Exhibit 10.27
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AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of June 27, 2002
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
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BANK OF AMERICA, N.A.
as the Administrative Agent
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BANC OF AMERICA SECURITIES, LLC
as the Lead Arranger and Sole Book Manager
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FLEET CAPITAL CORPORATION
and
WACHOVIA BANK, NATIONAL ASSOCIATION
as the Co-Syndication Agents
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JPMORGAN CHASE BANK
and
GENERAL ELECTRIC CAPITAL CORPORATION
as the Co-Documentation Agents
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MAIL-WELL, INC.
as Parent
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MAIL-WELL I CORPORATION
and
certain of its subsidiaries
as the Borrowers
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TABLE OF CONTENTS
Section Page
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ARTICLE 1 LOANS AND LETTERS OF CREDIT........................................2
1.1 Total Facility.............................................2
1.2 Revolving Loans............................................2
1.3 [Intentionally Deleted]....................................5
1.4 Letters of Credit..........................................5
1.5 Bank Products..............................................8
ARTICLE 2 INTEREST AND FEES..................................................9
2.1 Interest...................................................9
2.2 Continuation and Conversion Elections......................9
2.3 Maximum Interest Rate.....................................10
2.4 Agent's Fees..............................................11
2.5 Unused Line Fee...........................................11
2.6 Letter of Credit Fee......................................11
ARTICLE 3 PAYMENTS AND PREPAYMENTS..........................................11
3.1 Revolving Loans...........................................11
3.2 Termination of Facility...................................12
3.3 Mandatory Reductions of Maximum PP&E Loan Amount..........12
3.4 [Intentionally Deleted]...................................13
3.5 LIBOR Rate Loan Prepayments...............................13
3.6 Payments by the Borrowers.................................13
3.7 Payments as Revolving Loans...............................13
3.8 Apportionment, Application and Reversal of Payments.......13
3.9 Indemnity for Returned Payments...........................14
3.10 Agent's and Lenders' Books and Records; Monthly
Statements................................................14
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY............................15
4.1 Taxes.....................................................15
4.2 Illegality................................................16
4.3 Increased Costs and Reduction of Return...................16
4.4 Funding Losses............................................17
4.5 Inability to Determine Rates..............................17
4.6 Certificates of Agent.....................................17
4.7 Removal of Affected Lender................................18
4.8 Survival..................................................18
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.................18
5.1 Books and Records.........................................18
5.2 Financial Information.....................................18
5.3 Notices to the Lenders....................................21
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS............................23
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6.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents..........................23
6.2 Validity and Priority of Security Interest................23
6.3 Organization and Qualification; Subsidiaries and
Affiliates................................................23
6.4 Corporate Name; Prior Transactions........................24
6.5 [Intentionally deleted]...................................24
6.6 Financial Statements and Projections......................24
6.7 Capitalization............................................24
6.8 Solvency..................................................24
6.9 Debt......................................................24
6.10 Distributions.............................................25
6.11 Real Estate; Leases.......................................25
6.12 Proprietary Rights........................................25
6.13 Trade Names...............................................25
6.14 Litigation................................................25
6.15 Labor Disputes............................................25
6.16 Environmental Laws........................................26
6.17 No Violation of Law.......................................27
6.18 No Default................................................27
6.19 ERISA Compliance..........................................27
6.20 Taxes.....................................................28
6.21 Regulated Entities........................................28
6.22 Use of Proceeds; Margin Regulations.......................28
6.23 Copyrights, Patents, Trademarks and Licenses, etc.........28
6.24 No Material Adverse Effect................................28
6.25 Full Disclosure...........................................28
6.26 Material Agreements.......................................29
6.27 Bank Accounts.............................................29
6.28 Governmental Authorization................................29
6.29 Senior Debt...............................................29
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS................................29
7.1 Taxes and Other Obligations...............................29
7.2 Legal Existence and Good Standing.........................30
7.3 Compliance with Law and Agreements; Maintenance of
Licenses..................................................30
7.4 Maintenance of Property; Inspection of Property...........30
7.5 Insurance.................................................30
7.6 Insurance and Condemnation Proceeds.......................31
7.7 Environmental Laws........................................32
7.8 Compliance with ERISA.....................................33
7.9 Mergers, Consolidations or Sales..........................33
7.10 Distributions; Restricted Investments.....................34
7.11 Transactions Affecting Collateral or Obligations..........34
7.12 Guaranties................................................35
7.13 Debt......................................................35
7.14 Prepayment................................................36
7.15 Transactions with Affiliates..............................37
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7.16 Investment Banking and Finder's Fees......................37
7.17 Business Conducted........................................37
7.18 Liens.....................................................37
7.19 Sale and Leaseback Transactions...........................37
7.20 Additional Subsidiaries...................................37
7.21 Fiscal Year...............................................39
7.22 Fixed Charge Coverage Ratio...............................39
7.23 Adjusted Tangible Net Worth...............................39
7.24 Use of Proceeds...........................................40
7.25 Further Assurances........................................40
ARTICLE 8 CONDITIONS OF LENDING.............................................40
8.1 Conditions Precedent to Making of Loans on the Initial
Funding Date..............................................40
8.2 Conditions Precedent to Each Loan.........................42
ARTICLE 9 DEFAULT; REMEDIES.................................................43
9.1 Events of Default.........................................43
9.2 Remedies..................................................45
ARTICLE 10 TERM AND TERMINATION.............................................47
10.1 Term and Termination......................................47
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.....47
11.1 Amendments and Waivers....................................47
11.2 Assignments; Participations...............................49
ARTICLE 12 THE AGENT........................................................51
12.1 Appointment and Authorization.............................51
12.2 Delegation of Duties......................................51
12.3 Liability of Agent........................................51
12.4 Reliance by Agent.........................................52
12.5 Notice of Default.........................................52
12.6 Credit Decision...........................................52
12.7 Indemnification...........................................53
12.8 Agent in Individual Capacity..............................53
12.9 Successor Agent...........................................53
12.10 Withholding Tax...........................................54
12.11 Collateral Matters........................................55
12.12 Restrictions on Actions by Lenders; Sharing of Payments...56
12.13 Agency for Perfection.....................................57
12.14 Payments by Agent to Lenders..............................57
12.15 Settlement................................................57
12.16 Letters of Credit; Intra-Lender Issues....................60
12.17 Concerning the Collateral and the Related Loan Documents..62
12.18 Field Audit and Examination Reports; Disclaimer by
Lenders...................................................63
12.19 Relation Among Lenders....................................63
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12.20 Co-Agents.................................................63
ARTICLE 13 JOINT AND SEVERAL LIABILITY OF BORROWERS; GUARANTY...............64
13.1 Joint and Several Liability of Borrowers..................64
13.2 Contribution and Indemnification among the Borrowers......65
13.3 Waiver....................................................66
13.4 Independent Investigation.................................67
13.5 Stay of Acceleration......................................68
13.6 Subrogation...............................................68
13.7 Cumulative Remedies.......................................68
13.8 Additional Waivers........................................68
13.9 Survival..................................................68
ARTICLE 14 MISCELLANEOUS....................................................69
14.1 No Waivers; Cumulative Remedies...........................69
14.2 Severability..............................................69
14.3 Governing Law; Choice of Forum; Service of Process........69
14.4 WAIVER OF JURY TRIAL......................................71
14.5 Survival of Representations and Warranties................71
14.6 Other Security and Guaranties.............................71
14.7 Fees and Expenses.........................................72
14.8 Notices...................................................72
14.9 Waiver of Notices.........................................73
14.10 Binding Effect............................................73
14.11 Indemnity of the Agent and the Lenders by the Borrowers...74
14.12 Limitation of Liability...................................74
14.13 Final Agreement...........................................75
14.14 Counterparts..............................................75
14.15 Captions..................................................75
14.16 Right of Setoff...........................................75
14.17 Confidentiality...........................................76
14.18 Conflicts with Other Loan Documents.......................76
14.19 Designation of Mail-Well I as Agent of Borrowers..........77
14.20 Canadian Borrowing Base Assets............................77
14.21 Release of Real Estate Collateral.........................78
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ANNEXES, EXHIBITS AND SCHEDULES
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ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF REVOLVING LOAN NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE C-1 - LENDERS' COMMITMENTS (ANNEX A - DEFINED TERMS)
SCHEDULE E-1 - ELIGIBLE REAL ESTATE (ANNEX A - DEFINED TERMS)
SCHEDULE R-1 - RESTRUCTURING ASSETS (ANNEX A - DEFINED TERMS)
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES
AND AFFILIATES
SCHEDULE 6.4 - CORPORATE NAMES; PRIOR TRANSACTIONS
SCHEDULE 6.7 - CAPITALIZATION
SCHEDULE 6.9 - DEBT
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR DISPUTES
SCHEDULE 6.16 - ENVIRONMENTAL LAW
SCHEDULE 6.18 - DEFAULTS
SCHEDULE 6.19 - ERISA COMPLIANCE
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.27 - BANK ACCOUNTS
SCHEDULE 7.5 - INSURANCE
SCHEDULE 7.12 - GUARANTIES
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AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of June 27,
2002 (this "Agreement"), among the financial institutions from time to time
parties hereto (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), Bank of America, N.A., with an
office at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as
administrative agent for the Lenders (in its capacity as agent, the
"Agent"), Mail-Well, Inc., a Colorado corporation ("Parent"), Mail-Well I
Corporation, a Delaware corporation ("Mail-Well I"), and those Subsidiaries
of Mail-Well I set forth on the signature pages hereto or which hereafter
become parties hereto in accordance with the terms of this Agreement
(Mail-Well I and each such Subsidiary, individually, a "Borrower", and,
collectively, the "Borrowers").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Parent, Mail-Well I, and certain other Subsidiaries of
Parent, the several financial institutions from time to time party thereto
and the Agent have entered into a Credit Agreement, dated as of February 18,
2000 (as amended, the "Original Credit Agreement");
WHEREAS, Mail-Well I is a wholly owned Subsidiary of Parent, each
of the Borrowers (other than Mail-Well I) is a wholly-owned Subsidiary of
Mail-Well I, and all Borrowers are engaged in an inter-related business
enterprise with an identity of interests, and accordingly the financing
provided hereunder will directly and/or indirectly benefit each of the
Borrowers;
WHEREAS, the Borrowers have requested Agent and the Lenders to
amend and restate the Original Credit Agreement to, among other things, make
available to the Borrowers a revolving line of credit for loans and letters
of credit in an aggregate amount not to exceed $300,000,000, which
extensions of credit the Borrowers will use for the purposes permitted
hereunder;
WHEREAS, Agent and the Lenders have agreed to make available to the
Borrowers, a revolving credit facility upon the terms and conditions set
forth in this Agreement.
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in Annex A which is
attached hereto and incorporated herein; the rules of construction contained
therein shall govern the interpretation of this Agreement, and all Annexes,
Exhibits and Schedules attached hereto are incorporated herein by reference;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the Lenders, the
Agent, Parent, and the Borrowers hereby agree to amend and restate the
Original Credit Agreement as follows.
1
ARTICLE 1
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LOANS AND LETTERS OF CREDIT
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1.1 Total Facility. Subject to all of the terms and conditions
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of this Agreement, the Lenders agree to make available a total credit
facility of up to $300,000,000 (the "Total Facility") to the Borrowers from
time to time during the term of this Agreement. The Total Facility shall be
composed of a revolving line of credit consisting of Revolving Loans and
Letters of Credit described herein.
1.2 Revolving Loans.
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(a) (i) Amounts. Subject to the satisfaction of the
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conditions precedent set forth in Article 8, and except for Non-Ratable
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Loans and Agent Advances, each Lender severally, but not jointly, agrees,
upon a Borrower's request from time to time on any Business Day during the
period from the Closing Date to the Termination Date, to make revolving
loans (the "Revolving Loans") to the Borrowers in aggregate amounts not to
exceed such Lender's Pro Rata Share of the Availability. The Lenders,
however, in their unanimous discretion, may, on one or more occasions, elect
to make Revolving Loans, or issue or arrange to have issued Letters of
Credit, in excess of Availability, but if they do so, neither the Agent nor
the Lenders shall be deemed thereby to have changed the limits of
Availability for Borrowers or to be obligated to exceed such limits on any
other occasion. If any Borrowing would exceed Availability, the Lenders may
refuse to make or otherwise restrict the making of Revolving Loans to
Borrowers, as the Lenders determine until such excess has been eliminated,
subject to the Agent's authority, in its sole discretion, to make Agent
Advances pursuant to the terms of Section 1.2(i). The entire unpaid balance
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of the Revolving Loans and all other non-contingent Obligations (other than
Bank Products) shall be immediately due and payable in full in immediately
available funds on the Termination Date.
(ii) Revolving Loan Notes. At the request of any
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Lender, Borrowers shall execute and deliver to such Lender a promissory note
to evidence the Revolving Loans of that Lender. Each note shall be in the
principal amount of the Lender's Pro Rata Share of the Revolving Loan
Commitments, dated the date hereof and substantially in the form of Exhibit A
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(such promissory note, together with any new note issued pursuant to
Section 11.2 upon the assignment of any portion of such Lender's Loans and
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Commitment being hereafter referred to as a "Revolving Loan Note" and,
collectively with any other such notes, the "Revolving Loan Notes"). Each
Revolving Loan Note shall represent the obligation of each Borrower to pay
the amount of Lender's Pro Rata Share of the Revolving Loan Commitments, or,
if less, such Lender's Pro Rata Share of the aggregate unpaid principal
amount of all Revolving Loans to Borrowers, together with interest thereon
as prescribed in Section 2.1.
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(b) Procedure for Borrowing.
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(1) Each Borrowing shall be made upon Borrowers'
irrevocable written notice delivered to the Agent in the form of a notice of
borrowing ("Notice of Borrowing"), which must be received by the Agent prior
to (i) 12:00 noon (Los Angeles time) 3 Business Days prior to the requested
Funding Date, in the case of LIBOR Rate Loans and
2
(ii) 10:00 a.m. (Los Angeles time) on the requested Funding Date, in the
case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which in the
case of a LIBOR Rate Loan must equal or exceed $1,000,000 (and increments of
$1,000,000 in excess of such amount);
(B) the requested Funding Date, which must
be a Business Day;
(C) whether the Revolving Loans requested
are to be Base Rate Revolving Loans or LIBOR Revolving Loans (and if not
specified, it shall be deemed a request for a Base Rate Revolving Loan); and
(D) the duration of the Interest Period for
LIBOR Revolving Loans (and if not specified, it shall be deemed a request
for an Interest Period of one month); provided, however, that with respect
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to the Borrowings to be made on the Initial Funding Date, such Borrowing
will consist of Base Rate Revolving Loans only.
(2) In lieu of delivering a Notice of Borrowing,
Administrative Borrower may give the Agent telephonic notice of such request
for advances to the Designated Account on or before the deadline set forth
above. The Agent at all times shall be entitled to rely on such telephonic
notice in making such Revolving Loans, regardless of whether any written
confirmation is received.
(3) Borrowers shall not have a right to request
a LIBOR Rate Loan while a Default or Event of Default has occurred and is
continuing.
(c) Reliance upon Authority. Prior to the Closing Date,
-----------------------
Borrowers shall deliver to the Agent a notice setting forth the account of
such Borrowers (the "Designated Account") to which the Agent is authorized
to transfer the proceeds of the Revolving Loans requested hereunder by
Borrowers. Borrowers may designate a replacement account from time to time
by written notice. Such Designated Accounts must be reasonably satisfactory
to the Agent. The Agent is entitled to rely conclusively on any person's
request for Revolving Loans on behalf of any Borrower, so long as the
proceeds thereof are to be transferred to the applicable Designated Account.
The Agent has no duty to verify the identity of any individual representing
himself or herself as a person authorized by Borrowers to make such requests
on its behalf.
(d) No Liability. The Agent shall not incur any
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liability to any Borrower as a result of acting upon any notice referred to
in Sections 1.2(b) and (c), which the Agent believes in good faith to have
--------------- ---
been given by an officer or other person duly authorized by Borrowers to
request Revolving Loans on behalf of any Borrower. The crediting of
Revolving Loans to the Designated Account conclusively establishes the
obligation of Borrowers to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or
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telephonic notice in lieu thereof) made pursuant to Section 1.2(b) shall be
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irrevocable. Borrowers shall be bound to borrow the funds requested therein
in accordance therewith.
3
(f) Agent's Election. Promptly after receipt of a
----------------
Notice of Borrowing (or telephonic notice in lieu thereof), the Agent shall
elect to have the terms of Section 1.2(g) or the terms of Section 1.2(h)
-------------- --------------
apply to such requested Borrowing. If the Bank declines in its sole
discretion to make a Non-Ratable Loan pursuant to Section 1.2(h), the terms
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of Section 1.2(g) shall apply to the requested Borrowing.
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(g) Making of Revolving Loans. If Agent elects to have
-------------------------
the terms of this Section 1.2(g) apply to a requested Borrowing, then
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promptly after receipt of a Notice of Borrowing or telephonic notice in lieu
thereof, the Agent shall notify the Lenders by telecopy or, telephone of the
requested Borrowing. Each Lender shall transfer its Pro Rata Share of the
requested Borrowing available to the Agent in immediately available funds,
to the account from time to time designated by Agent, not later than 12:00
noon (Los Angeles time) on the applicable Funding Date. After the Agent's
receipt of all proceeds of such Revolving Loans, the Agent shall make the
proceeds of such Revolving Loans available to the Designated Account on the
applicable Funding Date by transferring same day funds to the Designated
Account, or, with respect to Revolving Loans made on the Initial Funding
Date, as Borrowers shall otherwise instruct in writing; provided, however,
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that the amount of Revolving Loans so made on any Funding Date shall not
exceed Availability on that Funding Date.
(h) Making of Non-Ratable Loans.
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(A) If Agent elects, with the consent of the Bank,
to have the terms of this Section 1.2(h) apply to a requested Borrowing, the
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Bank shall make a Revolving Loan in the amount of that Borrowing available
on the applicable Funding Date by transferring same day funds to the
Designated Account. Each Revolving Loan made solely by the Bank pursuant to
this Section is herein referred to as a "Non-Ratable Loan", and such
Revolving Loans are collectively referred to as the "Non-Ratable Loans."
Each Non-Ratable Loan shall be subject to all the terms and conditions
applicable to other Revolving Loans except that all payments thereon shall
be payable to the Bank solely for its own account. The aggregate amount of
Non-Ratable Loans outstanding at any time shall not exceed $30,000,000. The
Agent shall not request the Bank to make any Non-Ratable Loan if (1) the
Agent has received written notice from any Lender that one or more of the
applicable conditions precedent set forth in Article 8 will not be satisfied
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on the requested Funding Date for the applicable Borrowing, and such
conditions have not been waived in accordance with this Agreement or (2) the
requested Borrowing would exceed Availability on that Funding Date.
(B) The Non-Ratable Loans shall be secured by
the Agent's Liens in and to the Collateral and shall constitute Base Rate
Revolving Loans and Obligations hereunder.
(i) Agent Advances.
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(A) Subject to the limitations set forth below,
the Agent is authorized by each Borrower and the Lenders (and with
concurrent notice to the Lenders), from time to time in the Agent's
reasonable credit judgment, (A) after the occurrence of a Default or an
Event of Default, or (B) at any time that any of the other conditions
precedent set forth in Article 8 have not been satisfied, to make Base Rate
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Revolving Loans to such Borrower on behalf of the Lenders in an aggregate
amount outstanding at any time for all Borrowers not to exceed the
4
lesser of (w) $10,000,000 or (x) 10% of the Borrowing Base which the Agent,
in its reasonable business judgment, deems necessary or desirable (1) to
preserve or protect the Collateral, or any portion thereof, (2) to enhance
the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations (other than Bank Products), or (3) to pay any other amount
chargeable to such Borrower pursuant to the terms of this Agreement,
including costs, fees and expenses as described in Section 13.7 (any of such
------------
advances are herein referred to as "Agent Advances"); provided, that (y) in
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no event shall Agent make Agent Advances which would cause the Aggregate
Revolver Outstandings at any time to exceed the Maximum Revolver Amount and
(z) the Majority Lenders may at any time revoke the Agent's authorization to
make Agent Advances. Any such revocation must be in writing and shall become
effective prospectively upon the Agent's receipt thereof.
(B) The Agent Advances shall be secured by the
Agent's Liens in and to the Collateral and shall constitute Base Rate
Revolving Loans and Obligations hereunder.
1.3 [Intentionally Deleted]
1.4 Letters of Credit.
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(a) Agreement to Issue or Cause to Issue. Subject to
------------------------------------
the terms and conditions of this Agreement, the Agent agrees (i) to cause
the Letter of Credit Issuer to issue for the account of any Borrower one or
more commercial/documentary and standby letters of credit ("Letter of
Credit") and/or (ii) to provide credit support or other enhancement to a
Letter of Credit Issuer acceptable to Agent, which issues a Letter of Credit
for the account of any Borrower (any such credit support or enhancement
being herein referred to as a "Credit Support") from time to time during the
term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall
--------------------------------
not issue or cause to be issued any Letter of Credit or to provide Credit
Support for any Letter of Credit at any time if: (i) the maximum face amount
of the requested Letter of Credit is greater than the Unused Letter of
Credit Subfacility at such time; (ii) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from
the relevant Borrower in connection with the opening thereof would exceed
Availability at such time; or (iii) such Letter of Credit has an expiration
date less than 30 days prior to the Stated Termination Date or more than 12
months from the date of issuance for standby letters of credit and 180 days
for documentary letters of credit. With respect to any Letter of Credit
which contains any "evergreen" or automatic renewal provision, and subject
to the satisfaction of the other conditions of this Section 1.4, each Lender
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shall be deemed to have consented to any such extension or renewal unless
any such Lender shall have provided to the Agent, written notice that it
declines to consent to any such extension or renewal at least thirty (30)
days prior to the date on which the Letter of Credit Issuer is entitled to
decline to extend or renew the Letter of Credit. If all of the requirements
of this Section 1.4 are met and no Default or Event of Default has occurred
-----------
and is continuing, no Lender shall decline to consent to any such extension
or renewal.
(c) Other Conditions. In addition to conditions
----------------
precedent contained in Article 8, the Agent may not issue or cause to be
---------
issued any Letter of Credit or provide Credit
5
Support for any Letter of Credit unless each of the following conditions
precedent having been satisfied in a manner reasonably satisfactory to the
Agent:
(1) Such Borrower shall have delivered to the
Letter of Credit Issuer, at such times and in such manner as such Letter of
Credit Issuer may prescribe, an application in form and substance
satisfactory to such Letter of Credit Issuer and reasonably satisfactory to
the Agent for the issuance of the Letter of Credit and such other documents
as may be required pursuant to the terms thereof, and the form, terms and
purpose of the proposed Letter of Credit shall be reasonably satisfactory to
the Agent and the Letter of Credit Issuer; and
(2) As of the date of issuance, no order of
any court, arbitrator or Governmental Authority shall purport by its terms
to enjoin or restrain money center banks generally from issuing letters of
credit of the type and in the amount of the proposed Letter of Credit, and
no law, rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally
shall prohibit, or request that the proposed Letter of Credit Issuer refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit.
(d) Issuance of Letters of Credit.
-----------------------------
(1) Request for Issuance. Borrowers must notify
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the Agent of a requested Letter of Credit at least 3 Business Days prior to
the proposed issuance date. Such notice shall be irrevocable and must
specify the original face amount of the Letter of Credit requested, the
Business Day of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the Business
Day on which the requested Letter of Credit is to expire, the purpose for
which such Letter of Credit is to be issued, and the beneficiary of the
requested Letter of Credit. Borrowers shall attach to such notice the
proposed form of the Letter of Credit.
(2) Responsibilities of the Agent; Issuance. As
---------------------------------------
of the Business Day immediately preceding the requested issuance date of the
Letter of Credit, the Agent shall determine the amount of the applicable
Unused Letter of Credit Subfacility and Availability. If (i) the face amount
of the requested Letter of Credit is less than the Unused Letter of Credit
Subfacility and (ii) the amount of such requested Letter of Credit and all
commissions, fees, and charges due from the relevant Borrower in connection
with the opening thereof would not exceed Availability, the Agent shall
cause the Letter of Credit Issuer to issue the requested Letter of Credit on
the requested issuance date so long as the other conditions set forth in
this Agreement, including without limitation this Section 1.4 and Article 8
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are met.
(3) No Extensions or Amendment. The Agent shall
--------------------------
not be obligated to cause the Letter of Credit Issuer to extend or amend any
Letter of Credit issued pursuant hereto unless the requirements of this
Section 1.4 are met as though a new Letter of Credit were being requested
-----------
and issued.
(e) Payments Pursuant to Letters of Credit. Each
--------------------------------------
Borrower agrees to reimburse immediately the Letter of Credit Issuer for any
draw under any Letter of Credit issued
6
for the benefit of any Borrower and the Agent for the account of the Lenders
upon any payment pursuant to any Credit Support, and to pay the Letter of
Credit Issuer the amount of all other charges and fees payable to the Letter
of Credit Issuer in connection with any Letter of Credit immediately when
due, irrespective of any claim, setoff, defense or other right which such
Borrower may have at any time against the Letter of Credit Issuer or any
other Person. Each drawing under any Letter of Credit shall constitute a
request by the applicable Borrower to the Agent for a Borrowing of a Base
Rate Revolving Loan in the amount of such drawing. The Funding Date with
respect to such borrowing shall be the date of such drawing.
(f) Indemnification; Exoneration; etc.
---------------------------------
(1) Indemnification. In addition to amounts
---------------
payable as elsewhere provided in this Section 1.4, each Borrower agrees to
-----------
protect, indemnify, pay and save the Lenders and the Agent harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which any Lender
or the Agent (other than a Lender in its capacity as Letter of Credit
Issuer) may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit or the provision of any Credit Support
or enhancement in connection therewith. Each Borrower's obligations under
this Section shall survive payment of all other Obligations.
(2) Assumption of Risk by the Borrowers. As among
-----------------------------------
the Borrowers, the Lenders, and the Agent, each Borrower assumes all risks
of the acts and omissions of, or misuse of any of the Letters of Credit by,
the respective beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, the Lenders and the Agent shall not be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any Person in connection with
the application for and issuance of and presentation of drafts with respect
to any of the Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (C) the failure of the
beneficiary of any Letter of Credit to comply duly with conditions required
in order to draw upon such Letter of Credit; (D) 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; (E) errors in interpretation of technical terms; (F) 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;
(G) the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; (H) any consequences
arising from causes beyond the control of the Lenders or the Agent,
including any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto Governmental Authority or (I) the Letter of
-- ---- -- -----
Credit Issuer's honor of a draw for which the draw or any certificate fails
to comply in any respect with the terms of the Letter of Credit. None of the
foregoing shall affect, impair or prevent the vesting of any rights or
powers of the Agent or any Lender under this Section 1.4(f).
--------------
(3) Exoneration. Without limiting the foregoing,
-----------
no action or omission whatsoever by Agent or any Lender (excluding any
Lender in its capacity as a Letter of
7
Credit Issuer) shall result in any liability of Agent and/or Lender to any
Borrower, or relieve any Borrower of any of its obligations hereunder to any
such Person.
(4) Rights Against Letter of Credit Issuer.
--------------------------------------
Nothing contained in this Agreement is intended to limit any Borrower's
rights, if any, with respect to the Letter of Credit Issuer which arise as a
result of the letter of credit application and related documents executed by
and between such Borrower and the Letter of Credit Issuer.
(5) Account Party. Each Borrower hereby authorizes
-------------
and directs any Letter of Credit Issuer to name such Borrower as the
"Account Party" therein and to deliver to the Agent all instruments,
documents and other writings and property received by the Letter of Credit
Issuer pursuant to the Letter of Credit, and to accept and rely upon the
Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the application therefor.
(g) Supporting Letter of Credit; Cash Collateral. If,
--------------------------------------------
notwithstanding the provisions of Section 1.4(b) and Section 10.1, any
-------------- ------------
Letter of Credit or Credit Support is outstanding upon the termination of
this Agreement, then upon such termination, Borrowers shall deposit with the
Agent, for the ratable benefit of the Agent and the Lenders, with respect to
each Letter of Credit or Credit Support then outstanding, cash ("Cash
Collateral") or a standby letter of credit (a "Supporting Letter of Credit")
in form and substance satisfactory to the Agent, issued by an issuer
satisfactory to the Agent, in each case in an amount equal to the greatest
amount for which such Letter of Credit or such Credit Support may be drawn
plus any fees and expenses associated with such Letter of Credit or such
Credit Support, under which Supporting Letter of Credit the Agent is
entitled to draw amounts necessary to reimburse the Agent and the Lenders
for payments to be made by the Agent and the Lenders under such Letter of
Credit or Credit Support and any fees and expenses associated with such
Letter of Credit or Credit Support. Such Supporting Letter of Credit and/or
Cash Collateral shall be held by the Agent, for the ratable benefit of the
Agent and the Lenders, as security for, and to provide for the payment of,
the aggregate undrawn amount of such Letters of Credit or such Credit
Support remaining outstanding.
(h) Existing Letters of Credit. Agent, Lenders, Parent
--------------------------
and Borrowers acknowledge that the letters of credit identified on
Schedule 6.9 as being issued by Bank (the "Existing L/Cs") have been issued
------------
by Bank under the Original Credit Agreement and remain outstanding. The
Existing L/Cs shall constitute Letters of Credit hereunder.
1.5 Bank Products. Any Borrower may obtain Bank Products from
-------------
any Lender or any Lender's Affiliates, although no Borrower is required to
do so. To the extent Bank Products are provided by a Lender or an Affiliate
of a Lender, each Borrower agrees to indemnify and hold the Agent and the
other Lenders harmless from any and all costs and obligations now or
hereafter incurred by the Agent or the other Lenders related to such Bank
Products; provided, however, nothing contained herein is intended to limit
-------- -------
such Borrower's rights, with respect to the Lender or its Affiliates
providing the Bank Products, if any, which arise as a result of the
execution of documents by and between such Borrower and such Lender or its
Affiliates which relate to Bank Products. The agreement contained in this
Section shall survive termination of this Agreement. Each Borrower
acknowledges and agrees that the obtaining of Bank Products from a Lender or
8
its Affiliates (a) is in the sole and absolute discretion of such Lender or
its Affiliates, and (b) is subject to all rules and regulations of such
Lender or its Affiliates.
ARTICLE 2
---------
INTEREST AND FEES
-----------------
2.1 Interest.
--------
(a) Interest Rates. All outstanding Obligations (other
--------------
than Bank Products) shall bear interest on the unpaid principal amount
thereof (including, to the extent permitted by law, on interest thereon not
paid when due) from the date made until paid in full in cash at a rate
determined by reference to the Base Rate or the LIBOR Rate plus the
Applicable Margins, but not to exceed the Maximum Rate. If at any time,
Loans are outstanding with respect to which Borrowers have not delivered to
the Agent a notice specifying the basis for determining the interest rate
applicable thereto in accordance herewith, those Loans shall bear interest
at a rate determined by reference to the Base Rate until notice to the
contrary has been given to the Agent in accordance with this Agreement and
such notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Revolving Loans and other
Obligations (other than Bank Products or LIBOR Rate Loans) at a fluctuating
per annum rate equal to the Base Rate plus the Applicable Margin; and
----
(ii) For all LIBOR Revolving Loans at a per annum
rate equal to the LIBOR Rate plus the Applicable Margin.
----
Each change in the Base Rate shall be reflected in the interest rate
applicable to Base Rate Loans as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and
actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Borrowers shall pay to the Agent,
for the ratable benefit of Lenders, interest accrued on all Loans in arrears
on the first day of each month hereafter and on the Termination Date.
(b) Default Rate. If any Default or Event of Default
------------
occurs and is continuing and the Agent or the Required Lenders in their
discretion so elect, then, while any such Default or Event of Default is
continuing, all of the Obligations (other than Bank Products) shall bear
interest at the Default Rate applicable thereto.
2.2 Continuation and Conversion Elections.
-------------------------------------
(a) Borrowers may:
(i) elect, as of any Business Day, in the case of
Base Rate Loans to convert any Base Rate Loans (or any part thereof in an
amount not less than $1,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate Loans having Interest Periods
expiring on such day (or any part
9
thereof in an amount not less than $1,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
--------
respect of any Borrowing is reduced, by payment, prepayment, or conversion
of part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans; provided further that if the
-------- -------
notice shall fail to specify the duration of the Interest Period, such
Interest Period shall be one month.
(b) Borrowers shall deliver a notice of continuation/
conversion ("Notice of Continuation/Conversion") to the Agent not later than
12:00 noon (Los Angeles time) at least 3 Business Days in advance of the
Continuation/Conversion Date, if the Loans are to be converted into or
continued as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted
or renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period,
provided, however, Borrowers may not select an Interest Period that ends
-------- -------
after the Stated Termination Date.
(c) If upon the expiration of any Interest Period
applicable to LIBOR Rate Loans, Borrowers have failed to select timely a new
Interest Period to be applicable to LIBOR Rate Loans or if any Default or
Event of Default then exists, Borrowers shall be deemed to have elected to
convert such LIBOR Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given
held by each Lender.
