service marks and Borrowers will pay the cost of filing the same
with the United States Patent and Trademark Office and any other public offices
reasonably designated by Agent, if Agent determines any such filings to be
necessary.
SECTION 3.3 Financing Statements; Certificates of Title. Each Borrower will
join with Agent in executing such financing statements and continuation
statements (in form satisfactory to Agent) under the Uniform Commercial Code as
Agent may specify, and will pay the cost of filing the same in such public
offices as Agent shall designate. If requested by Agent, Borrowers shall have
noted on the certificate of title of any Collateral the liens created hereby and
shall deliver to Agent the originals of each such certificate of title. Each
Borrower agrees to take whatever action Agent reasonably requests to perfect and
to continue the perfection of Agent's security interest for the benefit of
itself, Issuing Bank and Lenders in the Collateral.
SECTION 3.4 Landlord's Waiver. Borrowers shall cause the owners of the
locations identified on Exhibit 3.6 hereto to execute and deliver to Agent an
instrument (in form satisfactory to Agent) by which each such owner waives its
right to distrain on any of the Collateral, and by which such owner grants to
Agent the right (but not the obligation) to cure any default by Borrowers under
the applicable lease (each, a "Landlord's Waiver").
SECTION 3.5 Agent's Rights With Respect to Accounts, Chattel Paper,
Instruments and General Intangibles. With respect to any Account, Chattel Paper,
Instrument and General Intangible that is Collateral hereunder, (A) upon the
occurrence and continuance of a Default or an Event of Default, Agent shall have
the right at any time and from time to time, with notice to Borrowers (which may
be oral or written), to endorse in the name of any Borrower all proceeds of the
Accounts, Chattel Paper, Instruments and General Intangibles payable to such
Borrower that may come to Agent; and (B) upon the occurrence and continuance of
an Event of Default, Agent shall have the right at any time and from time to
time, with notice to Borrowers (which may be oral or written), to (1) notify
Purchasers under any Borrower's Accounts, Chattel Paper, Instruments and General
Intangibles that such Accounts, Chattel Paper, Instruments and General
Intangibles have been assigned to Agent for the benefit of itself, Issuing Bank
and Lenders, forward invoices to such Purchasers directing them to make payments
to Agent, collect all Accounts, Chattel Paper, Instruments and General
43
Intangibles of any Borrower in Agent's or any Borrower's name, and take control
of any cash or non-cash proceeds of any Borrower's Accounts, Chattel Paper,
Instruments and General Intangibles, (2) compromise, extend, or renew any
Account, Chattel Paper, Instrument or General Intangible of any Borrower or deal
with any Borrower's Accounts, Chattel Paper, Instruments and General Intangibles
as Agent may deem advisable, (3) make exchanges, substitutions, or surrenders of
Collateral, and (4) take control of any cash or non-cash proceeds of any
Collateral.
SECTION 3.6 Places of Business; Location of Collateral. (A) Borrowers
represent that (1) the properties listed on part A of Exhibit 3.6 attached
hereto serve as each Borrower's chief place of business, chief executive office,
and the place where it keeps its Books and Records, and (2) all of the Equipment
or Inventory are kept at the locations listed on part B of Exhibit 3.6 attached
hereto.
(B) Borrowers will not permit (1) any change in the location of the chief
place of business or chief executive office of any Borrower, (2) any change in
the place where any Borrower keeps its Equipment and/or Inventory or its Books
and Records, (3) the establishment of any new or the discontinuance of any
existing place of business, or (4) the establishment of any new or the
discontinuance of any location where Inventory, Equipment or Books and Records
are kept, without giving Agent prior written notice and then, only if and to the
extent Agent retains a first priority, perfected security interest in the
Collateral for the benefit of itself, Issuing Bank and Lenders.
(C) Except for the temporary removal of mobile Equipment in the ordinary
course of Borrowers' business, Borrowers will not permit any of their Equipment
to be removed from its current location or any of their Inventory serving as
Collateral to be so removed without giving Agent prior written notice and then,
only if and to the extent Agent retains a first priority, perfected security
interest therein for the benefit of itself, Issuing Bank and Lenders.
SECTION 3.7 Accounts. With respect to each Account (A) each Borrower
represents that: (1) such Account is not evidenced by a judgment, an Instrument
or Chattel Paper or secured by a letter of credit (except (a) such judgment as
has been assigned, (b) such Instrument or Chattel Paper as has been endorsed and
delivered to Agent and (c) such letter of credit as has been assigned and
delivered to Agent) and represents a bona fide completed transaction; (2) the
amount shown on any such Borrower's Books and Records and on any list, invoice
or statement furnished to Agent is owing to such Borrower; (3) the title of such
Borrower to such Account is absolute; (4) such Account has not been transferred
to any other Person, and, at the time such Account is created, no Person except
such Borrower or the relevant Purchaser has any claim thereto or to the goods or
services represented thereby; (5) no partial payment against any Account has
been made by anyone other than as noted on such Borrower's Books and Records;
and (6) no set-off or counter-claim to such Account exists, and no
44
agreement has been made with any Person under which any deduction or discount
may be claimed.
(B) Borrowers will immediately notify Agent if any Account arises out of
contracts with the United States or any department, agency or instrumentality
thereof, furnish Agent with copies of each such contract and execute any
instruments and take any steps reasonably required by Agent in order that all
moneys due and to become due under any such contract shall be assigned to Agent
and notice given under the Federal Assignment of Claims Act.
(C) Each Borrower will (1) if requested by Agent, furnish to Agent copies,
with such duplicate copies as Agent may request, of any invoice applicable to
each of its Accounts; (2) inform Agent immediately of any material delay in
performance by such Borrower or claims made in regard to its Accounts; (3) take
such actions necessary to provide notice to a Person examining the records of
such Borrower's Accounts that each Account has been assigned to Agent for the
benefit of itself, Issuing Bank and Lenders; and (4) furnish Agent and Lenders
with such other reports as Agent may from time to time reasonably request.
SECTION 3.8 Chattel Paper; Letters of Credit and Instruments. Each Borrower
covenants that it will deliver to Agent promptly all originals of (A) letters of
credit supporting Accounts, (B) Chattel Paper, and/or (C) Instruments now in its
possession or hereafter acquired, each properly assigned and/or endorsed over to
Agent, which letters of credit, Chattel Paper and Instruments shall be held by
Agent as security hereunder. Borrowers shall remain solely responsible for the
observance and performance of all of its or their covenants and obligations
under all Chattel Paper and Instruments, and neither Agent nor any Lender shall
be required to observe or perform any such covenants or obligations.
SECTION 3.9 Equipment and Inventory. Each Borrower represents, warrants and
agrees that (A) such Borrower is the absolute owner of its Equipment, subject
only to the security interests created hereby and Permitted Liens; (B) such
Borrower will not dispose of any of its Equipment other than in the ordinary
course of business and then in accordance with the terms of this Agreement, or
permit any of its Equipment to become a fixture or an accession to other goods
unless Agent's security interest therein for the benefit of itself, Issuing Bank
and Lenders would continue to be a perfected, first lien priority security
interest therein; and (C) no consignment Inventory of any Borrower is
represented on the financial statements or Books and Records of such Borrower as
being owned by such Borrower.
SECTION 3.10 Expenses of Agent. Borrowers will reimburse Agent within ten
(10) days after demand for all reasonable expenses (including the reasonable
fees and expenses of legal counsel for Agent) in connection with the enforcement
of Agent's rights to take possession of the Collateral and the proceeds thereof
and to hold, collect, render in compliance with applicable laws and regulations
(including without limitation Environmental Laws), prepare for sale, sell and
dispose of the Collateral.
45
SECTION 3.11 Notices. If notice of sale, disposition or other intended
action by Agent with respect to the Collateral is required by the U.C.C. or
other applicable law, any notice thereof sent to any Borrower at its address
listed herein or such other address of such Borrower as may from time to time be
shown on the records of Agent at least ten days prior to such action, shall
constitute reasonable notice to such Borrower.
SECTION 3.12 Insurance; Discharge of Taxes, etc. Agent shall have the right
at any time and from time to time, with or without notice to any Borrower, to
(A) obtain insurance covering any of the Collateral if Borrowers fail to do so,
(B) discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on any of the Collateral and (C) pay for the maintenance and
preservation of any of the Collateral. Borrowers will reimburse Agent, on
demand, with interest thereon at the Default Rate for any payment Agent makes,
for any reasonable expense Agent incurs under this authorization. Each Borrower
assigns to Agent for the benefit of itself, Issuing Bank and Lenders all right
to receive the proceeds of insurance covering the Collateral, directs any
insurer to pay all such proceeds directly to Agent, authorizes Agent to endorse
in the name of any or all Borrowers any draft for such proceeds, and authorizes
Agent to apply such proceeds, at Agent's discretion, as a prepayment against the
Loans in the same manner and order as a prepayment under Section 2.12 hereof,
provided however that in the event of a casualty resulting in damages to
property of Borrowers or any of them, Agent shall agree to allow Borrowers to
use the resulting insurance proceeds to repair or replace such property if
Borrowers so elect in writing within thirty (30) days after such casualty, on
the following terms and conditions: (i) there does not then exist any Default or
Event of Default; (ii) the insurance proceeds received by Agent are sufficient
to repair or replace such property, or if not, Borrowers deposit with Agent an
amount which, when added to such insurance proceeds, will be sufficient to
repair or replace such property; (iii) Agent for the benefit of itself, Issuing
Bank and Lenders has a first priority, perfected security interest on any new
replacement or old repaired property, except with respect to the Premises which
Agent shall have a second priority, perfected security interest on; and (iv)
insurance proceeds and funds deposited by Borrowers or any of them shall be
advanced by Agent against costs incurred by Borrowers or any of them for such
repair or replacement on terms reasonably determined by Agent.
SECTION 3.13 Waiver and Release by Borrowers. Each Borrower (A) waives
protest of all commercial paper at any time held by Agent on which such Borrower
is in any way liable, notice of nonpayment at maturity of any and all Accounts
and, except where required hereby or by law, notice of action taken by Agent,
and (B) releases Agent and Lenders from all claims for loss or damage caused by
any failure to collect any Account or by any act or omission on the part of
Agent or its officers, agents and employees.
SECTION 3.14 Records and Reports. Each Borrower shall keep accurate and
complete records of its Accounts (and the collection thereof), General
Intangibles,
46
Chattel Paper, Instruments, Documents and Inventory and furnish Agent and
Lenders such information about such Borrower's Accounts, General Intangibles,
Chattel Paper, Instruments, Documents, and Inventory as Agent may request. Agent
shall have the right to conduct periodic examinations and verifications of
Borrowers' Books and Records, which examination may include, without limitation,
verifications of Accounts by contacting Purchasers; provided that if there then
exists no Default or Event of Default, Agent shall conduct such verifications
with Borrowers' assistance (which Borrowers agree to provide) using such
Borrower's letterhead with responses to be returned to a lock box under Agent's
control. Each Borrower agrees to make its Books and Records available to Agent
at such Borrower's principal place of business for purposes of such examination.
Borrowers shall reimburse Agent for the reasonable costs and expenses (whether
internal or external) of one (1) examination per calendar year and for
additional examinations conducted during the existence of an Event of Default.
SECTION 3.15 Further Assurances. From time to time each Borrower will
execute and deliver to Agent such additional instruments as Agent may reasonably
request to effectuate the purposes of this Agreement and to assure to Agent, for
the benefit of itself, Issuing Bank and Lenders, as secured party, a security
interest in the Collateral.
SECTION 3.16 Application of Proceeds of Collateral. All proceeds of
Collateral shall be applied (A) to the costs of preservation and, after the
occurrence of an Event of Default, liquidation of such Collateral and Agent's
exercise of its rights under Articles 3 and 7 hereof, then (B) as set forth in
Article 2 hereof, then (C) to all other Liabilities.
SECTION 3.17 Continuing Collateral. Agent shall be under no obligation to
proceed first against any part of the Collateral before proceeding against any
other part of the Collateral. It is expressly agreed that all of the Collateral
stands as equal security for all Liabilities and Agent shall have the right to
proceed against or sell any and/or all of the Collateral in any order, or
simultaneously, as it, in its sole discretion, shall determine.
