EXHIBIT 4(o)
LOAN AND SECURITY AGREEMENT
Dated as of October 11, 2001
among
MATERIAL SCIENCES CORPORATION
and
LASALLE BANK NATIONAL ASSOCIATION,
THE NORTHERN TRUST COMPANY
and
LASALLE BANK NATIONAL ASSOCIATION,
AS AGENT
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as of
October 11, 2001, is entered into among "Agent", "Lenders" and "Borrower"
(hereinafter defined).
R E C I T A L S:
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A. Borrower has requested that (i) Lenders make available to Borrower
a syndicated revolving credit facility in the aggregate principal amount not to
exceed $20,000,000, with a letter of credit subfacility in an amount not to
exceed $8,000,000, and (ii) Agent be appointed as agent for Lenders.
B. Each Lender is willing to make the accommodations and Agent is
willing to be appointed as agent for itself and for any additional Lender, all
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the parties' mutual agreements
contained herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 General Terms. As used in this Agreement, the following terms
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shall have the following definitions:
"Account Debtor" means the Person who is obligated on or under an Account.
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"Accounts" means all presently existing and hereafter arising accounts, accounts
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receivable, contract rights, instruments, documents, chattel paper, and all
other forms of obligations owing to Borrower or the Guarantors, in each case
arising out of the sale or lease of goods or the rendition of services thereby,
whether or not earned by performance, and any and all credit insurance,
guarantees, letters of credit and other security therefor, as well as all
merchandise returned to or reclaimed thereby, and all products and proceeds of
the foregoing.
"Acquisition" means any transaction or series of related transactions for the
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purpose of or resulting, directly or indirectly, in (i) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (ii) the acquisition of in excess of 50% of the capital stock,
partnership interest, membership interest or equity of any Person, or otherwise
causing any Person to become a Subsidiary, or (iii) a merger or consolidation or
any other combination with any other Person (other than a Person that is a
Subsidiary) provided that Borrower is the surviving entity.
"Affiliate" means any corporation or any other Person that directly or
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indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with Borrower. A Person shall be deemed to be
"controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 25% or more of the securities (on a fully diluted
basis) having
ordinary voting power for the election of directors or managers or power to
direct or cause the direction of the management and policies of such Person
whether through the ownership of voting securities, membership interests, by
contract or otherwise.
"Agent" means LaSalle Bank National Association in its separate capacity as
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agent for Lenders.
"Agreement" means this Loan and Security Agreement, any and all exhibits or
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schedules thereto, any and all concurrent or subsequent riders to this Loan and
Security Agreement and any extensions, supplements, amendments, modifications or
restatements to or of this Loan and Security Agreement and/or to or of any such
rider.
"Applicable Lending Office" means for Agent and each Lender and for each loan or
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extension of credit hereunder, the lending office of Agent or Lender designated
on the signature pages hereof or such other office of such Lender as such Lender
may from time to time specify to Agent and Borrower in writing as the office by
which its Loans are to be made and maintained.
"Applicable Margin" means an incremental amount in excess of the Libor Rate or
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the Prime Rate, as applicable, as set forth on Annex A attached hereto, which
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will fluctuate as a function of the ratio pursuant to Section 2.10(a) below and
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said Annex A.
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"Asset Sale" means the sale, lease, assignment or other transfer for value (each
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a "Disposition") by Borrower or any Subsidiary to any Person (other than
Borrower or any Subsidiary) of any asset or right of Borrower or such Subsidiary
other than (a) the Disposition of any asset which is to be replaced, and is in
fact replaced, within one hundred-eighty (180) days with another asset
performing the same or a similar function, (b) the sale or lease of inventory in
the ordinary course of business, and (c) other Dispositions in any Fiscal Year
the Net Proceeds of which do not in the aggregate exceed $250,000.
"Assignment Agreement" has the meaning set forth in Section 2.25(b) hereof.
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"Authorized Representative" means an officer, director, employee or other Person
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designated by Borrower to execute this Agreement and/or any Loan Document.
"Balance Sheet Leverage" means Liabilities divided by Tangible Net Worth.
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"Benefit Plan" means an employee pension benefit plan of Borrower or an ERISA
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Affiliate, as defined in Section 3(2) of ERISA, which is subject to Title IV of
ERISA.
"Borrower" means Material Sciences Corporation, a Delaware corporation.