(e) There may not be more than 10 different LIBOR Rate
Loans in effect hereunder at any time.
2.3 Maximum Interest Rate. In no event shall any interest rate
---------------------
provided for hereunder exceed the maximum rate legally chargeable by any
Lender under applicable law for such Lender with respect to loans of the
type provided for hereunder (the "Maximum Rate"). If, in any month, any
interest rate, absent such limitation, would have exceeded the Maximum Rate,
then the interest rate for that month shall be the Maximum Rate, and, if in
future months, that interest rate would otherwise be less than the Maximum
Rate, then that interest rate shall remain at the Maximum Rate until such
time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum
Rate. In the event that, upon payment in full of the Obligations, the total
amount of interest paid or accrued under the terms of this Agreement is less
than the total amount of interest which would,
10
but for this Section 2.3, have been paid or accrued if the interest rate
-----------
otherwise set forth in this Agreement had at all times been in effect, then
Borrowers shall, to the extent permitted by applicable law, pay the Agent,
for the account of the Lenders, an amount equal to the excess of (a) the
lesser of (i) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect or (ii) the amount of
interest which would have accrued had the interest rate otherwise set forth
in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. If a court of
competent jurisdiction determines that the Agent and/or any Lender has
received interest and other charges hereunder in excess of the Maximum Rate,
such excess shall be deemed received on account of, and shall automatically
be applied to reduce, first the Obligations other than interest or Bank
-----
Products, second interest, and third Bank Products, and if there are no
------ -----
Obligations outstanding, the Agent and/or such Lender shall promptly refund
to Borrowers such excess.
2.4 Agent's Fees. The Borrower agrees to pay Agent the fees
------------
(the "Agent's Fees") at the times and in the amounts as set forth in the
Agent Fee Letter.
2.5 Unused Line Fee. On the first day of each month and on the
---------------
Termination Date, Borrowers agree to pay to the Agent, for the account of
the Lenders, in accordance with their respective Pro Rata Shares, an unused
line fee (the "Unused Line Fee") equal to the Applicable Unused Line Fee
Margin times the amount by which (a) the Maximum Revolver Amount exceeded
(b) the sum of (i) the average daily outstanding amount of Revolving Loans
and (ii) the average daily undrawn face amount of outstanding Letters of
Credit, during the immediately preceding month or shorter period if
calculated for the first month hereafter or on the Termination Date. The
Unused Line Fee shall be computed on the basis of a 360-day year for the
actual number of days elapsed. All principal payments received by the Agent
shall be deemed to be credited to the Borrowers' Loan Account immediately
upon receipt for purposes of calculating the Unused Line Fee pursuant to
this Section 2.5.
-----------
2.6 Letter of Credit Fee. Each Borrower agrees to pay to the
--------------------
Agent, for the account of the Lenders, in accordance with their respective
Pro Rata Shares, for each Letter of Credit, a fee (the "Letter of Credit
Fee") at a per annum rate equal to the Applicable Margin then in effect for
LIBOR Revolving Loans and to Agent for the benefit of the Letter of Credit
Issuer a fronting fee of 0.250% per annum of the undrawn face amount of each
Letter of Credit, and to the Letter of Credit Issuer, all out-of-pocket
costs, fees and expenses incurred by the Letter of Credit Issuer in
connection with the application for, processing of, issuance of, or
amendment to any Letter of Credit. The Letter of Credit Fee shall be payable
monthly in arrears on the first day of each month following any month in
which a Letter of Credit is outstanding and on the Termination Date. The
Letter of Credit Fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed.
ARTICLE 3
---------
PAYMENTS AND PREPAYMENTS
------------------------
3.1 Revolving Loans. Borrowers shall repay the outstanding
---------------
principal balance of the Revolving Loans, plus all accrued but unpaid
interest thereon, on the Termination Date. Borrowers may prepay Revolving
Loans at any time, and reborrow subject to the terms of this Agreement. In
addition, and without limiting the generality of the foregoing, upon demand,
11
Borrowers shall pay to the Agent, for account of the Lenders, the amount,
without duplication, by which the Aggregate Revolver Outstandings exceed (a)
the lesser of (i) the Borrowing Base or (ii) the Maximum Revolver Amount,
less (b) Reserves other than Reserves deducted in the calculation of the
----
Borrowing Base.
3.2 Termination of Facility. The Borrowers, acting jointly,
-----------------------
may terminate this Agreement upon at least 30 Business Days' notice to the
Agent and the Lenders, upon (a) the payment in full of all outstanding
Revolving Loans, together with accrued interest thereon, and the
cancellation and return of all outstanding Letters of Credit (or the
provision of Cash Collateral or a Supporting Letter of Credit in accordance
with Section 1.4(g)), (b) the payment of the early termination fee set forth
--------------
below in this Section 3.2, (c) the payment in full in cash of all
-----------
reimbursable expenses and other Obligations (including accrued and unpaid
Agent's Fees, but excluding Bank Products (any required repayment of which
shall be governed by the documents evidencing the same)), and (d) with
respect to any LIBOR Rate Loans prepaid, payment of the amounts due under
Section 4.4, if any. If this Agreement is terminated at any time prior to
-----------
the Stated Termination Date, whether pursuant to this Section 3.2 or
-----------
pursuant to Section 9.2, the Borrowers shall pay to the Agent, for the
-----------
ratable account of the Lenders, an early termination fee determined in
accordance with the following table:
PERIOD DURING WHICH
EARLY TERMINATION EARLY TERMINATION
OCCURS FEE
------------------- -----------------
On or prior to the first Anniversary Date 0.50% of the Maximum Revolver Amount
After the first Anniversary Date but on or 0.25% of the Maximum Revolver Amount
prior to the second Anniversary Date
After the second Anniversary Date 0.00% of the Maximum Revolver Amount
provided, however, that the early termination fee described in this Section 3.2
-------- ------- -----------
shall not be payable in the event that Borrowers repay the Obligations
(other than Bank Products) utilizing the proceeds of a credit facility
provided in whole by, or with respect to which the sole administrative agent
is, another lending department of the Bank or any of its Affiliates.
3.3 Mandatory Reductions of Maximum PP&E Loan Amount. The
------------------------------------------------
Maximum PP&E Loan Amount shall immediately be permanently reduced by the
greater of (a) (i) 100% of the net proceeds of any disposition of assets
described in clauses (b) through (c) of the definition of Permitted
----------- ---
Disposition, less the amount that any such assets consisting of Eligible
----
Accounts or Eligible Inventory contributed towards the Borrowing Base as of
the date of such disposition as determined by the Agent in its reasonable
discretion, (ii) 100% of the net proceeds of any Debt described in clause (d)
----------
of Section 7.13; or (iii) 100% of the net proceeds of any insurance
------------
settlement or condemnation awards in respect of Collateral consisting of
Fixed Assets (as
12
provided in Section 7.6 (b)) or (b) the amount actually included in the
---------------
Borrowing Base for the purpose of borrowing against such assets referenced
in clause (a) above.
----------
3.4 [Intentionally Deleted]
3.5 LIBOR Rate Loan Prepayments. In connection with any
---------------------------
prepayment, if any LIBOR Rate Loans are prepaid prior to the expiration date
of the Interest Period applicable thereto, such Borrower shall pay to the
Lenders the amounts described in Section 4.4.
-----------
3.6 Payments by the Borrowers.
-------------------------
(a) All payments to be made by any Borrower shall be
made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by each Borrower shall be made to
the Agent for the account of the Lenders, at the account designated by the
Agent and shall be made in Dollars and in immediately available funds, no
later than 12:00 noon (Los Angeles time) on the date specified herein. Any
payment received by the Agent after such time shall be deemed (for purposes
of calculating interest only) to have been received on the following
Business Day and any applicable interest shall continue to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period", whenever any payment is due on a day other
than a Business Day, such payment shall be due on the following Business
Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
3.7 Payments as Revolving Loans. At the election of Agent,
---------------------------
all payments of principal, interest, reimbursement obligations in connection
with Letters of Credit and Credit Support for Letters of Credit, fees,
premiums, reimbursable expenses and other sums payable hereunder, may be
paid from the proceeds of Revolving Loans made hereunder. Each Borrower
hereby irrevocably authorizes the Agent to charge the Loan Account for the
purpose of paying all amounts from time to time due from any Borrower and
agrees that all such amounts charged shall constitute Revolving Loans
(including Non-Ratable Loans and Agent Advances).
3.8 Apportionment, Application and Reversal of Payments.
---------------------------------------------------
Principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Loans to which
such payments relate held by each Lender), and payments of the fees, except
for fees payable solely to Agent and the Letter of Credit Issuer shall be
apportioned among Lenders on the Initial Funding Date as may be provided in
the separate fee letters between Agent and individual Lenders. All payments
shall be remitted to the Agent and all such payments not relating to
principal or interest of specific Loans, or not constituting payment of
specific fees, and all proceeds of Accounts or other Collateral received by
the Agent, and all payments received after the occurrence and during the
continuance of an Event of Default, shall be applied, ratably, as follows:
first, to pay any fees, indemnities or expense reimbursements (excluding any
-----
amounts relating to Bank Products) then due to the Agent from Borrowers
under this Agreement and any other Loan Document; second, to pay any fees,
------
indemnities, or expense reimbursements (excluding any amount relating to
Bank Products) then due to the Lenders from Borrowers under this Agreement
and any other Loan Document; third, to pay interest due from Borrowers in
-----
respect of all Revolving Loans, including Non-Ratable Loans and Agent
Advances;
13
fourth, to pay or prepay principal of the Non-Ratable Loans and Agent
------
Advances owed by Borrowers; fifth, to pay or prepay principal of the
-----
Revolving Loans (other than Non-Ratable Loans and Agent Advances) and unpaid
reimbursement obligations in respect of Letters of Credit; sixth, to pay an
-----
amount to Agent equal to all outstanding Letter of Credit Obligations of
Borrowers to be held as Cash Collateral for such Obligations; seventh, to
-------
the payment of any other Obligation (excluding any amount relating to Bank
Products) due to the Agent or any Lender from Borrowers, eighth, to the
------
payment of any amount relating to the Bank Products which are subject to a
Bank Product Reserve, and ninth, to the payment of any amounts relating to
-----
Bank Products that are not subject to a Bank Product Reserve.
Notwithstanding anything to the contrary contained in this Agreement, unless
so directed by a Borrower, or unless an Event of Default has occurred and is
continuing, neither the Agent nor any Lender shall apply any payments which
it receives to any LIBOR Rate Loan, except (a) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event,
and only to the extent, that there are no outstanding Base Rate Loans and,
in any event, Borrowers shall pay LIBOR breakage losses in accordance with
Section 4.4. The Agent and the Lenders shall have the continuing and
-----------
exclusive right to apply and reverse and reapply any and all such proceeds
and payments to any portion of the Obligations other than Bank Products.
3.9 Indemnity for Returned Payments. If after receipt of any
-------------------------------
payment which is applied to the payment of all or any part of the
Obligations, the Agent, any Lender, the Bank or any Affiliate of the Bank is
for any reason compelled to surrender such payment or proceeds to any Person
because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other
reason, then the Obligations or part thereof intended to be satisfied shall
be revived and continued and this Agreement shall continue in full force as
if such payment or proceeds had not been received by the Agent or such
Lender, the Bank or any Affiliate of the Bank, and the Borrowers shall be
liable to pay to the Agent and the Lenders, and hereby indemnify the Agent
and the Lenders and hold the Agent and the Lenders harmless for the amount
of such payment or proceeds surrendered. The provisions of this Section 3.9
-----------
shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender, the Bank or any Affiliate of the
Bank or any Lender in reliance upon such payment or application of proceeds,
and any such contrary action so taken shall be without prejudice to the
Agent's, the Bank's and the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment or application of
proceeds having become final and irrevocable. The provisions of this
Section 3.9 shall survive the termination of this Agreement.
-----------
3.10 Agent's and Lenders' Books and Records; Monthly Statements.
----------------------------------------------------------
The Agent shall record the principal amount of the Loans owing to each
Lender, the undrawn face amount of all outstanding Letters of Credit and the
aggregate amount of unpaid reimbursement obligations outstanding with
respect to the Letters of Credit from time to time on its books. In
addition, each Lender may note the date and amount of each payment or
prepayment of principal of such Lender's Loans in its books and records.
Failure by Agent or any Lender to make such notation shall not affect the
obligations of the Borrowers with respect to the Loans or the Letters of
Credit. Each Borrower agrees that the Agent's and each Lender's books and
records showing the Obligations and the transactions pursuant to this
Agreement and the other Loan Documents shall be admissible in any action or
proceeding arising therefrom, and shall constitute rebuttably
14
presumptive proof thereof, irrespective of whether any Obligation is also
evidenced by a promissory note or other instrument. The Agent will provide
to the Borrowers a monthly statement of Loans, payments, and other
transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on each Borrower and an account stated
(except for reversals and reapplications of payments made as provided in
Section 3.8 and corrections of errors discovered by the Agent), unless such
-----------
Borrower notifies the Agent in writing to the contrary within 30 days after
such statement is rendered. In the event a timely written notice of
objections is given by a Borrower, only the items to which exception is
expressly made will be considered to be disputed by such Borrower.
ARTICLE 4
---------
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.1 Taxes.
-----
(a) Any and all payments by each Borrower to each
Lender or the Agent under this Agreement and any other Loan Document shall
be made free and clear of, and without deduction or withholding for any
Taxes. In addition, each Borrower shall pay all Other Taxes.
(b) The Borrowers agree to indemnify and hold harmless
each Lender and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by any Lender or the Agent and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date such Lender or
the Agent makes written demand therefor.
(c) If any Borrower shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section) such Lender or the Agent, as the case may be, receives
an amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) such Borrower shall make such deductions
and withholdings;
(iii) such Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) such Borrower shall also pay to each Lender
or the Agent for the account of such Lender, at the time interest is paid,
all additional amounts necessary to preserve the after-tax yield such Lender
would have received if such Taxes or Other Taxes had not been imposed.
15
(d) At the Agent's request, within 30 days after the
date of any payment by any Borrower of Taxes or Other Taxes (or, if not then
made available to such Borrower, as soon thereafter as available), such
Borrower shall furnish the Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment reasonably
satisfactory to the Agent.
(e) If any Borrower is required to pay additional
amounts to any Lender or the Agent pursuant to subsection (c) of this
--------------
Section, then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change its lending office to one in
another jurisdiction so as to eliminate any such additional payment by such
Borrower which may thereafter accrue, if such change in the judgment of such
Lender is not otherwise disadvantageous to such Lender.
4.2 Illegality.
----------
(a) If any Lender determines that the introduction
of any Requirement of Law, or any change in any Requirement of Law, or in
the interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable lending
office to make LIBOR Rate Loans, then, on notice thereof by that Lender to
Borrowers through the Agent, any obligation of that Lender to make LIBOR
Rate Loans shall be suspended until that Lender notifies the Agent and
Borrowers that the circumstances giving rise to such determination no longer
exist.
(b) If a Lender determines that it is unlawful to
maintain any LIBOR Rate Loan to a Borrower, Borrowers shall, upon their
receipt of notice of such fact and demand from such Lender (with a copy to
the Agent), prepay in full such LIBOR Rate Loans of that Lender then
outstanding, together with interest accrued thereon and amounts required
under Section 4.4, either on the last day of the Interest Period thereof, if
-----------
that Lender may lawfully continue to maintain such LIBOR Rate Loans to such
day, or immediately, if that Lender may not lawfully continue to maintain
such LIBOR Rate Loans. If Borrowers are required to so prepay any LIBOR Rate
Loans, then concurrently with such prepayment, Borrowers shall borrow from
the affected Lender, in the amount of such repayment, a Base Rate Loan.
4.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or regulation
or (ii) the compliance by that Lender with any guideline or request from any
central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Rate Loans,
then Borrowers shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Agent), pay to the Agent for
the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in
16
the interpretation or administration of any Capital Adequacy Regulation by
any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender
or any corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation or other
entity controlling such Lender and (taking into consideration such Lender's
or such corporation's or other entity's policies with respect to capital
adequacy and such Lender's desired return on capital) determines that the
amount of such capital is increased as a consequence of its Commitments,
Loans, credits or obligations under this Agreement, then, upon demand of
such Lender to the Borrowers through the Agent, the Borrowers shall pay to
such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender for such increase.
4.4 Funding Losses. Borrowers shall reimburse each Lender and
--------------
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of:
(a) the failure of Borrowers to make on a timely
basis any payment of principal of any LIBOR Rate Loan;
(b) the failure of Borrowers to borrow, continue or
convert a Loan after Administrative Borrower has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loans on a day that is not the last
day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense
arising from the liquidation or reemployment of funds obtained by it to
maintain its LIBOR Rate Loans or from fees payable to terminate the deposits
from which such funds were obtained. Borrowers shall also pay any customary
administrative fees charged by any Lender in connection with the foregoing.
4.5 Inability to Determine Rates. If the Agent determines that
----------------------------
for any reason adequate and reasonable means do not exist for determining
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan, or that the LIBOR Rate for any requested Interest Period
with respect to a proposed LIBOR Rate Loan does not adequately and fairly
reflect the cost to the Lenders of funding such Loan, the Agent will
promptly so notify the Borrowers and each Lender. Thereafter, the obligation
of the Lenders to make or maintain LIBOR Rate Loans hereunder shall be
suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, Administrative Borrower may revoke any Notice of Borrowing or
Notice of Continuation/Conversion then submitted by it. If Administrative
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by Administrative Borrower, in the amount
specified in the applicable notice submitted by Administrative Borrower, but
such Loans shall be made, converted or continued as Base Rate Loans instead
of LIBOR Rate Loans.
4.6 Certificates of Agent. If any Lender claims reimbursement or
---------------------
compensation under this Article 4, Agent shall determine the amount thereof
---------
and shall deliver to the Borrowers (with a copy to the affected Lender) a
certificate setting forth in reasonable detail the amount
17
payable to the affected Lender, and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.
4.7 Removal of Affected Lender. At Borrowers' request, the
--------------------------
Agent or an Eligible Assignee reasonably acceptable to the Agent and
Borrowers shall have the right (but not the obligation) to purchase from any
Lender (other than Agent) that has requested compensation under Sections 4.1
------------
or 4.3, or suspended making LIBOR Rate Loans under Sections 4.2 or 4.5 (in
--- ------------ ---
each case an "Affected Lender"), and each Affected Lender shall, upon such
request, sell and assign to the Agent or such Eligible Assignee, all of the
Affected Lender's outstanding Commitments hereunder. Such sale shall be
consummated promptly after Agent has arranged for a purchase by Agent or an
Eligible Assignee pursuant to an Assignment and Acceptance, and at a price
equal to the outstanding principal balance of the Affected Lender's Loans,
plus accrued interest and fees, without premium or discount.
4.8 Survival. The agreements and obligations of the Borrowers
--------
in this Article 4 shall survive the payment of all other Obligations.
---------
ARTICLE 5
---------
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
-------------------------------------------------
5.1 Books and Records. Parent shall, and shall cause each of its
-----------------
Subsidiaries to maintain, at all times, correct and complete books, records
and accounts in which complete, correct and timely entries are made of its
transactions in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a).
--------------
Parent shall, and shall cause each of its Subsidiaries to, by means of
appropriate entries, reflect in such accounts and in all Financial
Statements proper liabilities and reserves for all taxes and proper
provision for depreciation and amortization of property and bad debts, all
in accordance with GAAP. Parent shall, and shall cause each of its
Subsidiaries to maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all
payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejection, repossession, stoppage in transit,
loss, damage, or destruction of any Inventory; and (c) all other dealings
affecting the Collateral.
5.2 Financial Information. Parent shall, and shall cause each
---------------------
of its Subsidiaries to promptly furnish to each Lender, all such financial
information as the Agent shall reasonably request. Without limiting the
foregoing, Parent and the Borrowers will furnish to the Agent, with
sufficient copies for distribution by the Agent to, and Agent shall
distribute to, each Lender, in such detail as the Agent or the Lenders shall
request, the following:
(a) As soon as available, but in any event not later
than 90 days after the close of each Fiscal Year, consolidated audited
balance sheets, and income statements, cash flow statements and changes in
stockholders' equity for Parent and its Subsidiaries for such Fiscal Year,
and the accompanying notes thereto, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable
detail, fairly presenting the financial position and the results of
operations of Parent and its consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be
18
examined in accordance with generally accepted auditing standards by and
accompanied by a report thereon unqualified in any respect of independent
certified public accountants selected by Parent and reasonably satisfactory
to the Agent. Parent and the Borrowers hereby authorize the Agent to
communicate directly with their certified public accountants with the
approval of, or in the presence of, a Responsible Officer of Parent, and, by
this provision, authorize those accountants to disclose to the Agent with
the approval of, or in the presence of, a Responsible Officer of Parent, any
and all financial statements and other supporting financial documents and
schedules relating to Parent and its Subsidiaries and to discuss directly
with the Agent with the approval of, or in the presence of, a Responsible
Officer of Parent, the finances and affairs of Parent and its Subsidiaries.
(b) As soon as available, but in any event not later
than 30 days after the end of each month, consolidated and consolidating (by
business segment) unaudited balance sheets of Parent and its consolidated
Subsidiaries as at the end of such month, and consolidated and consolidating
(by business segment) unaudited income statements and cash flow statements
for Parent and its consolidated Subsidiaries for such month and for the
period from the beginning of the Fiscal Year to the end of such month, all
in reasonable detail, fairly presenting the financial position and results
of operations of Parent and its consolidated Subsidiaries as at the date
thereof and for such periods, and, in each case, in comparable form, figures
for the corresponding period in the prior Fiscal Year and (if such month is
the last month in a fiscal quarter) in the forecast of Parent and its
Subsidiaries delivered pursuant to Section 5.2(c), and prepared (except for
--------------
consolidating statements) in accordance with GAAP applied consistently with
the audited Financial Statements required to be delivered pursuant to
Section 5.2(a). Parent shall certify by a certificate signed by a
--------------
Responsible Officer that all such statements have been prepared (except for
consolidating statements) in accordance with GAAP and present fairly the
financial position of Parent and its Subsidiaries as at the dates thereof
and its results of operations for the periods then ended, subject to the
absence of notes and normal year-end adjustments.
(c) With each of the audited Financial Statements
delivered pursuant to Section 5.2(a), a certificate of the independent
--------------
certified public accountants that examined such statement to the effect that
they have reviewed and are familiar with this Agreement and that, in
examining such Financial Statements, they did not become aware of any fact
or condition which then constituted a Default or Event of Default with
respect to a financial covenant, except for those, if any, described in
reasonable detail in such certificate.
(d) With each of the annual audited Financial Statements
delivered pursuant to Section 5.2(a), and within 30 days after the end of
--------------
each month, a certificate of a Responsible Officer of Parent setting forth
in reasonable detail the calculations required to establish that Parent and
its Subsidiaries were in compliance with the covenants set forth in Sections
--------
7.22 through 7.23 during the period covered (excluding the comparable prior
---- ----
period) in such Financial Statements and as at the end thereof. Within 30
days after the end of each month, a certificate of a Responsible Officer of
Parent stating that, except as explained in reasonable detail in such
certificate, (A) all of the representations and warranties of the Loan
Parties contained in this Agreement and the other Loan Documents are correct
and complete in all material respects as at the date of such certificate as
if made at such time, except for those that speak as of a particular date,
(B) the Loan Parties are, at the date of such certificate, in compliance in
all material
19
respects with all of their respective covenants and agreements in this
Agreement and the other Loan Documents, (C) no Default or Event of Default
then exists or existed during the period covered by the Financial Statements
for such month, (D) describing and analyzing in reasonable detail all
material trends, changes, and developments in each and all Financial
Statements; and (E) explaining the variances of the figures in the
corresponding budgets and prior Fiscal Year financial statements, which
explanations, descriptions, and analysis to be given pursuant to Sections
--------
5.2(d)(D) or (E) shall be in form and substance similar to the discussion
--------- ---
appearing in the "Management's Discussion and Analysis of Financial
Condition and Results of Operation" sections of either Parent's Annual
Report on Form 10-K or Parent's Quarterly Report on Form 10-Q. If any such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default
or Event of Default existed or exists, such certificate shall set forth what
action the Loan Parties have taken or propose to take with respect thereto.
(e) No sooner than 60 days and not less than 15 days
prior to the beginning of each Fiscal Year, annual forecasts (to include
forecasted consolidated and consolidating (by business segment) balance
sheets, income statements and cash flow statements) for Parent and its
Subsidiaries as at the end of and for each month of such Fiscal Year.
(f) Promptly after filing with the PBGC and the IRS,
a copy of each annual report or other filing filed with respect to each Plan
of Parent and any of its Subsidiaries.
(g) Promptly upon the filing thereof, copies of all
reports, if any, to or other documents filed by Parent or any of its
Subsidiaries with the Securities and Exchange Commission under the Exchange
Act, and all reports, notices, or statements sent or received by Parent or
any of its Subsidiaries to or from the holders of any equity interests of
Parent (other than routine non-material correspondence sent by shareholders
of Parent to Parent) or any such Subsidiary or of any Debt of Parent or any
of its Subsidiaries registered under the Securities Act of 1933 or to or
from the trustee under any indenture under which the same is issued.
(h) As soon as available, but in any event not later
than 15 days after any Loan Party's receipt thereof, a copy of all
management reports and management letters prepared for such Loan Party by
any independent certified public accountants.
(i) Promptly after their preparation, copies of any
and all proxy statements, financial statements, and reports which Parent
makes available to its shareholders.
(j) If requested by the Agent and subject to the
confidentiality provisions of Section 14.17, promptly after filing with the
-------------
IRS, a copy of each tax return filed by Parent or by any of its
Subsidiaries.
(k) As soon as available, but in any event within
20 days after the end of each fiscal month (for such fiscal month) a
Borrowing Base Certificate, and supporting information in accordance with
Section 9 of the Security Agreement; provided, however, that after
-------- -------
Availability has dropped below (i) $15,000,000 at any time, or (ii)
$20,000,000 for 5 consecutive Business Days, the Borrowing Base Certificate
shall be delivered by Wednesday of each week, respecting the prior week.
20
(l) Such additional information as the Agent and/or
any Lender may from time to time reasonably request regarding the financial
and business affairs of Parent or any Subsidiary thereof.
5.3 Notices to the Lenders. Parent or the Borrowers shall notify
----------------------
the Agent and the Lenders in writing of the following matters at the following
times:
(a) Immediately after becoming aware of any Default or
Event of Default;
(b) Immediately after becoming aware of the assertion
by the holder of any capital stock of Parent or of any of its Subsidiaries
or the holder of any Debt of Parent or any such Subsidiary in a face amount
in excess of $1,000,000 that a default exists with respect thereto or that
Parent or such Subsidiary is not in compliance with the terms thereof, or
the threat or commencement by such holder of any enforcement action because
of such asserted default or non-compliance;
(c) Immediately after becoming aware of any event or
circumstance which could reasonably be expected to have a Material Adverse
Effect;
(d) Immediately after becoming aware of any pending
or threatened action, suit, or proceeding, by any Person, or any pending or
threatened investigation by a Governmental Authority, which could reasonably
be expected to have a Material Adverse Effect;
(e) Immediately after becoming aware of any pending
or threatened strike, work stoppage, unfair labor practice claim, or other
labor dispute affecting Parent or any of its Subsidiaries in a manner which
could reasonably be expected to have a Material Adverse Effect;
(f) Immediately after becoming aware of any violation
of any law, statute, regulation, or ordinance of a Governmental Authority
affecting Parent or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect;
(g) Immediately after receipt of any notice of any
violation by Parent or any of its Subsidiaries of any Environmental Law
which could reasonably be expected to have a Material Adverse Effect or that
any Governmental Authority has asserted in writing that Parent or any of its
Subsidiaries is not in compliance with any Environmental Law or is
investigating Parent's or such Subsidiary's compliance therewith where such
noncompliance, or the regulatory response thereto, could reasonably be
expected to have a Material Adverse Effect;
(h) Immediately after receipt of any written notice
that Parent or any of its Subsidiaries is or may be liable to any Person as
a result of the Release or threatened Release of any Contaminant or that
Parent or any of its Subsidiaries is subject to investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Contaminant which, in
either case, is reasonably likely to give rise to liability in excess of
$500,000;
(i) Immediately after receipt of any written notice
of the imposition of any Environmental Lien against any property of Parent
or any of its Subsidiaries;
21
(j) (1) At least 10 Business Days prior written notice
of any change in any Loan Party's name as it appears in the state of its
incorporation or other organization, state of incorporation or organization,
type of entity, organizational identification number, or form of
organization, trade names under which it will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made
payable, and (2) concurrently, any change in locations of Collateral;
(k) Within 10 Business Days after Parent or any of
its ERISA Affiliates knows or has reason to know, that an ERISA Event or a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code (and which could reasonably be expected to result in liability of one
or more Loan Parties in excess of $500,000)) has occurred, and, when known,
any action taken or threatened by the IRS, the DOL or the PBGC with respect
thereto;
(l) Upon request, or, in the event that such filing
reflects a significant change with respect to the matters covered thereby,
within 3 Business Days after the filing thereof with the PBGC, the DOL or
the IRS, as applicable, copies of the following: (i) each annual report
(form 5500 series), including Schedule B thereto, filed with the PBGC, the
DOL or the IRS with respect to each Plan, (ii) a copy of each funding waiver
request filed with the PBGC, the DOL or the IRS with respect to any Plan and
all communications received by Parent, any of its Subsidiaries, or any of
their ERISA Affiliates from the PBGC, the DOL or the IRS with respect to
such request, and (iii) a copy of each other filing or notice filed with the
PBGC, the DOL or the IRS, with respect to each Plan by either Parent, any of
its Subsidiaries, or any of their ERISA Affiliates;
(m) Upon request, copies of each actuarial report
for any Plan or Multi-employer Plan and annual report for any Multi-employer
Plan; and within 3 Business Days after receipt thereof by Parent, any of its
Subsidiaries, or any of their ERISA Affiliates, copies of the following: (i)
any notices of the PBGC's intention to terminate a Plan or to have a trustee
appointed to administer such Plan; (ii) any favorable or unfavorable
determination letter from the IRS regarding the qualification of a Plan
under Section 401(a) of the Code; or (iii) any notice from a Multi-employer
Plan regarding the imposition of withdrawal liability;
(n) Within 3 Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which increase
the annual costs of Parent and its Subsidiaries with respect thereto by an
amount in excess of $500,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which Parent, any of its
Subsidiaries, or any of their ERISA Affiliates was not previously
contributing; or (ii) any failure by Parent, any of its Subsidiaries, or any
of their ERISA Affiliates to make a required installment or any other
required payment under Section 412 of the Code on or before the due date for
such installment or payment; or
(o) Within 3 Business Days after Parent, any of its
Subsidiaries, or any of their ERISA Affiliates knows or has reason to know
that any of the following events has or will occur: (i) a Multi-employer
Plan has been or will be terminated; (ii) the administrator or plan sponsor
of a Multi-employer Plan intends to terminate a Multi-employer Plan; or
(iii) the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multi-employer Plan.
22
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth the action
that such Parent, its Subsidiaries, or any of their ERISA Affiliates, as
applicable, has taken or proposes to take with respect thereto.
ARTICLE 6
---------
GENERAL WARRANTIES AND REPRESENTATIONS
--------------------------------------
Parent and each Borrower warrants and represents to the Agent and
the Lenders that except as hereafter disclosed to and accepted by the Agent
and the Required Lenders in writing:
6.1 Authorization, Validity, and Enforceability of this Agreement
-------------------------------------------------------------
and the Loan Documents. Each Loan Party has the power and authority to
----------------------
execute, deliver and perform this Agreement and the other Loan Documents to
which it is a party, to incur the Obligations, and to grant to the Agent
Liens upon and security interests in its Collateral. Each Loan Party has
taken all necessary action (including obtaining approval of its stockholders
if necessary) to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party. This
Agreement and the other Loan Documents to which it is a party have been duly
executed and delivered by each Loan Party that is a party thereto, and
constitute the legal, valid and binding obligations of such Loan Party,
enforceable against it in accordance with their respective terms. Each Loan
Party's execution, delivery, and performance of this Agreement and the other
Loan Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or result in the imposition of any Lien
upon the property of Parent or any of its Subsidiaries, by reason of the
terms of (a) any contract, mortgage, lease, agreement, indenture, or
instrument to which Parent or any of its Subsidiaries is a party or which is
binding upon it, (b) any Requirement of Law applicable to Parent or any of
its Subsidiaries, or (c) the certificate or articles of incorporation or
by-laws or the limited liability company or limited partnership agreement
(or other organizational documents) of Parent or any of its Subsidiaries.
6.2 Validity and Priority of Security Interest. The provisions
------------------------------------------
of this Agreement, and the other Loan Documents create legal and valid Liens
on all the personal property Collateral in favor of the Agent, for the
ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the personal property Collateral (to
the extent perfection is required as of the Initial Funding Date by the
Security Agreement), having priority over all other Liens on the personal
property Collateral, except for Permitted Liens, securing all the
Obligations, and enforceable against the Loan Parties and all third parties.