ARTICLE 4
CONDITIONS OF LENDING
SECTION 4.1 Conditions Precedent to Each Lender's Obligations. The
obligations of Lenders, Agent and Issuing Bank hereunder are subject to the
condition precedent that each Lender shall have received on or before the day on
which the Term Loan is to be advanced, the initial Advance is to be made, or an
additional Letter of Credit is to be issued, Agent shall have received all of
the following, in form and substance satisfactory to Lenders and Agent:
(A) with respect to each corporate Borrower, a copy, certified in writing
by the Secretary or an Assistant Secretary of each Borrower, of (1) resolutions
of the Board of Directors of such Borrower evidencing approval of the Loan
Documents to
47
which such Borrower is a party and the matters contemplated thereby, (2) each
document evidencing other necessary consents, approvals, actions and approvals,
if any, with respect to the Loan Documents, and (3) such Borrower's
articles/certificate of incorporation and by-laws;
(B) with respect to Realty, a copy, certified in writing by an officer of
Realty, of (1) each document evidencing other necessary consents, approvals,
actions and approvals, if any, with respect to the Loan Documents, and (2)
Realty's charter documents and operating agreement;
(C) a favorable opinion of independent counsel(s) for Borrowers as Agent
may require on such matters and in form and substance acceptable to Agent and
Lenders;
(D) written certificate by the Secretary or an Assistant Secretary of each
Borrower as to the names and signatures of the officers of such Borrower
authorized to sign the Loan Documents and the other documents or certificates of
such Borrower to be executed and delivered pursuant thereto;
(E) recent certificates, issued by the Secretary of State of each state of
incorporation or formation of each Borrower, stating that such Borrower is duly
incorporated or formed and in good standing under the laws of such state;
(F) recent certificates, issued by the Secretaries of State of each state
in which each Borrower does business, stating that such Borrower is in good
standing under the laws of such state;
(G) the executed Notes;
(H) the executed Mortgage;
(I) the executed Assignment of Leases;
(J) the executed Trademark Security Agreement;
(K) the executed Pledge Agreement;
(L) certificates and instruments representing stock certificates and other
instruments pledged pursuant to the Pledge Agreement, accompanied by duly
executed undated instruments of transfer or assignment in blank, and, to the
extent required by the Pledge Agreement, duly endorsed to the order of the
Agent;
(M) any and all U.C.C. financing statements required to be delivered to
Agent;
(N) a policy of title insurance or "marked-up" commitment to issue a policy
of title insurance, with all premiums paid, issued by a title company
satisfactory to
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Agent, insuring the lien of the Mortgage with respect to the Premises, in
amounts acceptable to Agent, as a valid second priority lien, subject only to
exceptions approved by Agent and with such affirmative insurance as Agent may
require;
(O) [THIS SECTION WAS INTENTIONALLY LEFT BLANK]
(P) evidence that none of the improvements now existing or intended to be
constructed on the Premises are located in a flood hazard area or evidence of
flood insurance;
(Q) copies of all easements, agreements, restrictions and conditions
pertaining to the Premises;
(R) a Phase I environmental assessment of the Premises in form and
substance satisfactory to Agent together with such other more detailed
environmental assessments as Agent may require after review of such Phase I
environmental assessment;
(S) copies of all real property leases under which a Borrower is a lessee
or lessor;
(T) the financial information required by Section 5.4 hereof;
(U) such other financial statements, reports, projections and other
financial information as Agent may reasonably request, all of which shall be
certified by Borrowers as having been prepared in good faith and based on
assumptions reasonably believed by Borrowers to be reasonable, all of which
shall be satisfactory to Agent in form and substance;
(V) all of Borrowers' instruments, chattel paper and letters of credit, if
any, supporting any Account owed by a Purchaser, each properly endorsed and/or
assigned to Agent;
(W) [THIS SECTION WAS INTENTIONALLY LEFT BLANK]
(X) evidence that Borrowers have provided to Agent the documents necessary
for Agent to open the Letter of Credit Cash Collateral Account;
(Y) certificates of insurance and/or insurance policies in form and
substance satisfactory to Agent in such amounts and with such insurance
companies as are acceptable to Lenders, insuring Borrowers and their assets,
against such risks and with such coverage (including, without limitation,
property damage, workmen's compensation, public liability, products liability,
fire with extended coverage, vandalism, malicious mischief, and flood) as may be
reasonably required by Agent; with each policy of insurance (1) showing Agent's
security interest therein for the benefit of itself, Issuing Bank and Lenders in
such manner that all payments for damage or loss will be paid to Agent, as
lender loss payee, (2) providing that it will not be terminated or
49
otherwise modified adversely to Lenders without at least 30 days' prior written
notice to Agent, (3) naming Agent, as additional insured, and (4) providing that
such policy shall not be cancelable with respect to Agent for the fraud,
misrepresentation or other act or omission of any other insured; Borrowers will
furnish Agent with satisfactory evidence of compliance with this Section and
upon request of Agent, will deliver a certified copy of each policy to be held
by Agent, and the original of each loss payee endorsement;
(Z) representations that Borrowers and all of their properties are in full
compliance with all applicable state, federal and local laws and regulations,
including without limitation, Environmental Laws, including, but not limited to,
compliance with or non-applicability of the (1) Industrial Site Recovery Act
("ISRA") to the Premises and transactions contemplated in connection with the
Loans, and (2) Compensation and Control Act, N.J.S.A. 58:10-23 et seq. (the
"Spill Act"), employee benefits, health care, wetlands, and all other laws and
regulations;
(AA) [THIS SECTION WAS INTENTIONALLY LEFT BLANK]
(BB) representations that each Borrower has all licenses and permits
necessary and material to the conduct of its business as now being conducted,
together with copies of all such licenses and permits and any pending
application;
(CC) each certificate, agreement, financing statement and any other
document or instrument required to be delivered by Borrowers under or pursuant
to any Loan Document;
(DD) evidence that Borrowers have paid or have made arrangements
satisfactory to Agent to pay all fees, costs and expenses incurred in connection
with the transactions contemplated hereby including, without limitation, the
audit fees, lien search fees, filing fees and the fees and expenses of Agent's
and each Lender's counsel;
(EE) the results of Uniform Commercial Code, tax, judgment, and bankruptcy
searches showing no prior liens or judgments against any Borrower or any of its
assets;
(FF) certified copies of all shareholder agreements, if any, relating to
Borrowers, or any of them;
(GG) satisfactory completion of each Lender's due diligence;
(HH) duly executed Landlord Waivers;
(II) payment of upfront fees to each Lender as required by such Lender's
commitment or other letter agreement with Borrowers or to the Agent;
(JJ) an environmental indemnity agreement satisfactory to Agent executed by
each Borrower; and
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(KK) such other documents as Agent may reasonably require.
SECTION 4.2 Additional Conditions Precedent. The obligations of Lenders,
Issuing Bank and Agent hereunder are subject to the further conditions
precedent:
(A) the representations and warranties contained in this Agreement and in
the other Loan Documents shall be correct and accurate in all material respects
on and as of the date of each advance, issuance or selection as though made on
and as of such date;
(B) no Default or Event of Default shall have occurred and be continuing or
will result from the making of any advance, issuance or selection;
(C) there shall have occurred no material adverse change in any Borrower or
the financial condition, business, properties, prospects or operations of any
Borrower, since the date of the last financial statements received and accepted
by Lenders; and
(D) there shall be no pending or threatened litigation which, if ever
decided against any Borrower, would be reasonably likely to have a material
adverse effect on any Borrower or the financial condition, operations, business,
prospects or properties of any Borrower.
Each request by Borrowers for an advance, issuance or selection, shall
constitute a representation by Borrowers that at the time thereof all conditions
precedent described in this Section 4.2 have been satisfied.
SECTION 4.3 Conditions to Letters of Credit. The obligation of Issuing Bank
to issue any Letter of Credit hereunder and each Lender to participate therein
is subject to the prior or concurrent satisfaction of all of the following
conditions:
(A) On or before the date of issuance of each Letter of Credit, Issuing
Bank in respect of such Letter of Credit shall have received in accordance with
the provisions of Section 2.23 hereof, a notice requesting the issuance of such
Letter of Credit, an executed application for such Letter of Credit in the form
customarily required by Issuing Bank for the issuance of letters of credit, all
other information specified in Section 2.23 hereof, and such other documents as
Issuing Bank may reasonably require in connection with the issuance of such
Letter of Credit;
(B) On the date of issuance of each Letter of Credit, all conditions
precedent described in Section 4.2 hereof shall be satisfied to the same extent
as though the issuance of such Letter of Credit were the making of an Advance,
and each request by Borrowers to Issuing Bank to issue a Letter of Credit shall
constitute a representation by Borrowers that at the time thereof all conditions
precedent described in Section 4.2 hereof have been satisfied and the sum of the
proposed Letter of Credit plus the Letter of Credit Obligations then outstanding
would not exceed the Letter of
51
Credit Limit and the sum of the proposed Letter of Credit plus the Letter of
Credit Obligations plus the outstanding Revolving Credit Advances will not
exceed the Revolving Credit Limit; and
(C) On or before the date of issuance of such Letter of Credit, Borrowers
shall have paid the fees therefor required under Section 2.23(D) hereof.
SECTION 4.4 Special Conditions for Acquisition Advances. The obligations of
each Lender to make an Acquisition Advance (including the initial Acquisition
Advance) requested by Borrowers is subject to the further conditions precedent
that:
(A) Such proposed Acquisition Advance is for the purpose of financing the
acquisition of substantially all of the assets or capital stock or other equity
interests of a business ("Target") (1) which is engaged in substantially the
same line of business as a Borrower or a business complementary to the business
of a Borrower as reasonably determined by Agent, and (2) whose board of
directors (or similar governing group in the case of a business which is not a
corporation) has given its approval in writing to such acquisition.
(B) The Acquisition Consideration to be paid to acquire the Target shall
not exceed the product of such Target's Recasted EBITDA for the twelve month
period immediately prior to such acquisition (such recasting subject to Agent's
reasonable consent) times six and one half (6.5).
(C) The Acquisition Consideration to be paid to acquire the Target shall
not exceed the product of such Target's Recasted EBITDA for the twelve month
period immediately prior to such acquisition (such recasting subject to Agent's
reasonable consent) times eight (8); provided, that, for the purpose of this
Section 4.4(C) only, "Acquisition Consideration" shall be deemed to include
consideration in the form of stock in Parent.
(D) Borrowers shall have delivered to Agent and Lenders twenty one (21)
days prior to any proposed Acquisition Advance the following:
(1) a copy of any executed letter of intent or similar document, or if
executed, any agreement of sale or purchase;
(2) an internal accretion analysis; and
(3) Target's internal financial statements.
(E) Borrowers shall have delivered to Agent and Lenders with the written
request to be submitted in accordance with Section 2.7(A) hereof each of the
following, in form and substance reasonably satisfactory to Agent and Lenders:
(1) the annual financial statements, including a balance sheet and
profit and loss statement and interim statements for the Target being
acquired with the
52
proceeds of such Acquisition Advance (covering the periods during the past
three (3) years, if available), which annual financial statements, if
available or if required by Regulation S-X under the Securities Act of
1933, as amended, shall be audited and unqualifiedly certified by a firm of
independent certified public accountants reasonably acceptable to Agent and
Lenders; provided however that, in the event Borrowers deliver financial
statements which have not been audited Borrowers shall also deliver to
Agent and Lenders within ninety (90) days of the closing of such
acquisition, an opening balance sheet reviewed by an accounting firm
reasonably acceptable to Agent and Lenders;
(2) a pro forma balance sheet and profit and loss statement for
Borrowers and their Subsidiaries after giving effect to the proposed
acquisition and demonstrating to the reasonable satisfaction of Agent and
Lenders pro forma compliance with the covenants set forth in Sections 6.6
through 6.9 hereof for the one (1) year period prior to such proposed
acquisition certified by Borrowers' management to the effect that such pro
forma balance sheet and profit and loss statement have been prepared on the
basis of historical results and that management has no reason to believe
they are incorrect or misleading in any respect;
(3) the latest draft of the agreement of sale for the acquisition of
the Target being financed with the requested Acquisition Advance, certified
by Borrowers as a true, correct and complete copy of the agreement of sale
(or if not yet executed, a current draft) for the purchase of such Target
for which the requested Acquisition Advance is being made with terms and
conditions consistent with Section 4.4(A), (B) and (C) hereof and which
shall not result in a Default or Event of Default;
(4) an environmental audit of each property owned or leased by the
Target proposed to be acquired performed by an auditor reasonably
satisfactory to Agent and Lenders, in form and substance reasonably
satisfactory to Agent and Lenders, together with such other more detailed
environmental assessments as Agent may require after review of such audit;
and
(5) for acquisitions having Acquisition Consideration in excess of
$8,500,000.00 evidence satisfactory to Lenders that the Target will be in
compliance with the covenants set forth in Section 6.30 hereof, including
any compliance plan being implemented by Target and a status report with
respect thereto, and for all other acquisitions, Parent shall deliver
copies of any Y2K plans prepared by the Target.
(F) With respect to acquisitions (1) of any entity organized under the laws
of a jurisdiction other than a state or territory of the United States or of
assets, a substantial portion of which are located outside the United States, or
(2) acquisitions having Acquisition Consideration in excess of $10,000,000.00,
Borrowers shall retain an independent accounting firm, reasonably acceptable to
Agent, to review the financial statements of the Target. Agent and Lenders shall
have received and had a reasonable opportunity to review all due diligence
available to Borrowers (produced by a Borrower or any third party) related to
such proposed acquisition as and in such detail
53
as Agent may request, including without limitation the independent accounting
firm's report on its review conducted in accordance with the previous sentence.
(G) Borrowers shall have delivered to Agent and Lenders not less than three
(3) Business Days prior to the date such Acquisition Advance is to be made all
of the following in form and substance reasonably satisfactory to Agent and
Lenders:
(1) a lien search against the Target to be acquired showing no liens
(other than Permitted Liens) against the assets or business being acquired
except in favor of Agent or any Lender and those which will be released in
connection with such purchase or are otherwise permitted hereunder; and
(2) a joinder to this Agreement, UCC-1 Financing Statements,
mortgages, pledge agreements, stock certificates with powers signed in
blank, or any other instrument or document needed whereby (a) such Target
shall (i) become a Borrower hereunder and become jointly and severally
liable for all past, present and future Liabilities hereunder and (ii)
grant Agent for the benefit of itself, Issuing Bank and Lenders a lien on
the business and/or all of the assets being acquired, and (b) Borrowers
shall grant to Agent for the benefit of itself, Issuing Bank and Lenders a
lien on and security interest in all assets (including equity interests)
acquired by Borrowers in such transaction all of which shall be in form and
substance reasonably satisfactory to Agent and Lenders, shall be executed,
witnessed, and where appropriate, acknowledged and otherwise in a form
acceptable for recordation.
(H) Borrowers shall have delivered to Agent and Lenders no later than 11:00
A.M. of the Business Day on which such requested Acquisition Advance is to be
made (1) a certification that all conditions precedent to the proposed
acquisition have been satisfied in full or provisions for their satisfaction on
such day have been made, and that all liens on the assets or business being
acquired (excluding Permitted Liens) have been satisfied or that satisfactions
have been placed in escrow pending disbursement of funds and representing and
warranting that upon making such requested Acquisition Advance, together with
such evidence as Agent and Lenders may reasonably require supporting the
representations, warranties and covenants contained in such certification; and
(2) any other certificate, report, instrument, legal opinion or study as Agent
may have required.
(I) If the portion of Acquisition Consideration for such acquisition
consisting of cash, marketable securities and other liquid assets, Earnouts and
Indebtedness (incurred or assumed) is greater than $8,500,000.00, such
acquisition is approved in a writing signed by Required Lenders.
(J) If, after giving effect to any proposed acquisition, the total
Acquisition Consideration paid or payable by Borrower and any of its
Subsidiaries for all Permitted Acquisitions (including the proposed acquisition)
occurring on or after the Closing Date will be in excess of $20,000,000.00, such
acquisition is approved in a writing signed by Required Lenders.
54
(K) If, after giving effect to any proposed Acquisition Advance with
respect to an acquisition of an entity organized under the laws of a
jurisdiction other than a state or territory of the United States or of assets,
a substantial portion of which are located outside the United States, the total
Acquisition Advances used to finance acquisitions outside the United States or
any of its territories shall exceed $7,500,000.00, such acquisition is approved
in a writing signed by all Lenders.
(L) Except for (1) Indebtedness to Lenders, (2) Indebtedness of Target to
third parties assumed by any Borrower or any Subsidiary of any Borrower from
Target and (3) unsecured Indebtedness owing to the seller, such acquisition does
not result in the creation of any Indebtedness.
(M) If Target becomes a Subsidiary, Borrowers shall have complied with
Section 6.21(E) hereof.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
In addition to all other representations and warranties set forth in this
Agreement (including, without limitation, those in Article 3 hereof), each
Borrower represents and warrants as follows:
SECTION 5.1 Existence. Each Borrower, and each Subsidiary of each Borrower,
is a corporation or limited liability company duly formed, validly existing, and
in good standing under the laws of its jurisdiction of incorporation or
formation. Each Borrower, and each Subsidiary of each Borrower, has all
requisite power and authority to conduct its business and to own its properties
and is duly qualified and in good standing in all jurisdictions in which it is
required to so qualify.
SECTION 5.2 Authorization. The execution, delivery, and performance by each
Borrower of each Loan Document to which it is a party has been duly authorized
by all necessary corporate or limited liability company action and does not and
will not violate any provision of law or judgment or of the certificate/articles
of incorporation, certificate of formation, bylaws or operating agreement of
such Borrower, and will not result in a breach of or constitute a default under
any agreement, indenture, or instrument to which such Borrower is a party or by
which such Borrower or any of their properties may be bound or affected.
SECTION 5.3 Validity of Documents. Each Loan Document when duly executed
and delivered by a Borrower will constitute the valid and legally binding
obligation of such Borrower, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity.
55
SECTION 5.4 Financial Information. The financial information and statements
of Borrowers and their Subsidiaries (or their respective predecessors in
interest as the case may be) as identified on Exhibit 5.4 attached hereto and
made a part hereof previously delivered to Agent are true and correct in all
material respects, and accurately reflect the financial condition of Borrowers
and their Subsidiaries as of such dates, subject to year-end adjustments, in
accordance with GAAP. Since such dates, there has been no material adverse
change in such financial condition, except as disclosed on Exhibit 5.4 attached
hereto.
SECTION 5.5 Litigation. Except as set forth on Exhibit 5.5 attached hereto,
there are no actions, suits, or proceedings pending or, to the knowledge of any
Borrower or any Subsidiary of any Borrower, threatened, against any Borrower,
any Subsidiary of any Borrower or any Borrower's or any Subsidiary's properties
before any court or governmental department, commission, board, bureau, agency,
or instrumentality (domestic or foreign). None of the items listed on Exhibit
5.5 would have a material adverse effect on any Borrower or the financial
condition, business, properties, prospects or operation of any Borrower.
SECTION 5.6 Contingent Liabilities. There are no suretyship agreements,
guarantees, or other Contingent Liabilities of any Borrower or any Subsidiary of
any Borrower that are not included on the financial statements mentioned in
Section 5.4 hereof or otherwise disclosed in this Agreement and Exhibit 5.6
attached hereto.
SECTION 5.7 Taxes. Each Borrower, and each Subsidiary of each Borrower, has
filed all tax returns and reports required to be filed before the date hereof
and has paid all taxes, assessments, and charges imposed upon it or its
property, or that it is required to withhold and pay over, to the extent that
they were required to be paid before the date hereof (except taxes, assessments
and charges being disputed in good faith for which adequate reserves have been
set aside).
SECTION 5.8 Liens. None of the properties or assets of any Borrower or any
Subsidiary of any Borrower is subject to any mortgage, pledge, security,
interest, lien, or other encumbrance except for Permitted Liens.
SECTION 5.9 Consents. No authorization, consent, approval, license,
exemption by or filing or registration with any court or governmental
department, commission, board (including the Board of Governors of the Federal
Reserve System), bureau, agency, or instrumentality, domestic or foreign, or
other Person is or will be necessary for the valid execution, delivery, or
performance by Borrowers or any of them of the Loan Documents, excluding filings
required to perfect liens intended to be created by the Loan Documents.
SECTION 5.10 ERISA. Each Borrower and each Subsidiary of each Borrower and
the other members of its Controlled Group maintain only those Defined Benefit
Pension Plans, Defined Contribution Plans or other Plans set forth on Exhibit
5.10 hereto. Neither any Borrower nor any Subsidiary of any Borrower is
obligated to
56
contribute to any Multiemployer Plans and neither any Borrower nor any
Subsidiary of any Borrower has any Withdrawal Liability with respect to any
Multiemployer Plan of which such Borrower, such Subsidiary or any member of its
Controlled Group had previously been a member. No lien has been attached and no
Person has threatened to attach a lien on any property of any Borrower, any
Subsidiary of any Borrower or any Controlled Group member as a result of any
failure to comply with the Code or ERISA. Neither any Borrower, nor any
Subsidiary of any Borrower, nor any member of its Controlled Group has any
unfunded liabilities of unfunded and uninsured "employee welfare benefit plans"
(as defined in ss.3(1) of ERISA). There is not now, and has not been, any
violation of the "continuation coverage requirements" of "group health plans" of
former Section 162(k) of the Code and the regulations thereunder (as in effect
for tax years beginning on or before December 31, 1988) and of Section 4980B of
the Code and the regulations thereunder (as in effect for tax years beginning on
or after January 1, 1989) and Part 6 of Subtitle B of Title I of ERISA with
respect to any Employee Benefit Plan of any Borrower, any Subsidiary of any
Borrower or of any member of its Controlled Group to which such continuation
coverage requirements apply.
SECTION 5.11 Ownership of Stock; Subsidiaries and Affiliates; Fictitious
Name. The record and beneficial owners of the outstanding capital stock and
other equity ownership interests of each Borrower and each Subsidiary of each
Borrower are set forth on Part A of Exhibit 5.11 hereto. No Borrower has any
Subsidiaries or Affiliates other than as listed on Part B of Exhibit 5.11
attached hereto (as it may be supplemented from time to time) and does not trade
under any fictitious names. Except as indicated on Part B of Exhibit 5.11
hereto, within the last five (5) years, neither any Borrower nor any Subsidiary
of any Borrower has (A) operated under any other name, (B) acquired all or
substantially all of the assets of any other Person, or (C) merged or
consolidated with any other Person.
SECTION 5.12 Licenses, Permits, etc. Each Borrower, and each Subsidiary of
each Borrower, is in possession of and operating in compliance in all material
respects with all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders required for the conduct of its
businesses, and all of them are valid and in full force and effect.
SECTION 5.13 Compliance with Laws Generally. Each Borrower and each
Subsidiary of each Borrower is in compliance with all laws, rules, regulations,
and orders of all federal, state, and governmental agencies and courts which are
applicable to it, to the conduct of its businesses, or to the ownership and use
of its properties.
SECTION 5.14 Environmental Matters. To the extent necessary for the conduct
of its business, each Borrower, and each Subsidiary of each Borrower, is in
possession of and in compliance with all required permits relating to the
discharge or release of liquids, gases or solids into the air, water, and soil.
Neither any Borrower nor any Subsidiary of any Borrower refines, processes,
generates, stores, recycles, transports, disposes of, or releases into the
environment any "hazardous substance" as that term is defined in Section 101(14)
of CERCLA or any hazardous or toxic
57
substances as those terms are used in any state or local environmental statute
or regulation except in compliance with all Environmental Laws. Neither any
Borrower nor any Subsidiary of any Borrower has received notice from any
governmental agency that such Person is a potentially responsible party in any
proceeding under CERCLA or any similar state or local environmental statute or
regulation, received any notice of violation, citation, complaint, request for
information, order, directive, compliance schedule, notice of any claim,
proceeding, or litigation from any party concerning such Person's compliance
with any Environmental Law.
SECTION 5.15 Patents, etc. Borrowers and their Subsidiaries possess all
material patents, trademarks, copyrights, tradenames, trade secrets, and other
intellectual property rights, or licenses therefor, that are required to conduct
their respective businesses without conflict by, or with the rights or claimed
rights of, others, all of which are identified on Exhibit 5.15 attached hereto.
SECTION 5.16 Regulation U, Etc. None of the Loans or Letters of Credit will
constitute a violation of Regulation T, U or X of the Board of Governors of the
Federal Reserve System. No part of the proceeds of the Loans or Letters of
Credit will be used for any purposes which violate or are inconsistent with the
provisions of any of such regulations.
SECTION 5.17 Labor Matters. There are no existing, or to the knowledge of
Borrowers, threatened, or contemplated, strikes, slowdowns, picketing or work
stoppages by any employees against any Borrower or any Subsidiary of any
Borrower, any lockouts by any Borrower or any Subsidiary of any Borrower of any
of their employees or any labor trouble or other occurrence, event or condition
of a similar character.
SECTION 5.18 Outstanding Judgments or Orders. Each Borrower, and each
Subsidiary of each Borrower, has satisfied all judgments against it to the
extent outstanding and not stayed pending appeal for more than thirty (30) days,
and neither any Borrower nor any Subsidiary of any Borrower is in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court, arbitrator or commission, board bureau, agency or instrumentality,
domestic or foreign, pertaining to it.
SECTION 5.19 No Defaults on Other Agreements. Neither any Borrower nor any
Subsidiary of any Borrower is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which such Person is a party which has not been
waived in writing or cured, if such default could have a material adverse effect
on any Borrower or the financial condition, properties, prospects, business or
operations of any Borrower or any Subsidiary of any Borrower or on the ability
of any Borrower to perform such Person's obligations under the Loan Documents.
58
SECTION 5.20 Debt and Credit Arrangements. After repayment in full of the
existing debt of Borrowers to Summit in its individual capacity, except for the
Liabilities and other Indebtedness identified by creditor, current amount
outstanding and maturity date in Exhibit 5.20 attached hereto and made a part
hereof, neither any Borrower nor any Subsidiary of any Borrower has any debt or
is party to any debt that would be classified as Indebtedness hereunder.
SECTION 5.21 Real Estate Owned and Leased. The only real estate which any
Borrower owns is identified in part A of said Exhibit 5.21 attached hereto and
made a part hereof, and part B of Exhibit 5.21 lists by property, lessor, date
and term, all leases of real property under which any Borrower is a lessee or
licensee, as such Exhibit may be supplemented from time to time. Each Borrower
enjoys quite possession under all such leases to which such Person is a party as
a lessee, and all such leases are valid, subsisting and in full force and
effect. None of such leases contains any provision restricting the incurrence of
indebtedness by the lessee. No casualty has occurred which has not been repaired
with respect to any real estate owned by any Borrower, nor is there any
condemnation or similar proceeding pending, or to Borrowers' knowledge,
threatened against any real estate owned by any Borrower.
SECTION 5.22 Material Contracts. Attached hereto as Exhibit 5.22 is a
listing by contracting party, date and subject matter of all material
agreements, including without limitation, right of entry or access agreements,
license agreements, distribution agreements, employment agreements, loan
agreements and leases to which any Borrower or any Subsidiary of any Borrower
(or its predecessor in interest) is a party that, on the date hereof, are
material to the operation of such Person's business. Except as otherwise
disclosed on Exhibit 5.22 hereto, true and correct copies of such contracts and
agreements have been provided to Agent or its counsel.
SECTION 5.23 Solvency. After giving effect to the transactions contemplated
by this Agreement (A) the property of Borrowers and their Subsidiaries, on a
Consolidated basis, at a fair valuation, will exceed their debt; (B) the capital
of Borrowers and their Subsidiaries, on a Consolidated basis, will not be
unreasonably small to conduct its/their business; (C) Borrowers and their
Subsidiaries, on a Consolidated basis, will not have incurred debts, or have
intended to incur debts, beyond their ability to pay such debts as they mature;
and (D) the present fair salable value of the assets of Borrowers and their
Subsidiaries, on a Consolidated basis, will be greater than the amount that will
be required to pay its/their probable liabilities (including debts) as they
become absolute and matured. For purposes of this Section, "debt" means any
liability on a claim, and "claim" means (1) the right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (2)
the right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured
or unsecured.
59
SECTION 5.24 Ownership. Each Borrower, and each Subsidiary of each
Borrower, has title to, or valid leasehold interests in, all of its properties
and assets, real and personal, including the properties and assets, and
leasehold interests reflected on the financial statements referred to in Section
5.4 hereof free and clear of all Liens other than Permitted Liens.