6.3 Organization and Qualification; Subsidiaries and Affiliates.
-----------------------------------------------------------
Schedule 6.3 is a correct and complete list of the name and relationship to
------------
Parent of all its Subsidiaries and other Affiliates. Parent and each such
Subsidiary (a) is duly organized or incorporated and validly existing in
good standing under the laws of the state of its organization or
incorporation set forth on Schedule 6.3, (b) is qualified to do business and
------------
is in good standing in the jurisdictions set forth on Schedule 6.3 which are
------------
the only jurisdictions in which qualification is necessary in order for it
to own or lease its property and conduct its business and (c) has all
requisite power and authority to conduct its business and to own its
property.
23
6.4 Corporate Name; Prior Transactions. Except as set forth on
----------------------------------
Schedule 6.4, no Loan Party has, during the past 5 years, been known by or
------------
used any other corporate or fictitious name, or been a party to any merger
or consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property outside of the ordinary course of
business.
6.5 [Intentionally deleted]
6.6 Financial Statements and Projections.
------------------------------------
(a) Parent has delivered to the Agent and the Lenders
the audited balance sheet and related statements of income, retained
earnings, cash flows, and changes in stockholders equity for Parent and its
consolidated Subsidiaries as of December 28, 2001, and for the Fiscal Year
then ended, accompanied by the report thereon of such Borrower's independent
certified public accountants, Ernst & Young. Parent has also delivered to
the Agent and the Lenders the unaudited balance sheet and related statements
of income and cash flows for Parent and its consolidated Subsidiaries as of
May 25, 2002. Such financial statements are attached hereto as Exhibit C.
---------
All such financial statements have been prepared in accordance with GAAP and
present accurately and fairly in all material respects the financial
position of Parent and its consolidated Subsidiaries as at the dates thereof
and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the
Lenders as required herein represent Parent's good faith and reasonable
estimate of the future financial performance of Parent and its consolidated
Subsidiaries for the periods set forth therein. The Latest Projections have
been prepared on the basis of the assumptions set forth therein, which
Parent believes are fair and reasonable, in light of current and reasonably
foreseeable business conditions, at the time submitted to the Lenders.
6.7 Capitalization. Schedule 6.7 sets forth, as of the Closing
-------------- ------------
Date, the capitalization of Parent and its Subsidiaries and all of the
authorized and issued Capital Stock of each such Person. All outstanding
Capital Stock has been validly issued, and is fully paid and non-assessable.
All of the Capital Stock of Parent's Subsidiaries is owned, beneficially and
of record, by the Person set forth on such Schedule 6.7.
------------
6.8 Solvency. Parent and each of its Subsidiaries is Solvent
--------
prior to and after giving effect to the Borrowings to be made on the Initial
Funding Date and the issuance of the Letters of Credit to be issued on the
Closing Date, and shall remain Solvent during the term of this Agreement.
6.9 Debt. After giving effect to the making of the Revolving
----
Loans to be made on the Initial Funding Date, neither Parent nor any of its
Subsidiaries has any Debt, except (a) the Obligations, and (b) Debt
described on Schedule 6.9. Schedule 6.9 sets forth all "Indebtedness" (as
------------ ------------
that term is defined in the Senior Unsecured Note Indenture) existing as of
the Initial Funding Date. No "Indebtedness" (as that term is used under the
Senior Subordinated Note Indenture or under the Senior Unsecured Note
Indenture) other than the Obligations hereunder has been incurred as of the
Initial Funding Date pursuant to Section 4.09 (b)(i) of either of such
Indentures. As of the Initial Funding Date, there have been no "Net
Proceeds" from any "Asset
24
Sales" (as such terms are defined in the Senior Unsecured Note Indenture)
that have been applied under clause (b) of the second paragraph of Section
4.07 of the Senior Unsecured Note Indenture.
6.10 Distributions. Since December 31, 2001, no Distribution has
-------------
been declared, paid, or made upon or in respect of any Capital Stock or other
securities of Parent or, other than as would be permitted by Section 7.10,
------------
any of its Subsidiaries.
6.11 Real Estate; Leases. Schedule 6.11 sets forth, as of the
------------------- -------------
Closing Date, a correct and complete list of all Real Estate owned by Parent
and all Real Estate owned by each of its Subsidiaries, all leases and
subleases of real or personal property held by Parent or any of its
Subsidiaries as lessee or sublessee (other than leases of personal property
as to which Parent or any of its Subsidiaries is lessee or sublessee for
which the aggregate value of such personal property covered by such lease is
less than $500,000), and all leases and subleases of real or personal
property held by Parent or any of its Subsidiaries as lessor, or sublessor.
Each of such leases and subleases is valid and enforceable in accordance
with its terms and is in full force and effect, and no default by any party
to any such lease or sublease exists. Parent and its Subsidiaries have good
and marketable title in fee simple to the Real Estate identified on
Schedule 6.11 as owned by such Person, or valid leasehold interests in all
-------------
Real Estate designated therein as "leased" by such Person and Parent and its
Subsidiaries have good, indefeasible, and merchantable title to all of its
other real property reflected on the May 25, 2002 Financial Statements
delivered to the Agent and the Lenders, except as disposed of in the
ordinary course of business since the date thereof, free of all Liens except
Permitted Liens.
6.12 Proprietary Rights. Schedule 6.12 sets forth a correct and
------------------ -------------
complete list of all of the material Proprietary Rights (other than trade
secrets) now owned by or licensed to Parent or any of its Subsidiaries. None
of the Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 6.12. To the best knowledge of
-------------
Parent and the Borrowers, none of the Proprietary Rights infringes on or
conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The Proprietary
Rights described on Schedule 6.12 constitute all of the property of such
-------------
type necessary to the current and anticipated future conduct of the business
of Parent and its Subsidiaries.
6.13 Trade Names. All trade names or styles under which Parent
-----------
or any of its Subsidiaries will sell Inventory or create Accounts, or to
which instruments in payment of Accounts may be made payable, are listed on
Schedule 6.13.
-------------
6.14 Litigation. Except as set forth on Schedule 6.14, there
---------- -------------
is no pending, or to the best knowledge of Parent and the Borrowers
threatened, action, suit, proceeding, or counterclaim by any Person, or to
the best knowledge of Parent and the Borrowers, investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to have a Material Adverse Effect. Schedule 6.14
-------------
designates any of the foregoing with respect to which the potential
liability exceeds $1,000,000.
6.15 Labor Disputes. Except as set forth on Schedule 6.15, as of
-------------- -------------
the Closing Date (a) there is no collective bargaining agreement or other
labor contract covering employees of
25
Parent or any of its Subsidiaries, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of
this Agreement, (c) to the best knowledge of Parent or Borrowers, no union
or other labor organization is seeking to organize, or to be recognized as,
a collective bargaining unit of employees of Parent or any of its
Subsidiaries or for any similar purpose, and (d) there is no pending or (to
the best knowledge of Parent and the Borrowers) threatened, strike, work
stoppage, material unfair labor practice claim, or other material labor
dispute against or affecting Parent or any of its Subsidiaries or their
employees.
6.16 Environmental Laws. Except as otherwise disclosed
------------------
on Schedule 6.16:
-------------
(a) Parent and its Subsidiaries have complied in all
material respects with all Environmental Laws and neither Parent nor any of
its Subsidiaries, nor any of their presently owned real property or
presently conducted operations, nor to their knowledge any of their
previously owned real property or prior operations, is subject to any
enforcement order from or liability agreement with any Governmental
Authority or private Person respecting (i) compliance with any Environmental
Law or (ii) any potential liabilities and costs or remedial action arising
from the Release or threatened Release of a Contaminant.
(b) Parent and its Subsidiaries have obtained all
permits necessary for their current operations under Environmental Laws, and
all such permits are in good standing and Parent and its Subsidiaries are in
compliance with all material terms and conditions of such permits.
(c) Neither Parent nor any of its Subsidiaries, nor,
to the best knowledge of Parent and the Borrowers, any of its predecessors
in interest, has in violation of applicable law stored, treated or disposed
of any hazardous waste.
(d) Neither Parent nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice indicating
that it is not currently in compliance with, or that any Governmental
Authority is investigating its compliance with, any Environmental Laws or
that it is or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(e) To the best knowledge of Parent and the Borrowers,
none of the present or past operations of Parent or its Subsidiaries is the
subject of any investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to a Release or threatened
Release of a Contaminant.
(f) There is not now, nor to the best knowledge of
Parent and the Borrowers has there ever been, on or in the Real Estate:
(1) any underground storage tanks or surface
impoundments,
(2) any asbestos-containing material, or
(3) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other equipment.
26
(g) Neither Parent nor any of its Subsidiaries has
filed any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted Release or discharge of a Contaminant
into the environment.
(h) Neither Parent nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property) imposing material obligations or
liabilities on Parent or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) None of the products manufactured, distributed
or sold by Parent or any of its Subsidiaries contains asbestos containing
material.
(j) No Environmental Lien has attached to the Real
Estate.
6.17 No Violation of Law. Neither Parent nor any of its
-------------------
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably
be expected to have a Material Adverse Effect.
6.18 No Default. Neither Parent nor any of its Subsidiaries is
----------
in default with respect to any note, indenture, loan agreement, mortgage,
lease, deed, or other agreement to which Parent or any of its Subsidiaries
is a party or by which it is bound, which default could reasonably be
expected to have a Material Adverse Effect, and except as set forth in
Schedule 6.18, no Loan Party has received notification of any default under
-------------
any such agreement.
6.19 ERISA Compliance. Except as specifically disclosed in
----------------
Schedule 6.19:
-------------
(a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal
or state law. Each Plan which is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS and to
the best knowledge of Parent and the Borrowers, nothing has occurred which
would cause the loss of such qualification. Parent, each of its Subsidiaries
and each of their ERISA Affiliates has made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge
of such Borrower, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has
been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither Parent, nor any of its Subsidiaries, nor any of their ERISA
Affiliates has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due
and not delinquent under Section 4007 of ERISA); (iv) neither Parent, nor
any of its Subsidiaries, nor any of their ERISA Affiliates has incurred, or
reasonably expects to incur, any liability (and no
27
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multi-employer Plan; and (v) neither Parent, nor any of
their Subsidiaries, nor any of their ERISA Affiliates has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
6.20 Taxes. Parent and its Subsidiaries have filed all federal
-----
and other tax returns and reports required to be filed, and have paid all
federal and other taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise
due and payable unless such unpaid taxes and assessments would constitute a
Permitted Lien.
6.21 Regulated Entities. Neither Parent, nor any Person
------------------
controlling Parent, nor any Subsidiary of Parent, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. Neither Parent nor
any Subsidiary of Parent is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, any state public utilities code or law, or any other federal or state
statute or regulation limiting its ability to incur indebtedness.
6.22 Use of Proceeds; Margin Regulations. The proceeds of the
-----------------------------------
Loans are to be used by the Borrowers solely for the repayment of Debt and
other working capital purposes. Neither Parent, such Borrower nor any
Subsidiaries has purchased or sold or extended credit for the purpose of
purchasing, selling or carrying Margin Stock.
6.23 Copyrights, Patents, Trademarks and Licenses, etc. Parent
-------------------------------------------------
and each of its Subsidiaries owns or is licensed or otherwise has the right
to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, licenses, rights of way, authorizations
and other rights that are reasonably necessary for the operation of its
businesses, without conflict with the rights of any other Person. To the
best knowledge of Parent and the Borrowers, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Parent nor any of its
Subsidiaries infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of Parent and
the Borrowers, proposed, which, in either case, could reasonably be expected
to have a Material Adverse Effect.
6.24 No Material Adverse Effect. No Material Adverse Effect has
--------------------------
occurred since the latest date of the Financial Statements delivered to the
Lenders.
6.25 Full Disclosure. None of the representations or warranties
---------------
made by Parent or any Subsidiary of Parent in the Loan Documents as of the
date such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of Parent or any Subsidiary of Parent in
connection with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of Parent or any of its Subsidiaries to
the Lenders prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary
28
to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.
6.26 Material Agreements. Schedule 6.26 sets forth as of the
------------------- -------------
Closing Date all material agreements and contracts to which Parent or any of
the Borrowers is a party or is bound, which are material to the business of
Parent or any of Parent's primary operating divisions (i.e. print or
----
envelopes), taken as a whole.
6.27 Bank Accounts. Schedule 6.27 contains as of the Closing
------------- -------------
Date a complete and accurate list of all bank accounts maintained by Parent
or any of the other Loan Parties with any bank or other financial
institution.
6.28 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, Parent or any of its Subsidiaries of this Agreement or any other
Loan Document, except for customary filings and recordations to protect the
Agent's Lien such as the filing of financing statements and the recording of
the Intellectual Property Security Agreement at the U.S. Patent and
Trademark Office and the U.S. Copyright Office.
6.29 Senior Debt. All Obligations of Parent and the Borrowers
-----------
under the Loan Documents are "Senior Debt" under the Convertible Note
Indenture and the Senior Subordinated Note Indenture.
ARTICLE 7
---------
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Parent and each Borrower covenants to the Agent and each Lender
that so long as any of the Obligations remain outstanding or this Agreement
is in effect:
7.1 Taxes and Other Obligations. Parent shall, and shall cause
---------------------------
each of its Subsidiaries to, (a) file when due all tax returns and other
reports which it is required to file; (b) pay, or provide for the payment,
when due, of all taxes, fees, assessments and other governmental charges
against it or upon its property, income and franchises, make all required
withholding and other tax deposits, and establish adequate reserves for the
payment of all such items, and provide to the Agent and the Lenders, upon
request, satisfactory evidence of its timely compliance with the foregoing;
(c) pay when due all Debt owed by it; and (d) pay when due all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and
other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it;
provided, however, neither Parent nor any of its Subsidiaries need pay any
-------- -------
tax, fee, assessment, or governmental charge under clause (b) above, or pay
----------
any claim or indebtedness under clause (d) above (i) that it is contesting
----------
in good faith by appropriate proceedings diligently pursued, (ii) for which
Parent or such Subsidiary, as the case may be, has established proper
reserves as required under GAAP, (iii) the nonpayment of which does not
result in the imposition of a Lien (other than a Permitted Lien), and (iv)
with respect to any such taxes, fees, assessments, charges, claims, or
indebtedness in an amount greater than $500,000, so long as Parent has
notified the Agent thereof in writing.
29
7.2 Legal Existence and Good Standing. Parent shall, and shall
---------------------------------
cause each of its Subsidiaries to, maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably
be expected to have a Material Adverse Effect.
7.3 Compliance with Law and Agreements; Maintenance of Licenses.
-----------------------------------------------------------
Parent shall comply, and shall cause each of its Subsidiaries to comply, in
all material respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws). Parent shall, and
shall cause each of its Subsidiaries to, obtain and maintain all licenses,
permits, franchises, and governmental authorizations necessary to own its
property and to conduct its business as conducted on the Closing Date.
Parent shall not, nor shall any of its Subsidiaries, modify, amend or alter
its certificate or articles of incorporation, or its limited liability
company operating agreement or limited partnership agreement, as applicable,
other than in a manner which does not adversely affect the rights of the
Lenders or the Agent.
7.4 Maintenance of Property; Inspection of Property.
-----------------------------------------------
(a) Parent shall, and shall cause each of its
Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary
wear and tear excepted.
(b) Parent and Borrowers shall permit, and shall
cause each of the Loan Parties to permit, representatives and independent
contractors of the Agent (at the expense of Borrowers, not to exceed four
(4) times per year unless an Event of Default has occurred and is
continuing), accompanied by any Lender which so elects (with the consent of
the Agent, but at the sole cost of such Lender) to visit and inspect any of
its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom and to discuss its affairs,
finances and accounts with its directors, officers and independent public
accountants, at such reasonable times during normal business hours and as
soon as may be reasonably desired, upon reasonable advance notice; provided,
--------
however, when an Event of Default exists, the Agent or any Lender may do any
-------
of the foregoing, at the expense of Borrowers (with respect to the Agent),
at any time during normal business hours and without advance notice.
7.5 Insurance.
---------
(a) Parent shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers
having a rating of at least A+ or better by Best Rating Guide (except as
specifically provided on Schedule 7.5), insurance against loss or damage by
------------
fire with extended coverage; theft, burglary, pilferage and loss in transit;
public liability and third party property damage; larceny, embezzlement or
other criminal liability; business interruption at the locations set forth
on Schedule 7.5; public liability and third party property damage; and such
------------
other hazards or of such other types as is customary for Persons engaged in
the same or similar business, as the Agent, in its discretion, or acting at
the direction of the Required Lenders, shall specify, in amounts, and under
policies acceptable to the Agent and the Required Lenders. Without limiting
the foregoing, in the event that any improved Real Estate covered by the
Mortgages is determined to be located within an area that has been
identified by the Director
30
of the Federal Emergency Management Agency as a Special Flood Hazard Area
("SFHA"), the applicable Loan Party shall purchase and maintain flood
insurance on the improved Real Estate and any Equipment and Inventory
located on such Real Estate. The amount of said flood insurance will be
reasonably determined by the Agent, and shall, at a minimum, comply with
applicable federal regulations as required by the Flood Disaster Protection
Act of 1973, as amended. Except as set forth on Schedule 7.5, each Loan
------------
Party shall also maintain flood insurance for its Inventory and Equipment
which is, at any time, located in a SFHA. Agent and Lenders acknowledge that
the insurance and insurers of Parent and its Subsidiaries disclosed to Agent
and Lenders as of the Initial Funding Date are acceptable to Agent and the
Lenders.
(b) Parent shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party or
mortgagee and sole loss payee or additional insured, in a manner acceptable
to the Agent. Each policy of insurance shall contain a clause or endorsement
requiring the insurer to give not less than 30 days' prior written notice to
the Agent in the event of cancellation of the policy for any reason
whatsoever and a clause or endorsement stating that the interest of the
Agent shall not be impaired or invalidated by any act or neglect of Parent
or any of its Subsidiaries or the owner of any Real Estate for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by Parent and its Subsidiaries when due, and certificates of
insurance and, if requested by the Agent or any Lender, photocopies of the
policies, shall be delivered to the Agent, in each case in sufficient
quantity for distribution by the Agent to each of the Lenders. If Parent and
its Subsidiaries fail to procure such insurance or to pay the premiums
therefor when due, the Agent may, and at the direction of the Required
Lenders shall, do so from the proceeds of Revolving Loans.
7.6 Insurance and Condemnation Proceeds. Borrowers shall
-----------------------------------
promptly notify the Agent and the Lenders of any loss, damage, or
destruction to the Collateral in excess of $25,000 per occurrence, whether
or not covered by insurance. The Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral directly and to
apply or remit them as follows:
(a) With respect to insurance and condemnation proceeds
relating to Collateral other than Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds,
ratably, to the reduction of the Obligations in the order provided for in
Section 3.8.
-----------
(b) With respect to insurance and condemnation proceeds
relating to Collateral consisting of Fixed Assets, the Agent shall permit or
require Borrowers to use such proceeds, or any part thereof, to replace,
repair, restore or rebuild the relevant Fixed Assets in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction so long as (1) no
Default or Event of Default has occurred and is continuing, (2) the
aggregate proceeds do not exceed $10,000,000 and (3) Borrowers first (i)
provide the Agent and the Required Lenders with plans and specifications for
any such repair or restoration which shall be reasonably satisfactory to the
Agent and the Required Lenders and (ii) demonstrate to the reasonable
satisfaction of the Agent and the Required Lenders that the funds available
will be sufficient to complete such project in the manner provided therein.
In all other circumstances, the Agent shall apply such insurance
31
and condemnation proceeds, ratably, to the reduction of the Obligations in
the order provided for in Sections 3.3 and 3.8.
------------ ---
7.7 Environmental Laws.
------------------
(a) Parent shall, and shall cause each of its
Subsidiaries to, conduct its business in compliance with all Environmental
Laws applicable to it, including those relating to the generation, handling,
use, storage, and disposal of any Contaminant. Parent shall, and shall cause
each of its Subsidiaries to, take prompt and appropriate action to respond
to any non-compliance with Environmental Laws and shall regularly report to
the Agent on such response.
(b) Without limiting the generality of the foregoing,
Parent shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, an update
of the status of its environmental permits, disposal practices,
environmental investigations and any asserted violations of Environmental
Laws. The Agent or any Lender may request copies of technical reports
prepared by Parent or any of its Subsidiaries and their communications with
any Governmental Authority to determine whether Parent or any of its
Subsidiaries is proceeding reasonably to correct, cure or contest in good
faith any alleged non-compliance or environmental liability. Where a
material amount of Collateral is or may be involved, Parent shall, at the
Agent's or the Required Lenders' request and at Borrowers' expense, (i)
retain an independent environmental engineer acceptable to the Agent to
evaluate the site, including tests if appropriate, where the non-compliance
or alleged non-compliance with Environmental Laws has occurred and prepare
and deliver to the Agent, in sufficient quantity for distribution by the
Agent to the Lenders, a report setting forth the results of such evaluation,
a proposed plan for responding to any environmental problems described
therein, and an estimate of the costs thereof, and (ii) provide to the Agent
and the Lenders a supplemental report of such engineer whenever the scope of
the environmental problems, or the response thereto or the estimated costs
thereof, shall increase in any material respect.
(c) The Agent or any Lender and their respective
representatives will have the right at any reasonable time to enter and
visit the Real Estate subject to a Mortgage for the purposes of observing
such Real Estate, taking and removing soil or groundwater samples, and
conducting tests on any part of such Real Estate. The Agent is under no
duty, however, to visit or observe any Real Estate or to conduct tests, and
any such acts by the Agent will be solely for the purposes of protecting the
Agent's Liens and preserving the Agent and the Lenders' rights under the
Loan Documents. No site visit, observation or testing by the Agent and the
Lenders will result in a waiver of any default or impose any liability on
the Agent or the Lenders. In no event will any site visit, observation or
testing by the Agent or any Lender be a representation that hazardous
substances are or are not present in, on or under the Real Estate, or that
there has been or will be compliance with any Environmental Law. Neither
Parent nor any of its Subsidiaries, nor any other party is entitled to rely
on any site visit, observation or testing by the Agent or any Lender. The
Agent and the Lenders owe no duty of care to protect Parent, or any of its
Subsidiaries, or any other party against, or to inform Parent, or any of its
Subsidiaries, or any other party of, any hazardous substances or any other
adverse condition affecting the Real Estate. The Agent or any Lender may in
its discretion disclose to Parent, or any of its Subsidiaries, or to any
other party if so required by law any report or findings made as a result
of, or in connection with, any site visit, observation or testing by the
Agent or any Lender.
32
Parent and Borrowers understand and agree that neither the Agent nor any
Lender makes any warranty or representation to Parent and Borrowers or any
other party regarding the truth, accuracy or completeness of any such report
or findings that may be disclosed. Parent and Borrowers also understand that
depending on the results of any site visit, observation or testing by the
Agent or any Lender and disclosed to Parent, Parent or one or more of its
Subsidiaries may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are site-specific,
and are to be evaluated by Parent or its Subsidiaries without advice or
assistance from the Agent or any Lender. In each instance, the Agent or such
Lender will give Parent reasonable notice before entering the Real Estate or
any other place the Agent or any Lender is permitted to enter under this
Section 7.7(c). The Agent and any such Lender will make reasonable efforts
--------------
to avoid interfering with such use of the Real Estate or any other property
in exercising any rights provided hereunder. All costs and expenses of any
Lender, other than Agent and its representatives, under this Section 7.7(c)
--------------
shall be the sole expense of such Lender.
7.8 Compliance with ERISA. Parent shall, and shall cause each
---------------------
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) make all
required contributions to any Plan subject to Section 412 of the Code;
(d) not engage in a prohibited transaction that could reasonably be expected
to have a Material Adverse Effect or any violation of the fiduciary
responsibility rules with respect to any Plan; and (e) not engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
7.9 Mergers, Consolidations or Sales. Neither Parent nor any
--------------------------------
of its Subsidiaries shall enter into any transaction of merger, reorganization,
or consolidation, or transfer, sell, assign, lease, or otherwise dispose of
all or any part of its property, or wind up, liquidate or dissolve, or agree
to do any of the foregoing, except for:
(a) Permitted Dispositions;
(b) with concurrent notice to Agent, any Subsidiary
of Parent may merge with, or sell all or substantially all of its assets to,
a Borrower, provided, that such Borrower shall be the continuing or
--------
surviving Person, Agent's Liens shall remain unimpaired, and the surviving
Borrower shall enter into any documentation reasonably requested by Agent to
evidence the continuing liability of such Borrower for any obligations of
the disappearing Subsidiary to the Agent and the Lenders, and the Agent's
Liens securing the same;
(c) any Subsidiary of Parent that is not a Loan Party
may merge with, or sell all or substantially all of its assets to, another
Subsidiary of Parent that is a Guarantor, provided, that the Guarantor shall
--------
be the surviving Person and shall enter into any documentation reasonably
requested by Agent to evidence the continuing liability of such Loan Party
for any obligations of the disappearing Subsidiary to the Agent and the
Lenders, and the Agent's Liens securing the same;
(d) any Subsidiary of Parent that is not a Loan Party
may merge with, or sell all or substantially all of its assets to, another
Subsidiary of Parent that is not a Loan Party; and
33
(e) Permitted Acquisitions which are consummated as a
merger or consolidation.
7.10 Distributions; Restricted Investments. Neither Parent nor
-------------------------------------
any of its Subsidiaries shall:
(a) directly or indirectly declare or make, or incur
any liability to make, any Distribution, except for
(i) Distributions to a Borrower by its
Subsidiaries,
(ii) Distributions by any Subsidiary of Parent
that is not a Loan Party;
(iii) Distributions by any Subsidiary of Parent
that is not a Borrower to a Loan Party; and
(iv) Distributions by Mail-Well I to Parent
(y) to pay Parent's operating expenses incurred in the ordinary course of
business and consistent with past practices, and other normal corporate
overhead costs and expenses, including indirect costs of any Permitted
Acquisitions (such as attorneys costs in respect of such Permitted
Acquisitions and salaries of employees of the Parent), which are incurred by
the Parent, and (z) to fund the retirement in full of the Convertible Notes
(taking into account any amounts already held by Parent for such purpose),
provided, that in either case, at the time of making such Distribution, and
--------
taking such Distribution into account, no Default or Event of Default exists
or would result therefrom; or
(b) make any Restricted Investment, except for
(i) so long as no Default or Event of Default
exists, or would result therefrom, capital investments, loans or advances by
a Borrower or another Loan Party to Parent or to any Subsidiaries of Parent
that are not Borrowers, in an aggregate amount not to exceed at any one time
$10,000,000 (net of any investments, distributions, repayments or
outstanding loans or advances to such Borrower or Loan Party, as the case
may be, made simultaneously with or subsequent to the capital investments,
loans or advances by such Borrower or Loan Party, as the case may be, that
are subject to this paragraph (b)(i)).
----------------
(ii) so long as no Default or Event of Default
exists, or would result therefrom, net capital investments, loans or
advances by Parent or a Subsidiary of Parent, to a Borrower;
(iii) net capital investments, loans or advances
by Parent or a Subsidiary of Parent that is not a Borrower to another
Subsidiary of Parent that is not a Borrower;
(iv) Permitted Acquisitions.
7.11 Transactions Affecting Collateral or Obligations. Neither
------------------------------------------------
Parent nor any of its Subsidiaries shall enter into any transaction which
would be reasonably expected to have a Material Adverse Effect.
34
7.12 Guaranties. Neither Parent nor any of its Subsidiaries
----------
shall make, issue, or become liable on any Guaranty, except for:
(a) Guaranties of the Obligations in favor of the
Agent and the Lenders;
(b) unsecured Guaranties in respect of Debt of
Parent or any Subsidiary of Parent that is specifically permitted under
Section 7.13;
------------
(c) Guaranties of operating leases; and
(d) Guaranties of the Parent and any of its Subsidiaries
existing as of the Initial Funding Date and listed in Schedule 7.12.
-------------
7.13 Debt. Neither Parent nor any of its Subsidiaries shall incur
----
or maintain any Debt, except for:
(a) the Obligations;
(b) Debt described on Schedule 6.9;
------------
(c) any Debt evidencing a refunding, renewal or
extension of the Debt described on Schedule 6.9 (including the replacement
------------
of any Debt represented by the KeyBank Lease on the terms substantially as
set forth in the term sheet from Fleet Capital Leasing delivered to the
Agent on or before the Initial Funding Date so long as such replacement
occurs within 60 days of the termination of the KeyBank Lease), provided
--------
that (i) the principal amount thereof is not increased, (ii) the Liens, if
any, securing such refunded, renewed or extended Debt do not attach to any
assets in addition to those assets, if any, securing the Debt to be
refunded, renewed or extended, (iii) no Person that is a Loan Party, but is
not an obligor or guarantor of such Debt, as of the Initial Funding Date
shall become an obligor or guarantor thereof, and (iv) the material terms of
such refunding, renewal or extension are no less favorable to Parent and its
Subsidiaries, the Agent or the Lenders, in the Agent's and Lenders'
reasonable discretion, than the original Debt;
(d) Debt of any Borrower incurred after the Initial
Funding Date and secured by some or all of a Borrower's Real Estate or
Equipment, provided that (i) at the time of incurring such Debt, and taking
--------
such Debt into account, no Default or Event of Default exists or would
result therefrom, and, for purposes of this clause, Parent shall deliver a
certificate, signed by a Responsible Officer of Parent, demonstrating that
Parent will continue to be in compliance with its financial covenants
hereunder on a pro forma basis, taking such additional Debt into account,
(ii) the Liens securing such Debt attach only to such Real Estate or
Equipment, (iii) no other Loan Party shall become an obligor or guarantor of
such new Debt; (iv) the net cash proceeds from the incurrence of any such
Debt secured by Equipment or Real Estate shall be at least 80% of the
orderly liquidation value of any Equipment secured by such Debt, plus 65% of
----
the fair market value of any Eligible Real Estate secured by such Debt, and
such proceeds are delivered to Agent for application to the Revolving Loans
and the reduction of the Maximum PP&E Loan Amount in accordance with
Sections 3.3 and 3.8; and (v) the aggregate amount of any such Debt existing
------------ ---
at any one time does not exceed $20,000,000;
35
(e) Capital Leases of Equipment and purchase money
secured Debt incurred to purchase Equipment or Real Estate provided that
--------
(i) Liens securing such Debt attach only to the Equipment or Real Estate
acquired by the incurrence of such Debt, and (ii) the aggregate outstanding
amount of such Debt (including Capital Leases) does not exceed $15,000,000
at any time;
(f) Debt consisting of Guaranties permitted under
Section 7.12;
------------
(g) Debt of any Borrower owing to another Borrower,
provided that such Debt is evidenced by a promissory note pledged and
--------
delivered to the Agent as Collateral;
(h) Debt of any Borrower owing to Parent or any
Subsidiary of Parent other than another Borrower, provided that such Debt
--------
(if owed to a Loan Party) is evidenced by a promissory note pledged and
delivered to the Agent as Collateral and the obligations of such Borrower
owing to such Person are subordinated to the repayment in full of the
obligations of such Borrower owing to the Agent and the Lenders;
(i) Debt of any Loan Party (other than Parent or a
Borrower) owing to another Loan Party (other than Parent or a Borrower),
provided that such obligations of the Loan Party incurring such Debt are
--------
subordinated to the repayment in full of the obligations of such Loan Party
owing to Agent and the Lenders;
(j) Debt of Parent and other Subsidiaries of Parent
that are not Borrowers, owing to one or more Borrowers or other Loan
Parties, provided that on the date of the advance of the proceeds of such
--------
Debt, such Borrowers or other Loan Parties would be permitted to make a
Restricted Investment in Parent or such Subsidiary pursuant to
Section 7.10(b)(i) and such Debt is evidenced by a promissory note pledged
------------------
to the Agent as Collateral;
(k) unsecured Debt, and Debt secured by Liens permitted
under clause (g) of the definition of "Permitted Liens", existing as a
----------
consequence of a Permitted Acquisition;
(l) additional unsecured Debt incurred after the
Initial Funding Date in an aggregate amount not to exceed $20,000,000,
provided that, at the time of incurring such Debt, and taking such Debt into
--------
account, no Default or Event of Default exists or would result therefrom,
and, for purposes of this clause, Parent shall deliver a certificate, signed
by a Responsible Officer of Parent, demonstrating that Parent will continue
to be in compliance with its financial covenants hereunder on a pro forma
basis, taking such additional Debt into account; and
(m) Debt of Subsidiaries of Parent that are not Loan
Parties owing to other Subsidiaries of Parent that are not Loan Parties.
7.14 Prepayment. Neither Parent nor any of its Subsidiaries shall
----------
voluntarily prepay any Debt, except:
(a) the Obligations in accordance with the terms of
this Agreement; and
36
(b) the prepayment of the Convertible Notes, so long as
no Default or Event of Default exists, or would result therefrom, taking such
prepayment into account.