SECTION 5.25 No Restrictions in Other Agreements. Neither any Borrower nor
any Subsidiary of any Borrower is subject to any charter or other corporate
restriction which could have a material adverse effect on any Borrower or the
financial condition, properties, prospects, business or operations of any
Borrower or any Subsidiary of any Borrower, or on the ability of any Borrower to
perform such Person's obligations under the Loan Documents, and no Borrower or
Subsidiary of any Borrower is party to any indenture, loan or credit agreement
or any lease or other agreement or instrument which could have a material
adverse effect on the ability of any Borrower to perform such Person's
obligations under the Loan Documents.
SECTION 5.26 Full Disclosure. No representation or warranty by any Borrower
in this Agreement (including the Exhibits hereto) and no information in any
statement, certificate, schedule or other document furnished or to be furnished
to Agent or Lenders pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. Except as disclosed in
this Agreement and the Exhibits attached hereto, there is no fact known to any
Borrower which it has not disclosed to Agent and Lenders in writing which such
Borrower presently knows materially adversely affects any Borrower or any
Subsidiary of any Borrower.
ARTICLE 6
COVENANTS
In addition to all other covenants set forth in this Agreement, each
Borrower covenants that so long as any of the Liabilities shall remain unpaid,
unless the Required Lenders shall otherwise consent in writing:
SECTION 6.1 Use of Proceeds. The proceeds of the Loans will be used as set
forth in the Background Section hereof.
SECTION 6.2 Financial Information.
(A) Borrowers will furnish to Agent and each Lender (1) as soon as
available, and in any event within one hundred twenty (120) days after the close
of each fiscal year of Borrowers, a Consolidating and an audited Consolidated
balance sheet of Borrowers and their Subsidiaries as of the end of such fiscal
year; a Consolidating and an audited Consolidated profit and loss statement of
Borrowers and their Subsidiaries;
60
a Consolidating and an audited Consolidated statement of operations and retained
earnings of Borrowers and their Subsidiaries; and a Consolidating and an audited
Consolidated statement of cash flows of Borrowers and their Subsidiaries and
changes in stockholder's equity of Borrowers and their Subsidiaries for the year
then ended; (2) within forty-five (45) days after the end of each of the first
three fiscal quarters, a Consolidated and Consolidating balance sheet of
Borrowers and their Subsidiaries as of the end of such quarter, a Consolidated
and Consolidating profit and loss statement of Borrowers and their Subsidiaries,
a Consolidated and Consolidating statement of operations and retained earnings
of Borrowers and their Subsidiaries; and a Consolidated and Consolidating
statement of cash flows for Borrowers and their Subsidiaries for such period
then ended, all in detail as Agent may reasonably require, prepared and
certified as to fairness of presentation by the Chief Financial Officer or other
authorized officer of Parent; (3) simultaneously with the filing thereof, copies
of all notices required by law or regulation to be filed, reports,
registrations, requests for interpretive letters or rulings, proxy statements
and any other material filed from time to time with the Securities and Exchange
Commission or delivered to the shareholders of Parent; and (4) thirty (30) days
prior to the end of a fiscal year, Consolidated and Consolidating financial
projections for the ensuing fiscal year prepared on a monthly basis. All data of
Borrowers and their Subsidiaries that is subject to GAAP will be prepared on a
Consolidated and Consolidating bases and according to GAAP. All financial
information required under Section 6.2(A)(1) above will be audited and
unqualifiedly certified by independent certified public accountants reasonably
acceptable to Agent.
(B) (1) The financial information required under Section 6.2(A)(1) above
must be accompanied by (a) a certificate of the relevant accountants as to
whether anything has come to their attention that led them to believe that a
Default or an Event of Default has occurred, and (b) if any Event of Default or
Default has occurred, a written statement by such accountants setting forth the
details of each such Event of Default or Default and stating whether or not the
same is continuing. Such certificate or statement will certify to the accuracy
of the calculations set forth in the certificate being simultaneously delivered
to each Lender pursuant to Section 6.2(B)(2).
(2) Each statement or report called for by subsections (A)(1), (2) and (3)
of this Section 6.2 must be accompanied by a certification in the form of
Exhibit 6.2 attached hereto and made a part hereof, signed by of the chief
executive or chief financial officer or other authorized officer of each
Borrower stating that each of them has reviewed the operations of Borrowers and
their Subsidiaries on a Consolidated basis for that period and that no Event of
Default or Default has occurred, or if any Event of Default or Default has
occurred, a written statement setting forth the details of such Event of Default
or Default, stating whether or not the same is continuing and, if so, the action
that Borrowers propose to take with respect thereto. Such certificate or
statement will also include, for the periods covered by subsections (A)(1) and
(2) of this Section 6.2 a reasonably detailed calculation of the ratios,
coverages and capital expenditures set forth in Sections 6.5 through 6.9 hereof
(if and to the extent such
61
covenant is measured at the end of such fiscal period) for the purpose of
establishing whether Borrowers were in compliance with the requirements of such
Sections as of the end of the period covered by the financial statement or
report. Such certificate or statement will also include, for the periods covered
by subsection (B) of this Section 6.2 ending on each December 31st, commencing
with the fiscal year ending December 31, 1999, calculation of the Excess Cash
Flow for the twelve (12) month period ended December 31st in such detail as
Agent may require.
(C) In addition to the financial information required in this Section 6.2,
Borrowers shall submit to each Lender such other information and reports as
Agent or any Lender may reasonably request.
SECTION 6.3 Insurance. In addition to the requirements of Article 3 hereof,
each Borrower will at all times carry, and each Borrower will cause each of such
Person's Subsidiaries to carry, insurance, in form and amount reasonably
satisfactory to Agent, and underwritten by financially sound and reputable
insurers satisfactory to Agent, against fire (with extended coverage and, if
required by the location of any of such Person's premises on a flood plain,
flood coverage), liability and all other hazards specified by Agent and will
furnish to Agent, upon Agent's request, a copy of all such insurance policies
which shall insure the interest of Agent, for the benefit of itself, Issuing
Bank and Lenders, in accordance with a standard lender's loss payable clause as
to all non-liability policies.
SECTION 6.4 Liens. No Borrower will create, incur, assume, or suffer to
exist, and no Borrower will permit any of such Person's Subsidiaries to create,
incur, assume, or suffer to exist, any Lien in or to any of such Borrower's or
such Subsidiary's property or assets (including, but not limited to, the
Collateral), whether now owned or hereafter acquired, except for the following
(collectively, "Permitted Liens"): (A) Liens for taxes not yet delinquent or
which are being contested in good faith for which adequate reserves have been
set aside in conformity with GAAP; (B) statutory inchoate Liens in connection
with workmen's compensation, unemployment insurance, or other social security
obligations; (C) mechanic's, ▇▇▇▇▇▇▇'▇, materialman's, landlord's, carrier's, or
other similar Liens arising in the ordinary course of business with respect to
obligations that are not past due or that are being contested in good faith for
which adequate reserves have been set aside in conformity with GAAP; (D) Liens
created by deposits of cash to secure the performance of bids, tenders,
contracts or leases entered into in the ordinary course of business, or to
secure surety or similar bonds that a Borrower or a Subsidiary of a Borrower is
required to obtain under licenses or contracts entered into in the ordinary
course of business; (E) encumbrances in the nature of (1) zoning restrictions,
(2) easements, and (3) restrictions of record on the use of real property, which
in each case do not materially detract from the value of the encumbered property
or materially interfere with the ordinary conduct of business of any Borrower or
any Subsidiary of any Borrower; (F) Liens created under the Security Documents
or hereunder in favor of Agent for the benefit of itself, Issuing Bank and
Lenders; (G) Liens in respect of Capitalized Lease Obligations incurred by any
Borrower to the extent permitted by Section 6.18 hereof; (H) purchase money
security interests (limited to the asset being acquired) with respect to
Indebtedness incurred by a Borrower to the extent
62
permitted by Section 6.18 hereof; (I) Summit's existing first priority mortgage
lien in the Premises, the First Mortgage Account, and fixtures securing Summit's
first mortgage loan with respect thereto, which shall be superior in priority to
the Liens granted to Agent under the Security Documents, and liens in other
assets of Borrowers, securing such first mortgage loan which shall be
subordinate to the Liens granted to the Agent under the Security Documents; and
(J) liens on assets of any Foreign Subsidiary with respect to Indebtedness
incurred by a Foreign Subsidiary to the extent permitted by Section 6.18 hereof.
No Borrower will, and no Borrower will permit any of such Person's Subsidiaries
to, agree with any Person to restrict such Person's ability to grant mortgages,
pledges, liens, or other encumbrances upon, or security interests in, any of its
property or assets.
SECTION 6.5 Maximum Annual Capital Expenditures. Capital Expenditures of
Borrowers and their Subsidiaries on a Consolidated basis during any fiscal year
shall not exceed 4% of sales during such fiscal year, plus 50% of the unused
amount of allowable Capital Expenditures carried over from the immediately prior
fiscal year, provided that such unused Capital Expenditures for any fiscal year
shall only be carried forward for one (1) year. For the purposes of this Section
6.5 only and only for the 1999 fiscal year, the determination of Capital
Expenditures shall not include (A) up to $7,400,000.00 used to acquire the
Premises and up to $4,600,000.00 used to initially rehabilitate the Premises and
(B) up to $3,000,000.00 incurred prior to December 31, 1999 by CGII to acquire
Equipment and other assets of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇.
SECTION 6.6 Leverage Ratio. The Leverage Ratio shall not be more than the
following levels at any time during the following periods measured as of the end
of each fiscal quarter ending during such period, provided, however, if the
EBITDA used to determine the Leverage Ratio is equal to or less than zero,
Borrowers shall be deemed to be in violation of the requirements set forth in
the chart below:
------------------------------------ -----------------------------------------
Period Leverage Ratio
------------------------------------ -----------------------------------------
From the Closing Date through 4.10 to 1.0
December 31, 1999
------------------------------------ -----------------------------------------
From January 1, 2000 through March 3.75 to 1.0
31, 2000
------------------------------------ -----------------------------------------
From April 1, 2000 through 3.5 to 1.0
September 30, 2000
------------------------------------ -----------------------------------------
From October 1, 2000 through 3.25 to 1.0
December 31, 2000
------------------------------------ -----------------------------------------
From January 1, 2001 through March 2.75 to 1.0
31, 2001
------------------------------------ -----------------------------------------
From April 1, 2001 through 2.25 to 1.0
December 31, 2002
------------------------------------ -----------------------------------------
From January 1, 2003 and thereafter 2.0 to 1.0
------------------------------------ -----------------------------------------
63
SECTION 6.7 Interest Coverage Ratio. The Interest Coverage Ratio shall not
be less than the following levels at any time during the following periods
measured as of the end of each fiscal quarter ending during such period:
------------------------------------ -----------------------------------------
Period Interest Coverage Ratio
------------------------------------ -----------------------------------------
From the Closing Date through 3.00 to 1.0
December 31, 1999
------------------------------------ -----------------------------------------
From January 1, 2000 through 3.50 to 1.0
December 31, 2000
------------------------------------ -----------------------------------------
From January 1, 2001 through 4.00 to 1.0
December 31, 2001
------------------------------------ -----------------------------------------
From January 1, 2002 through 4.50 to 1.0
December 31, 2002
------------------------------------ -----------------------------------------
From January 1, 2003 and thereafter 5.0 to 1.0
------------------------------------ -----------------------------------------
SECTION 6.8 Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio
shall not be less than the following levels at any time during the following
periods measured as of the end of each fiscal quarter ending during such period:
------------------------------------ -----------------------------------------
Period Fixed Charge Coverage Ratio
------------------------------------ -----------------------------------------
From the Closing Date through June 1.25 to 1.0
30, 2000
------------------------------------ -----------------------------------------
From July 1, 2000 and thereafter 1.10 to 1.0
------------------------------------ -----------------------------------------
SECTION 6.9 Minimum Net Worth. As of December 31, 1999, Net Worth shall not
be less than the sum of $40,103,000.00, plus 90% of positive net income for the
period from April 1, 1999 to December 31, 1999, plus 100% of the net proceeds of
any equity issuances (including proceeds received in the form of cash, stock or
other assets) during the period commencing on April 1, 1999 and ending on
December 31, 1999. As of March 31, 2000 and as of the end of each fiscal quarter
thereafter, Net Worth shall not be less than the sum of Net Worth as of December
31, 1999, plus 90% of positive net income for each fiscal quarter thereafter,
plus 100% of the net proceeds of any equity issuances during each fiscal quarter
thereafter. Notwithstanding anything to the contrary contained in this Section,
the Borrowers shall be deemed in compliance with this covenant if (A) Borrower's
Net Worth at the end of the fiscal quarter for which such determination is to be
made is within $500,000.00 of the minimum Net Worth otherwise required by this
Section, and (B) Borrowers provide documentation satisfactory to the Agent and
the Lenders that the Borrowers would have been in compliance with this Section
but for the fluctuation of the value of foreign currencies against the US Dollar
since the prior fiscal quarter as such fluctuations are manifested in the
foreign currency translations into US Dollars on the Borrowers' financial
statements in accordance with GAAP.
SECTION 6.10 Fiscal Year. Each Borrower shall at all times maintain, and
shall cause each of its Subsidiaries to maintain, such Person's fiscal year
ending on December 31.