7.15 Transactions with Affiliates. Except as set forth below
----------------------------
in this Section 7.15, or as explicitly permitted in another Section of this
------------
Credit Agreement, neither Parent nor any Borrower shall, sell, transfer,
distribute, or pay any money or property, including, but not limited to, any
fees or expenses of any nature (including, but not limited to, any fees or
expenses for management services), to any Affiliate, or lend or advance
money or property to any Affiliate, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any
property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate.
Notwithstanding the foregoing, but subject to the limitations set forth in
Sections 7.9, 7.10, 7.12, 7.13, or 7.18 while no Default or Event of Default
------------ ---- ---- ---- ----
has occurred and is continuing, Parent and Borrowers may engage in their
ordinary course cash management transactions among themselves and with
Affiliates notwithstanding the failure to charge interest in connection with
such transactions, and Parent and Borrowers may engage in transactions with
Affiliates in the ordinary course of business, consistent with past
practices, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less favorable to Parent and Borrowers than would be
obtained in a comparable arm's-length transaction with a third party who is
not an Affiliate.
7.16 Investment Banking and Finder's Fees. Neither Parent nor
------------------------------------
any of its Subsidiaries shall pay or agree to pay, or reimburse any other
party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. Parent and Borrowers shall defend and indemnify the
Agent and the Lenders against and hold them harmless from all claims of any
Person that any Loan Party is obligated to pay for any such fees, and all
costs and expenses (including attorneys' fees) incurred by the Agent and/or
any Lender in connection therewith.
7.17 Business Conducted. Parent shall not and shall not permit
------------------
any of its Subsidiaries to, engage directly or indirectly, in any line of
business other than the businesses in which it is engaged on the Closing
Date, or any substantially similar or ancillary line of business.
7.18 Liens. Neither Parent nor any of its Subsidiaries shall
-----
create, incur, assume, or permit to exist any Lien on any property now owned
or hereafter acquired by any of them, except Permitted Liens.
7.19 Sale and Leaseback Transactions. Neither Parent nor any of its
-------------------------------
Subsidiaries shall, directly or indirectly, enter into any arrangement with
any Person providing for Parent or such Subsidiary to lease or rent property
that Parent or such Subsidiary has sold or will sell or otherwise transfer
to such Person, except where such sales are Permitted Dispositions and any
such leases, if they are Capital Leases, are permitted under the terms of
Section 7.13 (d).
----------------
7.20 Additional Subsidiaries. Parent shall not, directly or
-----------------------
indirectly, organize, create, acquire or permit to exist any direct or
indirect Subsidiary other than those listed on Schedule 6.3, unless: within
------------
10 days after such formation or acquisition, the Parent or any applicable
Borrower, as the case may be, shall:
37
(a) (A) pledge the Capital Stock of such additional
Subsidiary to the Agent pursuant to a Pledge Agreement, if such Capital
Stock is directly owned by the Parent or a Borrower, or (B) if such Capital
Stock is owned by another Loan Party, cause such other Loan Party to pledge
the Capital Stock of such additional Subsidiary to the Agent pursuant to a
Pledge Agreement;
(b) execute and deliver, or cause such other Loan Party
to have executed and delivered, to the Agent stock transfer powers executed
in blank with signatures guaranteed as the Agent shall request, such UCC-1
financing statements (as furnished by the Agent) in any jurisdiction in
which such filing is necessary to perfect the Agent's Liens in such Capital
Stock;
(c) deliver such other items as are reasonably requested
by the Agent in connection with the foregoing, including resolutions,
incumbency and officers' certificates, opinions of counsel, search reports
and other certificates and documents; provided, however, that if any such
-------- -------
additional Subsidiary is not a domestic Subsidiary, in no event shall more
than 65% of the Capital Stock of any such Subsidiary be required to be so
pledged;
(d) if such additional Subsidiary is a domestic Subsidiary,
cause such domestic Subsidiary to furnish each of the following to the
Agent, in sufficient quantities for each Lender:
(i) a duly executed notice and assumption agreement
in form and substance acceptable to Agent (an "Additional Guarantor Assumption
Agreement");
(ii) (A) copies of the resolutions of the board
of directors (or equivalent governing body) of such Subsidiary approving and
authorizing the execution, delivery and performance by such Subsidiary of
its Additional Guarantor Assumption Agreement and this Agreement, certified
as of the date of such Additional Guarantor Assumption Agreement (the
"Additional Guarantor Accession Date") by the Secretary or an Assistant
Secretary (or other appropriate officer) of such Subsidiary; (B) a
certificate of the Secretary or Assistant Secretary (or other appropriate
officer) of such Subsidiary certifying the names and true signatures of the
officers of such Subsidiary authorized to execute and deliver and perform,
as applicable, its Additional Guarantor Assumption Agreement, this Agreement
and all other Loan Documents to be delivered hereunder; (C) copies of the
articles or certificate of incorporation and bylaws (or other applicable
organizational documents) of such Subsidiary as in effect on the Additional
Guarantor Accession Date, certified by the Secretary or Assistant Secretary
(or other appropriate officer) of such Subsidiary as of the Additional
Guarantor Accession Date; and (D) an opinion of counsel to such Subsidiary
and addressed to the Agent and the Lenders, in form and substance acceptable
to Agent; and
(iii) (A) such amendments to the schedules to any
Security Agreement as shall be required in connection with the accession of
such Subsidiary thereto; and (B) executed UCC-1 financing statements
furnished by the Agent in any jurisdiction in which such filing is necessary
to perfect the Agent's Liens in the personal property assets of such
Subsidiary and in which the Agent or the Majority Lenders shall request that
such filing be made; and
38
(e) have executed and delivered to the Agent (in
sufficient quantities for each Lender) such other items as reasonably
requested by the Agent in connection with the foregoing, including officers'
certificates, search reports and other certificates and documents.
Notwithstanding the compliance of Parent, each Borrower, and such additional
Subsidiary with the terms of this Section 7.20, no additional Subsidiary
------------
will be considered for inclusion as a Borrower hereunder, nor will any of
its Accounts, Inventory, or other assets be considered for inclusion in the
Borrowing Base until (a) such assets have been appraised and/or audited, as
applicable, with results satisfactory to Agent and Lenders, and (b) Agent
and Lenders have otherwise approved such Subsidiary as a Borrower.
7.21 Fiscal Year. Parent shall not change its Fiscal Year, and
-----------
shall not permit any of its Subsidiaries to have a fiscal year different from
Parent's.
7.22 Fixed Charge Coverage Ratio. Parent will maintain a Fixed
---------------------------
Charge Coverage Ratio for each period of four consecutive fiscal quarters
ended on the last day of each fiscal quarter set forth below (or with
respect to the fiscal quarters ending on or before June 28, 2003, the period
commencing on first day of the fiscal quarter ending September 28, 2002, and
ending on the last day of such fiscal quarter) of at least the ratio set
forth below opposite each such fiscal quarter:
Fiscal Quarter Ending Minimum Fixed Charge Coverage Ratio
--------------------- -----------------------------------
September 2002 through and including December 2002 1.10:1.00
March 2003 and thereafter 1.15:1.00
provided, however, that following the Permitted Disposition of the Printed
-------- -------
Office Products division, and the reduction of the Maximum PP&E Loan Amount
to $0, the above minimum Fixed Charge Coverage Ratios will each be reduced
by 0.05:1.00.
7.23 Adjusted Tangible Net Worth. Parent will maintain Adjusted
---------------------------
Tangible Net Worth, determined as of the last day of each of the following
fiscal months, of at least the amounts below opposite such month:
Measurement Date Minimum Amount
---------------- --------------
June 2002 - August 2002 $295,000,000
September 2002 - November 2002 $300,000,000
December 2002 - February 2003 $310,000,000
March 2003 - May 2003 $315,000,000
June 2003 - August 2003 $325,000,000
September 2003 - November 2003 $335,000,000
December 2003 and thereafter $350,000,000
39
provided, however, that the foregoing Minimum Amounts shall be adjusted, by:
-------- -------
(a) increasing such amounts to reflect 100% of the net cash proceeds
received by Parent from the issuance of Capital Stock since the Initial
Funding Date, and any gains recognized by Parent or its Subsidiaries
resulting from the disposition of Assets Held For Disposition or
Restructuring Assets since the Initial Funding Date, and (b) decreasing such
amounts to reflect any losses (not to exceed an aggregate amount of
$32,000,000) recognized by Parent or its Subsidiaries since the Initial
Funding Date resulting from the disposition of Assets Held For Disposition
or Restructuring Assets, and to reflect any reduction in Adjusted Tangible
Net Worth resulting from a Permitted Acquisition (but only up to an
aggregate amount for all Permitted Acquisitions equal to 25% of the amount
received by Parent from the issuance of Capital Stock since the Initial
Funding Date).
7.24 Use of Proceeds. Borrowers shall not, and shall not suffer
---------------
or permit any of their Subsidiaries to, use any portion of the Loan
proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of Parent, its
Subsidiaries, or others incurred to purchase or carry Margin Stock, (iii) to
extend credit for the purpose of purchasing or carrying any Margin Stock, or
(iv) to acquire any security in any transaction that is subject to Section
13 or 14 of the Exchange Act.
7.25 Further Assurances. Parent shall execute and deliver, or
------------------
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions,
as the Agent or any Lender may, from time to time, request to carry out the
terms and conditions of this Agreement and the other Loan Documents.
ARTICLE 8
---------
CONDITIONS OF LENDING
---------------------
8.1 Conditions Precedent to Making of Loans on the Initial
------------------------------------------------------
Funding Date. The obligation of the Lenders to make the initial Revolving
------------
Loans, and the obligation of the Agent to cause the Letter of Credit Issuer
to issue any Letter of Credit on the Initial Funding Date, are subject to
the following conditions precedent having been satisfied in a manner
satisfactory to the Agent and each Lender:
(a) This Agreement and the other Loan Documents shall
have been executed by each party thereto and the Loan Parties shall have
performed and complied with all covenants, agreements and conditions
contained herein and the other Loan Documents which are required to be
performed or complied with by them before or on such Closing Date.
(b) Upon making the Revolving Loans (including such
Revolving Loans made to finance the Agent's Fees due on such date or
otherwise as reimbursement for fees, costs and expenses then payable under
this Agreement) and with all obligations of the Borrowers and their
Subsidiaries current, the Borrowers shall have Availability of at least
$90,000,000.
(c) All representations and warranties made hereunder
and in the other Loan Documents shall be true and correct as if made on such
date.
40
(d) No Default or Event of Default shall have occurred
and be continuing after giving effect to the Loans to be made and the
Letters of Credit to be issued on the Initial Funding Date.
(e) The Agent and the Lenders shall have received
such opinions of counsel for Parent and its Subsidiaries (including local
counsel) as the Agent or any Lender shall request, each such opinion to be
in a form, scope, and substance satisfactory to the Agent, the Lenders, and
their respective counsel.
(f) The Agent shall have received:
(i) acknowledgment copies of proper financing
statements, duly filed on or before the Closing Date under the UCC of all
jurisdictions that the Agent may deem necessary or desirable in order to
perfect the Agent's Liens; and
(ii) authorization for Agent to file or record
UCC-3 Termination Statements and such other instruments, in form and
substance satisfactory to the Agent, as shall be necessary to terminate and
satisfy all Liens on the Property of Parent and its Subsidiaries except
Permitted Liens.
(g) The Borrowers shall have paid all fees (including
Agent's Fees due on such date) and expenses of the Agent and the Attorney
Costs incurred in connection with any of the Loan Documents and the
transactions contemplated thereby to the extent invoiced.
(h) The Agent shall have received evidence, in form,
scope, and substance, reasonably satisfactory to the Agent, of all insurance
coverage as required by this Agreement.
(i) The Agent and the Lenders shall have had an
opportunity, if they so choose, to examine the books of account and other
records and files of Parent and its Subsidiaries and to make copies thereof,
and to conduct a pre-closing audit which shall include, without limitation,
verification of Borrowers' Inventory, Accounts, Fixed Assets and the
Borrowing Base, and the results of such examination and audit shall have
been satisfactory to the Agent and the Lenders in all respects.
(j) Agent's receipt of appraisals of Inventory and
Fixed Assets of the Borrowers in form and substance, and performed by
appraisal firms, satisfactory to Agent.
(k) The Commitments shall have been successfully
syndicated on the terms set forth herein, to the satisfaction of Agent, and
all Lenders shall ratably fund the Loans on the Initial Funding Date.
(l) All proceedings taken in connection with the
execution of this Agreement, any Notes, all other Loan Documents and all
documents and papers relating thereto shall be satisfactory in form, scope,
and substance to the Agent and the Lenders.
(m) Without limiting the generality of the items
described above, each Loan Party shall have delivered or caused to be
delivered to the Agent (in form and substance reasonably satisfactory to the
Agent), the financial statements, instruments, resolutions,
41
documents, agreements, certificates, opinions and other items set forth on
the "Closing Checklist" delivered by the Agent to Parent and each Borrower
prior to the Closing Date.
The acceptance by any Borrower of any Loans made
or Letters of Credit issued on the Initial Funding Date shall be deemed to
be a representation and warranty made by Parent and the Borrowers to the
effect that all of the conditions precedent to the making of such Loans or
the issuance of such Letters of Credit set forth in clauses (a), (b), (c),
----------- --- ---
(d), (g) and (m) of this Section 8.1 have been satisfied, with the same
--- --- --- -----------
effect as delivery to the Agent and the Lenders of a certificate signed by a
Responsible Officer of each Borrower, dated the Initial Funding Date, to
such effect.
Execution and delivery to the Agent by a Lender
of a counterpart of this Agreement shall be deemed confirmation by such
Lender that (i) all conditions precedent in this Section 8.1 have been
-----------
fulfilled or waived to the satisfaction of such Lender, (ii) the decision of
such Lender to execute and deliver to the Agent an executed counterpart of
this Agreement was made by such Lender independently and without reliance on
the Agent or any other Lender as to the satisfaction of any condition
precedent set forth in this Section 8.1, and (iii) all documents sent to
-----------
such Lender for approval consent, or satisfaction were acceptable to such
Lender.
8.2 Conditions Precedent to Each Loan. The obligation of the
---------------------------------
Lenders to make each Loan, including the initial Revolving Loans on the
Initial Funding Date, and the obligation of the Agent to cause the Letter of
Credit Issuer to issue any Letter of Credit, including any Letters of Credit
to be issued on the Initial Funding Date, shall be subject to the further
conditions precedent that on and as of the Funding Date of any such
extension of credit:
(a) The following statements shall be true, and the
acceptance by any Borrower of any extension of credit shall be deemed to be
a statement to the effect set forth in clauses (i), (ii) and (iii) with the
----------- ---- -----
same effect as the delivery to the Agent and the Lenders of a certificate
signed by a Responsible Officer of each Borrower, dated the date of such
extension of credit, stating that:
(i) The representations and warranties contained
in this Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though made on
and as of such date, other than any such representation or warranty which
relates to a specified other date and except to the extent the Agent and the
Lenders have been notified in writing by Borrowers that any representation
or warranty is not correct and the Required Lenders have explicitly waived
in writing compliance with such representation or warranty; and
(ii) No event has occurred and is continuing,
or would result from such extension of credit, which constitutes a Default
or an Event of Default; and
(iii) No event has occurred and is continuing,
or would result from such extension of credit, which has had or could
reasonably be expected to have a Material Adverse Effect.
(b) No such Borrowing shall exceed Availability,
provided, however, that the foregoing conditions precedent are not
-------- -------
conditions to each Lender participating in or reimbursing
42
the Bank or the Agent for such Lenders' Pro Rata Share of any Non-Ratable
Loan or Agent Advance made in accordance with the provisions of
Sections 1.2(h) and (i).
--------------- ---
ARTICLE 9
---------
DEFAULT; REMEDIES
-----------------
9.1 Events of Default. It shall constitute an event of default
-----------------
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure by Borrowers to pay the principal of
or interest or premium on any of the Obligations or any fee or other amount
owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made
by Parent or any Borrower in this Agreement or by Parent or any Subsidiary
of Parent in any of the other Loan Documents, any Financial Statement, or
any certificate furnished by Parent or any Subsidiary of Parent at any time
to the Agent or any Lender shall prove to be untrue in any material respect
as of the date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance
or performance of any of the covenants and agreements contained in
Sections 5.2(k), 7.2, 7.4(b), 7.5, 7.9-7.24 of this Agreement, or Section 11
--------------- --- ------ --- -------- ----------
of the Security Agreement, (ii) any default shall occur in the observance or
performance of any of the covenants and agreements contained in Sections 5.2
------------
(other than 5.2(k)), or 5.3 and such default shall continue for 3 Business
------ ---
Days or more; or (iii) any default shall occur in the observance or
performance of any of the other covenants or agreements contained in any
other Section of this Agreement or any other Loan Document, or any other
agreement entered into at any time to which any Parent or any of its
Subsidiaries and the Agent or any Lender are party (including in respect of
any Bank Product) and such default shall continue for 15 Business Days or
more;
(d) any default shall occur with respect to any Debt
(other than the Obligations) of Parent or any Subsidiary of Parent in an
outstanding principal amount which exceeds $1,000,000, or under any
agreement or instrument under or pursuant to which any such Debt may have
been issued, created, assumed, or guaranteed by Parent or any of its
Subsidiaries, and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without the
giving of notice or further lapse of time or both) is to accelerate, or to
permit the holders of any such Debt to accelerate, the maturity of any such
Debt; or any such Debt shall be declared due and payable or be required to
be prepaid (other than by a regularly scheduled required prepayment) prior
to the stated maturity thereof;
(e) Parent or any Subsidiary of Parent shall (i) file
a voluntary petition in bankruptcy or file a voluntary petition or an answer
or otherwise commence any action or proceeding seeking reorganization,
arrangement or readjustment of its debts or for any other relief under the
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act
or law of the United States, any foreign country, or any political
subdivision of the foregoing, now or hereafter existing, or consent to,
approve of, or acquiesce in, any such petition, action or proceeding; (ii)
apply for or acquiesce in the appointment of a receiver, assignee,
liquidator,
43
sequestrator, custodian, monitor, trustee or similar officer for it or for
all or any part of its property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts as they become due;
(f) an involuntary petition shall be filed or an
action or proceeding otherwise commenced seeking reorganization,
arrangement, consolidation or readjustment of the debts of Parent or any
Subsidiary of Parent or for any other relief under the Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law of the
United States, any foreign country, or any political subdivision of the
foregoing, now or hereafter existing and such petition or proceeding shall
not be dismissed within 30 days after the filing or commencement thereof or
an order of relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for Parent or any Subsidiary
of Parent or for all or any part of its property shall be appointed or a
warrant of attachment, execution or similar process shall be issued against
any part of the property of Parent or any Subsidiary of Parent;
(h) except in connection with a transaction expressly
permitted under this Agreement, Parent or any Subsidiary of Parent shall
file a certificate of dissolution under applicable state law (except as may
be explicitly permitted under this Agreement) or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any
action or proceeding for dissolution, winding-up or liquidation, or shall
take any corporate action in furtherance thereof;
(i) all or any material part of the property of Parent
or any Subsidiary of Parent shall be nationalized, expropriated or
condemned, seized or otherwise appropriated, or custody or control of such
property or of any Borrower or such Subsidiary shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the
instance of any Governmental Authority, except where contested in good faith
by proper proceedings diligently pursued where a stay of enforcement is in
effect or, with respect to an action where the fair market value of the
property subject thereto is less than $500,000;
(j) any Loan Document shall be terminated, revoked or
declared void or invalid or unenforceable or challenged by any Loan Party or
any other obligor;
(k) one or more judgments, orders, decrees or
arbitration awards is entered against Parent or any Subsidiary of Parent
involving in the aggregate liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related or unrelated series of transactions,
incidents or conditions, of $500,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days
after the entry thereof;
(l) any loss, theft, damage or destruction of any
item or items of Collateral or other property of Parent or any Subsidiary of
Parent occurs which could reasonably be expected to cause a Material Adverse
Effect and is not adequately covered by insurance;
(m) there is filed against Parent or any Subsidiary
of Parent any action, suit or proceeding under any federal or state
racketeering statute (including the Racketeer Influenced
44
and Corrupt Organization Act of 1970), which action, suit or proceeding (i)
is not dismissed within 120 days, and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(n) for any reason other than the failure of the Agent
to take any action available to it, or the failure of Agent to request any
Loan Party to take any action, to maintain perfection of the Agent's Liens
pursuant to the Loan Documents, any Loan Document ceases to be in full force
and effect or any Lien with respect to any material portion of the
Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected and prior to all other Liens (other than Permitted Liens) or is
terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a
Pension Plan or Multi-employer Plan which has resulted or could reasonably
be expected to result in liability of Parent or any of its Subsidiaries
under Title IV of ERISA to the Pension Plan, Multi-employer Plan or the PBGC
in an aggregate amount in excess of $10,000,000; (ii) the aggregate amount
of Unfunded Pension Liability among all Pension Plans at any time exceeds
$10,000,000; or (iii) Parent or any ERISA Affiliate of Parent shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multi-employer Plan in an aggregate amount in excess
of $10,000,000; or
(p) there occurs a Change of Control; or
(q) there occurs an event having a Material Adverse
Effect.
9.2 Remedies.
--------
(a) If a Default or an Event of Default exists, the
Agent may, in its discretion, and shall, at the direction of the Required
Lenders, do one or more of the following at any time or times and in any
order, without notice to or demand on Parent or any Borrower: (i) reduce the
Maximum Revolver Amount, or the advance rates against Eligible Accounts
and/or Eligible Inventory used in computing the Borrowing Base, or reduce
one or more of the other elements used in computing the Borrowing Base; (ii)
restrict the amount of or refuse to make Revolving Loans; and (iii) restrict
or refuse to provide Letters of Credit or Credit Support. If an Event of
Default exists, the Agent shall, at the direction of the Required Lenders,
do one or more of the following, in addition to the actions described in the
preceding sentence, at any time or times and in any order, without notice to
or demand on Parent or any Borrower: (A) terminate the Commitments and this
Agreement; (B) declare any or all Obligations (other than Bank Products) to
be immediately due and payable; provided, however, that upon the occurrence
-------- -------
of any Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g), or
--------------- ------ ------
9.1(h), the Commitments shall automatically and immediately expire and all
------
Obligations (other than Bank Products) shall automatically become
immediately due and payable without notice or demand of any kind; (C)
require the Borrowers to provide Cash Collateral for all outstanding Letter
of Credit Obligations; and (D) pursue its other rights and remedies under
the Loan Documents and applicable law.
45
(b) If an Event of Default has occurred and is
continuing: (i) the Agent shall have for the benefit of the Lenders, in
addition to all other rights of the Agent and the Lenders, the rights and
remedies of a secured party under the Loan Documents and the UCC; (ii) the
Agent may, at any time, and shall at the direction of the Required Lenders,
take possession of the Collateral and keep it on Parent's or any Borrower's
premises, at no cost to the Agent or any Lender, or remove any part of it to
such other place or places as the Agent may desire, or Borrowers shall, upon
the Agent's demand, at Borrowers' cost, assemble the Collateral and make it
available to the Agent at a place reasonably convenient to the Agent; and
(iii) the Agent may, and shall at the direction of Required Lenders, sell
and deliver any Collateral at public or private sales, for cash, upon credit
or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, or as otherwise directed by Required
Lenders, and may, if the Agent deems it reasonable, with the consent of the
Required Lenders, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way requiring
notice to be given in the following manner, Parent and each Borrower agrees
that any notice by the Agent of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC or
otherwise, shall constitute reasonable notice to Borrowers if such notice is
mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least 5 Business
Days prior to such action to Borrowers' address specified in or pursuant to
Section 14.8. If any Collateral is sold on terms other than payment in full
------------
at the time of sale, no credit shall be given against the Obligations until
the Agent or the Lenders receive payment, and if the buyer defaults in
payment, the Agent may resell the Collateral without further notice to
Parent or any Borrower. In the event the Agent seeks to take possession of
all or any portion of the Collateral by judicial process, each Borrower
irrevocably waives: (A) the posting of any bond, surety or security with
respect thereto which might otherwise be required; (B) any demand for
possession prior to the commencement of any suit or action to recover the
Collateral; and (C) any requirement that the Agent retain possession and not
dispose of any Collateral until after trial or final judgment. Each Borrower
agrees that the Agent has no obligation to preserve rights to the Collateral
or marshal any Collateral for the benefit of any Person. The Agent is hereby
granted a license or other right to use, without charge, Parent's and each
Borrower's labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar property, in completing
production of, advertising or selling any Collateral, and Parent's and each
Borrower's rights under all licenses and all franchise agreements shall
inure to the Agent's benefit for such purpose. The proceeds of sale shall be
applied first to all expenses of sale, including attorneys' fees, and then
to the Obligations as set forth in Section 3.8. The Agent will return any
-----------
excess to Borrowers and Borrowers shall remain liable for any deficiency.
(c) If an Event of Default occurs, each Borrower
hereby waives all rights to notice and hearing prior to the exercise by the
Agent of the Agent's rights to repossess the Collateral without judicial
process or to reply, attach or levy upon the Collateral without notice or
hearing.
(d) Notwithstanding any other provision in this
Agreement or the Loan Documents, the Agent shall not foreclose on any
Collateral consisting of Real Estate or stock without the approval of the
Lenders.
46
ARTICLE 10
----------
TERM AND TERMINATION
--------------------
10.1 Term and Termination. The term of this Agreement shall end
--------------------
on the Stated Termination Date unless sooner terminated in accordance with
the terms hereof. The Agent upon direction from the Required Lenders shall
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination
of this Agreement for any reason whatsoever, all Obligations (including all
unpaid principal, accrued and unpaid interest and any early termination or
prepayment fees or penalties, but excluding Bank Products) shall become
immediately due and payable and Borrowers shall immediately arrange for the
cancellation and return of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, each Borrower shall remain
bound by the terms of this Agreement and shall not be relieved of any of its
Obligations hereunder or under any other Loan Document, and the Agent and
the Lenders shall retain all their rights and remedies hereunder (including
the Agent's Liens in and all rights and remedies with respect to all then
existing and after-arising Collateral).
ARTICLE 11
----------
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
------------------------------------------------------------
11.1 Amendments and Waivers.
----------------------
(a) No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by any Loan Party therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Lenders (or by the Agent at
the written request of the Majority Lenders), Parent and the Borrowers and
then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
-------- -------
that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders, Parent and the Borrowers and acknowledged by the
Agent, do any of the following:
(i) increase or extend the Commitment of any
Lender;
(ii) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees or other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document;
(iii) reduce the principal of, or the rate of
interest specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans which is required
for the Lenders or any of them to take any action hereunder;
(v) increase any of the percentages set forth
in the definition of the Borrowing Base;
47
(vi) include in the Borrowing Base (1) any class
of assets other than Accounts, Inventory, Equipment, or Real Estate, or (2)
any assets acquired in a Permitted Acquisition unless and until such
Accounts, Inventory, Equipment or Real Estate, as the case may be, have been
appraised and/or audited with results satisfactory to Agent and Lenders,
and, any other requirements under Section 7.20, or otherwise hereunder, have
------------
been met;
(vii) amend this Section or any provision of this
Agreement providing for consent or other action by all Lenders;
(viii) release any Guaranties of the Obligations
or release or subordinate Agent's Liens on Collateral other than as permitted
by Section 12.11;
-------------
(ix) change the definitions of "Majority Lenders"
or "Required Lenders";
(x) increase the Maximum Revolver Amount or
the Maximum PP&E Loan Amount or postpone or delay any date fixed by this
Agreement for any reduction (or reduce the amount of such reduction) of the
Maximum PP&E Loan Amount (or change the definition thereof or Section 3.3,
-----------
to the same effect); or
(xi) amend the order of payments set forth in
the second sentence of Section 3.8.
-----------
provided, however, the Agent may, in its sole discretion and notwithstanding
-------- -------
the limitations contained in clauses (v), (vi), and (x) above, make Agent
----------- ---- ---
Advances in accordance with Section 1.2(i) and, provided further, that no
-------------- -------- -------
amendment, waiver or consent shall, unless in writing and signed by the
Agent, affect the rights or duties of the Agent under this Agreement or any
other Loan Document and provided further, that Schedule 1.2 hereto
-------- ------- ------------
(Commitments) may be amended from time to time by Agent alone to reflect
assignments of Commitments in accordance herewith.
(b) [Intentionally deleted]
(c) If, in connection with any proposed amendment,
waiver or consent (a "Proposed Change"):
(i) requiring the consent of all Lenders, the
consent of Required Lenders is obtained, but the consent of other Lenders is
not obtained (any such Lender whose consent is not obtained as described in
this clause (i) and in clause (ii) below being referred to as a
"Non-Consenting Lender"), or
(ii) requiring the consent of Required Lenders,
the consent of Majority Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrowers'
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the principal
48
balances thereof and all accrued interest and fees with respect thereto
through the date of sale pursuant to Assignment and Acceptance Agreement(s),
without premium or discount.
11.2 Assignments; Participations.
---------------------------
(a) Any Lender may, with the written consent of the
Agent (which consent shall not be unreasonably withheld), assign and
delegate to one or more Eligible Assignees (provided that no consent of the
Agent shall be required in connection with any assignment and delegation by
a Lender to an Affiliate of such Lender) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Lender hereunder, in a minimum amount of $10,000,000
(provided that, unless an assignor Lender has assigned and delegated all of
its Loans and Commitments, no such assignment and/or delegation shall be
permitted unless, after giving effect thereto, such assignor Lender retains
a Commitment in a minimum amount of $15,000,000; provided, however, that
-------- -------
each Borrower and the Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until
(i) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have
been given to the Borrowers and the Agent by such Lender and the Assignee;
(ii) such Lender and its Assignee shall have delivered to the Borrowers and
the Agent an Assignment and Acceptance in the form of Exhibit F ("Assignment
---------
and Acceptance") together with any note or notes subject to such assignment
and (iii) the assignor Lender or Assignee has paid to the Agent a processing
fee in the amount of $3,500. Borrowers agree to promptly execute and deliver
new promissory notes and replacement promissory notes as reasonably
requested by the Agent to evidence assignments of the Loans and Commitments
in accordance herewith.
(b) From and after the date that the Agent notifies
the assignor Lender that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations, including, but not limited to, the obligation to
participate in Letters of Credit and Credit Support have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under
the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Loan Document furnished pursuant hereto or the
attachment, perfection, or priority of any Lien granted by any Loan Party to
the Agent or any Lender in the Collateral; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to
the financial condition of any Loan Party or the performance or
49
observance by any Loan Party of any of its obligations under this Agreement
or any other Loan Document furnished pursuant hereto; (iii) such Assignee
confirms that it has received a copy of this Agreement, together with such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such Assignee will, independently and without reliance upon the Agent,
such assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement;
(v) such Assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers,
including the discretionary rights and incidental power, as are reasonably
incidental thereto; and (vi) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements
of Section 11.2(a), this Agreement shall be deemed to be amended to the
---------------
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom.
The Commitment allocated to each Assignee shall reduce such Commitments of
the assigning Lender pro tanto.
--- -----
(e) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
a Loan Party (a "Participant") participating interests in any Loans, the
Commitment of that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender's obligations under this
-------- -------
Agreement shall remain unchanged, (ii) the originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the
Borrowers and the Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document except the
matters set forth in Sections 11.1(a) (i), (ii) and (iii), and all amounts
------------------------------------
payable by any Borrower hereunder shall be determined as if such Lender had
not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent and subject to the same
limitation as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with Regulation
A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
50
ARTICLE 12
----------
THE AGENT
---------
12.1 Appointment and Authorization. Each Lender hereby designates
-----------------------------
and appoints Bank as its Agent under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
The Agent agrees to act as such on the express conditions contained in this
Article 12. The provisions of this Article 12 are solely for the benefit of
---------- ----------
the Agent and the Lenders and no Loan Party shall have any rights as a third
party beneficiary of any of the provisions contained herein. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in
any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Loan Document
or otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which
the Agent is expressly entitled to take or assert under this Agreement and
the other Loan Documents, including (a) the determination of the
applicability of ineligibility criteria with respect to the calculation
of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 1.2(i), and (c) the exercise of remedies pursuant to Section 9.2,
-------------- -----------
and any action so taken or not taken shall be deemed consented to by the
Lenders.
12.2 Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
12.3 Liability of Agent. None of the Agent-Related Persons
------------------
shall (i) be liable for any action taken or omitted to be taken by any of
them under or in connection with this Agreement or any other Loan Document
or the transactions contemplated hereby (except for its own gross negligence
or willful misconduct), or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by
Parent or any Subsidiary or Affiliate of Parent, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of any Loan Party or any other party to any Loan Document
to perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any
51
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of Parent or any Subsidiaries or Affiliates of Parent.