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SECTION 6.11 Taxes. Each Borrower shall pay when due, and shall cause each
of such Person's Subsidiaries to pay when due, all taxes, assessments, and
charges imposed upon such Person or such Person's properties or which such
Person is required to withhold or pay over. Notwithstanding the foregoing, such
Borrower or such Subsidiary shall be entitled to withhold such payment for any
such tax, assessment or charge while it diligently contests such tax,
assessment, or charge in good faith provided that such Borrower or such
Subsidiary maintains adequate reserves in conformity with GAAP and provided
further that the effect of such contest stays the right of the taxing authority
to execute upon the assets of such Borrower or such Subsidiary for such
non-payment.
SECTION 6.12 Guarantees, etc. No Borrower shall become liable, and no
Borrower shall permit any of such Person's Subsidiaries to make, nor shall any
Subsidiary of any Borrower become liable, on the obligation of another Person or
otherwise incur any consensual Contingent Liability except by endorsement of
negotiable instruments for deposit or collection in the usual course of business
and except for guarantees or suretyship agreements: (A) given pursuant to this
Agreement, (B) given in connection with Indebtedness incurred by any Borrower
and permitted under this Agreement or (C) given by Parent to secure Earnouts.
SECTION 6.13 Loans; Investments; Holding of Cash and Other Liquid Assets.
No Borrower shall make, and no Borrower shall permit any of such Person's
Subsidiaries to make, any loans or investments (including without limitation
loans to directors, officers or employees or loans to or investments in
Affiliates or Subsidiaries) except for (A) investments in direct obligations of,
or obligations fully guaranteed by, the United States of America, (B)
investments in obligations of a Lender, (C) investments in bank deposits
maintained at domestic branches of national banking associations or banking
institutions organized under the laws of one of the states of the United States,
(D) loans to and investments in any Domestic Subsidiary of any Borrower provided
such Domestic Subsidiary has executed and delivered the documents required under
Section 6.21 hereof upon formation of such Subsidiary, (E) loans to and
investments to acquire Foreign Subsidiaries of any Borrower, provided that such
loans and investments are of proceeds of Acquisition Advances made in compliance
with this Agreement, and provided further that (1) to the extent loans, they are
evidenced by intercompany notes having a market rate of interest and such notes
are pledged to Agent for the benefit of itself, the Issuing Bank and Lenders, or
(2) to the extent investments by a Borrower or Domestic Subsidiary of any
Borrower, such investments are evidenced by stock certificates or other evidence
of equity ownership and 66% of such ownership interest has been pledged to Agent
for the benefit of itself, the Issuing Bank and the Lenders by delivering such
evidence of equity ownership to Agent, (F) loans to and investments in any
Foreign Subsidiary of any Borrower (not otherwise permitted under clause (E)
above), provided that such loans and investments do not exceed $2,000,000.00 in
the aggregate and (1) to the extent loans, are evidenced by intercompany notes
having a market rate of interest and provided further that all such notes are
pledged to Agent, for the benefit of itself, Issuing Bank and Lenders, or (2) to
the extent investments by a
65
Borrower or a Domestic Subsidiary, such investments are evidenced by stock
certificates or other evidence of equity ownership and 66% of such ownership
interest has been pledged to Agent, for the benefit of itself, Issuing Bank and
Lenders, by delivering such evidence of equity ownership to Agent, (G) loans and
investments listed on Exhibit 6.13 attached hereto, and (H) loans to officers
and employees in the ordinary course of business consistent with past practices,
which loans in the aggregate do not exceed $100,000.00. In addition to the
foregoing limitations on loans and investments, no Borrower shall permit such
Person's Foreign Subsidiaries to own cash, marketable securities and other
liquid assets in an aggregate amount in excess of $4,000,000.00 at any time.
SECTION 6.14 Compliance with Laws. Each Borrower shall comply with, and
each Borrower shall cause each of such Person's Subsidiaries to comply with, all
laws and regulations applicable to such Borrower or such Subsidiary in the
operation of such Borrower's or such Subsidiary's business.
SECTION 6.15 Environmental Matters.
(A) To the extent necessary for the conduct of its businesses, each
Borrower will obtain and comply with, and each Borrower will cause each of such
Person's Subsidiaries to obtain and comply with, all required permits, licenses,
registrations, and approvals relating to the discharge or release of liquids,
gases or solids into the environment. To the extent that such are applicable to
the conduct of such Borrower's or such Subsidiary's business, each Borrower will
comply with, and each Borrower shall cause each of such Person's Subsidiaries to
comply with, all laws, rules, regulations and governmental orders and directives
relating to the generation, treatment, storage, transportation, disposal and
release into the environment and cleanup of any hazardous or toxic waste or
substance which is subject to the provisions of CERCLA or any similar state or
local environmental statute or regulation at all premises owned or operated by
such Borrower such Subsidiary. Each Borrower will comply with, and each Borrower
shall cause each of such Person's Subsidiaries to comply with, all laws, rules,
regulations, and governmental orders and directives relating to the cleanup of
hazardous or toxic substances at all premises owned or operated by such Borrower
or such Subsidiary.
(B) Each Borrower will immediately notify Agent and each Lender if any
Borrower or any Subsidiary of any Borrower receives (1) any notice from any
governmental agency that any Borrower or any Subsidiary of any Borrower is a
potentially responsible party in any proceeding under CERCLA or any similar
state or local environmental statute or regulation, (2) any written notice of
any claim, proceeding, litigation, order, directive, citation, or request for
information concerning environmental conditions, or notice of any alleged
violation of any environmental statute, ordinance, regulation, or permit
condition, or (3) any formal notice concerning any potentially adverse
environmental condition, including, but not limited to, any spilling, leaking,
discharge, release, or threat of release of any hazardous or toxic waste or
substance.
66
(C) Each Borrower shall comply with, and each Borrower shall cause each of
such Person's Subsidiaries to comply with, any notice or directive from any
other governmental authority, whether state, federal, or local, regarding the
removal or discharge of any hazardous substance on any of its properties within
such period as may be required therein unless the same is being contested by
such Borrower or such Subsidiary in good faith and, upon request of Agent, shall
provide a bond reasonably satisfactory to Agent insuring Agent's continued lien,
for the benefit of itself, Issuing Bank and Lenders, on the Collateral affected
by such notice or directive.
(D) Each Borrower hereby indemnifies and agrees to defend and hold harmless
Agent, Issuing Bank and Lenders, and their respective parent Persons,
subsidiaries, successors, assigns, officers, directors, shareholders, employees,
agents and counsel from and against any and all claims, actions, causes of
action, liabilities, penalties, fines, damages, judgments, losses, suits,
expenses, legal or administrative proceedings, interest, costs and expenses
(including court costs and reasonable attorneys', consultants' and experts'
fees) arising out of or in any way relating to (1) the presence of any substance
which is or becomes regulated under any Environmental Law whether now or
hereafter enacted, on, about, beneath or arising from any property used or
occupied by any Borrower or any Subsidiary of any Borrower; (2) the failure of
any Borrower or any Subsidiary of any Borrower to comply with any Environmental
Law; (3) breach of any of the representations and warranties or covenants
contained herein by any Borrower or any Subsidiary of any Borrower; (4) any
notice of violation, citation, complaint, request for information, order,
directive, compliance schedule, notice of claim, consent decree, action,
litigation or proceeding brought or instituted by any governmental authority or
any third party under or in connection with any Environmental Law or based on
the presence of any substances described in (1) above; and (5) the imposition or
recording of a lien against any property of or occupied by any Borrower or any
Subsidiary of any Borrower pursuant to any Environmental Law, unless due solely
to the gross negligence or willful misconduct of Agent, Issuing Bank or a
Lender. IT IS INTENDED THAT THE INDEMNITY PROVIDED IN THIS SECTION SHALL SURVIVE
THE REPAYMENT OF THE LIABILITIES, NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT.
SECTION 6.16 Maintenance of Property. Each Borrower will maintain, and each
Borrower shall cause each of such Person's Subsidiaries to maintain, all of such
Person's property (subject to ordinary wear and tear) in good condition and
repair.
SECTION 6.17 Inspection by Lenders. Each Borrower will permit, and each
Borrower shall cause each of such Person's Subsidiaries to permit, Agent and
representatives of each Lender to inspect, examine and/or audit the Collateral,
any of its other property and/or its Books and Records and to make extracts
therefrom at Borrowers' expense and at all reasonable times provided that unless
a Default or Event of Default has occurred and is continuing, such Lender shall
give Borrowers at least three Business Days' notice (which notice need not be in
writing) prior to conducting such inspection or audit.
67
SECTION 6.18 Limitations on Borrowing. Except for (A) borrowings from
Lenders hereunder, (B) Indebtedness listed on Exhibit 5.20 hereto, (C)
Indebtedness of any Borrower or any Subsidiary of any Borrower to manufacturers
and/or manufacturers' representatives or agents and/or leasing companies to
purchase Equipment from such creditor and incurred or assumed at the time of
acquisition, so long as the Indebtedness shall not exceed the purchase price of
such Equipment, (D) Capitalized Lease Obligations, (E) Indebtedness of Foreign
Subsidiaries of Borrowers arising after the date hereof not exceeding
$2,000,000.00 in the aggregate at any time, (F) Indebtedness of Foreign
Subsidiaries of Borrowers arising from a refinancing of Indebtedness of such
Foreign Subsidiaries listed on Exhibit 5.20 hereof as long as such refinancing
meets the following requirements: (1) the amount of Indebtedness is less than or
equal to the amount refinanced and (2) the refinanced Indebtedness is on terms
no less favorable to the borrower than the Indebtedness being refinanced, (G)
Indebtedness assumed in connection with a Permitted Acquisition, provided that
such Indebtedness is not originally incurred (by Borrower or its Subsidiaries,
or the seller) in contemplation of such Permitted Acquisition and (H) additional
Indebtedness (not otherwise prohibited by any Loan Document) not to exceed
$1,000,000.00 in the aggregate at any time, no Borrower will incur, and no
Borrower will permit any of such Person's Subsidiaries to incur, any
indebtedness for borrowed money, or purchase any assets or property on an
installment or other deferred payment basis, enter into leases that under GAAP
constitute Capitalized Leases, or sell and leaseback any property or assets.
SECTION 6.19 Reports. Each Borrower will furnish the following to Agent and
each Lender:
(A) as soon as possible and in any event within 5 days after such Borrower
becomes aware of the occurrence of any Default or Event of Default a written
statement by the chief executive or chief financial officer of such Borrower
setting forth details of such Default or Event of Default, stating whether or
not the same is continuing and, if so, the action proposed to be taken with
respect thereto;
(B) immediately after receiving knowledge thereof, notice in writing of all
actions, suits, or proceedings before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting any Borrower or any Subsidiary of any Borrower which, if determined
adversely to such Person, would be reasonably likely to have a material adverse
effect on any Borrower or the financial condition, properties, prospects,
business or operations of any Borrower or any Subsidiary of any Borrower, or on
the ability of Borrowers to perform Borrowers' obligations under the Loan
Documents, or would result in a judgment, fines, taxes or other monetary damages
exceeding $100,000.00;
(C) as soon as possible and in any event within 5 days after any Borrower
becomes aware of the occurrence of a significant material adverse change in any
Borrower or the business, properties, operations, prospects or financial
condition of any Borrower or any Subsidiary of any Borrower, a written statement
by the chief executive
68
or chief financial officer of each Borrower setting forth details of such
significant material adverse change and the action proposed to be taken with
respect thereto;
(D) immediately after receiving knowledge thereof, notice in writing of any
strike, walkout, boycott or other labor dispute involving any Borrower or any
Subsidiary of any Borrower; and
(E) such other information respecting the business, properties, operations,
and condition (financial or otherwise) of Borrowers and their Subsidiaries as
Agent or a Lender may at any time and from time to time reasonably request.
SECTION 6.20 ERISA.
(A) Each Borrower, each Subsidiary of each Borrower and all members of its
Controlled Group will comply in all material respects with the provisions of
ERISA and the Code with respect to any Defined Benefit Pension Plan and Defined
Contribution Plan including the timely filing of required annual reports and the
payment of PBGC premiums.
(B) Each Borrower will furnish to Agent and each Lender, promptly after the
filing thereof with the United States Secretary of Labor and the PBGC, copies of
each annual or other report with respect to each Defined Benefit Pension Plan
and Defined Contribution Plan maintained by such Borrower or such Borrower's
Subsidiaries or any member of its Controlled Group.
(C) Each Borrower and each Subsidiary of each Borrower will cause to be
made all contributions required to avoid any accumulated funding deficiency (as
defined in Section 412(a) of the Code and the regulations thereunder and
ss.302(a) of ERISA), unless waived, with respect to any pension plan (as defined
in ss.3(2) of ERISA), other than a Multiemployer Plan, which is subject to Part
3 of Subtitle B of Title I of ERISA or Section 412 of the Code and the
regulations thereunder and which is maintained by such Borrower, such Subsidiary
or any member of its Controlled Group.
(D) As soon as possible (and in any event within five days) after such
Borrower has reason to know (1) that any Reportable Event has occurred with
respect to any Defined Benefit Pension Plan maintained by any Borrower, any
Subsidiary of any Borrower, or any member of its Controlled Group, (2) that any
Defined Benefit Pension Plan maintained by any Borrower, any Subsidiary of any
Borrower or any member of its Controlled Group is to be terminated in a distress
termination (within the meaning of 4041(c) of ERISA), (3) that the PBGC has
instituted or will institute proceedings under Title IV of ERISA to terminate
any Defined Benefit Pension Plan maintained by any Borrower, any Subsidiary of
any Borrower, or any member of its Controlled Group, (4) that any Borrower or
any Subsidiary of any Borrower has incurred Withdrawal Liability from a
Multiemployer Plan maintained by any Borrower, any Subsidiary of any Borrower,
or any member of its Controlled Group, or (5) that any Multiemployer Plan to
which any Borrower, any Subsidiary of any Borrower, or any member of its
Controlled
69
Group have made contributions is in ERISA Reorganization, such Borrower will
furnish a statement to Agent and each Lender setting forth the details as to
such Reportable Event, distress termination, termination proceedings, Withdrawal
Liability, or ERISA Reorganization, and the action that Borrowers propose to
take with respect thereto, together with a copy of any notice of such Reportable
Event or distress termination given to the PBGC, or a copy of any notice of
termination proceedings, Withdrawal Liability, or ERISA Reorganization received
by any Borrower, any Subsidiary of any Borrower, or any member of its Controlled
Group.