12.4 Reliance by Agent. The Agent shall be entitled to rely,
-----------------
and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex
or telephone message, statement or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Borrowers), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the 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. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the
Required Lenders (or all Lenders if so required by Section 11.1) and such
------------
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
12.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default,
unless the Agent shall have received written notice from a Lender or a
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." The Agent
will notify the Lenders of its receipt of any such notice. The Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Section 9; provided,
--------- --------
however, that unless and until the Agent has received any such request, the
-------
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
12.6 Credit Decision. Each Lender acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of Parent, its Subsidiaries, and its Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition and creditworthiness of the Loan Parties, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Loan Documents, and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall
52
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of any Borrower which may
come into the possession of any of the Agent-Related Persons.
12.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrowers and without limiting the obligation of the Borrowers to do so), in
accordance with their Pro Rata Shares, from and against any and all
Indemnified Liabilities as such term is defined in Section 14.11, but
-------------
excluding any Indemnified Liabilities arising from Bank Products; provided,
--------
however, that no Lender shall be liable for the payment to the Agent-Related
-------
Persons of any portion of such Indemnified Liabilities to the extent
resulting from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for its Pro Rata Share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Borrowers. The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation
or replacement of the Agent.
12.8 Agent in Individual Capacity. The Bank and its Affiliates
----------------------------
may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind
of banking, trust, financial advisory, underwriting or other business with
Parent and any Subsidiaries and Affiliates of Parent as though the Bank were
not the Agent hereunder and without notice to or consent of the Lenders. The
Bank or its Affiliates may receive information regarding Parent, its
Subsidiaries, its Affiliates and Account Debtors (including information that
may be subject to confidentiality obligations in favor of Parent or such
Subsidiary or Affiliate) and the Lenders acknowledge that the Agent and the
Bank shall be under no obligation to provide such information to them. With
respect to its Loans, the Bank shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" include the Bank in
its individual capacity.
12.9 Successor Agent. The Agent may resign as Agent upon at
---------------
least 30 days' prior notice to the Lenders and the Borrowers, such
resignation to be effective upon the acceptance of a successor agent to its
appointment as Agent. In the event the Bank sells all of its Commitment and
Revolving Loans as part of a sale, transfer or other disposition by the Bank
of substantially all of its loan portfolio, the Bank shall resign as Agent
and such purchaser or transferee shall become the successor Agent hereunder,
except to the extent such purchaser or transferee is not acceptable to
Required Lenders (excluding Agent) as a successor Agent, in which case a
successor Agent shall be appointed under the terms applicable to a resigning
Agent as set forth in the next two sentences. Subject to the foregoing, if
the Agent resigns under this Agreement, the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders. If no successor
agent is appointed prior to the effective date of the resignation of the
Agent, the Agent
53
may appoint, after consulting with the Lenders and the Borrowers, a
successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term
"Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this
Article 12 shall continue to inure to its benefit as to any actions taken or
----------
omitted to be taken by it while it was Agent under this Agreement.
12.10 Withholding Tax.
---------------
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441
or 1442 of the Code, such Lender agrees with and in favor of the Agent, to
deliver to the Agent:
(i) if such Lender claims an exemption from,
or a reduction of, withholding tax under a United States of America tax
treaty, properly completed IRS Forms W-8BEN and W-8ECI before the payment of
any interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest may be
paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States of America withholding tax
because it is effectively connected with a United States of America trade or
business of such Lender, two properly completed and executed copies of IRS
Form W-8ECI before the payment of any interest is due in the first taxable
year of such Lender and in each succeeding taxable year of such Lender
during which interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required
under the Code or other laws of the United States of America as a condition
to exemption from, or reduction of, United States of America withholding
tax.
Such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States of America tax treaty by providing
IRS Form FW-8BEN and such Lender sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations owing to such Lender,
such Lender agrees to notify the Agent of the percentage amount in which it
is no longer the beneficial owner of Obligations of the Borrowers to such
Lender. To the extent of such percentage amount, the Agent will treat such
Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States
of America withholding tax by filing IRS Form W-8ECI with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of
the Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
54
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the Agent,
--------------
then the Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(e) If the IRS or any other Governmental Authority
of the United States of America or other jurisdiction asserts a claim that
the Agent did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the Agent of
a change in circumstances which rendered the exemption from, or reduction
of, withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
12.11 Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize the Agent,
at its option and in its sole discretion, to release any Agent's Liens upon
any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and the termination of
all outstanding Letters of Credit (whether or not any of such obligations
are due) and all other Obligations; (ii) constituting property being sold or
disposed of if the Borrowers certify to the Agent that the sale or
disposition is made in compliance with Section 7.9 (and the Agent may rely
-----------
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which no Borrower owned any interest at the time
the Lien was granted or at any time thereafter; (iv) constituting property
leased to any Borrower under a lease which has expired or been terminated in
a transaction permitted under this Agreement, or (v) constituting Real
Estate, in accordance with Section 14.21. Except as provided above, the
-------------
Agent will not release any of the Agent's Liens without the prior written
authorization of all of the Lenders; provided that the Agent may, in its
--------
discretion, release the Agent's Liens on Collateral valued in the aggregate
not in excess of $500,000 during each Fiscal Year without the prior written
authorization of the Lenders and the Agent may release the Agent's Liens on
Collateral valued in the aggregate not in excess of $1,000,000 during each
Fiscal Year with the prior written authorization of Required Lenders. Upon
request by the Agent or the Borrowers at any time, the Lenders will confirm
in writing the Agent's authority to release any Agent's Liens upon
particular types or items of Collateral pursuant to this Section 12.11.
-------------
(b) Upon receipt by the Agent of any authorization
required pursuant to Section 12.11(a) from the Lenders of the Agent's
----------------
authority to release Agent's Liens upon particular types or items of
Collateral, and upon at least 5 Business Days prior written request by
Borrowers, the Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the
release of the Agent's Liens upon such
55
Collateral; provided, however, that (i) the Agent shall not be required to
-------- -------
execute any such document on terms which, in the Agent's opinion, would
expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of any Loan Party in respect of) all
interests retained by any Loan Party, including the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is owned by any
Borrower or is cared for, protected or insured or has been encumbered, or
that the Agent's Liens have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant to
any of the Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, the Agent may
act in any manner it may deem appropriate, in its sole discretion given the
Agent's own interest in the Collateral in its capacity as one of the Lenders
and that the Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing.
12.12 Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not,
without the express consent of all Lenders, and that it shall, to the extent
it is lawfully entitled to do so, upon the request of all Lenders, set off
against the Obligations, any amounts owing by such Lender to any Loan Party
or any accounts of any Loan Party now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by all Lenders, take or cause to be taken
any action to enforce its rights under this Agreement or against any Loan
Party, including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral. Each Lender further agrees that it will undertake no
"action" within the meaning of California Code of Civil Procedure Section
726, and the cases interpreting the meaning of same (a "Cal Action").
(b) If at any time or times any Lender shall receive
(i) by payment, foreclosure, setoff or otherwise, any proceeds of Collateral
or any payments with respect to the Obligations (other than Bank Products)
to such Lender arising under, or relating to, this Agreement or the other
Loan Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (ii)
payments from the Agent in excess of such Lender's Pro Rata Share of all
such distributions by the Agent, such Lender shall promptly (1) turn the
same over to the Agent, in kind, and with such endorsements as may be
required to negotiate the same to the Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with Section 3.8, or (2) purchase, without
-----------
recourse or warranty, an undivided interest and participation in the
Obligations (other than Bank Products) owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders
in accordance with their Pro Rata Shares; provided, however, that if all or
-------- -------
part of such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be
56
rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party,
but without interest except to the extent that such purchasing party is
required to pay interest in connection with the recovery of the excess
payment.
(c) Each Lender agrees to defend, indemnify and hold
the Agent-Related Persons and each other Lender and each of their respective
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact (each, an "Action Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of the committing of a Cal Action by such
Lender.
12.13 Agency for Perfection. Each Lender hereby appoints each
---------------------
other Lender as agent for the purpose of perfecting the Lenders' security
interest in assets which, in accordance with Article 9 of the UCC can be
perfected by possession. Should any Lender (other than the Agent) obtain
possession of any such Collateral, such Lender shall notify the Agent
thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions.
12.14 Payments by Agent to Lenders. All payments to be made by
----------------------------
the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire
transfer instructions delivered in writing to the Agent on or prior to the
Initial Funding Date (or if such Lender is an Assignee, on the applicable
Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the
Agent. Concurrently with each such payment, the Agent shall identify whether
such payment (or any portion thereof) represents principal, premium or
interest on the Revolving Loans or otherwise. Unless the Agent receives
notice from Borrowers prior to the date on which any payment is due to the
Lenders that Borrowers will not make such payment in full as and when
required, the Agent may assume that Borrowers have made such payment in full
to the Agent on such date in immediately available funds and the Agent may
(but shall not be so required), in reliance upon such assumption, distribute
to each Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent Borrowers have not made such payment in full to
the Agent, each Lender shall repay to the Agent on demand such amount
distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
12.15 Settlement.
----------
(a) (i) Each Lender's funded portion of the Revolving
Loans is intended by the Lenders to be equal at all times to such Lender's
Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, the Bank, and the other Lenders agree (which agreement
shall not be for the benefit of or enforceable by any Borrower) that in
order to facilitate the administration of this Agreement and the other Loan
Documents,
57
settlement among them as to the Revolving Loans, the Non-Ratable Loans and
the Agent Advances shall take place on a periodic basis in accordance with
the following provisions:
(ii) The Agent shall request settlement
("Settlement") with the Lenders on at least a weekly basis, or on a more
frequent basis at Agent's election, (A) on behalf of the Bank, with respect
to each outstanding Non-Ratable Loan, (B) for itself, with respect to each
Agent Advance, and (C) with respect to collections received, in each case,
by notifying the Lenders of such requested Settlement by telecopy, telephone
or other similar form of transmission, of such requested Settlement, no
later than 11:00 a.m. (Los Angeles time) on the date of such requested
Settlement (the "Settlement Date"). Each Lender (other than the Bank, in the
case of Non-Ratable Loans and the Agent in the case of Agent Advances) shall
transfer the amount of such Lender's Pro Rata Share of the outstanding
principal amount of the Non-Ratable Loans and Agent Advances with respect to
each Settlement to the Agent, to Agent's account, not later than 1:00 p.m.
(Los Angeles time), on the Settlement Date applicable thereto. Settlements
may occur during the continuation of a Default or an Event of Default and
whether or not the applicable conditions precedent set forth in Article 8
---------
have then been satisfied. Such amounts made available to the Agent shall be
applied against the amounts of the applicable Non-Ratable Loan or Agent
Advance and, together with the portion of such Non-Ratable Loan or Agent
Advance representing the Bank's Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not transferred to
the Agent by any Lender on the Settlement Date applicable thereto, the Agent
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first 3 days from
and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans (A) on behalf of the Bank, with respect to
each outstanding Non-Ratable Loan, and (B) for itself, with respect to each
Agent Advance.
(iii) Notwithstanding the foregoing, not more
than one (1) Business Day after demand is made by the Agent (whether before
or after the occurrence of a Default or an Event of Default and regardless
of whether the Agent has requested a Settlement with respect to a
Non-Ratable Loan or Agent Advance), each other Lender (A) shall irrevocably
and unconditionally purchase and receive from the Bank or the Agent, as
applicable, without recourse or warranty, an undivided interest and
participation in such Non-Ratable Loan or Agent Advance equal to such
Lender's Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if
Settlement has not previously occurred with respect to such Non-Ratable
Loans or Agent Advances, upon demand by Bank or Agent, as applicable, shall
pay to Bank or Agent, as applicable, as the purchase price of such
participation an amount equal to one-hundred percent (100%) of such Lender's
Pro Rata Share of such Non-Ratable Loans or Agent Advances. If such amount
is not in fact made available to the Agent by any Lender, the Agent shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first 3 days from and
after such demand and thereafter at the Interest Rate then applicable to
Base Rate Revolving Loans.
(iv) From and after the date, if any, on which
any Lender purchases an undivided interest and participation in any
Non-Ratable Loan or Agent Advance pursuant to clause (iii) above, the Agent
------------
shall promptly distribute to such Lender, such Lender's Pro Rata Share of
all payments of principal, interest and fees, if applicable, and all
proceeds of Collateral received by the Agent in respect of such Non-Ratable
Loan or Agent Advance.
58
(v) Between Settlement Dates, the Agent, to the
extent no Agent Advances are outstanding, may pay over to the Bank any
payments received by the Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the Revolving Loans, for
application to the Bank's Revolving Loans including Non-Ratable Loans. If,
as of any Settlement Date, collections received since the then immediately
preceding Settlement Date have been applied to the Bank's Revolving Loans
(other than to Non-Ratable Loans or Agent Advances in which such Lender has
not yet funded its purchase of a participation pursuant to clause (iii)
above), as provided for in the previous sentence, the Bank shall pay to the
Agent for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata Share
of the Revolving Loans. During the period between Settlement Dates, the Bank
with respect to Non-Ratable Loans, the Agent with respect to Agent Advances,
and each Lender with respect to the Revolving Loans other than Non-Ratable
Loans and Agent Advances, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the actual average daily
amount of funds employed by the Bank, the Agent and the other Lenders.
(vi) Unless the Agent has received written notice
from a Lender or a Borrower to the contrary, the Agent may assume that the
applicable conditions precedent set forth in Article 8 have been satisfied
---------
and the requested Borrowing will not exceed Availability on any Funding Date
for a Revolving Loan or Non-Ratable Loan.
(b) Lenders' Failure to Perform. All Revolving Loans
---------------------------
(other than Non-Ratable Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata Shares. It is
understood that (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Revolving Loans
hereunder, nor shall any Commitment of any Lender be increased or decreased
as a result of any failure by any other Lender to perform its obligation to
make any Revolving Loans hereunder, (ii) no failure by any Lender to perform
its obligation to make any Revolving Loans hereunder shall excuse any other
Lender from its obligation to make any Revolving Loans hereunder, and (iii)
the obligations of each Lender hereunder shall be several, not joint and
several.
(c) Defaulting Lenders. Unless the Agent receives
------------------
notice from a Lender on or prior to the Initial Funding Date or, with
respect to any Borrowing after the Initial Funding Date, at least one
Business Day prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to the Agent that Lender's Pro
Rata Share of a Borrowing, the Agent may assume that each Lender has made
such amount available to the Agent in immediately available funds on the
Funding Date. Furthermore, the Agent may, in reliance upon such assumption,
make available to any Borrower on such date a corresponding amount. If any
Lender has not transferred its full Pro Rata Share to the Agent in
immediately available funds and the Agent has transferred corresponding
amount to any Borrower on the Business Day following such Funding Date that
Lender shall make such amount available to the Agent, together with interest
at the Federal Funds Rate for that day. A notice by the Agent submitted to
any Lender with respect to amounts owing shall be conclusive, absent
manifest error. If each Lender's full Pro Rata Share is transferred to the
Agent as required, the amount transferred to the Agent shall constitute that
Lender's Revolving Loan for all purposes of this Agreement. If that amount
is not transferred to the Agent on the Business Day following the
59
Funding Date, the Agent will notify the Borrowers of such failure to fund
and, upon demand by the Agent, Borrowers shall pay such amount to the Agent
for the Agent's account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the Interest
Rate applicable at the time to the Revolving Loans comprising that
particular Borrowing. The failure of any Lender to make any Revolving Loan
on any Funding Date (any such Lender, prior to the cure of such failure,
being hereinafter referred to as a "Defaulting Lender") shall not relieve
any other Lender of its obligation hereunder to make a Revolving Loan on
that Funding Date. No Lender shall be responsible for any other Lender's
failure to advance such other Lenders' Pro Rata Share of any Borrowing.
(d) Retention of Defaulting Lender's Payments. The
-----------------------------------------
Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by any Borrower to the Agent for the Defaulting Lender's benefit; nor
shall a Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead be paid to
or retained by the Agent. In its discretion, the Agent may loan to Borrowers
the amount of all such payments received or retained by it for the account
of such Defaulting Lender. Any amounts so loaned to Borrowers shall bear
interest at the rate applicable to Base Rate Revolving Loans and for all
other purposes of this Agreement shall be treated as if they were Revolving
Loans, provided, however, that for purposes of voting or consenting to
matters with respect to the Loan Documents and determining Pro Rata Shares,
such Defaulting Lender shall be deemed not to be a "Lender". Until a
Defaulting Lender cures its failure to fund its Pro Rata Share of any
Borrowing (A) such Defaulting Lender shall not be entitled to any portion of
the Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the
Lenders which have funded their respective Pro Rata Shares of such requested
Borrowing and shall be allocated among such performing Lenders ratably based
upon their relative Commitments. This Section shall remain effective with
respect to such Lender until such time as the Defaulting Lender shall no
longer be in default of any of its obligations under this Agreement. The
terms of this Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the performance by any
Borrower of its duties and obligations hereunder.
(e) Removal of Defaulting Lender. At Borrowers'
----------------------------
request, the Agent or an Eligible Assignee reasonably acceptable to the
Agent and Borrowers shall have the right (but not the obligation) to
purchase from any Defaulting Lender, and each Defaulting Lender shall, upon
such request, sell and assign to the Agent or such Eligible Assignee, all of
the Defaulting Lender's outstanding Commitments hereunder. Such sale shall
be consummated promptly after Agent has arranged for a purchase by Agent or
an Eligible Assignee pursuant to an Assignment and Acceptance, and at a
price equal to the outstanding principal balance of the Defaulting Lender's
Loans, plus accrued interest and fees, without premium or discount.
12.16 Letters of Credit; Intra-Lender Issues.
--------------------------------------
(a) Notice of Letter of Credit Balance. On each
----------------------------------
Settlement Date the Agent shall notify each Lender of the issuance of all
Letters of Credit since the prior Settlement Date.
60
(b) Participations in Letters of Credit.
-----------------------------------
(i) Purchase of Participations. Immediately upon
--------------------------
issuance of any Letter of Credit in accordance with Section 1.4(d), each
--------------
Lender shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and
participation equal to such Lender's Pro Rata Share of the face amount of
such Letter of Credit or the Credit Support provided through the Agent to
the Letter of Credit Issuer, if not the Bank, in connection with the
issuance of such Letter of Credit (including all obligations of Borrowers
with respect thereto, and any security therefor or guaranty pertaining
thereto).
(ii) Sharing of Reimbursement Obligation Payments.
--------------------------------------------
Whenever the Agent receives a payment from any Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit Support
as to which the Agent has previously received for the account of the Letter
of Credit Issuer thereof payment from a Lender, the Agent shall promptly pay
to such Lender such Lender's Pro Rata Share of such payment from such
Borrower. Each such payment shall be made by the Agent on the next
Settlement Date.
(iii) Documentation. Upon the request of any Lender,
-------------
the Agent shall furnish to such Lender copies of any Letter of Credit,
Credit Support for any Letter of Credit, reimbursement agreements executed
in connection therewith, applications for any Letter of Credit, and such
other documentation as may reasonably be requested by such Lender.
(iv) Obligations Irrevocable. The obligations
-----------------------
of each Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to their participation therein or with respect to any
Credit Support for any Letter of Credit or with respect to the Revolving
Loans made as a result of a drawing under a Letter of Credit and the
obligations of such Borrower for whose account the Letter of Credit or
Credit Support was issued to make payments to the Agent, for the account of
the Lenders, shall be irrevocable and shall not be subject to any
qualification or exception whatsoever, including any of the following
circumstances:
(1) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(2) the existence of any claim, setoff, defense
or other right which any Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting), any Lender, the
Agent, the issuer of such Letter of Credit, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between any Borrower or any other Person and the beneficiary
named in any Letter of Credit);
(3) any draft, certificate or any other document
presented under the 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;
61
(4) the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan
Documents;
(5) the occurrence of any Default or Event
of Default; or
(6) the failure of any Borrower to satisfy the
applicable conditions precedent set forth in Article 8.
---------
(c) Recovery or Avoidance of Payments; Refund of
--------------------------------------------
Payments In Error. In the event any payment by or on behalf of any Borrower
-----------------
received by the Agent with respect to any Letter of Credit or Credit Support
provided for any Letter of Credit and distributed by the Agent to the
Lenders on account of their respective participations therein is thereafter
set aside, avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon
demand by the Agent, pay to the Agent their respective Pro Rata Shares of
such amount set aside, avoided or recovered, together with interest at the
rate required to be paid by the Agent upon the amount required to be repaid
by it. Unless the Agent receives notice from Borrowers prior to the date on
which any payment is due to the Lenders that Borrowers will not make such
payment in full as and when required, the Agent may assume that Borrowers
have made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender,
together with interest thereon at the Federal Funds Rate for each day from
the date such amount is distributed to such Lender until the date repaid.
(d) Indemnification by Lenders. To the extent not
--------------------------
reimbursed by Borrowers and without limiting the obligations of any Borrower
hereunder, the Lenders agree to indemnify the Letter of Credit Issuer
ratably in accordance with their respective Pro Rata Shares, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees) or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Letter of Credit Issuer in any way relating to or arising out of
any Letter of Credit or the transactions contemplated thereby or any action
taken or omitted by the Letter of Credit Issuer under any Letter of Credit
or any Loan Document in connection therewith; provided that no Lender shall
--------
be liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Letter of
Credit Issuer promptly upon demand for its Pro Rata Share of any costs or
expenses payable by Borrowers to the Letter of Credit Issuer, to the extent
that the Letter of Credit Issuer is not promptly reimbursed for such costs
and expenses by Borrowers. The agreement contained in this Section shall
survive payment in full of all other Obligations.
12.17 Concerning the Collateral and the Related Loan Documents.
--------------------------------------------------------
Each Lender authorizes and directs the Agent to enter into the other Loan
Documents, for the ratable benefit and obligation of the Agent and the
Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders or Required Lenders, as applicable, in accordance with the terms of
this Agreement or the other Loan Documents, and the exercise by the Agent,
the Majority Lenders,
62
or the Required Lenders, as applicable, of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders. The Lenders
acknowledge that the Revolving Loans, Agent Advances, Non-Ratable Loans,
Bank Products and all interest, fees and expenses hereunder constitute one
Debt, secured pari passu by all of the Collateral.
---- -----
12.18 Field Audit and Examination Reports; Disclaimer by Lenders.
----------------------------------------------------------
By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish
such Lender, promptly after it becomes available, a copy of each field audit
or examination report (each a "Report" and collectively, "Reports") prepared
by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither
the Bank nor the Agent (i) makes any representation or warranty as to the
accuracy of any Report, or (ii) shall be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that the Agent or the Bank or
other party performing any audit or examination will inspect only specific
information regarding the Borrowers and their Subsidiaries and will rely
significantly upon the Parent's and its Subsidiaries' books and records, as
well as on representations of the Parent's and its Subsidiaries' personnel;
(d) agrees to keep all Reports confidential and
strictly for its internal use, and not to distribute except to its
participants, or use any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold
the Agent and any such other Lender preparing a Report harmless from any
action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or
other credit accommodations that the indemnifying Lender has made or may
make to any Borrower, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of any Borrower; and (ii)
to pay and protect, and indemnify, defend and hold the Agent and any such
other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts (including
Attorney Costs) incurred by the Agent and any such other Lender preparing a
Report as the direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying Lender.
12.19 Relation Among Lenders. The Lenders are not partners or
----------------------
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to
act for, any other Lender.
12.20 Co-Agents. None of the Lenders or other Persons identified
---------
on the facing page or signature pages of this Agreement as a "lead
arranger," "sole book manager," "co-syndication agent," or "co-documentation
agent" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders or
other Persons as such. Without limiting the foregoing, none of the Lenders
so identified as a "lead arranger," "co-syndication agent,"
"co-documentation agent" or "sole book manager" shall have
63
or be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the
Lenders or other Persons so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
ARTICLE 13
----------
JOINT AND SEVERAL LIABILITY OF BORROWERS; GUARANTY
--------------------------------------------------
13.1 Joint and Several Liability of Borrowers.
----------------------------------------
(a) Each Borrower shall be liable for all amounts due
to the Agent and/or any Lender under this Agreement and the other Loan
Documents, regardless of which Borrower actually receives Loans or other
extensions of credit hereunder or the amount of such Loans received or the
manner in which the Agent and/or such Lender accounts for such Loans or
other extensions of credit on its books and records. Each Borrower's
obligations with respect to Loans made to it, and such Borrower's
Obligations arising as a result of the joint and several liability of such
Borrower hereunder with respect to Loans made to any other Borrower
hereunder, shall be separate and distinct obligations, but all such
obligations shall be primary obligations of such Borrower.
(b) Each Borrower's Obligations arising as a result
of the joint and several liability of such Borrower hereunder with respect
to Loans or other extensions of credit made to any of the other Borrowers
hereunder, and with respect to all other Obligations of any of the other
Borrowers hereunder (including any such Obligation of any other Borrower in
respect of interest accruing after the commencement by or against such other
Borrower of an Insolvency Proceeding, irrespective of whether a claim for
such accrued interest is allowed in such Insolvency Proceeding), shall, to
the fullest extent permitted by law, be unconditional irrespective of (i)
the validity, enforceability, avoidance or subordination of any of the
Obligations of any of the other Borrowers or of any promissory note or other
document evidencing all or any part of the Obligations of any of the other
Borrowers, (ii) any incapacity or change in the constitution of any party to
any of the Loan Documents or any of Agent's Liens; (iii) the absence of any
attempt to collect any of the Obligations from any of the other Borrowers,
any guarantor of any of such Obligations of any of the other Borrowers, or
any other security therefor, or the absence of any other action to enforce
the same, (iv) the waiver, consent, variation, extension, forbearance or
granting of any indulgence by the Agent and/or any Lender with respect to
any provision of any instrument evidencing the Obligations of any of the
other Borrowers, or any part thereof, or any other agreement now or
hereafter executed by any of the other Borrowers and delivered to the Agent
and/or any Lender, (v) the failure by the Agent and/or any Lender to take
any steps to perfect and maintain its Lien on, or to preserve its rights to,
any security or collateral for any of the Obligations of any of the other
Borrowers, (vi) the Agent's and/or any Lender's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (vii) any borrowing or grant of a Lien by
any other Borrower as debtor-in-possession under Section 364 of the
Bankruptcy Code, (viii) the disallowance of all or any portion of the
Agent's and/or any Lender's claim(s) for the repayment of the Obligations of
any of the other Borrowers under Section 502 of the Bankruptcy Code, or
(ix) any other circumstances which might constitute a legal or equitable
discharge or defense of a guarantor or of any of the other Borrowers, or
which might prejudicially affect the rights or remedies of the Agent or the
Lenders under the Loan Documents or otherwise conferred
64
by law. With respect to any Borrower's Obligations arising as a result of
the joint and several liability of such Borrower hereunder with respect to
Loans or other extensions of credit made to any of the other Borrowers
hereunder or any other Obligations of any of the other Borrowers hereunder,
such Borrower waives, until all Obligations of all Borrowers shall have been
paid in full and this Agreement shall have been terminated, any benefit of,
and any right to participate in, any security or collateral given to the
Agent and/or any Lender to secure payment of any of the Obligations of any
of the other Borrowers or any other liability of any of the other Borrowers
to the Agent and/or any Lender.
(c) Without limiting the Agent's or any Lender's rights
against any Borrower, upon any Event of Default, the Agent may, and at the
direction of Required Lenders shall, proceed directly and at once, without
notice, against each Borrower to collect and recover the full amount, or any
portion, of the Obligations, without first proceeding against any other
Borrower or any other Person, or against any security or collateral for any
of the Obligations. Each Borrower consents and agrees that the Agent shall
be under no obligation to marshal any assets in favor of any Borrower or
against or in payment of any or all of the Obligations.
13.2 Contribution and Indemnification among the Borrowers. To
----------------------------------------------------
the extent that any Borrower (the "Paying Borrower") shall, as a joint and
several obligor in respect of Obligations of any other Borrower, repay any
Loans made to any other Borrower hereunder or other Obligations incurred
directly and primarily by any other Borrower (such other Borrower herein
called the "Incurring Borrower", and the payment made by the Paying Borrower
for Loans made to or Obligations incurred by the Incurring Borrower herein
called an "Accommodation Payment"), then the Paying Borrower shall be
entitled to reimbursement of such Accommodation Payment from the Incurring
Borrower and, subject to the last sentence of Section 13.1(a), shall further
---------------
be entitled to contribution and indemnification from, and to be reimbursed
by, each of the other Borrowers (the "Other Borrowers") in an amount, for
each such Other Borrower, equal to a fraction of such Accommodation Payment,
the numerator of which is such Other Borrower's "Allocable Amount" (as
defined below) and the denominator of which is the sum of the Allocable
Amounts of all of the Borrowers other than the Incurring Borrower. As of any
date of determination, the "Allocable Amount" of any Borrower (other than
the Incurring Borrower) in respect of any Accommodation Payment shall be
equal to the maximum amount of liability for such Accommodation Payment
which could be asserted against such Borrower hereunder without (i)
rendering such Borrower "insolvent" within the meaning of Section 101(31) of
the Bankruptcy Code, Section 2 of the U.S. Uniform Fraudulent Transfer Act
("UFTA") or Section 2 of the Uniform Fraudulent Conveyance Act ("UFCA"),
(ii) leaving such Borrower with unreasonably small capital or assets, within
the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or
Section 5 of the UFCA, (iii) leaving such Borrower unable to pay its debts
as they become due within the meaning of Section 548 of the Bankruptcy Code
or Section 4 of the UFTA, or Section 5 of the UFCA, or (iv) in the case of a
Borrower that is organized or registered outside of the United States of
America, voiding or making unenforceable or illegal such liability or
payment as against such Borrower under applicable foreign law. All rights
and claims of contribution, indemnification and reimbursement under this
section shall be subordinate in right of payment to the prior payment in
full of all Obligations of all the Borrowers. The provisions of this
Section 13.2 shall, to the extent expressly inconsistent with any provision
------------
in any Loan Document, supersede such inconsistent provision. The failure or
inability of any Borrower to recover from any other Borrower such other
Borrower's share of any
65
Accommodation Payment made by such Borrower, or the unenforceability as to
any Borrower of any of the foregoing provisions of this Section 13.2, shall
------------
not limit or otherwise affect any Borrower's joint and several obligations
hereunder. In no event shall any Paying Borrower be entitled to any payment
from the other Borrowers in respect of any Accommodation Payment made by
such Paying Borrower in excess of the amount of such Accommodation Payment.
13.3 Waiver. Each Borrower hereby waives and agrees not to assert
------
or take advantage of: (i) any defense now existing or hereafter arising
based upon any legal disability or other defense of any other Borrower or
any guarantor or other Person, or by reason of the cessation or limitation
of the liability of any other Borrower or any guarantor or other Person from
any cause other than full payment and performance of all obligations due
under this Agreement or any of the other Loan Documents; (ii) any defense
based upon any lack of authority of the officers, directors, partners or
agents acting or purporting to act on behalf of any other Borrower or any
guarantor or other Person, or any defect in the formation of any other
Borrower or any guarantor or other Person; (iii) the unenforceability or
invalidity of any security or guaranty or the lack of perfection or
continuing perfection, or failure of priority of any security for the
Obligations; (iv) any and all rights and defenses arising out of an election
of remedies by the Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for an
Obligation, has destroyed such Borrower's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise; (v) any defense based upon
any failure to disclose to such Borrower any information concerning the
financial condition of any other Borrower or any guarantor or other Person
or any other circumstances bearing on the ability of any other Borrower or
any guarantor or other Person to pay and perform all obligations due under
this Agreement or any of the other Loan Documents; (vi) any failure by the
Agent or any Lender to give notice to any Borrower or any guarantor or other
Person of the sale or other disposition of security, and any defect in
notice given by the Agent or any Lender in connection with any such sale or
disposition of security; (vii) any failure of the Agent or any Lender to
comply with applicable laws in connection with the sale or disposition of
security, including, without limitation, any failure by the Lender to
conduct a commercially reasonable sale or other disposition of such
security; (viii) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in any other respects more burdensome than that of a principal, or that
reduces a surety's or guarantor's obligations in proportion to the
principal's obligation; (ix) any use of cash collateral under Section 363 of
the Bankruptcy Code; (x) any defense based upon an election by the Agent or
any Lender, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code or any successor
statute; (xi) any defense based upon any borrowing or any grant of a
security interest under Section 364 of the Bankruptcy Code; (xii) any right
of subrogation, any right to enforce any remedy which the Agent or any
Lender may have against any other Borrower or any guarantor or other Person
and any right to participate in, or benefit from, any security now or
hereafter held by the Agent or any Lender for the Obligations; (xiii)
presentment, demand, protest and notice of any kind, including notice of
acceptance of this Agreement and of the existence, creation or incurring of
new or additional Obligations; (xiv) the benefit of any statute of
limitations affecting the liability of any other Borrower or any guarantor
or other Person, enforcement of this Agreement or any other Loan Documents,
the liability of any Borrower hereunder or the enforcement hereof; (xv) all
notices of intention to accelerate and/or notice of acceleration of the
Obligations; (xvi) relief from any applicable valuation or
66
appraisement laws; (xvii) any other action by the Agent or any Lender,
whether authorized by this Agreement or otherwise, or any omission by the
Agent or any Lender or other failure of the Agent or any Lender to pursue,
or delay in pursuing, any other remedy in its power; (xviii) any and all
claims and/or rights of counterclaim, recoupment, setoff or offset; and
(xix) any defense based upon the application of the proceeds of a Loan for
purposes other than the purposes represented by the Borrowers or intended or
understood by the Agent or any Lender or any Borrower. Each Borrower agrees
that the payment and performance of all Obligations or any part thereof or
other act which tolls any statute of limitations applicable to this
Agreement or the other Loan Documents shall similarly operate to toll the
statute of limitations applicable to such Borrower's liability hereunder.