(E) Each Borrower will furnish to Agent and each Lender as soon as possible
(and in any event within five days) after receipt thereof a copy of any notice
that any Borrower, any Subsidiary of any Borrower or any member of its
Controlled Group receives from the PBGC or the Internal Revenue Service or from
the sponsor of any Multiemployer Plan that sets forth or proposes any action to
be taken or determination made by the PBGC or the Internal Revenue Service with
respect to any Defined Benefit Pension Plan, Defined Contribution Plan or
Multiemployer Plan.
(F) Each Borrower will promptly notify Agent and each Lender of any taxes,
penalties, interest charges and other financial obligation that have been
assessed or imposed or that such Borrower has reason to believe may be assessed
or imposed against any Borrower, any Subsidiary of any Borrower, or any member
of its Controlled Group by the Internal Revenue Service, the PBGC or any other
governmental entity with respect to any Plan or Multiemployer Plan.
(G) Each Borrower will promptly notify Agent and each Lender of the
adoption of any Defined Benefit Pension Plan or Defined Contribution Plan or any
obligation to contribute to any Multiemployer Plan by any Borrower, any
Subsidiary of any Borrower, or any member of its Controlled Group.
(H) Neither any Borrower nor any Subsidiary of any Borrower will contribute
to, or permit any other member of its Controlled Group to contribute to, any
Multiemployer Plan. Neither any Borrower nor any Subsidiary of any Borrower will
permit (1) with respect to any Employee Benefit Plan, any Prohibited Transaction
or Prohibited Transactions under ERISA or the Code resulting in liability of any
Borrower, Neither any Borrower, any Subsidiary of any Borrower or any of its
Controlled Group members in excess of $25,000.00 in the aggregate or (2) with
respect to any Defined Benefit Pension Plan, any Reportable Event under ERISA,
if upon termination of the Plan or Plans with respect to which one or more such
Reportable Events has occurred there is or would be any liability of any
Borrower, any Subsidiary of any Borrower or any of its Controlled Group members
to the PBGC in excess of [$25,000.00] in the aggregate. Neither any Borrower nor
any Subsidiary of any Borrower will take or fail to take any action which would
result in any Withdrawal Liability becoming due.
(I) Neither any Borrower nor any Subsidiary of any Borrower will fail to
make required minimum contributions, or permit any other Controlled Group member
to fail to make required minimum contributions with respect to a Defined Benefit
Pension
70
Plan, resulting in a lien (as provided in ss.302(f) of ERISA) against any
Borrower, any Subsidiary or any of its Controlled Group members.
(J) Neither any Borrower nor any Subsidiary of any Borrower will permit the
adoption of a plan amendment which results in significant under funding (as
defined in ss.307 of ERISA) of a Defined Benefit Pension Plan which requires any
Borrower, any Subsidiary or any of its Controlled Group members to provide
security.
(K) Neither any Borrower nor any Subsidiary of any Borrower will permit the
unfunded liabilities of unfunded and uninsured employee welfare benefit plans"
(as defined in ss.3(1) of ERISA) of any Borrower, any Subsidiary of any Borrower
and of any members of its Controlled Group to exceed, in the aggregate
$10,000.00.
(L) Neither any Borrower nor any Subsidiary of any Borrower will acquire or
permit the acquisition by any of its Controlled Group members, of any trade or
business which has incurred either directly or indirectly an unfunded benefit
liability (as defined in ss.4001 of ERISA) under any Defined Benefit Pension
Plan prior to such acquisition or acquire or permit the acquisition, by any
Borrower, any Subsidiary of any Borrower or any of its Controlled Group members,
of any trade or business which has incurred either directly or indirectly an
unfunded benefit liability under any Defined Benefit Pension Plan.
SECTION 6.21 Mergers, etc. No Borrower will, and no Borrower will permit
any of its Subsidiaries to, directly or indirectly (A) merge or consolidate with
any other Person, (1) excluding in connection with Permitted Acquisitions, and
(2) provided that MVP and Super Pack shall be permitted to merge with and into
CGIIC, (B) except for the sale of Inventory in the ordinary course of business,
sell or lease or otherwise transfer all or any substantial part of its assets to
any Person, (C) acquire whether through purchase or exchange of capital stock or
assets or otherwise, all or any substantial part of the assets of any other
Person or any capital stock of or other equity interest in any other Person,
excluding Permitted Acquisitions, (D) consummate any recapitalization or
reorganization, or (E) create or acquire any Subsidiary, unless (1) with respect
to each new Domestic Subsidiary, such Domestic Subsidiary (a) executes a joinder
agreement in form and substance reasonably satisfactory to Agent pursuant to
which such Domestic Subsidiary shall become a Borrower hereunder, become jointly
and severally liable for all Liabilities, past, present and future, and be bound
by this Agreement and (b) grants to Agent, for the benefit of itself, Issuing
Bank and Lenders, a first priority lien on and security interest in and to all
assets of such Domestic Subsidiary; (2) with respect to each such new Domestic
Subsidiary, 100% of the capital stock, membership interests, partnership
interests or other equity ownership interests in such Domestic Subsidiary is
pledged as collateral to secure the Liabilities, and (3) with respect to each
such new Foreign Subsidiary, 66% of the capital stock, membership interests or
partnership interests or other equity ownership interests of such Foreign
Subsidiary is pledged as collateral to secure the Liabilities, except no pledge
shall be required with respect to the equity ownership interests of any Foreign
Subsidiary of any Foreign Subsidiary.
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SECTION 6.22 Nature of Business. No Borrower will make, and no Borrower
will permit any of such Person's Subsidiaries to make, any material change in
the nature of its business as conducted on the date hereof.
SECTION 6.23 Disposal of Assets. Except for the sale of Inventory in the
ordinary course of business, replacement of Equipment with other equipment of at
least equal utility and value (provided that Agent's Lien for the benefit of
itself, Issuing Bank and Lenders upon such newly-acquired equipment has the same
priority as Agent's Lien for the benefit of itself, Issuing Bank and Lenders
upon such replaced equipment) and the disposal of obsolete Equipment, no
Borrower will dispose of, and no Borrower will permit any Subsidiary of any
Borrower to dispose of, any assets, except that a Borrower or Subsidiary of a
Borrower may transfer assets to another Borrower as long as such assets remain
subject to Agent's first priority lien.
SECTION 6.24 Patents, etc. Each Borrower will maintain, and each Borrower
will cause each of such Person's Subsidiaries to maintain, all of such Person's
material patents, trademarks, copyrights, trade secrets and other intellectual
property rights, and licenses therefor, if any, in full force and effect until
their respective expiration dates, if any.
SECTION 6.25 Dividends and Distributions; Changes in Capitalization. No
Borrower will, and no Borrower will permit any of such Person's Subsidiaries to,
declare or make any payment or distribution on, or acquire, any of its capital
stock or other equity interests, or make any other payment to shareholders on
account of their ownership of such equity, except that (A) any Borrower or any
Subsidiary of any Borrower may pay dividends and other distributions to any
Borrower and (B) any Borrower may make capital investments in any Subsidiary of
any Borrower to the extent permitted by Section 6.13 hereof. No Borrower will,
and no Borrower will permit any of such Person's Subsidiaries to, permit or
effect (A) any change in the capitalization or capital structure of such
Borrower or Subsidiary, including the issuance of any new, additional or
different type or class of stock or other equity interest, (B) any modification,
reduction or retirement of any existing class of stock or other equity interest
or (C) the alteration or modification of the voting rights of any stock or other
equity interest.
SECTION 6.26 Indemnification. Each Borrower hereby indemnifies and agrees
to protect, defend, and hold harmless Agent, Issuing Bank, Lenders and their
respective directors, officers, employees, agents, attorneys and shareholders
from and against any and all losses, damages, expenses or liabilities of any
kind or nature and from any suits, claims, or demands, including all reasonable
counsel fees incurred in investigating, evaluating, or defending such claims,
suffered by any of them and caused by, relating to, arising out of, resulting
from, or in any way connected with this Agreement, the Notes, any other Loan
Document and any transaction contemplated herein or therein including, but not
limited to, claims based upon any act or omission by Agent, Issuing Bank or a
Lender in connection with this Agreement, the Notes or any other Loan Document
and any transaction contemplated herein or therein to the extent
72
not caused solely by the gross negligence, bad faith or willful misconduct of
the Person seeking indemnification. If any Borrower shall have knowledge of any
claim or liability hereby indemnified against, it shall promptly give written
notice to Agent and each Lender. THIS COVENANT SHALL SURVIVE THE PAYMENT OF THE
INDEBTEDNESS CREATED BY THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT.
SECTION 6.27 Licenses, Permits. Each Borrower will maintain, and each
Borrower will cause each of such Person's Subsidiaries to maintain, the
validity, force and effect of, and operate in compliance with, all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates and
orders required for the conduct of such Borrower's and such Subsidiary's
business.
SECTION 6.28 RICO. No Borrower shall engage in any conduct or fail to take
any action, and no Borrower shall permit any of such Person's Subsidiaries to
engage in any conduct or fail to take any action, which will, or would, under
the facts and circumstances relative thereto, violate the Racketeer Influenced
and Corrupt Organization Act as amended by the Comprehensive Act of 1984, 18
U.S.C. ss.ss.1961-68.
SECTION 6.29 Equity Interests. Neither any Borrower (other than Parent) nor
any Subsidiary of any Borrower will issue, sell or transfer any equity
interests, unless the transferee (A) executes a pledge agreement granting to
Agent for the benefit of itself, Issuing Bank and Lenders a lien on such equity
interests and (B) executes any and all documents and takes such other action
reasonably required by Agent to perfect Agent's Lien for the benefit of itself,
Issuing Bank and Lenders on all of the equity interests, provided however that,
with respect to transfers of equity interest in a Foreign Subsidiary (excluding
equity interests in any Foreign Subsidiary of a Foreign Subsidiary) Agent shall
have a perfected lien for the benefit of itself, Issuing Bank and Lenders in 66%
of such equity interest.
SECTION 6.30 Year 2000 Compliance. The advent of the year 2000 shall not
and will not materially adversely affect the performance of any information
technology of any Borrower or any Subsidiary of any Borrower. Without limiting
the generality of the foregoing, (A) the hardware and software utilized by each
Borrower and each Subsidiary of each Borrower are designed to be used prior to,
during and after calendar year 2000 A.D. and such hardware and software will
operate during each such time period without error relating to date data,
specifically including any error relating to, or the conduct of, date data which
represents or references different centuries or more than one century, (B) the
hardware and software utilized by each Borrower and each Subsidiary of each
Borrower do not abnormally end or provide invalid or incorrect results as a
result of date data, and (C) the hardware and software utilized by each Borrower
and each Subsidiary of each Borrower have been designed to ensure year 2000 A.D.
compatibility, including date data, century recognition, leap year, calculations
73
which accommodate same century and multicentury formulas and date values and
date data interface values that reflect the century.
SECTION 6.31 Operating and Deposit Accounts. Parent and CGII shall
establish and maintain an operating and deposit account with Agent for purposes
of facilitating funding of Loans hereunder.
SECTION 6.32 Material Amendments. (A) No Borrower shall amend, modify or
waive the terms or conditions applicable to any Earnout (whether now existing or
hereafter agreed to), or pay any such Earnout if the conditions for payment
thereof have not been fully satisfied; (B) no Borrower shall amend or modify any
permit or license or any material agreement listed on Exhibit 5.22 hereto if
such amendment or modification is reasonably likely to have a material adverse
effect on any Borrower and (C) no Borrower shall amend or modify in any material
respect their charter and operational documents.
SECTION 6.33 Transactions with Affiliates. No Borrower shall enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (A) otherwise permitted under this Agreement, and (B) upon
terms no less favorable to such Borrower than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
SECTION 6.34 Representations and Warranties. The representations and
warranties set forth in Article 5 shall remain true and correct as long as the
Loans remain outstanding.
ARTICLE 7
DEFAULT
SECTION 7.1 Events of Default. Each of the following shall be an event of
default ("Event of Default"):
(A) except as set forth in Section 7.1(L) hereof, if any Borrower shall
fail to pay when due any interest, principal, the Commitment Fee, the Letter of
Credit Fee or any other Liabilities on the date due;
(B) if an event of default (as therein defined) shall occur under any other
Loan Document;
(C) if any Borrower fails to comply with any of its covenants contained in
Section 6.11, 6.14, 6.15, 6.16, 6.19 or 6.20 hereof and such failure is not
fully cured within fifteen (15) days from the earlier of (1) notice of such
Default from any Lender or Agent, or (2) any Borrower becoming aware of such
failure;
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(D) if any Borrower fails to comply with any of its covenants contained
herein, not referred to in another subsection of this Section 7.1;
(E) if any representation or warranty made or deemed made by any Borrower
or any Subsidiary of any Borrower or any of their Affiliates in any Loan
Document or in any certificate, agreement, instrument, statement, or report
contemplated by or made or delivered pursuant to or in connection with any
thereof, or if any information furnished to Lenders, Issuing Bank or Agent
pertaining to the Loans shall prove to have been incorrect when made, deemed
made or furnished in any material respect;
(F) if any Borrower or any Subsidiary of any Borrower shall fail to pay any
Credit Obligation owing by it, or any interest or premium thereon, when due,
whether owed to Lenders or any other Person and whether such Credit Obligation
shall become due by scheduled maturity, by required prepayment, by acceleration,
by demand, or otherwise, or shall fail to perform any term, covenant, or
agreement on its part to be performed under any agreement or instrument
evidencing or securing or relating to any such Credit Obligation when required
to be performed, (1) if the effect of such failure to pay or perform is to
accelerate the final maturity of at least $100,000.00, or (2) if the effect is
to permit the holder or holders of such Credit Obligation to accelerate the
final maturity of at least $500,000.00, in case of either clauses (1) or (2)
whether or not such failure to perform shall be waived by the holder or holders
of such Credit Obligation, unless such waiver has the effect of terminating the
right of such holder or holders to accelerate the maturity of such Credit
Obligation as a result of such failure; or (3) if any Borrower or any Subsidiary
of any Borrower fails to pay any Credit Obligation(s) of at least $100,000.00 in
the aggregate at final maturity;
(G) if any Borrower or any Subsidiary of any Borrower shall be adjudicated
bankrupt or insolvent, or admit in writing its inability or be generally unable
to pay its debts as they mature, or make an assignment for the benefit of its
creditors; or if any Borrower or any Subsidiary of any Borrower shall apply for
or consent to the appointment of any receiver, trustee, or similar officer for
it or for all or any substantial part of its property; or any such receiver,
trustee, or similar officer shall be appointed without the application or
consent of any Borrower or any Subsidiary of any Borrower and shall continue
undischarged for a period of 60 days; or if any Borrower or any Subsidiary of
any Borrower shall institute (by petition, application, answer, consent, or
otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation, or similar proceeding relating to them under
the laws of any jurisdiction; or if such proceeding shall be instituted (by
petition, application, or otherwise) against any Borrower or any Subsidiary of
any Borrower and an order for relief shall be entered in such proceeding or such
proceeding shall remain undismissed for a period of 60 days; or if any judgment,
writ, warrant of attachment or execution or similar process shall be issued or
levied against property of any Borrower or any Subsidiary of any Borrower and
such judgment, writ, or similar process shall not be released, vacated, or fully
bonded within 60 days after its issue or levy;
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(H) if (1) any Reportable Event, or any failure of compliance required by
Section 6.20 hereof, that Agent reasonably determines in good faith creates a
reasonable possibility of the termination of any Defined Benefit Pension Plan of
any Borrower or any Subsidiary of any Borrower or of the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan of such Borrower or such Subsidiary shall have occurred and be continuing
30 days, or (2) any such plan shall be terminated, or (3) the plan administrator
of any such Plan shall file with the PBGC a notice of intention to terminate
such Defined Benefit Pension Plan, or (4) the PBGC shall institute proceedings
to terminate any such Defined Benefit Pension Plan or to appoint a trustee to
administer any such Defined Benefit Pension Plan and such proceedings shall
remain undismissed or unstayed for 30 days and if, in any of the cases described
in the foregoing clauses (1) to (4), Agent further determines that the amount of
the unfunded guaranteed benefits (within the meaning of Title IV of ERISA)
resulting upon termination of such Defined Benefit Pension Plan would have a
material adverse effect on the business, properties, operation, or condition
(financial or otherwise) of any Borrower or any Subsidiary of any Borrower if a
lien against the assets of any Borrower or any Subsidiary of any Borrower were
to result under ERISA;
(I) if there occurs a material adverse change to the financial condition,
assets, nature of the assets, or operations of any Borrower or any Subsidiary of
any Borrower, which change is reasonably likely to have a material adverse
effect on any Borrower;
(J) if any license, permit or authorization held by (i) any Subsidiary of
any Borrower having 5% of the total sales of Borrowers and their Subsidiaries on
a Consolidated basis in the prior fiscal year or (ii) any Borrower, and material
to the operation of such Borrower's or such Subsidiary's business shall be
revoked or terminated for any reason;
(K) if a Change of Control occurs;
(L) if Issuing Bank is not reimbursed in full, either from funds in the
Letter of Credit Cash Collateral Account or from other funds, for any request
for any Letter of Credit Liability when due and such failure continues for two
(2) Business Days thereafter, provided that Borrowers shall not be entitled to
such grace period more often than two times in any twelve month period; or
(M) if for any reason any Loan Document at any time shall not be in full
force and effect in all material respects or shall not be enforceable in all
material respects in accordance with its terms, or any security interest or
material lien granted pursuant thereto shall fail to be perfected, or any party
thereto shall contest the validity of any material lien granted under, or shall
seek to disaffirm or reduce its obligations under, any Loan Document.
SECTION 7.2 Remedies. If any Event of Default other than those described in
Section 7.1(G) hereof shall occur and be continuing, then at the option of Agent
at the
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direction of Required Lenders, and if any Event of Default described in Section
7.1(G) hereof shall occur then automatically, (A) the Commitments and the right
of Borrowers to request Advances and Letters of Credit hereunder shall
terminate; (B) the Liabilities shall be due and payable immediately without
presentment, demand, protest, or further action of any kind; (C) Agent may
exercise its rights under any Loan Document (including this Agreement); (D)
Agent or any Lender may set off any Borrower's funds or property in its
possession against the Liabilities in such order as it shall elect; (E) Agent
may exercise its rights with respect to any accounts maintained by any Borrower
with Agent and apply the proceeds thereof against the Liabilities in such order
as Agent shall elect; and (F) Agent may exercise any other rights and remedies
available to Agent whether available at law, in equity, or otherwise. Without
limiting the generality of the foregoing or limiting in any way the rights of
Lenders and Agent under the Loan Documents or otherwise under applicable law, at
any time after the occurrence, and during the continuance, of an Event of
Default, Agent, at the direction of the Required Lenders, shall be entitled to
apply for and have a receiver or receiver and manager appointed under state or
Federal law by a court of competent jurisdiction in any action taken by Agent or
Lenders to enforce their rights and remedies hereunder and under the other Loan
Documents in order to manage, protect, preserve, sell and otherwise dispose of
all or any portion of the Collateral and continue the operation of the business
of the respective Borrowers, and to collect all revenues and profits thereof and
apply the same to the payment of all expenses and other charges of such
receivership, including the compensation of the receiver, and to the payment of
the Notes until a sale or other disposition of such Collateral shall be finally
made and consummated. EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO AND WAIVES
ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AS
PROVIDED ABOVE. EACH BORROWER GRANTS SUCH WAIVER AND CONSENT KNOWINGLY AFTER
HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, ACKNOWLEDGES THAT THE
UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS
CONSIDERED ESSENTIAL BY LENDERS IN CONNECTION WITH THE ENFORCEMENT OF THEIR
RIGHTS AND REMEDIES HEREUNDER AND UNDER THE SECURITY DOCUMENTS, AND THE
AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES
WAS A MATERIAL FACTOR IN INDUCING LENDERS TO MAKE ( AND COMMIT TO MAKE) THE
LOANS TO BORROWERS, AND AGREES TO ENTER INTO ANY AND ALL STIPULATIONS IN ANY
LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN CONNECTION WITH THE
FOREGOING AND TO COOPERATE FULLY WITH AGENT AND LENDERS IN CONNECTION WITH THE
ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF
THE COLLATERAL.
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ARTICLE 8
AGENT
SECTION 8.1 Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes Agent, which designation and appointment is coupled with
an interest, as agent of such Lender hereunder and under the other Loan
Documents, to take such action on its behalf and to exercise such powers under
the Loan Documents as are delegated to Agent by the terms thereof, together with
such powers as are reasonably incidental thereto.
SECTION 8.2 General Immunity. In performing Agent's duties hereunder, Agent
will take the same care as it takes in connection with loans in which it alone
is interested. However, neither Agent nor any of its directors, officers, agents
or employees shall (A) have any duty or responsibility to be a trustee for any
Lender, (B) be responsible to any Lender for any recitals, representations or
warranties contained in any Loan Document or in any document or certificate
delivered in connection therewith, (C) be responsible to any Lender for the due
execution, legality, validity, perfection, or enforceability of any Loan
Document or Collateral, or (D) be liable for any action taken or omitted to be
taken by it hereunder or in connection herewith except for its own gross
negligence or willful misconduct.
SECTION 8.3 Consultation with Professionals. Agent may consult with legal
counsel and other professionals selected by it and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice of
such counsel and professionals in their respective areas of expertise.
SECTION 8.4 Documents. Agent shall be under no duty to examine or pass upon
the effectiveness, genuineness or validity of this Agreement, the Notes or the
other Loan Documents, and Agent shall be entitled to assume that the same are
valid, effective, genuine and what they purport to be. Agent specifically
disclaims any representation or warranty respecting any such provision and each
Lender agrees to undertake its own examination of such provisions.
SECTION 8.5 Rights as a Lender. With respect to its Pro Rata Share of the
Loans, the entity which is the Agent shall have the same rights and powers
hereunder as any Lender and may exercise the same as though it were not Agent.
The terms "Lender" and "Lenders" shall, unless the context otherwise indicates,
include the entity which is the Agent in its individual capacity. The entity
which is the Agent may accept deposits from, lend money to and generally engage
in any kind of commercial banking, investment banking or trust business with any
Borrower or any Affiliates of any Borrower as if the entity which is the Agent
were not Agent.
SECTION 8.6 Responsibility of Agent. It is expressly understood and agreed
that the obligations of Agent hereunder are only those expressly set forth in
this Agreement or in any other Loan Document and that Agent shall be entitled to
assume that neither a Default nor an Event of Default has occurred or is
continuing unless the officer of Agent having responsibility for the
administration of this Agreement has actual knowledge of such fact or has
received notice from a Lender or any Borrower that such Lender or Borrower
considers that a Default or an Event of Default has occurred and is
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continuing and specifying the nature thereof. Without limiting the foregoing,
Agent shall not have any obligation to distribute to Lenders any statements,
reports or other information received from any Borrower pursuant to this
Agreement which obligate Borrowers to send such statements, reports or other
information to Agent and Lenders.
SECTION 8.7 Action by Agent. So long as Agent shall be entitled, pursuant
to Section 8.6 hereof, to assume that no Default or Event of Default has
occurred and is continuing, Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights that may be
vested in it by taking or refraining from taking any action or actions that it
may be able to take under, or in respect of, this Agreement, the other Loan
Documents, or any of them; provided that, as between Agent and Lenders only,
after an Event of Default, Agent (A) shall be entitled to exercise any rights or
remedies granted to it hereunder, under the other Loan Documents, or otherwise
available to it at law or in equity unless directed otherwise in writing by
Required Lenders and (B) upon the direction of Required Lenders, shall exercise
such rights and remedies as so directed. Agent shall not incur liability under
or in respect of this Agreement by acting upon any notice, consent, certificate,
warranty or other paper or instrument believed by it to be genuine or authentic
or to be signed by the proper party or parties, or with respect to anything that
it may do or refrain from doing in the reasonable exercise of its judgment, or
that may seem to it to be necessary or desirable under the circumstances.
SECTION 8.8 Notices of Event of Default, Etc. In the event that Agent shall
have acquired actual knowledge of any Default or Event of Default, Agent shall
promptly give notice thereof to each Lender and, subject to Section 8.7 and
Section 9.10 hereof, Agent may take such action and assert such rights with
respect to taking or refraining from taking any action or actions that it may be
able to take under or in respect of this Agreement, the other Loan Documents, or
any of them, as it deems to be advisable in its sole discretion for the
protection of the interests of Lenders including, without limitation, the
exercise of rights and remedies under Article 7 hereof.
SECTION 8.9 Indemnification of Agents. Each Lender agrees to indemnify
Agent (to the extent not reimbursed by Borrowers), ratably according to its Pro
Rata Share of the Loans from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of this
Agreement, the other Loan Documents, or any of them, or any action taken or
omitted by Agent under this Agreement, the other Loan Documents, or any of them,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from Agent's gross negligence or
willful misconduct (except to the extent such gross negligence or willful
misconduct was committed at the express direction of Lenders). THIS PROVISION
SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS
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CREATED BY THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS.
SECTION 8.10 Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign from the
performance of all of its functions and duties at any time by giving 60 days'
prior written notice to Borrowers and to Lenders. Upon receipt of any such
notice Required Lenders shall appoint any bank or financial institution as the
successor Agent. If no successor Agent shall have been so appointed by Required
Lenders and shall have accepted such appointment within thirty (30) days after
the giving of notice by the retiring Agent, then such retiring Agent may on
behalf of Lenders appoint any bank or financial institution as the successor
Agent. Upon the acceptance of any Person of its appointment as successor Agent,
such Person shall thereupon succeed to and become vested with all the rights,
powers, privileges, duties and obligations of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations as Agent
under the Loan Documents. After any retiring Agent's resignation, the provisions
of this Article 8 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken while it was acting as such Agent. The
resignation of Agent of its duties as Agent shall not in any way affect its
rights as a Lender under this Agreement.
SECTION 8.11 Non-Reliance on Agent and other Lenders. Each Lender agrees
that it has, independently and without reliance on Agent or any other Lenders,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of Borrowers and its own decision to enter into this
Agreement and that it will, independently and without reliance upon Agent or any
other Lenders, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. Agent does not make any
warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement. Agent shall not be required
to inquire or keep itself informed as to the performance or observance by
Borrowers of this Agreement or any other document referred to or provided for
herein or to inspect the properties or books of Borrowers. Except for notices,
reports and other documents and information expressly required to be furnished
to Lenders by Agent hereunder, Agent shall have no duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or businesses of Borrowers or any Affiliates of Borrowers
which may come into the possession of Agent or any of its Affiliates.