Without limiting the generality of the foregoing or any other provision
hereof, each Borrower further waives any and all rights and defenses that
such Borrower may have because the debt of the Borrowers is secured by real
property of other Borrowers; this means, among other things, that: (1) the
Lenders may collect from such Borrower without first foreclosing on any real
or personal property collateral pledged by any other Borrower, (2) if the
Agent or any Lender forecloses on any real property collateral pledged by
any other Borrower, then (A) the amount of the debt may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price, and (B) the Agent or any
Lender may collect from such Borrower even if the Agent or any Lender, by
foreclosing on the real property collateral, has destroyed any right such
Borrower may have to collect from any other Borrower. The foregoing sentence
is an unconditional and irrevocable waiver of any rights and defenses each
Borrower may have because the Obligations are secured by real property of
any other Borrower. Each Borrower acknowledges and agrees that California
Civil Code Section 2856 authorizes and validates waivers of a guarantor's
rights of subrogation and reimbursement and waivers of certain other rights
and defenses available to a guarantor under California law. Based on the
preceding sentence and without limiting the generality of the foregoing
waivers contained in this subparagraph or any other provision hereof, each
Borrower expressly waives to the extent permitted by law any and all rights
and defenses (except the defense of indefeasible final payment in full),
including without limitation any rights of subrogation, reimbursement,
indemnification and contribution (except contribution pursuant to this
Agreement), which might otherwise be available to such Borrower under
California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433 and
under California Code of Civil Procedure Sections 580a, 580b, 580d and 726
(or any of such sections), or any other jurisdiction to the extent the same
are applicable to this Agreement or the agreements, covenants or obligations
of any Borrower hereunder.
13.4 Independent Investigation. Each Borrower is fully aware of
-------------------------
the financial condition of the other Borrowers, and is executing and delivering
this Agreement based solely upon such Borrower's own independent
investigation of all matters pertinent hereto and is not relying in any
manner upon any representation or statement by the Agent or any Lender. Each
Borrower hereby assumes full responsibility for obtaining any additional
information concerning the financial condition of the other Borrowers or any
other guarantor or their respective properties, financial condition and
prospects and any other matter pertinent hereto as such Borrower may desire,
and such Borrower is not relying upon or expecting the Agent or any Lender
to furnish to such Borrower any information now or hereafter in the
possession of the Agent or any Lender concerning the same or any other
matter. By executing this Agreement, each Borrower knowingly accepts the
full range of risks encompassed within a contract of this type, which risks
such Borrower acknowledges. No Borrower shall have the right to require the
67
Agent or any Lender to obtain or disclose any information with respect to
the Obligations, the financial condition or prospects of any Borrower, the
ability of any Borrower to pay or perform the Obligations, the existence,
perfection, priority or enforceability of any collateral security for any or
all of the Obligations, the existence or enforceability of any other
guaranties of all or any part of the Obligations, any action or non-action
on the part of the Agent or any Lender, any Borrower or any other Person, or
any other event, occurrence, condition or circumstance whatsoever.
13.5 Stay of Acceleration. If demand for, or acceleration of
--------------------
the time for, payment by any Borrower to Agent or any Lender of any
Obligations of any Borrower is stayed upon the commencement of any case
under the Bankruptcy Code or any other Insolvency Proceeding for such
Borrower, all such Obligations otherwise subject to demand for payment or
acceleration under the terms of this Agreement or any other Loan Document
shall nonetheless be payable by each other Borrower hereunder forthwith on
demand by the Agent.
13.6 Subrogation. No payment by any Borrower pursuant to
-----------
Article 13 or other satisfaction of the Obligations of any Borrower under
----------
Article 13 shall entitle it, by subrogation to the rights of Agent or any
----------
Lender, or by right of contribution, reimbursement, exoneration or
otherwise, to any payment from any other Borrower or out of the property of
any other Borrower, except after the payment in full to Agent and all the
Lenders of all sums which are or may become payable to any of them at any
time or from time to time by the Borrowers, under this Agreement or any
other Loan Document and the termination of this Agreement. Upon the payment
in full of all sums referred to in the immediately preceding sentence and
the termination of this Agreement, each Borrower shall be subrogated to the
rights of Agent and the Lenders hereunder to the extent of any payments made
by them hereunder.
13.7 Cumulative Remedies. The Agent and Lenders may pursue
-------------------
their rights and remedies under this Article 13 and Agent and Lenders shall
----------
be entitled to payment from Borrowers under this Article 13 notwithstanding
----------
any other guarantee of or security for all or any part of the Obligations of
the Borrowers or any other Person, and notwithstanding any action taken or
omitted to be taken by Agent or any Lender to enforce any of its rights or
remedies against any Borrower or any other Person hereunder or under such
other guarantee or with respect to any other security.
13.8 Additional Waivers. Except for notices and demands
------------------
expressly provided for herein, the Borrowers hereby waive diligence,
presentment, demand of payment, protest and all notices (whether of
nonpayment, dishonor, protest or otherwise) with respect to the Obligations,
notice of acceptance of the guaranty by Borrowers contained in this Article 13
----------
and of the incurrence by any Borrower of any Obligation and all demands
whatsoever.
13.9 Survival. The provisions of Article 13 shall continue in
-------- ----------
effect and be binding upon the Borrowers until all of the Obligations have
been paid in full and this Agreement is terminated. The liability of the
Borrowers under this Article 13 shall be reinstated and revived with respect
----------
to any amount at any time paid to or for the account of Agent and any Lender
by any Borrower or any other Person which is thereafter required to be, and
that is, restored and returned by Agent and any Lender to such Borrower or
such Person, or its trustee or receiver or similar official, upon the
bankruptcy, insolvency or reorganization of such Borrower or such
68
Person, or for any other reason, all as though such amount had not been paid
by such Borrower or such Person.
ARTICLE 14
----------
MISCELLANEOUS
-------------
14.1 No Waivers; Cumulative Remedies. No failure by the Agent
-------------------------------
or any Lender to exercise any right, remedy, or option under this Agreement
or any present or future supplement thereto, or in any other agreement
between or among the Borrowers (or any of them), the Loan Parties (or any of
them) and the Agent and/or any Lender, or delay by the Agent or any Lender
in exercising the same, will operate as a waiver thereof. No waiver by the
Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on
any occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by Parent and each Borrower of any
provision of this Agreement. The Agent and the Lenders may proceed directly
to collect the Obligations without any prior recourse to the Collateral. The
Agent's and each Lender's rights under this Agreement will be cumulative and
not exclusive of any other right or remedy which the Agent or any Lender may
have.
14.2 Severability. The illegality or unenforceability of any
------------
provision of this Agreement or any Loan Document or any instrument or
agreement required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this Agreement or
any instrument or agreement required hereunder.
14.3 Governing Law; Choice of Forum; Service of Process.
--------------------------------------------------
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT
ISSUES WITH RESPECT TO THE CREATION, PERFECTION, AND ENFORCEMENT OF LIENS
UNDER DIVISION 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF CALIFORNIA;
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES OF AMERICA LOCATED IN LOS
ANGELES COUNTY, CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE PARENT, THE BORROWERS, THE AGENT AND THE LENDERS CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE PARENT, THE BORROWERS, THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
--------------------
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
69
DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND
THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
PARENT, ANY BORROWER OR THEIR PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER
TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2)
EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS
DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) PARENT AND EACH BORROWER HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED
TO PARENT AND SUCH BORROWER AT ITS ADDRESS SET FORTH IN SECTION 14.8 AND
------------
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
AT THE REQUEST OF ANY PARTY HERETO BE DETERMINED BY BINDING ARBITRATION. The
arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial
relief or pursuant to a provisional or ancillary remedy shall not constitute
a waiver of the right of either party, including the plaintiff, to submit
the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(e) Notwithstanding the provisions of (d) above, no
controversy or claim shall be submitted to arbitration without the consent
of all parties if, at the time of the proposed submission, such controversy
or claim arises from or related to an obligation to the Lenders which is
secured by real estate property collateral (exclusive of real estate space
lease assignments). If all the parties do not consent to submission of such
a controversy or claim to arbitration, the controversy or claim shall be
determined as provided in Section 14.3(f).
---------------
(f) At the request of either party a controversy or
claim which is not submitted to arbitration as provided and limited in
Sections 14.3(d) and (e) shall be determined by judicial reference. If such
---------------- ---
an election is made, the parties shall designate to the court a referee or
referees selected under the auspices of the AAA in the same manner as
arbitrators are selected
70
in AAA-sponsored proceedings. The presiding referee of the panel, or the
referee if there is a single referee, shall be an active attorney or retired
judge. Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced.
(g) No provision of Sections (d) through (g) shall
------------ ---
limit the right of the Agent or the Lenders to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal property
collateral or security, or obtaining provisional or ancillary remedies from
a court of competent jurisdiction before, after, or during the pendency of
any arbitration or other proceeding. The exercise of a remedy does not waive
the right of either party to resort to arbitration or reference. At the
Agent's option, foreclosure under a deed of trust or mortgage may be
accomplished either by exercise of power of sale under the deed of trust or
mortgage or by judicial foreclosure.
14.4 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF
--------------------
SECTION 14.3(d), PARENT, THE BORROWERS, THE LENDERS AND THE AGENT EACH
---------------
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. PARENT, THE BORROWERS, THE LENDERS AND THE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.5 Survival of Representations and Warranties. All of the
------------------------------------------
Borrowers' representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
14.6 Other Security and Guaranties. The Agent, may, without
-----------------------------
notice or demand and without affecting any Borrower's obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than
the Borrowers' Collateral) for the payment of all or any part of the
Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of
all or any part of the Obligations and release or substitute any such
endorser or guarantor, or any Person who has given any Lien in any other
collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part
of the Obligations.
71
14.7 Fees and Expenses. The Borrowers agree to pay to the Agent,
-----------------
for its benefit, on demand, all costs and expenses that Agent pays or incurs in
connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including: (a) Attorney Costs in connection therewith;
(b) costs and expenses (including reasonable attorneys' and paralegals' fees
and disbursements) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for
recording the Mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of this Agreement); (e) sums paid or incurred to pay any amount
or take any action required of any Loan Party under the Loan Documents that
such Loan Party fails to pay or take; (f) costs of appraisals, inspections,
and verifications of the Collateral, including travel, lodging, and meals
for inspections of the Collateral and the Loan Parties' operations by the
Agent plus the Agent's then customary charge for field examinations and
audits and the preparation of reports thereof (such charge is currently $750
per day (or portion thereof) for each Person retained or employed by the
Agent with respect to each field examination or audit); and (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Payment Accounts and lock boxes,
and costs and expenses of preserving and protecting the Collateral. In
addition, the Borrowers agree to pay costs and expenses incurred by the
Agent (including Attorney Costs) to the Agent, for its benefit, on demand,
and to the other Lenders (including their Attorney Costs) for their benefit,
on demand, and all reasonable fees, expenses and disbursements incurred by
such other Lenders for one law firm retained by such other Lenders as a
group, in each case, paid or incurred to obtain payment of the Obligations,
enforce the Agent's Liens, sell or otherwise realize upon the Collateral,
and otherwise enforce the provisions of the Loan Documents, or to defend any
claims made or threatened against the Agent or any Lender arising out of the
transactions contemplated hereby (including preparations for and
consultations concerning any such matters) except for those claims made or
threatened by the Borrowers against a Lender that has breached its
obligations with respect to confidential information under Section 14.17(b),
----------------
or against any Defaulting Lender arising out of its wrongful failure to fund
Loans hereunder. The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by
any Borrower. All of the foregoing costs and expenses shall be charged to
any Borrower's Loan Account as Revolving Loans as described in Section 3.7.
-----------
14.8 Notices. Except as otherwise provided herein, all notices,
-------
demands and requests that any party is required or elects to give to any
other shall be in writing, and any such notice shall become effective (a)
upon personal delivery thereof, including, but not limited to, delivery by
overnight mail and courier service, (b) four (4) days after it shall have
been mailed by United States mail, first class, certified or registered,
with postage prepaid, or (c) in the case of notice by telecopy, when
properly transmitted, in each case addressed to the party to be notified as
follows:
72
If to the Agent or to the Bank:
Bank of America, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Business Credit-Account Executive
Telecopy No.: 626.397.1273
with copies to:
Buchalter, Nemer, Fields & Younger
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: 213.896.0400
If to any Borrower:
c/o Mail-Well, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telecopy No.: 303.566.7466
with copies to:
c/o Mail-Well, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President, General Counsel
Telecopy No.: 303.566.7461
or to such other address as each party may designate for itself by like
notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
14.9 Waiver of Notices. Unless otherwise expressly provided
-----------------
herein, each Borrower waives presentment, and notice of demand or dishonor
and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any
and all other notices to which it might otherwise be entitled. No notice to
or demand on Parent or any Borrower which the Agent or any Lender may elect
to give shall entitle Parent or such Borrower to any or further notice or
demand in the same, similar or other circumstances.
14.10 Binding Effect. The provisions of this Agreement shall be
--------------
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto;
73
provided, however, that no interest herein may be assigned by any Borrower
-------- -------
without prior written consent of the Agent and each Lender. The rights and
benefits of the Agent and the Lenders hereunder shall, if such Persons so
agree, inure to any party acquiring any interest in the Obligations or any
part thereof.
14.11 Indemnity of the Agent and the Lenders by the Borrowers.
-------------------------------------------------------
(a) The Borrowers agree to defend, indemnify and hold
the Agent-Related Persons, and each Lender and each of its respective
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Lender) be
imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by
or referred to herein, or the transactions contemplated hereby, or any
action taken or omitted by any such Person under or in connection with any
of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement, any other Loan Document, or the
Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that Borrowers shall not have any obligation
--------
hereunder to any Indemnified Person with respect to Indemnified Liabilities
finally determined by a court of competent jurisdiction to have resulted
primarily from the bad faith, gross negligence or willful misconduct of such
Indemnified Person; provided, further, that Indemnified Liabilities shall
-------- -------
not include liabilities of an Indemnified Person with respect to taxes of
such Person imposed on or measured by such Person's net income, nor any
other costs or expenses that are expressly provided herein to be the
responsibility of such Indemnified Person and not the Parent or Borrowers.
The agreements in this Section shall survive payment of all other
Obligations.
(b) The Borrowers agree to indemnify, defend and hold
harmless the Agent-Related Persons and the Lenders from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance relating to any Loan Party's
operations, business or property. This indemnity will apply whether the
hazardous substance is on, under or about any Loan Party's and any Loan
Party's Subsidiaries' property or operations or property leased to any
Borrower or any Loan Party's Subsidiaries. The indemnity includes but is not
limited to Attorney Costs. The indemnity extends to the Agent and the
Lenders, their parents, affiliates, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns. "Hazardous
substances" means any substance, material or waste that is or becomes
designated or regulated as "toxic," "hazardous," "pollutant," or
"contaminant" or a similar designation or regulation under any federal,
state or local law (whether under common law, statute, regulation or
otherwise) or judicial or administrative interpretation of such, including
petroleum or natural gas. This indemnity will survive repayment of all other
Obligations.
14.12 Limitation of Liability. NO CLAIM MAY BE MADE BY PARENT,
-----------------------
ANY BORROWER, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY
74
LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL,
REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR
BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
AND PARENT, EACH BORROWER AND EACH LENDER HEREBY WAIVE, RELEASE AND AGREE
NOT TO ▇▇▇ UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
14.13 Final Agreement. This Agreement and the other Loan Documents
---------------
are intended by Parent, the Borrowers, the Agent and the Lenders to be the
final, complete, and exclusive expression of the agreement between them.
This Agreement supersedes any and all prior oral or written agreements
relating to the subject matter hereof.
14.14 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by the Agent, Parent, each Lender and each Borrower in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
14.15 Captions. The captions contained in this Agreement are for
--------
convenience of reference only, are without substantive meaning and should not
be construed to modify, enlarge, or restrict any provision.
14.16 Right of Setoff. In addition to any rights and remedies of
---------------
the Lenders provided by law, if an Event of Default exists or the Loans have
been accelerated, each Lender is authorized at any time and from time to time,
without prior notice to Parent or any Borrower, any such notice being waived
by Parent and each Borrower to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any
time owing by, such Lender or any Affiliate of such Lender to or for the
credit or the account of Parent or any Borrower against any and all
Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not the Agent or such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Borrowers
and the Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
-------- -------
validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE
AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF PARENT OR ANY LOAN PARTY HELD OR
MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE
LENDERS.
75
14.17 Confidentiality.
---------------
(a) Parent and each Borrower hereby consents that the
Agent and each Lender may, at its own expense, issue and disseminate to the
public general information describing the credit accommodation entered into
pursuant to this Agreement, including the name and address of Parent or any
Borrower and a general description of such Person's business and may use
such Parent's and the Borrowers' names in advertising and other promotional
material.
(b) The Agent and each Lender severally agrees to take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all non-public financial information provided to Agent
and the Lenders relating to Parent and its Subsidiaries, all non-public
information relating to major transactions not in the ordinary course of
business to be entered into by Parent or any of its Subsidiaries, and all
other information identified as "confidential" or "secret" by Parent or the
Borrowers and provided to the Agent or such Lender by or on behalf of Parent
or any of its Subsidiaries, under this Agreement or any other Loan Document,
except to the extent that such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Agent or
such Lender, or (ii) was or becomes available on a nonconfidential basis
from a source other than Parent or its Subsidiaries, provided that such
source is not bound by a confidentiality agreement with Parent or any of its
Subsidiaries known to the Agent or such Lender; provided, however, that the
-------- -------
Agent and any Lender may disclose such information (1) at the request or
pursuant to any requirement of any Governmental Authority to which the Agent
or such Lender is subject or in connection with an examination of the Agent
or such Lender by any such Governmental Authority; (2) pursuant to subpoena
or other court process; (3) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding
(including, but not limited to, any bankruptcy proceeding) to which the
Agent, any Lender or their respective Affiliates may be party; (5) to the
extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (6) to the Agent's or such
Lender's independent auditors, accountants, attorneys and other professional
advisors, provided that any such advisors have either agreed to keep such
--------
information confidential to the same extent required of Agent and the
Lenders hereunder, or otherwise have an existing duty to Agent or such
Lender to keep confidential such information; (7) to any prospective
Participant or Assignee under any Assignment and Acceptance, actual or
potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the Agent
and the Lenders hereunder; (8) as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which Parent or any
of its Subsidiaries is party or is deemed party with the Agent or such
Lender, and (9) to its Affiliates, provided that such Affiliates agree to
--------
keep such information confidential to the same extent required of Agent and
the Lenders hereunder. In no event shall Agent or any Lender disclose
confidential information except in furtherance of the purpose of this
Agreement and the other Loan Documents and except as provided in clauses (1)
-----------
through (6) of this paragraph 14.17(b).
--- ------------------
14.18 Conflicts with Other Loan Documents. Unless otherwise
-----------------------------------
expressly provided in this Agreement (or in another Loan Document by
specific reference to the applicable provision contained in this Agreement),
if any provision contained in this Agreement conflicts with any
76
provision of any other Loan Document, the provision contained in this
Agreement shall govern and control.
14.19 Designation of Mail-Well I as Agent of Borrowers. Each
------------------------------------------------
Borrower hereby designates and appoints Mail-Well I and each officer thereof
as the agent and attorney-in-fact of such Borrower for all purposes of this
Agreement (in such capacity, the "Administrative Borrower"), including for
the purpose of executing and delivering all documents, instruments and
certificates contemplated herein and modifications thereof, giving and
receiving notices and instructions, and making requests, hereunder and
otherwise communicating with the Agent and the Lenders (including receiving
the monthly Loan Account statements referred to in Section 4.11). The Agent
------------
and the Lenders may assume that such appointment and designation has not
been revoked unless and until written notice of revocation is actually
received by the Agent and the Lenders. Accordingly, the Agent and the
Lenders may give notices and instruction to any Borrower through the
Administrative Borrower and may accept and act upon any notices,
instructions and requests given by the Administrative Borrower, or any
officer thereof, on behalf of any Borrower, and any such notice, request and
instructions shall be binding upon such Borrower until the Agent and the
Lenders actually receive notice from such Borrower of its revocation of such
appointment and designation of the Administrative Borrower as such
Borrower's agent and attorney-in-fact. Notwithstanding such appointment and
designation, the Agent and the Lenders may also deal directly with, and give
and receive notices, instructions and requests to and from, any Borrower. If
conflicting instructions are received from a Borrower and from the
Administrative Borrower, or any officer thereof, acting as agent or
attorney-in-fact for such Borrower, the notice, instruction or request of
such Borrower shall prevail, unless the Agent or the Lenders have, prior to
their receipt of such notice, instruction or request from such Borrower,
acted on a contrary notice, instruction or request from the Administrative
Borrower, or any officer thereof, acting as agent and/or attorney-in-fact
for such Borrower. Any acknowledgment, consent, direction, certification or
other action which might otherwise be valid or effective only if given or
taken by all or any of the Borrowers, shall be valid and effective if given
or taken only by the Administrative Borrower, whether or not any Borrower
joins therein.
14.20 Canadian Borrowing Base Assets. Agent and Lenders
------------------------------
acknowledge that, at the request of Borrowers, and so long as no Default or
Event of Default exists and is continuing, Borrowers shall be entitled to
add to the Borrowing Base the Accounts, Inventory or Equipment owned by one
or more of Parent's Subsidiaries organized under the laws of Canada or any
province thereof ("Canadian Subsidiaries") on the following terms: (i) the
definitions of eligibility of such Canadian Accounts, Inventory or Equipment
will be based on the definitions of domestic Eligible Accounts, Eligible
Inventory and Eligible Equipment then in effect hereunder, as further
modified by Agent and the Required Lenders in their reasonable discretion,
provided, that such definitions shall be no less restrictive than the
--------
corresponding definitions then in effect hereunder of domestic Eligible
Accounts, Eligible Inventory, and Eligible Equipment without the approval of
all Lenders, (ii) the advance rates against (and any Reserves with respect
to) such Accounts, Inventory or Equipment will be set by Agent and the
Required Lenders in their reasonable discretion, provided, that they will
--------
not be less restrictive than the corresponding advance rates (and any
Reserves) then in effect hereunder for domestic Accounts, Inventory, or
Equipment without the approval of all Lenders, then in effect hereunder,
(iii) such Inventory and Equipment shall be subject to current appraisals
conducted by appraisal firms satisfactory to Agent, and in form and
substance satisfactory to Agent and the Required Lenders, (iv) there shall
77
be no change in the definitions of Maximum Revolving Amount or the Maximum
PP&E Loan Amount as a result of adding such assets to the Borrowing Base,
(v) the Loan Parties shall enter into such modifications of the existing
Loan Documents as Agent and the Required Lenders shall deem necessary or
desirable to reflect the changes contemplated by this Section 14.20, (vi)
-------------
the Canadian Subsidiaries shall execute and deliver to Agent for the benefit
of the Lenders one or more Guaranties of the Obligations hereunder, together
with such security agreements, mortgages, hypothecs, landlord waivers,
bailee agreements, and any other corporate and/or security documentation as
is required by Agent and its counsel (including Canadian counsel for the
Agent) and Required Lenders, as is necessary or desirable to perfect Agent's
Lien on the real and personal property of such Canadian Subsidiaries for the
benefit of the Lenders, together with a satisfactory opinion of Canadian
counsel to the Canadian Subsidiaries; and (v) all advances shall continue to
be made to the Designated Account in the United States, in Dollars. All of
the foregoing shall be at Borrowers' sole cost and expense.
14.21 Release of Real Estate Collateral. Agent and Lenders agree
---------------------------------
that, at any time that no Default or Event of Default exists and is
continuing, upon Borrowers' request (i) Agent shall release any Mortgages
respecting Real Estate (other than Eligible Real Estate) located in New
York, (ii) Agent shall release any Mortgage on Real Estate being disposed of
or refinanced in a transaction explicitly permitted hereunder, (iii) so long
as Agent has received satisfactory landlord waivers with respect to any
leased location of a Borrower at which Eligible Equipment is located, Agent
shall release any or all of the Mortgages with respect to any Real Estate
other than Eligible Real Estate, and (iv) if the Maximum PP&E Loan Limit has
been reduced to $0, Agent shall release the Mortgages with respect to
Eligible Real Estate.
78
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
"PARENT"
MAIL-WELL, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
"BORROWERS"
MAIL-WELL I CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
MAIL-WELL COMMERCIAL PRINTING, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
POSER BUSINESS FORMS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
DISCOUNT LABELS, INC.,
an Indiana corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
Amended and Restated Credit Agreement
S-1
NATIONAL GRAPHICS COMPANY,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
MAIL-WELL WEST, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
WISCO III, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
MAIL-WELL GOVERNMENT PRINTING, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
HILL GRAPHICS, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
MAIL-WELL SERVICES, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: VICE-PRESIDENT-TREASURER & TAX
-------------------------------------
Amended and Restated Credit Agreement
S-2
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: Vice President
"LENDERS"
BANK OF AMERICA, N.A.,
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: Vice President
FLEET CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
JPMORGAN CHASE BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-3
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
"LENDERS"
BANK OF AMERICA, N.A.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
FLEET CAPITAL CORPORATION,
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: SENIOR VICE PRESIDENT
-------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
JPMORGAN CHASE BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-3
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
"LENDERS"
BANK OF AMERICA, N.A.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
FLEET CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By: /s/ T.J. Rofonell
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Rofonell
-------------------------------------
Title: Duly Authorized Signatory
-------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
JPMORGAN CHASE BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-3
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
"LENDERS"
BANK OF AMERICA, N.A.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
FLEET CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
-------------------------------------
JPMORGAN CHASE BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-3
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
"LENDERS"
BANK OF AMERICA, N.A.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title: Vice President
FLEET CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
JPMORGAN CHASE BANK,
as a Lender
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Title: Senior Vice President
-------------------------------------
Amended and Restated Credit Agreement
S-3
FOOTHILL CAPITAL CORPORATION,
as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: AVP
-------------------------------------
WASHINGTON MUTUAL BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-4
FOOTHILL CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WASHINGTON MUTUAL BANK,
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Vice President
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-4
FOOTHILL CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WASHINGTON MUTUAL BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: VP, PORTFOLIO MANAGER
-------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-4
FOOTHILL CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WASHINGTON MUTUAL BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name:
-------------------------------------
Title: Vice President
-------------------------------------
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Amended and Restated Credit Agreement
S-4
FOOTHILL CAPITAL CORPORATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WASHINGTON MUTUAL BANK,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
-------------------------------------
Amended and Restated Credit Agreement
S-4
ANNEX A
TO
CREDIT AGREEMENT
----------------
1. Definitions. Capitalized terms used in the Loan Documents
-----------
shall have the following respective meanings (unless otherwise defined
therein), and all section references in the following definitions shall
refer to sections of the Agreement:
"Accounts" means, as to any Person, all of such Person's
--------
now owned or hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition
of services, whether or not they have been earned by performance.
"Account Debtor" means each Person obligated in any way on
--------------
or in connection with an Account, Chattel Paper or General Intangibles
(including a payment intangible).
"ACH Transactions" means any cash management or related
----------------
services including the automatic clearing house transfer of funds by the
Bank for the account of any Loan Party pursuant to agreement or overdrafts.
"Acquisition" means any transaction or series of related
-----------
transactions for the purpose of or resulting, directly or indirectly, in (a)
the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to become a Subsidiary
of such Person, or (c) a merger or consolidation or any other combination
with another Person.
"Action Indemnified Person" has the meaning specified in
-------------------------
Section 12.12(c).
----------------
"Adjusted Net Earnings from Operations" means, with
-------------------------------------
respect to any fiscal period of Parent, Parent's consolidated net income
after provision for income taxes for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such
period, including, for the purposes of this definition, any write-down or
---------
write-off of goodwill under FAS 142 and any write-down of Fixed Assets or
goodwill as a result of an impairment of the value of such Fixed Assets or
goodwill that requires a write-down in accordance with GAAP or non-cash
charges arising out of Parent's restructuring (as contemplated and disclosed
to the Lenders on the Initial Funding Date) to the extent they were excluded
in the calculation of such net income, but excluding, for the purposes of
---------
this definition, any and all of the following to the extent they were
included in the calculation of such net income: (a) gain or loss arising
from the sale of any capital assets including non-cash losses associated
with the Assets Held for Disposition or Restructuring Assets (including
write-offs of tax assets); (b) gain arising from any write-up in the book
value of any asset; (c) earnings of any Person, substantially all the assets
of which have been acquired by Parent or any of its Subsidiaries in any
ANNEX A
-------
1
manner, to the extent realized by such other Person prior to the date of
acquisition; (d) earnings of any Person in which Parent or any of its
Subsidiaries has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by Parent or any of its
Subsidiaries in the form of cash distributions; (e) earnings of any Person
to which assets of Parent or any of its Subsidiaries shall have been sold,
transferred or disposed of, or into which Parent or any of its Subsidiaries
shall have been merged, or which has been a party with Parent or any of its
Subsidiaries to any consolidation or other form of reorganization, prior to
the date of such transaction; (f) gain arising from the acquisition of debt
or equity securities of Parent or any of its Subsidiaries or from
cancellation or forgiveness of Debt; and (g) gain or loss arising from
extraordinary items, including any write-off of deferred financing fees, as
determined in accordance with GAAP.
"Adjusted Tangible Assets" means all of the Parent's
------------------------
consolidated assets except: (a) deferred assets, other than prepaid
insurance and prepaid taxes; (b) patents, copyrights, trademarks, trade
names, franchises, goodwill, and other similar intangibles; (c) unamortized
debt discount and expense; (d) assets constituting Intercompany Accounts;
and (e) Fixed Assets to the extent of any write-up in the book value thereof
resulting from a revaluation effective after the Closing Date.
"Adjusted Tangible Net Worth" means, at any date: (a) the
---------------------------
book value (after deducting related depreciation, obsolescence,
amortization, valuation, and other proper reserves as determined in
accordance with GAAP) at which the Adjusted Tangible Assets would be shown
on a balance sheet of the Parent at such date prepared in accordance with
GAAP, less (b) the amount at which the Parent's liabilities would be shown
----
on such balance sheet, including as liabilities all reserves for
contingencies and other potential liabilities which would be required to be
shown on such balance sheet, plus (c) the then outstanding principal balance
----
of the Senior Unsecured Notes and any Subordinated Debt (other than the
Convertible Notes).
"Administrative Borrower" has the meaning set forth in
-----------------------
Section 14.19.
-------------
"Affiliate" means, as to any Person, any other Person
---------
which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person or which owns, directly or
indirectly, 5% or more of the outstanding equity interest of such Person. A
Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as agent
-----
for the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section
-------------- -------
1.2(i).
------
"Agent Fee Letter" means that certain fee letter, of even
----------------
date herewith, between Mail-Well I and Agent.
ANNEX A
-------
2
"Agent's Fees" has the meaning specified in Section 2.4.
------------ -----------
"Agent's Liens" means the Liens in the Collateral granted
-------------
to the Agent, for the benefit of the Lenders, Bank, and Agent pursuant to
this Agreement and the other Loan Documents.
"Agent-Related Persons" means the Agent, together with its
---------------------
Affiliates, and the officers, directors, employees, counsel,
representatives, agents and attorneys-in-fact of the Agent and such
Affiliates.
"Aggregate Revolver Outstandings" means, at any date of
-------------------------------
determination: the sum of (a) the unpaid balance of Revolving Loans, (b) the
aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%)
of the aggregate undrawn face amount of all outstanding Letters of Credit,
and (d) the aggregate amount of any unpaid reimbursement obligations in
respect of Letters of Credit.
"Agreement" means the Credit Agreement to which this Annex
---------
A is attached, as from time to time amended, modified or restated.
"Anniversary Date" means each anniversary of the Closing
----------------
Date.
"Applicable Margin" means
-----------------
(i) with respect to Base Rate Revolving Loans and all
other Obligations (other than LIBOR Rate Loans),
1.00%; and
(ii) with respect to LIBOR Revolving Loans, 2.75%.
The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by Parent's Fixed Charge
Coverage Ratio as of the most recently completed fiscal quarter of Parent,
with the Fixed Charge Coverage Ratio on each such measurement date being
calculated on the same rolling 2, 3, or 4 fiscal quarter basis on which it
is calculated under Section 7.22 for that measurement date. Adjustments in
------------
Applicable Margins shall be determined by reference to the following grids:
------------------------------------------------------------------------------------------------------
IF FIXED CHARGE COVERAGE RATIO IS: LEVEL OF APPLICABLE MARGINS:
--------------------------------- ---------------------------
------------------------------------------------------------------------------------------------------
>1.50:1.00 Level I
-
------------------------------------------------------------------------------------------------------
>1.25:1.0, but <1.50:1.00 Level II
-
------------------------------------------------------------------------------------------------------
<1.25:1.00 Level III
------------------------------------------------------------------------------------------------------
ANNEX A
-------
3
-----------------------------------------------------------------------------------------------------------------
LOAN APPLICABLE MARGINS(1)
---- ---------------------
-----------------------------------------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III
------- -------- ---------
-----------------------------------------------------------------------------------------------------------------
Base Rate Revolving Loans 0.75% 1.00% 1.25%
-----------------------------------------------------------------------------------------------------------------
LIBOR Revolving Loans 2.50% 2.75% 3.00%
-----------------------------------------------------------------------------------------------------------------
The first such adjustment shall be made on the first day of the first
calendar month that occurs more than 5 days after delivery to the Lenders of
Parent's monthly Financial Statements for the month ending December 28,
2002. Subsequent adjustments in the Applicable Margins shall be implemented
prospectively on a quarterly basis, for each calendar month commencing at
least 5 days after the Lenders obtain the quarterly unaudited Financial
Statements set forth in Parent's Form 10Q quarterly reports (in the case of
the first 3 fiscal quarters of any Fiscal Year) or the delivery to the
Lenders of the monthly unaudited Financial Statements provided pursuant to
Section 5.2(b) (in the case of the last month in any Fiscal Year) evidencing
--------------
the need for an adjustment. Concurrently with the delivery or publication
(as the case may be) of those Financial Statements, Administrative Borrower
shall deliver to the Agent and the Lenders a certificate, signed by a
Responsible Officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margins. In the event that,
with respect to any fiscal quarter of Parent which shall be the last fiscal
quarter of a Fiscal Year, the audited Financial Statements of Parent
required under Section 5.2(a) for such Fiscal Year shall indicate a Fixed
--------------
Charge Coverage Ratio for the relevant measurement period then ended (as
determined by the Agent) less than that reflected in the monthly unaudited
Financial Statements delivered under Section 5.2(b)) for such relevant
--------------
measurement period, the Applicable Margin shall be adjusted retroactively
(to the effective date of the Applicable Margin which was determined based
upon the delivery of such preliminary financial statements) to reflect an
Applicable Margin based upon the Fixed Charge Coverage Ratio determined from
the audited Financial Statements and Borrowers shall make payments to the
Agent on behalf of the Lenders to reflect such adjustment. Failure to timely
deliver such Financial Statements shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the Applicable
Margins to the highest level set forth in the foregoing grid, until the
first day of the first calendar month following the delivery of those
Financial Statements demonstrating that such an increase is not required. If
a Default or Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margins is to be implemented, no reduction may
occur until the first day of the first calendar month following the date on
which such Default or Event of Default is waived or cured.
"Applicable Unused Line Fee Margin" means, from the
---------------------------------
Initial Funding Date through December 31, 2002, 0.375%. Commencing on the
first day of January,
--------
(1) Effective on the first day of the first month after the Maximum PP&E Loan
Amount has been reduced to $0, each of the above Applicable Margins shall be
reduced by an additional 0.25%.
ANNEX A
-------
4
2003, and on the first day of each month thereafter, the Applicable Unused
Line Fee Margin shall be adjusted (up or down) prospectively on a quarterly
basis as determined by Borrowers' average Aggregate Revolver Outstandings
for the prior 3 months, divided by the average Commitments in effect during
------- --
such 3 month period by reference to the following grid:
Aggregate Revolver Outstandings
(as a percentage of total Commitments) Applicable Unused Line Fee Margin
-------------------------------------- ---------------------------------
25% or less 0.50%
greater than 25% 0.375%
"Assets Held for Disposition" mean those assets of Parent
---------------------------
or Borrowers that have been designated by Parent as "discontinued
operations" and "assets held for sale" in Parent's Annual Report on Form
10-K for the fiscal period ending December 2001 as filed with the Securities
Exchange Commission on February 27, 2002, and consisting of the Printed
Office Products division, Filenet, and Prepress.
"Assignee" has the meaning specified in Section 11.2(a).
-------- ---------------
"Assignment and Acceptance" has the meaning specified in
-------------------------
Section 11.2(a).
---------------
"Attorney Costs" means and includes all reasonable fees,
--------------
expenses and disbursements of any law firm or other counsel (including the
reasonably allocated costs and expenses of internal legal services) engaged
by the Agent, or engaged by the Lenders as set forth in the third to last
sentence (commencing "In addition . . .") of Section 14.7 and in Section
------------ -------
14.11.
-----
"Availability" means, at any time (a) the lesser of (i)
------------
the Maximum Revolver Amount or (ii) the Borrowing Base, minus (b) Reserves
-----
(other than Reserves deducted in the calculation of the Borrowing Base),
minus (c) in each case, the Aggregate Revolver Outstandings.
-----
"Bank" means Bank of America, N.A., a national banking
----
association, or any successor entity thereto.
"Bank Product Reserves" means all Reserves which the Agent
---------------------
from time to time establishes in its sole discretion for the Bank Products
then provided or outstanding; provided that, without limiting the foregoing,
--------
(a) the Agent shall not be required to establish any Bank Product Reserve
with respect to any Bank Products provided by any Lender (or any of its
Affiliates) for which the applicable Lender has not requested that the Agent
establish a Reserve with respect thereto in advance of actually providing
such Bank Products to the Loan Party, (b) the amount of any Bank Product
Reserve requested by any Lender shall be reasonable in light of the
circumstances, and
ANNEX A
-------
5
(c) the Agent shall not be responsible for adjusting the amount of any Bank
Product Reserve from time to time without notice from the applicable Lender
to make any such adjustment.
"Bank Products" means any one or more of the following
-------------
types of services or facilities extended to any Loan Party by any Lender or
any Affiliate of any Lender in reliance on such Lender's agreement to
indemnify such Affiliate: (i) credit cards; (ii) ACH Transactions; (iii)
cash management, including controlled disbursement services; and (iv) Hedge
Agreements.
"Bankruptcy Code" means Title 11 of the United States Code
---------------
(11 U.S.C. Section 101 et seq.).
-- ---
"Base Rate" means, for any day, the rate of interest in
---------
effect for such day as publicly announced from time to time by the Bank in
Charlotte, North Carolina as its "prime rate" (the "prime rate" being a rate
set by the Bank based upon various factors including the Bank's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate). Any change in the prime rate announced by the
Bank shall take effect at the opening of business on the day specified in
the public announcement of such change. Each Interest Rate based upon the
Base Rate shall be adjusted simultaneously with any change in the Base Rate.
"Base Rate Loans" means the Base Rate Revolving Loans.
---------------
"Base Rate Revolving Loan" means a Revolving Loan during
------------------------
any period in which it bears interest based on the Base Rate.
"Blocked Account Agreement" means any agreement among one
-------------------------
or more of the Borrowers, the Agent and a Clearing Bank, in form and
substance reasonably satisfactory to the Agent, concerning the collection of
payments which represent the proceeds of Accounts or of any other
Collateral.
"Borrowers" has the meaning given that term in the
---------
preamble to the Agreement.
"Borrowing" means a borrowing hereunder by a Borrower
---------
consisting of Revolving Loans made on the same day by the Lenders to such
Borrower or by Bank in the case of a Borrowing funded by Non-Ratable Loans
or by the Agent in the case of a Borrowing consisting of an Agent Advance,
or the issuance of Letters of Credit hereunder.
"Borrowing Base" means, at any time, an amount equal to
--------------
the sum of: (a) 85% of the Net Amount of Eligible Accounts; plus (b) the
----
lesser of (i) 65% of Eligible Inventory valued at the lower of cost (on a
first-in, first-out basis) or market, or (ii) 85% of the orderly liquidation
value of appraised Eligible Inventory, net of expenses of liquidation; plus
----
(c) the lesser of (i) the Maximum PP&E Loan Amount, or (ii) the sum of (1)
80% of the orderly liquidation value of appraised Eligible Equipment, plus
----
(2) 65% of
ANNEX A
-------
6
the fair market value of Eligible Real Estate; minus (d) the Convertible
-----
Note Reserves, and such other Reserves from time to time established by the
Agent in its reasonable credit judgment; provided, however, that at no time
-------- -------
shall the Borrowing Base include any assets acquired as a result of a
Permitted Acquisition until the consent of the Lenders under Section 11.1
------------
has been obtained.
"Borrowing Base Certificate" means a certificate by a
--------------------------
Responsible Officer of Administrative Borrower, substantially in the form of
Exhibit B (or another form acceptable to the Agent) setting forth the
---------
calculation of the Borrowing Base, including a calculation of each component
thereof, all in such detail as shall be reasonably satisfactory to the
Agent. All calculations of the Borrowing Base in connection with the
preparation of any Borrowing Base Certificate shall originally be made by
Administrative Borrower and certified to the Agent; provided, that the Agent
shall have the right to review and adjust, in the exercise of its reasonable
credit judgment, any such calculation (1) to reflect its reasonable estimate
of declines in value of any of the Collateral described therein, and (2) to
the extent that such calculation is not in accordance with this Agreement.
"Business Day" means (a) any day that is not a Saturday,
------------
Sunday, or a day on which banks in Los Angeles, California or Charlotte,
North Carolina are required or permitted to be closed, and (b) with respect
to all notices, determinations, fundings and payments in connection with the
LIBOR Rate or LIBOR Rate Loans, any day that is a Business Day pursuant to
clause (a) above and that is also a day on which trading in Dollars is
----------
carried on by and between banks in the London interbank market.
"Cal Action" has the meaning specified in Section
---------- -------
12.12(a).
--------
"Capital Adequacy Regulation" means any guideline, request
---------------------------
or directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Expenditures" means all payments due (whether or
--------------------
not paid during any fiscal period) in respect of the cost of any fixed asset
or improvement, or replacement, substitution, or addition thereto, which has
a useful life of more than one year, including, without limitation, those
costs arising in connection with the direct or indirect acquisition of such
asset by way of increased product or service charges or in connection with a
Capital Lease.
"Capital Lease" means, as to any Person, any lease of
-------------
property by such Person or any Subsidiary of such Person which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of such Person.
"Capital Stock" means any and all shares, interests,
-------------
participations or other equivalents (however designated) of capital stock or
other equity interests, any and all equivalent ownership interests in a
Person, and any and all warrants, rights, options to purchase or other
rights to acquire any of the foregoing.
ANNEX A
-------
7
"Cash Collateral" has the meaning set forth in Section
--------------- -------
1.4(g).
------
"Change of Control" means either (i) a change shall occur
-----------------
in the Board of Directors of Parent so that a majority of the Board of
Directors of Parent ceases to consist of the individuals who constituted the
Board of Directors of Parent on the Closing Date (or individuals whose
election or nomination for election was approved by a vote of more than 50%
of the directors then in office who either were directors of Parent on the
Closing Date or whose election or nomination for election previously was so
approved); or (ii) any Person or Group (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission) shall become or be the owner,
directly or indirectly, beneficially or of record, of shares representing
more than 20% (or, in the case of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. ("▇▇▇▇▇") and any
Persons controlled by ▇▇▇▇▇, 35%, in the aggregate) of the aggregate
ordinary voting power represented by the issued and outstanding Capital
Stock of Parent on a fully diluted basis; or (iii) except as permitted
hereunder, any Loan Party (other than Parent) ceases to be a direct or
indirect wholly-owned Subsidiary of Parent.
"Chattel Paper" means, as to any Person, all of such
-------------
Person's now owned or hereafter acquired chattel paper, as defined in the
UCC, including electronic chattel paper.
"Clearing Bank" means the Bank or any other banking
-------------
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
------------
"Code" means the Internal Revenue Code of 1986.
----
"Collateral" means all of Parent's, the Borrowers', and
----------
each other Loan Party's real and personal property and all other assets of
any other Person from time to time subject to Agent's Liens securing payment
or performance of the Obligations.
"Commitment" means, at any time with respect to a Lender,
----------
the principal amount set forth beside such Lender's name under the heading
"Commitment" on Schedule C-1 attached to the Agreement or on the signature
---------- ------------
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 11.2, as such
------------
Commitment may be adjusted from time to time in accordance with the
provisions of Section 11.2 or the definition of Maximum Revolver Amount, and
------------
"Commitments" means, collectively, the aggregate amount of the commitments
-----------
of all of the Lenders.
"Contaminant" means any waste, pollutant, hazardous
-----------
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos in any form or condition,
polychlorinated biphenyls ("PCBs"), or any constituent of any such substance
or waste.
"Continuation/Conversion Date" means the date on which a
----------------------------
Loan is converted into or continued as a LIBOR Rate Loan.
ANNEX A
-------
8
"Convertible Notes" means those certain 5% Convertible
-----------------
Subordinated Notes, due 2002, of Parent, issued pursuant to the Convertible
Note Indenture.
"Convertible Note Indenture" means that certain Indenture,
--------------------------
dated November 19, 1997, between Parent and The Bank of New York, as
trustee, as the same may have been supplemented or amended through the
Initial Funding Date.
"Convertible Note Reserve" means that certain reserve
------------------------
established by Agent in the amount, at any time, of (a) the outstanding
amount that would be required at such time to retire in full the Convertible
Notes, less (b) the amount of Parent's otherwise unrestricted cash and cash
----
equivalents set aside at such time, the purpose of which is to retire in
full the Convertible Notes.
"Credit Support" has the meaning specified in Section
-------------- -------
1.4(a).
------
"Debt" means, as to any Person and without duplication,
----
all liabilities, obligations and indebtedness of such Person to any other
Person, of any kind or nature, now or hereafter owing, arising, due or
payable, howsoever evidenced, created, incurred, acquired or owing, whether
primary, secondary, direct, contingent, fixed or otherwise, consisting of
indebtedness for borrowed money or the deferred purchase price of property,
excluding trade payables, but including (a) all Obligations; (b) all
obligations and liabilities of any other Person secured by any Lien on such
Person's property, even though such Person shall not have assumed or become
liable for the payment thereof; provided, however, that all such obligations
-------- -------
and liabilities which are limited in recourse to such property shall be
included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of such Person prepared in accordance with
GAAP; (c) all obligations or liabilities created or arising under any
Capital Lease or conditional sale or other title retention agreement with
respect to property used or acquired by such Person, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations
-------- -------
and liabilities which are limited in recourse to such property shall be
included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of such Person prepared in accordance with
GAAP; (d) all obligations and liabilities under Guaranties and (e) the
present value (discounted at the Base Rate) of lease payments due under
synthetic leases.
"Default" means any event or circumstance which, with the
-------
giving of notice, the lapse of time, or both, would (if not cured, waived,
or otherwise remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate
------------
at all times equal to the sum of (a) the otherwise applicable Interest Rate
plus (b) two percentage points per annum. Each Default Rate shall be
----
adjusted simultaneously with any change in the applicable Interest Rate. In
addition, the Default Rate shall result in an increase in the Letter of
Credit Fee by two percentage points per annum.
"Defaulting Lender" has the meaning specified in Section
----------------- -------
12.15(c).
--------
ANNEX A
-------
9
"Designated Account" has the meaning specified in Section
------------------ -------
1.2(c).
------
"Dilution" means, for Borrowers (as determined by the
--------
Agent in its sole discretion), based upon the experience of the immediately
prior 12 months, the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising allowances, returns, rebates,
promotional allowances, credits, or other dilutive items with respect to the
Accounts of Borrowers, by (b) the aggregate amount of cash collections from
Borrower's Accounts plus the amount in clause (a) for such period.
----
"Dilution Reserve" means a reserve equal to (a) the total
----------------
Dollar amount of Eligible Accounts of Borrowers at any given location times
-----
two tenths of one percentage point for each one tenth of one percentage
point by which Dilution at such location is in excess of 7.5%. By way of
example, Dilution at a location of 9.6% would require a Dilution Reserve of
4.2% of the amount of Borrowers' Eligible Accounts at such location.
"Distribution" means, with respect to any Person: (a) the
------------
payment or making of any dividend or other distribution of property in
respect of capital stock (or any options or warrants for, or other rights
with respect to, such stock) of such Person, other than distributions in
capital stock (or any options or warrants for such stock) of the same class;
or (b) the redemption or other acquisition by such Person of any capital
stock (or any options or warrants for such stock) of such Person.
"Documents" means, with respect to any Person, all
---------
documents as such term is defined in the UCC, including bills of lading,
warehouse receipts or other documents of title, now owned or hereafter
acquired by such Person.
"DOL" means the United States Department of Labor or any
---
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of
------ -
the United States. Unless otherwise specified, all payments under the Loan
Documents shall be made in Dollars.
"EBITDA" means, with respect to any fiscal period of
------
Parent, Adjusted Net Earnings from Operations, plus, to the extent deducted
----
in the determination of Adjusted Net Earnings from Operations for that
fiscal period, interest expenses, Federal, state, local and foreign income
taxes, depreciation and amortization.
"Eligible Accounts" means the Accounts of Borrowers which
-----------------
the Agent in the exercise of its reasonable commercial discretion determines
to be Eligible Accounts. Without limiting the discretion of the Agent to
establish other criteria of ineligibility, Eligible Accounts shall not,
unless the Agent in its sole discretion elects (which discretion cannot be
exercised without the consent of Required Lenders), include any Account:
(a) with respect to which more than 90 days have elapsed
since the date of the original invoice therefor or which is more than 60
days past due;
ANNEX A
-------
10
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in the Security Agreement
are incorrect or have been breached;
(c) with respect to which Account (or any other Account
due from such Account Debtor), in whole or in part, a check, promissory
note, draft, trade acceptance or other instrument for the payment of money
has been received, presented for payment and returned uncollected for any
reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which a Borrower has extended the time for payment to a
date more than 60 days past the original due date or 90 days past the
original invoice date without the consent of the Agent; for the purposes
hereof, "progress billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the
Account Debtor's obligation to pay such invoice is conditioned upon such
Borrower's completion of any further performance under the contract or
agreement;
(e) with respect to which any one or more of the
following events has occurred to the Account Debtor on such Account: death
or judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of an Insolvency
Proceeding or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of,
the Account Debtor; the sale, assignment, or transfer of all or any material
part of the assets of the Account Debtor; the nonpayment generally by the
Account Debtor of its debts as they become due; or the cessation of the
business of the Account Debtor as a going concern;
(f) if 50% or more of the aggregate Dollar amount of
outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under clause (a) above;
----------
(g) owed by an Account Debtor which: (i) neither (1)
maintains its chief executive office in the United States of America or
Canada (excluding the Province of Newfoundland) nor (2) is organized under
the laws of the United States of America or Canada or any state or province
thereof (excluding the Province of Newfoundland); or (ii) is the government
of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or
employee of any Loan Party;
(i) except as provided in clause (k) below, with respect
----------
to which either the perfection, enforceability, or validity of the Agent's
Liens in such Account, or the Agent's right or ability to obtain direct
payment to the Agent of the proceeds of such
ANNEX A
-------
11
Account, is governed by any federal, state, or local statutory requirements
other than those of the UCC;
(j) owed by an Account Debtor to which any Borrower or
any of its Subsidiaries, is indebted in any way, or which is subject to any
right of setoff or recoupment by the Account Debtor, unless the Account
Debtor has entered into an agreement acceptable to the Agent to waive setoff
rights; or if the Account Debtor thereon has disputed liability or made any
claim with respect to any other Account due from such Account Debtor; but in
each such case only to the extent of such indebtedness, setoff, recoupment,
dispute, or claim;
(k) owed by the government of the United States of
America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of
1940, as amended (31 U.S.C. Section 3727 et seq.), and any other steps
-- ---
necessary or desirable to perfect or protect the Agent's Liens therein, have
been complied with to the Agent's satisfaction with respect to such Account
(but only to the extent that all such Accounts in the aggregate exceed 5% of
the aggregate gross accounts receivable of Borrowers);
(l) owed by any state, municipality, or other political
subdivision of the United States of America, or any other country, or any
department, agency, public corporation, or other instrumentality thereof and
as to which the Agent determines that its Lien therein is not or cannot be
perfected;
(m) which represents a sale on a ▇▇▇▇-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
(o) if the Agent believes, in the exercise of its
reasonable judgment, that the prospect of collection of such Account is
impaired or that the Account may not be paid by reason of the Account
Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located
in any state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit the relevant Borrower to seek judicial
enforcement in such State of payment of such Account, unless such Borrower
has qualified to do business in such state or has filed a Notice of Business
Activities Report or equivalent report for the then current year;
(q) which arises out of a sale not made in the ordinary
course of the relevant Borrower's business;
(r) with respect to which the goods giving rise to such
Account have not been shipped in full and delivered to and accepted by the
Account Debtor or the services giving rise to such Account have not been
performed by the relevant Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods
or services, or for which a chargeback or debit memo exists;
ANNEX A
-------
12
(s) owed by an Account Debtor which is obligated to the
Borrowers respecting Accounts the aggregate unpaid balance of which exceeds
15% of the aggregate unpaid balance of all Accounts owed to Borrowers at
such time by all of Borrowers' Account Debtors, but only to the extent of
such excess;
(t) which is not subject to a first priority and
perfected security interest in favor of the Agent for the benefit of the
Lenders; or
(u) that is a COD/cash account.
If any Account at any time ceases to be an Eligible
Account, then such Account shall promptly be excluded from the calculation
of Eligible Accounts.
"Eligible Assignee" means (a) a commercial bank,
-----------------
commercial finance company or other asset based lender, having total assets
in excess of $1,000,000,000; (b) any Lender listed on the signature page of
this Agreement; (c) any Affiliate of any Lender; and (d) if an Event of
Default has occurred and is continuing, any Person reasonably acceptable to
the Agent.
"Eligible Equipment" means the Equipment of Borrowers
------------------
which the Agent in the exercise of its reasonable commercial discretion
determines to be Eligible Equipment. Without limiting the discretion of the
Agent to establish other criteria of ineligibility, Eligible Equipment shall
not, unless the Agent in its sole discretion elects (which discretion cannot
be exercised without the consent of Required Lenders), include any
Equipment:
(a) that is not owned by a Borrower;
(b) that is not subject to the Agent's Liens, which are
first priority and perfected as to such Equipment, or that are subject to
any other Lien whatsoever (other than the Liens described in clauses (a) or
--------------
(d) of the definition of Permitted Liens provided that all such Liens are
--- --------
(i) junior in priority to the Agent's Liens or subject to Reserves and (ii)
do not impair directly or indirectly the ability of the Agent to realize on
or obtain the full benefit of the Collateral);
(c) that is not in good condition, ordinary wear and
tear excepted, is unmerchantable or does not meet in all material respects
all standards of any Governmental Authority having regulatory authority over
such Equipment, its use or sale;
(d) that has not been appraised by an appraiser
satisfactory to the Agent;
(e) that is located outside the United States; or
(f) that is in a facility leased by a Borrower (as
landlord or tenant) if the tenant or lessor, as the case may be, has not
delivered to the Agent a subordination or landlord agreement in form and
substance satisfactory to the Agent or if a Reserve for rents has not been
established.
ANNEX A
-------
13
If any Equipment at any time ceases to be Eligible
Equipment, such Equipment shall promptly be excluded from the calculation of
Eligible Equipment.
"Eligible Inventory" means Inventory of Borrowers which
------------------
the Agent, in its reasonable discretion, determines to be Eligible
Inventory. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Inventory shall not, unless the Agent in
its sole discretion elects (which discretion cannot be exercised without the
consent of Required Lenders), include any Inventory:
(a) that is not owned by a Borrower;
(b) that is not subject to the Agent's Liens, which are
perfected as to such Inventory, or that are subject to any other Lien
whatsoever (other than the Liens described in clause (d) of the definition
----------
of Permitted Liens provided that such Permitted Liens (i) are junior in
priority to the Agent's Liens or subject to Reserves and (ii) do not impair
directly or indirectly the ability of the Agent to realize on or obtain the
full benefit of the Collateral);
(c) that does not consist of finished goods (other than
custom or made to order finished goods) or raw materials (including ink);
(d) that consists of parts, work-in-process, chemicals
(other than ink), samples, prototypes, supplies, or packing and shipping
materials;
(e) that is not in good condition, is damaged or
defective, is unmerchantable, or does not meet all standards imposed by any
Governmental Authority, having regulatory authority over such goods, their
use or sale;
(f) that is not currently either usable or salable, at
prices approximating at least cost, in the normal course of a Borrower's
business, or that is slow moving or stale;
(g) that is obsolete or returned or repossessed or used
goods taken in trade;
(h) that is located outside the United States of America
(or that is in-transit from vendors or suppliers);
(i) that is located (1) at a processor or other bailee
(other than a public warehouse), or (2) in a public warehouse or in a
facility leased by a Borrower, if the warehouseman or the lessor, as the
case may be, has not delivered to the Agent, if requested by the Agent, a
warehouse letter or a landlord waiver in form and substance satisfactory to
the Agent or if a Reserve for rents or storage charges has not been
established for Inventory at that location;
(j) that contains or bears any Proprietary Rights
licensed to a Borrower by any Person, if the Agent is not satisfied that it
may sell or otherwise dispose of such Inventory in accordance with the terms
of the Security Agreement and
ANNEX A
-------
14
Section 9.2 without infringing the rights of the licensor of such
-----------
Proprietary Rights or violating any contract with such licensor (and without
payment of any royalties other than any royalties due with respect to the
sale or disposition of such Inventory pursuant to the existing license
agreement), and, as to which such Borrower has not delivered to the Agent a
consent or sublicense agreement from such licensor in form and substance
acceptable to the Agent if requested;
(k) that is neither reflected in the details of a
current perpetual inventory report nor subject to physical inventories
conducted at least monthly; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of Eligible Inventory.
"Eligible Real Estate" means each parcel of a Borrower's
--------------------
Real Estate that is proposed by Borrowers to be eligible hereunder and which
meets the following conditions: (i) such parcel is owned in fee simple by
such Borrower, (ii) such parcel is located in the United States, and (iii)
each of the following exists for such parcel: (1) a FIRREA appraisal by an
appraisal firm reasonably acceptable to the Agent and the Lenders, in form
and substance satisfactory to the Agent, (2) a duly executed Mortgage,
together with a subordination and attornment agreement from any tenant or
subtenant thereon, in each case in form and substance reasonably
satisfactory to the Agent and the Lenders, (3) a mortgagee title insurance
policy or endorsement (or marked commitment to issue the same) issued by
Chicago Title, or another title company satisfactory to the Agent (each a
"Mortgage Policy") in an amount satisfactory to Agent and the Lenders (but
not to exceed the fair market value of such parcel) assuring the Agent that
the Mortgage on such Eligible Real Estate is a valid and enforceable first
priority mortgage Lien, free and clear of all defects and encumbrances
except Liens described in clauses (a), (d) or (e) of the definition of
----------- --- ---
Permitted Liens, and the Mortgage Policy shall otherwise be in form and
substance satisfactory to Agent, and (4) a Phase-I (and, where reasonably
required by the Agent and the Lenders, a Phase II) environmental report,
with the environmental consultants retained for such report, the scope of
the report, and the results thereof being satisfactory to the Agent and the
Lenders. As of the Initial Funding Date there are no parcels of Eligible
Real Estate. Any parcel of Real Estate that qualifies as Eligible Real
Estate shall be so designated on Schedule E-1 hereto, as such Schedule may
------------
be amended from time to time. If any parcel of Real Estate ceases to be
Eligible Real Estate, such parcel shall promptly be excluded from the
calculation of Eligible Real Estate.
"Environmental Claims" means all claims, however asserted,
--------------------
by any Governmental Authority or other Person alleging potential liability
or responsibility for violation of any Environmental Law, or for a Release
or injury to the environment.
"Environmental Compliance Reserve" means any reserve which
--------------------------------
the Agent establishes in its reasonable discretion after prior written
notice to Borrowers from time to time for amounts that are reasonably likely
to be expended by Borrowers or any
ANNEX A
-------
15
Subsidiary of a Borrower in order for such Person and its operations and
property (a) to comply with any notice from a Governmental Authority
asserting material non-compliance with Environmental Laws, or (b) to correct
any such material non-compliance identified in a report delivered to the
Agent and the Lenders pursuant to Section 7.7.
-----------
"Environmental Laws" means all national, federal, state,
------------------
provincial, or local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders, directed
duties, licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case relating to environmental, health,
safety and land use matters.
"Environmental Lien" means a Lien in favor of any
------------------
Governmental Authority for (a) any liability under Environmental Laws, or
(b) damages arising from, or costs incurred by such Governmental Authority
in response to, a Release or threatened Release of a Contaminant into the
environment.
"Equipment" means, as to any Person, such Person's now
---------
owned and hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inventory), including
embedded software, motor vehicles with respect to which a certificate of
title has been issued, aircraft, dies, tools, jigs, molds and office
equipment, as well as all of such types of property leased by such Person
and all of such Person's rights and interests with respect thereto under
such leases (including, without limitation, options to purchase); together
with all present and future additions and accessions thereto, replacements
therefor, component and auxiliary parts and supplies used or to be used in
connection therewith, and all substitutes for any of the foregoing, and all
manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act
-----
of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" means, as to any Person, any trade or
---------------
business (whether or not incorporated) under common control with such Person
or any of its Subsidiaries within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to
-----------
a Pension Plan, (b) a withdrawal by Parent, or any Subsidiary or ERISA
Affiliate of Parent, from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated
as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or
partial withdrawal by Parent or any ERISA Affiliate of Parent from a
Multi-employer Plan or notification that a Multi-employer Plan is in
reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multi-employer Plan, (e) the
ANNEX A
-------
16
occurrence of an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or
Multi-employer Plan, or (f) the imposition of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon Parent or any ERISA Affiliate of Parent.
"Event of Default" has the meaning specified in Section
---------------- -------
9.1.
---
"Exchange Act" means the Securities Exchange Act of 1934,
------------
and the rules and regulations promulgated thereunder.
"Excluded Subsidiaries" means, collectively, McLaren,
---------------------
▇▇▇▇▇▇ & ▇▇▇▇ Company, a company organized under the laws of Nova Scotia,
Supremex, Inc., a company organized under the laws of Canada, MM&T Packaging
Company, a company organized under the laws of Nova Scotia, Graphic Arts
Center de Mexico, a company organized under the laws of Mexico, and any
Subsidiaries of Parent presently existing or hereafter created or acquired
that are not organized under the laws of one of the United States.
"FDIC" means the Federal Deposit Insurance Corporation,
----
and any Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per
------------------
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers
on such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided that (a) if such day is not
--------
a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such day shall
be the average rate charged to the Bank on such day on such transactions as
determined by the Agent.
"Federal Reserve Board" means the Board of Governors of
---------------------
the Federal Reserve System or any successor thereto.
"Financial Statements" means, according to the context in
--------------------
which it is used, the financial statements referred to in Sections 5.2 and
----------------
6.6 or any other financial statements required to be given to Agent or the
---
Lenders pursuant to this Agreement.
"Fiscal Year" means the fiscal year of Parent for
-----------
financial accounting purposes. The current Fiscal Year of Parent will end on
December 28, 2002.
"Fixed Assets" means, as to any Person, the Equipment and
------------
Real Estate of such Person.
"Fixed Charge Coverage Ratio" means, with respect to any
---------------------------
fiscal period of Parent, the ratio of EBITDA to Fixed Charges.
ANNEX A
-------
17
"Fixed Charges" means, with respect to any fiscal period
-------------
of Parent being measured on a consolidated basis, without duplication, cash
interest expense (excluding deferred financing fees), Capital Expenditures
(excluding Capital Expenditures funded with Debt other than Revolving Loans,
but including, without duplication, principal payments with respect to such
Debt), scheduled principal payments of Debt (but excluding scheduled monthly
reduction of the Maximum PP&E Loan Amount, unless paid in cash), cash
dividends and other dispositions to the extent permitted to be made
hereunder and the positive amount, if any, of all Federal, state, local and
foreign income taxes paid in cash (net of tax refunds received in such
measurement period).
"Funding Date" means the date on which a Borrowing occurs.
------------
"GAAP" means generally accepted accounting principles and
----
practices set forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the Initial Funding Date, subject to
Section 2 of this Annex A.
--------- -------
"General Intangibles" means, as to any Person, all of such
-------------------
Person's now owned or hereafter acquired general intangibles, choses in
action and causes of action and all other intangible personal property of
such Person of every kind and nature (other than Accounts), including,
without limitation, all contract rights, payment intangibles, Proprietary
Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, goodwill, computer software, customer
lists, registrations, interests in approved emission reductions under
Section 40711 of the California Health and Safety Code, tax refund claims,
any funds which may become due to such Person in connection with the
termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to such Person from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds
thereof, proceeds of insurance covering the lives of key employees on which
such Person is beneficiary, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for
pledged equity interests or Investment Property and any letter of credit,
guarantee, claim, security interest or other security held by or granted to
such Person.
"Governmental Authority" means any nation or government,
----------------------
any state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantors" means, collectively, Parent and each direct
----------
and indirect wholly owned domestic Subsidiary of Parent that is not a
Borrower.