SECTION 8.12 Failure to Act. Except for action expressly required of Agent
hereunder, Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall be indemnified to its satisfaction by Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action (except any such liability or
expense resulting solely from Agent's gross negligence or willful misconduct).
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ARTICLE 9
ADDITIONAL PROVISIONS
SECTION 9.1 No Waiver, Cumulative Remedies. No failure or delay on the part
of Agent or a Lender in exercising any right, power, or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power, or remedy preclude any other or further exercise thereof or
the exercise of any other right, power, or remedy hereunder. Except as otherwise
provided in Section 9.10 hereof, no waiver of any provision hereof shall be
effective unless the same shall be in writing and signed by all Lenders. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.2 Notices. All notices, requests, demands, and other
communications which this Agreement requires or permits any party to give any
other party shall be in writing, and shall be given to such party at its address
below or at such other address as shall be designated by such party in a notice
to each other party complying with the terms of this Section 9.2. All notices,
requests, demands, and other communications provided for hereunder shall be
effective (A) if given by mail, when deposited in the mails, with first class
postage prepaid, addressed as aforesaid, and (B) if given by any other means
(including telecopy), when delivered or received at the aforesaid addresses:
If to Agent or Issuing Bank:
Summit Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Ornegri
▇▇▇▇▇▇▇ Swiss
FAX: ▇▇▇-▇▇▇-▇▇▇▇
If to any other Lender:
at the address set forth on the signature page hereof or
such Lender's Assignment and Acceptance Agreement
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If to Borrowers:
▇▇▇▇▇▇▇▇▇▇ Graphics International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 9.3 Set-off. Each Lender shall have a right of set-off against, a
lien upon, and a security interest in all property of any Borrower now or at any
time in the possession of such Lender in any capacity whatever, including, but
not limited to, any Borrower's interest in any deposit account, as security for
the Liabilities, including without limitation, the obligations of any Borrower
under the Loan Documents and to reimburse such Lender for any returned checks.
In the event that a Lender recovers funds from any Borrower or any Subsidiary of
any Borrower, whether by exercise of its right of set-off or the foreclosure of
a banker's lien, such Lender agrees that all sums recovered from such Borrower
or such Subsidiary shall be recovered on behalf of all Lenders to be shared
proportionately according to their respective Pro Rata Shares of the Loans. If a
Lender makes any such recovery, it will promptly remit to Lenders their
respective Pro Rata Share of such recovery. No Lender's Pro Rata Share shall
have priority over any other Lender's Pro Rata Share.
SECTION 9.4 Sharing of Payments. If at any time any Lender receives a
payment on account of its portion of the Loans in a proportion greater than
similar payments on account of the portions of the Loans held by the other
Lenders, the Lender which receives such greater proportionate payment will
purchase a participation in the portions of the Loans held by the other Lenders
in such amount that after such purchase each Lender shall hold a proportionate
share in the aggregate outstanding principal balance of the Loans equal to their
respective proportionate shares in the outstanding principal balance of the
Loans before the disproportionate payment. Prior to the occurrence of an Event
of Default, each Lender's "proportionate share" and "portion of the Loans" as
those phrases are used in the preceding sentence shall be determined based on
the intended application of such payment, so that payments with respect to the
Loans shall be apportioned based on each Lender's Pro Rata Share of the Loans.
After the occurrence of an Event of Default, Lenders shall share in payments and
proceeds, after reimbursement of Agent's expenses and costs of collection, based
on each Lender's share of the sum of the principal outstanding under the Loans,
including without limitation, the Letter of Credit Obligations. If any payment
on account of the Loans is rescinded or invalidated or must otherwise be
restored or returned by the recipient in a bankruptcy or insolvency proceeding
or otherwise, then any participations purchased as a result of operation of this
Section 9.4 will be rescinded.
SECTION 9.5 Costs and Expenses. Each Borrower agrees to pay on demand (A)
all reasonable costs and expenses of Agent in connection with the preparation,
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execution, delivery and administration of the Loan Documents and in connection
with any request by Borrowers for an amendment, modification, or waiver of any
of the provisions of any thereof (including the fees and out-of-pocket expenses
of counsel with respect thereto); (B) all filing, recording, and similar fees
and charges; (C) all reasonable costs and expenses, if any, of Agent and Lenders
in connection with the enforcement of any Loan Document (including the fees and
out-of-pocket expenses of legal counsel with respect thereto); and (D) all
reasonable costs and expenses, if any, of Agent or any Lender in connection with
the enforcement of Agent's or any Lender's right to take possession of the
Collateral after the occurrence of a Default or an Event of Default and the
proceeds thereof and to hold, collect, prepare for sale, render in compliance
with federal, state or local environmental statutes, ordinances, regulations,
orders, directives, and permits, sell and dispose of the Collateral (including
the reasonable fees and out-of-pocket expenses of legal counsel with respect
thereto).
SECTION 9.6 Governing Law. This Agreement and the other Loan Documents
shall be governed in all respects by the law of the State of New Jersey, the
jurisdiction in which the Loan Documents have been executed and delivered, and
for all purposes shall be construed in accordance with such law.
SECTION 9.7 Survival of Agreements and Representations; JURY WAIVER;
Consent to Jurisdiction. All agreements, representations and warranties made
herein shall survive the delivery of this Agreement and the Notes. Any and all
judicial proceedings brought by Agent or a Lender against Borrowers or any of
them with respect to this Agreement may be brought in: (A) any court of
competent jurisdiction in the State of New Jersey; and (B) any Federal district
court having subject matter jurisdiction and being located in the State of New
Jersey. AFTER CONSULTATION WITH COUNSEL, AND WITH KNOWLEDGE OF THE CONSEQUENCES,
BORROWERS, AGENT AND LENDERS HEREBY WAIVE ALL RIGHTS TO DEMAND A JURY TRIAL AND
AGREE THAT ALL SUITS WILL BE HEARD BY A JUDGE ONLY. Each Borrower hereby
accepts, for itself and its properties, the non-exclusive jurisdiction of the
aforesaid courts and agrees to be bound by any judgments rendered by such courts
in connection with this Agreement. No Borrower will move to transfer any such
proceeding to any different court. Any such process may be mailed by registered
or certified mail to each Borrower at such Person's address referred to in
Section 9.2 hereof. Each Borrower agrees that service by mail will constitute
sufficient notice. Service will be considered complete upon delivery or
attempted delivery. Nothing herein limits the right of Agent or a Lender to
bring proceedings against Borrowers or any of them in the courts of any other
jurisdiction.
SECTION 9.8 Binding Effect. The Loan Documents shall be binding upon and
inure to the benefit of Borrowers, Lenders, Agent and their respective
successors and assigns, except no Borrower shall have the right to assign or
delegate such Person's respective rights or obligations under any of such
documents without the consent of all Lenders.
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SECTION 9.9 Headings. Article, Section and subsection headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
SECTION 9.10 Amendments. No amendment or waiver of any provision of this
Agreement or any other Loan Document nor consent to any departure by Borrowers
or any of them therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. Notwithstanding the foregoing, no amendment or waiver
may be made without the written consent of all Lenders which has the effect of
(A) postponing the maturity of any principal payment (including any
reimbursement obligation), or any interest payment due, or any fee payment, (B)
reducing the interest rates on the Loans, (C) reducing Borrower's obligation to
repay the principal of the Revolving Credit (including any reimbursement
obligation), the Term Loan or the Acquisition Loan, (D) reducing the Commitment
Fee or Letter of Credit Fee, (E) changing the definition of "Required Lenders,"
(F) modifying this Section 9.10, (G) modifying Section 9.4 hereof, (H) releasing
any Borrower from the Liabilities, (I) releasing any Collateral, except as
provided in the Security Documents or herein, or (J) modifying any provision
which provides that all of the Lenders must approve or consent to or be
satisfied with any action or matter. No Lender's Commitment shall be increased
or decreased, without such Lender's written consent, except in connection with a
reduction of the Commitments provided for under this Agreement.
SECTION 9.11 Usury. Nothing herein contained or in the Notes, or any other
Loan Document nor any transaction related thereto shall be construed or shall so
operate either presently or prospectively to require Borrowers or any of them
(A) to pay interest at a rate greater than is now lawful in such case to
contract for, but shall require payment of interest only to the extent of such
lawful rate, or (B) to make any payment or do any act contrary to law, but if
any provision herein or therein contained shall otherwise so operate to
invalidate this Agreement, the Notes, or any other Loan Document, in whole or in
part, then such provision only shall be held for naught as though not herein or
therein contained and the remainder of this Agreement, the Notes, and the other
Loan Documents shall remain operative and in full force and effect. Any interest
paid in excess of the lawful rate shall be refunded to Borrowers. Such refund
shall be made by application of the excessive amount of interest paid against
any sums outstanding under this Agreement and shall be applied in such order as
Agent may determine. If the excessive amount of interest paid exceeds the sums
outstanding hereunder, the portion exceeding the said sums outstanding shall be
refunded in cash by Agent. Any such crediting or refund shall not cure or waive
any default by any Borrower hereunder or under the Notes or any other Loan
Document. Each Borrower agrees, however, that in determining whether or not any
interest payable exceeds the highest rate permitted by law, any non-principal
payment (except payments specifically stated in this Agreement to be
"interest"), including without limitation prepayment
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premiums, shall be deemed, to the extent permitted by law, to be an expense,
fee, premium or penalty rather than interest.
SECTION 9.12 Participations; Assignments. Each Lender may assign, or sell
participations in, all or any part of its Commitment, or of its ratable share of
the Liabilities to another bank or other entity. Each assignment shall be in the
minimum amount of $5,000,000.00 and the proposed assignee shall be subject to
the prior written approval of Borrowers (which approval shall not be required if
a Default or Event of Default has occurred and is continuing and shall not be
otherwise unreasonably withheld) and Agent (which approval shall not be
unreasonably withheld) (except that no such consent shall be required in
connection with an assignment or participation sold by a Lender to (A) another
bank controlled by such Lender or its holding company or (B) another Lender). In
the event of an assignment or participation, (A) in the case of an assignment,
the assignee shall become a signatory hereto by execution of an Assignment and
Acceptance Agreement substantially in the form of Exhibit 9.12 attached hereto,
and upon notice thereof by such Lender to Borrowers with a copy to Agent, and
upon payment to Agent by the parties to the assignment of a processing and
recordation fee of $3,000.00, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits and
obligations as any other Lender hereunder; and (B) in the case of a
participation, the participant shall have no rights under the Loan Documents and
all amounts payable by Borrowers hereunder and under the other Loan Documents
shall be determined as if such Lender had not sold such participation. The
agreement executed by such Lender in favor of the participant shall not give the
participant the right to require such Lender to take or omit to take any action
hereunder except action directly relating to any of the actions described in
Sections 9.10 (A), (B), (C), (D) or (I) hereof. Lenders may furnish any
information concerning Borrowers in the possession of Lenders from time to time
to assignees and participants (including prospective assignees and
participants); provided that Lenders shall require any such prospective assignee
or such participant (prospective or otherwise) to agree in writing to maintain
the confidentiality of such information. In addition to the assignments and
participations permitted under this Section, any Lender may assign and pledge
all or any portion of its Commitment, Liabilities and Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circulars issued by
such Federal Reserve Bank without obtaining Borrowers' or Agent's approval. No
such sale or assignment shall release the selling or assigning Lender from its
obligations hereunder.
SECTION 9.13 Joint and Several Obligations. Whether or not expressly stated
herein or in any other document, all obligations of Borrowers (or any Borrower)
hereunder and under each other Loan Document (whether in connection with Loans,
Letters of Credit or other obligations) are joint and several obligations of all
Borrowers.
SECTION 9.14 Entire Agreement. This Agreement, the Exhibits attached hereto
and the other Loan Documents constitute the entire understanding among the
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parties with respect to the subject matter hereof, and supersedes any and all
contemporaneous and prior agreements between the parties hereto with respect to
the subject matter hereof.
SECTION 9.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
SECTION 9.16 Severability. Any provision of this Agreement which is
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 hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BANK
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
caused this Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
▇▇▇▇▇▇▇▇▇▇ GRAPHICS REALTY, L.L.C. ▇▇▇▇▇▇▇▇▇▇ GRAPHICS INTERNATIONAL, INC.
By: ▇▇▇▇▇▇▇▇▇▇ GRAPHICS ▇▇▇▇▇▇▇▇▇▇ GRAPHICS, INC.
INTERNATIONAL, INC. CGII CALIFORNIA HOLDINGS, INC.
MVP GRAPHICS, INC.
SUPER PACK, INC.
By: ________________________ ▇▇▇▇▇▇▇▇▇▇ GRAPHICS DELAWARE, INC.
▇▇▇▇▇▇ ▇. ▇▇▇▇ BENGAL GRAPHICS, INC.
Chief Financial Officer
By:_________________________
BOSTON TOWNE PRESS, INC. ▇▇▇▇▇▇ ▇. ▇▇▇▇
Chief Financial Officer
By: __________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, Treasurer
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SUMMIT BANK, as Agent, as Issuing Bank, THE BANK OF NEW YORK,
and as Lender as Lender
By:______________________________ By: __________________________
Name: Name:
Title: Title:
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ MANHATTAN BANK, NATIONAL BANK OF CANADA,
as Lender as Lender
By:______________________________ By: ___________________________
Name: Name:
Title: Title:
Notice Address:
Chase Manhattan Bank By: ___________________________
E. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name:
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Title:
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, VP
▇▇▇▇▇▇▇ ▇▇▇▇, VP Notice Address:
National Bank of Canada
Post Office Plaza
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
88