ANNEX A
-------
18
"Guaranty" means, with respect to any Person, all
--------
obligations of such Person which in any manner directly or indirectly
guarantee or assure, or in effect guarantee or assure, the payment or
performance of any indebtedness, dividend or other obligations of any other
Person (the "guaranteed obligations"), or assure or in effect assure the
holder of the guaranteed obligations against loss in respect thereof,
including any such obligations incurred through an agreement, contingent or
otherwise: (a) to purchase the guaranteed obligations or any property
constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.
"Hedge Agreement" means, with respect to any Person, any
---------------
and all transactions, agreements or documents now existing or hereafter
entered into, which provides for an interest rate, credit, commodity or
equity swap, cap, floor, collar, forward foreign exchange transaction,
currency swap, cross currency rate swap, currency option, or any combination
of, or option with respect to, these or similar transactions, for the
purpose of hedging such Person's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
"Initial Funding Date" shall mean the date of the funding
--------------------
of the initial Revolving Loans hereunder.
"Insolvency Proceeding" means, as to any Person, the
---------------------
filing by or against such Person of a request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any foreign country, or any political
subdivision of the foregoing, now or hereafter in effect, including the
commencement of a case by or against such Person under the Bankruptcy Code,
the making by such Person of any general assignment for the benefit of
creditors, the appointment of a receiver or trustee for such Person or for
all or a substantial portion of the assets of such Person (including,
without limitation, the appointment of or taking possession by a
"custodian," as defined in the Bankruptcy Code) and the institution by or
against such Person of any other type of insolvency proceeding under the
bankruptcy laws of the United States or any other jurisdiction. Such term
shall also include any case or proceeding resulting from or constituting any
of the foregoing.
"Instruments" means, as to any Person, all instruments as
-----------
such term is defined in the UCC, now owned or hereafter acquired by such
Person.
"Intellectual Property Security Agreement" means a Notice
----------------------------------------
of Security Interest, dated as of the date hereof, with respect to
Proprietary Rights, executed and delivered by one or more of the Borrowers
to the Agent, for the benefit of the Agent and the Lenders.
"Intercompany Accounts" means all assets and liabilities,
---------------------
however arising, which are due to the Parent or any of its Subsidiaries
from, which are due from the Parent
ANNEX A
-------
19
or any of its Subsidiaries to, or which otherwise arise from any transaction
by the Parent or any of its Subsidiaries with any Affiliate of the Parent or
any of its Subsidiaries.
"Interest Period" means, as to any LIBOR Rate Loan, the
---------------
period commencing on the Funding Date of such Loan or on the
Continuation/Conversion Date on which the Loan is converted into or
continued as a LIBOR Rate Loan, and ending on the date one, two, or three
months thereafter as selected by any Borrower in its Notice of Borrowing, in
the form attached hereto as Exhibit D, or Notice of Continuation/Conversion,
---------
in the form attached hereto as Exhibit E, provided that:
---------
(a) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Loan
that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates,
-------------
including the Default Rate, set forth in Section 2.1.
-----------
"Inventory" means, as to any Person, all of such Person's
---------
now owned and hereafter acquired inventory, goods and merchandise, wherever
located, to be furnished under any contract of service or held for sale or
lease, all returned goods, raw materials, work-in-process, finished goods
(including embedded software), other materials and supplies of any kind,
nature or description which are used or consumed in such Person's business
or used in connection with the packing, shipping, advertising, selling or
finishing of such goods, merchandise, and all documents of title or other
Documents representing them.
"Investment Property" means, as to any Person, all of such
-------------------
Person's right title and interest in and to any and all: (a) securities
whether certificated or uncertificated; (b) securities entitlements; (c)
securities accounts; (d) commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any
---
Governmental Authority succeeding to any of its principal functions under
the Code.
"KeyBank Lease" means that certain lease of equipment
-------------
evidenced by MailWell I's equipment lease documents with KeyBank, National
Association and Key Corporate Capital, Inc., dated as of December 26, 1997,
as amended.
ANNEX A
-------
20
"Latest Projections" means: (a) on the Closing Date and
------------------
thereafter until the Agent receives new projections pursuant to Section
-------
5.2(e), the projections of each Borrower's financial condition, results of
------
operations, and cash flows, for the period commencing on January 1 2002 and
ending on December 31, 2006 and delivered to the Agent prior to the Closing
Date; and (b) thereafter, the projections most recently received by the
Agent pursuant to Section 5.2(e).
--------------
"Lender" and "Lenders" have the meanings specified in the
------ -------
introductory paragraph hereof and shall include the Agent to the extent of
any Agent Advance outstanding and the Bank to the extent of any Non-Ratable
Loan outstanding; provided that no such Agent Advance or Non-Ratable Loan
--------
shall be taken into account in determining any Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in Section
---------------- -------
1.4(a).
------
"Letter of Credit Fee" has the meaning specified in
--------------------
Section 2.6.
-----------
"Letter of Credit Issuer" means the Bank, any Affiliate of
-----------------------
the Bank or any other financial institution that issues any Letter of Credit
pursuant to this Agreement.
"LIBOR Rate" means, for any Interest Period, with respect
----------
to LIBOR Rate Loans, the rate of interest per annum determined pursuant to
the following formula:
LIBOR Rate = Offshore Base Rate
----------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means the rate per annum appearing on
------------------
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If
for any reason such rate is not available, the Offshore Base Rate
shall be, for any Interest Period, the rate per annum appearing on
Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, however, if more
-------- -------
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates. If
for any reason none of the foregoing rates is available, the
Offshore Base Rate shall be, for any Interest Period, the rate per
annum determined by Agent as the rate of interest at which dollar
deposits in the approximate amount of the LIBOR Rate Loan
comprising part of such Borrowing would be offered by the Bank's
London Branch to major banks in the offshore dollar market at their
request at or about 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term
comparable to such Interest Period; and
ANNEX A
-------
21
"Eurodollar Reserve Percentage" means, for any day during
-----------------------------
any Interest Period, the reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on
such day applicable to member banks under regulations issued from
time to time by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental
or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"). The
Offshore Base Rate for each outstanding LIBOR Rate Loan shall be
adjusted automatically as of the effective date of any change in
the Eurodollar Reserve Percentage.
"LIBOR Rate Loans" means, collectively, the LIBOR
----------------
Revolving Loans.
"LIBOR Revolving Loan" means a Revolving Loan during any
--------------------
period in which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
----
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, charge, claim, or lien arising
from a mortgage, deed of trust, charge, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, agreement, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes; (b) to the extent not included under clause (a), any reservation,
----------
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or encumbrance affecting
property; and (c) any contingent or other agreement to provide any of the
foregoing.
"Loan Account" means the loan account of each Borrower,
------------
which account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Notes, the
--------------
Intellectual Property Security Agreement, the Security Agreement, the
Mortgages, the Pledge Agreement, the Parent/Subsidiary Guaranty, and any
other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations,
the Collateral, or any other aspect of the transactions contemplated by this
Agreement.
"Loan Parties" means collectively, the Borrowers and the
------------
Guarantors.
"Loans" means, collectively, all loans and advances
-----
provided for in Article 1, but does not include Bank Products.
---------
"Majority Lenders" means at any date of determination
----------------
Lenders whose Pro Rata Shares aggregate more than 50%.
"Margin Stock" means "margin stock" as such term is
------------
defined in Regulation T, U or X of the Federal Reserve Board.
ANNEX A
-------
22
"Material Adverse Effect" means (a) a material adverse
-----------------------
change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of (x) Parent,
(y) any of Parent's primary operating divisions (i.e., print or envelopes),
taken as a whole, or (z) the Collateral; (b) a material impairment of the
ability of (x) Parent or (y) the Loan Parties making up any of Parent's
primary operating divisions, taken as a whole, to perform under any Loan
Document to which it is or to which they are a party; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against (x) Parent or (y) the Loan Parties making up any of Parent's primary
operating divisions, taken as a whole, of any Loan Document to which it is
or they are a party.
"Maximum PP&E Loan Amount" means as of the Initial Funding
------------------------
Date, $100,000,000; provided, however, that such amount shall be reduced:
-------- -------
(i) on the first day of each month commencing August 1, 2002, by $1,666,667
(which amount may be adjusted from time to time as provided in the following
sentence); and (ii) immediately upon a Loan Party's receipt of the net
proceeds of certain Permitted Dispositions, the net proceeds of certain
incurrences of Debt, or certain insurance or condemnation proceeds, by the
amount of such net proceeds as set forth in Section 3.3. On the first day of
-----------
any month after a reduction of $5,000,000 or more pursuant to clause (ii) of
the preceding sentence, the amount of the scheduled monthly reduction under
clause (i) of the preceding sentence shall be adjusted to an amount equal to
(y) the reduced Maximum PP&E Loan Amount then in effect, divided by, (z) the
number of whole and partial months remaining before August 1, 2007.
"Maximum Revolver Amount" means $300,000,000; provided,
----------------------- --------
however, that Borrowers may from time to time at their option reduce
-------
permanently the Maximum Revolving Amount in increments of $5,000,000, so
long as: (i) Borrowers notify Agent at least 30 days in advance of their
intent to exercise such option; (ii) Borrowers repay, on the effective date
of such reduction, the amount, if any, by which the Aggregate Revolver
Outstandings on such date exceed the Maximum Revolver Amount, as reduced,
(iii) no Default or Event of Default exists on the date of such reduction,
or would exist as a result thereof, (iv) the Maximum PP&E Loan Amount shall
be reduced if necessary, at the same time, so that the ratio of the Maximum
PP&E Loan Amount (as reduced) to the Maximum Revolver Amount (as reduced)
does not exceed that existing on the Initial Funding Date; and (v) the
Maximum Revolver Amount shall not be reduced below $200,000,000.
Concurrently with any such reduction in the Maximum Revolver Amount, each
Lender's Commitment shall be reduced by its Pro Rata Share of such reduction
in the Maximum Revolver Amount.
"Mortgages" means and includes any and all of the
---------
mortgages, charges, deeds of trust, deeds to secure debt, assignments and
other instruments executed and delivered by a Borrower (or any other Loan
Party) to or for the benefit of the Agent by which the Agent, on behalf of
the Lenders, acquires a Lien on any Real Estate or a collateral assignment
of a Borrower's (or a Loan Party's) interest under leases of Real Estate,
and all amendments, modifications and supplements thereto.
ANNEX A
-------
23
"Multi-employer Plan" means a "multi-employer plan" as
-------------------
defined in Section 4001(a)(3) of ERISA which is or was at any time during
the current year or the immediately preceding six (6) years contributed to
by any Borrower or any ERISA Affiliate of any Borrower.
"Net Amount of Eligible Accounts" means, at any time, the
-------------------------------
gross amount of Eligible Accounts, calculated in Dollars, less sales, excise
or similar taxes, and less returns, discounts, claims, credits, allowances,
accrued rebates, offsets, deductions, counterclaims, disputes, unapplied
cash, and other defenses of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"Non-Ratable Loan" and "Non-Ratable Loans" have the
---------------- -----------------
meanings specified in Section 1.2(h).
--------------
"Notes" means the Revolving Loan Notes.
-----
"Notice of Borrowing" has the meaning specified in Section
------------------- -------
1.2(b).
------
"Notice of Continuation/Conversion" has the meaning
---------------------------------
specified in Section 2.2(b).
--------------
"Obligations" means all present and future loans,
-----------
advances, liabilities, obligations, covenants, duties, and debts owing by
any Borrower to the Agent and/or any Lender, arising under or pursuant to
this Agreement or any of the other Loan Documents, whether or not evidenced
by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees and any other sums chargeable to any Borrower
hereunder or under any of the other Loan Documents. "Obligations" includes,
without limitation, (a) all debts, liabilities, and obligations now or
hereafter arising from or in connection with the Letters of Credit and (b)
all debts, liabilities and obligations now or hereafter arising from or in
connection with Bank Products. Notwithstanding anything contained in this
Agreement or in any other Loan Document to the contrary, for purposes of
determining the portion of Obligations arising out of Bank Products ("Bank
Product Obligations") that are subject to the Lien of Agent or any Lender
pursuant to this Agreement or any Loan Document (the "Secured Bank Product
Obligations"), the maximum amount of any Secured Bank Product Obligations at
any time shall be the lesser of (a) the total amount of Bank Product
Obligations then existing, or (b) the difference of (i) $300,000,000 minus
-----
(ii) the total amount of Obligations then existing hereunder or otherwise
secured pursuant to the Loan Documents other than the Bank Product
Obligations. To the extent that the Bank Product Obligations exceed the
Secured Bank Product Obligations, such excess shall be apportioned among all
Lenders that have extended Bank Products pro rata based on their shares of
total Bank Product Obligations, and such excess amount shall be deemed to be
unsecured.
ANNEX A
-------
24
"Original Credit Agreement" has the meaning given that
-------------------------
term in the recitals to the Agreement.
"Other Taxes" means any present or future stamp or
-----------
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.
"Parent" has the meaning specified in the introductory
------
paragraph hereof.
"Parent/Subsidiary Guaranty" means the Guaranty dated as
--------------------------
of the Initial Funding Date from Parent and the Subsidiaries of Parent
(other than the Borrowers and any Excluded Subsidiaries) to the Agent, for
its benefit and the benefit of the Lenders.
"Participant" means any Person who shall have been granted
-----------
the right by any Lender to participate in the financing provided by such
Lender under this Agreement, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.
"Payment Account" means each bank account established
---------------
pursuant to the Security Agreement, to which the proceeds of Accounts and
other Collateral are deposited or credited, and which is maintained in the
name of the Agent or any Borrower as the Agent may determine, on terms
acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or
----
any Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the
-----------------------
aggregate principal amount of all Revolving Loans requested in any Notice of
Borrowing received by the Agent which have not yet been advanced, including
any amount that Agent is entitled to charge hereunder.
"Pension Plan" means a pension plan (as defined in Section
------------
3(2) of ERISA) subject to Title IV of ERISA which Parent or any ERISA
Affiliate of Parent sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multi-employer Plan
has made contributions at any time during the immediately preceding five (5)
plan years.
"Permitted Acquisition" means any Acquisition that
---------------------
conforms to the following requirements: (i) the assets, Person, division or
line of business to be acquired is primarily in a substantially similar or
ancillary line of business as one or more of the Borrowers, (ii) all
transactions related to such Acquisition shall be consummated in accordance
with applicable Requirements of Law, (iii) such Acquisition shall be
non-hostile in nature, (iv) the prior, effective written consent or approval
to such Acquisition of the board of directors or equivalent governing body
or management having the appropriate level of authority of the acquiree is
obtained, (v) with respect to any such Acquisition that is a merger or
consolidation affecting a Loan Party, such Loan Party shall be the surviving
entity, (vi) immediately after giving effect to such Acquisition:
ANNEX A
-------
25
(A) no Default or Event of Default exists or would result therefrom, and,
for purposes of this clause, Parent shall deliver a certificate, signed by a
Responsible Officer of Parent, demonstrating that Parent will continue to be
in compliance with its financial covenants hereunder on a pro forma basis,
taking such Acquisition into account, (B) 100% of the Capital Stock of any
acquired or newly formed corporation, partnership, limited liability company
or other business entity or, as the case may be, the assets, division or
line of business acquired, is owned directly by the Parent or a domestic
Subsidiary of the Parent, (C) all actions required to be taken with respect
to any such acquired or newly formed Subsidiary under Section 7.20 shall
------------
have been taken, and (D) with respect to any Acquisition where some or all
of the consideration paid by Parent or any of its Subsidiaries is other than
Capital Stock of Parent, Availability would be at least $45,000,000, and
(vii) the aggregate amount of consideration (other than Capital Stock of
Parent, but including assumed Debt) paid by Parent or any of its
Subsidiaries for such Acquisitions in any calendar year shall not exceed the
sum of (1) $15,000,000 (in the case of calendar year 2002) or $60,000,000
(in the case of any subsequent calendar year) plus (2) the net cash proceeds
----
received by Parent from the issuance of any Capital Stock since the Initial
Funding Date; provided, that the restrictions set forth in this clause (vii)
--------
shall not apply with respect to any Acquisition where, immediately after
giving effect to such Acquisition, Availability would be at least
$100,000,000.
"Permitted Disposition" means, for Parent or any of its
---------------------
Subsidiaries, any of the following:
(a) sales of Inventory in the ordinary course of such
Person's business;
(b) sales or other dispositions of Equipment in the
ordinary course of its business that is obsolete or no longer useable in its
business with a fair market value not to exceed $10,000,000 in the aggregate
in any of the first, second, or third years after the Initial Funding Date,
provided that (i) upon receipt, such net proceeds shall be delivered to
--------
Agent for application to the Revolving Loans in accordance with Section 3.8
-----------
and (ii) within 180 days following each such Equipment sale or disposition
involving Collateral, either (y) some or all the net proceeds of that sale
or disposition shall have been reinvested in other Equipment of a Borrower
that is Collateral or (z) to the extent that such reinvestment is not made
under clause (y), the Maximum PP&E Loan Amount shall be reduced by the
amount of such non-reinvested net proceeds in accordance with Section 3.3.
-----------
All Equipment purchased with such proceeds shall be free and clear of all
Liens, except the Agent's Liens;
(c) so long as no Default or Event of Default exists, or
would result therefrom:
(i) sales or dispositions of the Assets Held
For Disposition, provided that the applicable Person shall deliver the net cash
--------
proceeds of any such sale or disposition to Agent for application to the
Revolving Loans and reduction of the Maximum PP&E Loan Amount in accordance
with Sections 3.3 and 3.8, and any non-cash consideration received from such
------------ ---
sale or disposition shall constitute additional Collateral, in which Agent
shall have a duly perfected Lien,
ANNEX A
-------
26
(ii) sales or dispositions of other assets of
any Borrower that are not Assets held for Disposition, Restructuring Assets,
Accounts or Inventory, or Equipment that is subject (as of the Initial
Funding Date) to the KeyBank Lease provided that (x) the applicable Person
--------
receives net cash proceeds from such sale or disposition of not less than
100% of the fair market value thereof, (y) the applicable Person shall
deliver the net cash proceeds of any such sale or disposition to Agent for
application to the Revolving Loans and reduction of the Maximum PP&E Loan
Amount in accordance with Sections 3.3 and 3.8, and any non-cash
------------ ---
consideration received from such sale or disposition shall constitute
additional Collateral, in which Agent shall have a duly perfected Lien, and
(z) the aggregate net book value of all such assets sold or disposed of
under this clause (c)(ii) in any year does not exceed $20,000,000;
--------------
(d) so long as no Default or Event of Default exists,
or would result therefrom, sales or dispositions of the Restructuring Assets,
provided that the applicable Person shall deliver the net cash proceeds of
--------
any such sale or disposition to Agent for application to the Revolving Loans
in accordance with Section 3.8, and any non-cash consideration received from
-----------
such sale or disposition shall constitute additional Collateral, in which
Agent shall have a duly perfected Lien; and
(e) so long as no Default or Event of Default exists,
or would result therefrom, sales or dispositions of the Equipment that is
subject (as of the Initial Funding Date) to the KeyBank Lease, as part of a
synthetic lease with Fleet Capital Leasing that replaces the KeyBank Lease,
provided that such replacement lease is on terms substantially as set forth
--------
in the term sheet and any draft documents from Fleet Capital Leasing
delivered to the Agent on or before the Initial Funding Date (the "Fleet
Draft Documents") and to the extent the material terms of the final
documentation of such replacement lease are different from or in addition to
the terms set forth in the Fleet Draft Documents, such deviation or addition
is reasonably acceptable Agent and Majority Lenders, and such replacement
occurs within 60 days of the termination of the KeyBank Lease.
"Permitted Liens" means:
---------------
(a) Liens for taxes not delinquent or statutory Liens
for taxes in an amount not to exceed $500,000 provided that the payment of
such taxes which are due and payable is being contested in good faith and by
appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on the relevant Borrower's books
and records and a stay of enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary
course of business in connection with, or to secure payment of, obligations
under worker's compensation, unemployment insurance, social security and
other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of Debt) or to secure indemnity,
performance or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of Debt) or to secure statutory
ANNEX A
-------
27
obligations (other than liens arising under ERISA or Environmental Liens) or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons,
provided that if any such Lien arises from the nonpayment of such claims or
--------
demand when due, such claims or demands do not exceed $500,000 in the
aggregate;
(e) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way, covenants
running with the land, and other similar title exceptions or encumbrances
affecting any Real Estate; provided that they do not in the aggregate
--------
materially detract from the value of the Real Estate or materially interfere
with its use in the ordinary conduct of any Borrower's business;
(f) Liens arising from judgments and attachments in
connection with court proceedings not constituting an Event of Default,
provided that such Liens if enforced would not result in a Material Adverse
Effect and such Liens are being contested in good faith by appropriate
proceedings, adequate reserves have been set aside and no material Property
is subject to a material risk of loss or forfeiture and the claims in
respect of such Liens are fully covered by insurance (subject to ordinary
and customary deductibles) and a stay of execution pending appeal or
proceeding for review is in effect;
(g) Liens on specific tangible assets where such assets
are acquired in Permitted Acquisitions after the Initial Funding Date;
provided, that (A) such Liens existed at the time of the Permitted
--------
Acquisition and were not created in anticipation thereof, (B) any such Lien
does not by its terms cover any assets after the time of the Permitted
Acquisition which were not covered immediately prior thereto, and (C) any
such Lien does not by its terms secure any Debt other than Debt existing
immediately prior to the time of the Permitted Acquisition;
(h) Liens on assets of Subsidiaries of Parent where
such Subsidiaries are acquired in Permitted Acquisitions after the Initial
Funding Date; provided, that (A) such Liens existed at the time of the
--------
Permitted Acquisition of such Subsidiary and were not created in
anticipation thereof, and (B) any such Lien does not by its terms secure any
Debt other than Debt permitted under Section 7.13;
------------
(i) Liens, if any, in effect as of the Closing Date
described in Schedule 6.9 securing Debt described in Schedule 6.9;
------------ ------------
(j) Liens securing Debt permitted in Section 7.13(d);
---------------
and
(k) Liens securing Capital Leases and purchase money
Debt permitted in Section 7.13(d) or Section 7.13(e).
--------------- ---------------
"Person" means any individual, sole proprietorship,
------
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
ANNEX A
-------
28
"Plan" means an employee benefit plan (as defined in
----
Section 3(3) of ERISA) which Parent, any Subsidiary of Parent, or any ERISA
Affiliate of Parent sponsors or maintains or to which Parent, any Subsidiary
of Parent, or any ERISA Affiliate of Parent makes, is making, or is
obligated to make contributions and includes any Pension Plan.
"Pledge Agreement" means any of the Stock Pledge
----------------
Agreements, of even date herewith, between one or more of the Loan Parties,
on the one hand, and Agent, on the other hand.
"Proprietary Rights" means, as to any Person, all of such
------------------
Person's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, service marks, trade names, trade styles,
trade secrets, patent, trademark and service ▇▇▇▇ applications, and all
licenses and rights related to any of the foregoing, including (for
Borrowers) those patents, trademarks, service marks, trade names and
copyrights set forth on Schedule 6.12 hereto, and all other rights under any
-------------
of the foregoing, all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing, and all
rights to ▇▇▇ for past, present and future infringement of any of the
foregoing.
"Pro Rata Share" means, with respect to a Lender, a
--------------
fraction (expressed as a percentage), the numerator of which is the amount
of such Lender's Commitment and the denominator of which is the sum of the
amounts of all of the Lenders' Commitments, or if no Commitments are
outstanding, a fraction (expressed as a percentage), the numerator of which
is the amount of Loans owed to such Lender and the denominator of which is
the aggregate amount of the Loans owed to the Lenders, in each case giving
effect to a Lender's participation in non-settled Non-Ratable Loans and
Agent Advances.
"Real Estate" means, as to any Person, all of such
-----------
Person's now or hereafter owned or leased estates in real property,
including, without limitation, all fees, leaseholds and future interests,
together with all of such Person's now or hereafter owned or leased
interests in the improvements thereon, the fixtures attached thereto and the
easements appurtenant thereto.
"Release" means a release, spill, emission, leaking,
-------
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration of a Contaminant into the indoor or outdoor environment or into or
out of any Real Estate of Parent or any of its Subsidiaries, or other
property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate of Parent or any or its
Subsidiaries, or other property.
"Reportable Event" means, any of the events set forth in
----------------
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
ANNEX A
-------
29
"Required Lenders" means at any time Lenders whose Pro
----------------
Rata Shares aggregate more than 66-2/3%.
"Requirement of Law" means, as to any Person, any law
------------------
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any
of its property is subject.
"Reserves" means reserves that limit the availability of
--------
credit hereunder, consisting of reserves against Availability, Eligible
Accounts, Eligible Equipment, or Eligible Inventory, established by Agent
from time to time in Agent's reasonable credit judgment. Without limiting
the generality of the foregoing, the following reserves shall be deemed to
be a reasonable exercise of Agent's credit judgment: (a) Bank Product
Reserves, (b) a reserve for accrued, unpaid interest on the Obligations, (c)
reserves for at least three months of rent at leased locations subject to
statutory or contractual landlord liens or where Agent has not received an
acceptable agreement from the landlord, (d) Environmental Compliance
Reserves, (e) Convertible Note Reserve, (f) customs charges, (g) Dilution
Reserve, and (h) warehousemen's or bailees' charges.
"Responsible Officer" means, as to Parent or any Borrower
-------------------
(including the Administrative Borrower), the chief executive officer of such
Person or the president, or any other officer of such Person having
substantially the same authority and responsibility (including the Senior
Vice President-Corporate Development and Chief Legal Officer); or, with
respect to compliance with financial covenants and the preparation of the
Borrowing Base Certificate, the chief financial officer or the treasurer of
the Administrative Borrower, or any other officer of Administrative Borrower
(including the Vice President-Controller) having substantially the same
authority and responsibility.
"Restricted Investment" means, as to any Person, any
---------------------
acquisition of property by such Person in exchange for cash or other
property, whether in the form of an Acquisition or any other acquisition of
stock, debt, or other indebtedness or obligation, or the purchase or
acquisition of any other property, or a loan, advance, capital contribution,
or subscription, except the following (in each case only so long as Agent
has a perfected Lien therein subject only to Permitted Liens): (a)
acquisitions of Equipment to be used in the business of such Person
(including the purchase of Equipment subject to the Key Bank Lease, at the
termination thereof); (b) acquisitions of Inventory in the ordinary course
of business of such Person; (c) acquisitions of current assets acquired in
the ordinary course of business of such Person; (d) direct obligations of
the United States of America, or any agency thereof, or obligations
guaranteed by the United States of America, provided that such obligations
--------
mature within one year from the date of acquisition thereof; (e)
acquisitions of certificates of deposit maturing within one year from the
date of acquisition, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank
or trust company organized under the laws of the United States of America or
any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better
ANNEX A
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30
by ▇▇▇▇▇'▇ Investors Service, Inc. and maturing not more than one year from
the date of creation thereof; (g) Hedge Agreements; and (h) investments in
money market or other mutual funds at least 95% of whose assets comprise
securities described in clauses (d) through (g) above.
-----------
"Restructuring Assets" means those assets of Borrowers
--------------------
(including, but not limited to plants that become no longer in use) that
have been designated by Parent to be disposed of as a part of its strategic
consolidation and restructuring plan, as more completely described on
Schedule R-1 hereto.
------------
"Revolving Loans" has the meaning specified in Section 1.2
--------------- -----------
and includes each Agent Advance and Non-Ratable Loan, but excludes Bank
Products.
"Revolving Loan Note" and "Revolving Loan Notes" have the
------------------- --------------------
meanings specified in Section 1.2(a)(ii).
------------------
"Security Agreement" means the Amended and Restated
------------------
Security Agreement of even date herewith among the Borrowers and Agent for
the benefit of Agent and other Lenders.
"Senior Subordinated Notes" means those certain 8-3/4%
-------------------------
Senior Subordinated Notes, due 2008, of Mail-Well I, issued pursuant to the
Senior Subordinated Note Indenture.
"Senior Subordinated Note Indenture" means that certain
----------------------------------
Indenture, dated as of December 16, 1998, among Mail-Well I, certain
Affiliates of Mail-Well I as guarantors, and State Street Bank and Trust
Company, as trustee, as the same may have been supplemented or amended
through the Initial Funding Date.
"Senior Unsecured Notes" means those certain 9-5/8% Senior
----------------------
Notes, due 2012, of Mail-Well I, issued pursuant to the Senior Unsecured
Note Indenture.
"Senior Unsecured Note Indenture" means that certain
-------------------------------
Indenture, dated as of March 13, 2002, among Mail-Well I, certain Affiliates
of Mail-Well I as guarantors, and State Street Bank and Trust Company, as
trustee, as the same may have been supplemented or amended through the
Initial Funding Date.
"Settlement" and "Settlement Date" have the meanings
--------------------------------
specified in Section 12.15(a)(ii).
--------------------
"Solvent" means, when used with respect to any Person,
-------
that at the time of determination:
(a) the assets of such Person, at a fair valuation, are
in excess of the total amount of its debts (including contingent liabilities);
and
(b) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts
become absolute and matured; and
ANNEX A
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31
(c) it is then able and expects to be able to pay its
debts (including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent,
the amount of any contingent liability shall be computed as the amount that,
in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stated Termination Date" means June 27, 2005.
-----------------------
"Subordinated Debt" means Debt, subordinated to the
-----------------
Obligations on terms satisfactory to Agent and Lenders, including the
Convertible Notes and the Senior Subordinated Notes.
"Subsidiary" of a Person means any corporation,
----------
association, partnership, limited liability company, joint venture or other
business entity of which more than fifty percent (50%) of the voting Capital
Stock, is owned or controlled directly or indirectly by the Person, or one
or more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of Parent.
"Supporting Letter of Credit" has the meaning set forth in
---------------------------
Section 1.4(g).
--------------
"Taxes" means any and all present or future taxes, levies,
-----
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or
measured by the Agent's or each Lender's net income in any jurisdiction
(whether federal, state or local and including any political subdivision
thereof) under the laws of which such Lender or the Agent, as the case may
be, is organized or maintains a lending office.
"Termination Date" means the earliest to occur of (i) the
----------------
Stated Termination Date, (ii) the date the Total Facility is terminated
either by the Borrowers pursuant to Section 3.2 or by the Required Lenders
-----------
pursuant to Section 9.2, and (iii) the date this Agreement is otherwise
-----------
terminated for any reason whatsoever pursuant to the terms of this
Agreement.
"Total Facility" has the meaning specified in Section 1.1.
-------------- -----------
"UCC" means the Uniform Commercial Code, as in effect from
---
time to time, of the State of California or of any other state the laws of
which are required as a result thereof to be applied in connection with the
issue of perfection of security interests; provided, that to the extent that
--------
the UCC is used to define any term herein or in any other documents and such
term is defined differently in different Articles or Divisions of the UCC,
the definition of such term contained in Article or Division 9 shall govern.
ANNEX A
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32
"Unfunded Pension Liability" means the excess of a Plan's
--------------------------
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for
the applicable plan year.
"Unused Letter of Credit Subfacility" means an amount
-----------------------------------
equal to $25,000,000 minus the sum of (a) the aggregate undrawn amount of
-----
all outstanding Letters of Credit plus, without duplication, (b) the
----
aggregate unpaid reimbursement obligations with respect to all Letters of
Credit.
"Unused Line Fee" has the meaning specified in Section
--------------- -------
2.5.
---
2. Accounting Terms. Any accounting term used in the Agreement
----------------
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations in
the Agreement shall be computed, unless otherwise specifically provided
therein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements; provided, however, that if GAAP shall have been modified after
-------- -------
the Initial Funding Date and the application of such modified GAAP shall
have a material effect on such financial computations (including the
computations required for the purpose of determining compliance with the
covenants set forth in Article 7), then such computations shall be made and
---------
such financial statements, certificates and reports shall be prepared, and
all accounting terms not otherwise defined herein shall be construed, in
accordance with GAAP as in effect prior to such modification, unless and
until the Majority Lenders and Parent shall have agreed upon the terms of
the application of such modified GAAP.
3. Interpretive Provisions.
-----------------------
(a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to the Agreement as a whole and not to any particular provision
of the Agreement; and Subsection, Section, Schedule and Exhibit references
are to the Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and
other writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time from
a specified date to a later specified date, the word "from" means
"from and including," the words "to" and "until" each mean "to but
excluding" and the word "through" means "to and including."
ANNEX A
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33
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including the Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of the Agreement and other
Loan Documents are for convenience of reference only and shall not affect
the interpretation of the Agreement.
(f) The Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative
and shall each be performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of a financial
-----------
covenant contained in Sections 7.22-7.23 shall be deemed to have occurred as
------------------
of any date of determination thereof by the Agent or as of the last day of
any specified measuring period, regardless of when the Financial Statements
or other certificates reflecting such breach are delivered to the Agent.
(h) With respect to any action required to be performed
by a party hereto on a date which would not be a Business Day, such
performance shall be deemed to be required on the first Business Day
thereafter.
(i) The Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Parent, the Borrowers and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Lenders or the
Agent merely because of the Agent's or Lenders' involvement in their
preparation.
ANNEX A
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34