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"Borrower's Books" means all of Borrower's books and records including, but not
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limited to: correspondence, writings, minute books; ledgers; records indicating,
summarizing, or evidencing Borrower's assets, liabilities, the Accounts and all
information relating thereto; records indicating, summarizing, or evidencing
Borrower's business operations or financial condition; and all computer
programs, disc or tape files, printouts, runs, and other computer prepared
information and the equipment containing such information and any software
necessary to operate the same.
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"Borrower's Loan Account" means a loan account maintained by Agent on its books
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in which shall be recorded (i) all loans and advances made by Lenders to
Borrower pursuant to this Agreement, (ii) all payments made by Borrower on all
such loans and advances, and (iii) all other appropriate debits and credits as
provided in this Agreement, including, without limitation, all Out-of-Pocket
Fees and Costs and interest; all such entries shall be made by Agent in
accordance with Agent's customary accounting practices as in effect from time to
time.
"Business Day" means any day on which LaSalle is open for commercial banking
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business in Chicago, Illinois, and in the case of a Business Day which relates
to a Eurodollar Loan, on which dealings are carried on in the London Interbank
eurodollar market.
"Capital Expenditures" means all expenditures which, in accordance with
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Generally Accepted Accounting Principles, would be required to be capitalized
and shown on the consolidated balance sheet of Borrower and its Subsidiaries,
but excluding (a) expenditures made in connection with Acquisitions and (b)
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored, (ii) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced, or (iii)
with proceeds from Asset Sales.
"Capital Lease" means, with respect to any Person, any lease of (or other
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agreement conveying the right to use) any real or personal property by such
Person that, in conformity with Generally Accepted Accounting Principles, is
accounted for as a capital lease on the balance sheet of such Person.
"Cash Balances" means all cash or deposit account balances of Borrower and
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Guarantors plus any Cash Equivalent Investments thereof.
"Cash Collateralize" means to pledge and deposit with or deliver to Agent, for
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the benefit of Agent, Issuing Bank and Lenders, as collateral for the
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to Agent and Issuing Bank (which documents are hereby
consented to by Lenders), in an amount of at least 100% of the aggregate amount
of the outstanding Obligations. Borrower hereby grants Agent, for the benefit of
Agent, Issuing Bank and Lenders, a security interest in all such cash and
deposit account balances. Cash collateral shall be maintained in blocked deposit
accounts at LaSalle.
"Cash Equivalent Investment" means, at any time, (a) any evidence of
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Indebtedness, maturing not more than one year after such time, issued or
guaranteed by the United States Government or any agency thereof, (b) commercial
paper, maturing not more than one year from the date of issue, or corporate
demand notes, in each case (unless issued by a Lender or its holding company)
rated at least A-1 by Standard & Poor's Ratings Group or P-1 by ▇▇▇▇▇'▇
Investors Service, Inc., and (c) any certificate of deposit (or time deposits
represented by such certificates of deposit) or banker's acceptance, maturing
not more than one year after such time, or overnight federal funds transactions
that are issued or sold by any Lender or its holding company or by a commercial
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banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
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Liability Act of 1980.
"Change of Control" means the occurrence, after the date of this Agreement, of
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any of the following: (a) any Person or two or more Persons acting in concert
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the SEC
under the Exchange Act), directly or indirectly, of securities of Borrower (or
other securities convertible into such securities) representing 30% or more of
the combined voting power of all securities of Borrower entitled to vote in the
election of directors; or (b) during any period of up to 12 consecutive months,
commencing after the Closing Date, individuals who at the beginning of such
12-month period were directors of Borrower ceasing for any reason to constitute
a majority of the Board of Directors unless the Persons replacing such
individuals were nominated by the Board of Directors of Borrower.
"Closing" has the meaning set forth in Section 5.1 hereof.
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"Code" means the Uniform Commercial Code of the State of Illinois as in effect
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from time to time during the Initial Term and any renewal term hereof, and any
and all terms used in this Agreement which are not otherwise defined herein but
are defined in the Code shall be construed and defined in accordance with the
meaning and definition ascribed to such terms under the Code.
"Collateral" means all right, title or interest in and to and all Accounts of
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Borrower and of its Subsidiaries, whether now existing or owned or hereafter
created or acquired and all products and proceeds of every nature of the
foregoing, including, but not limited to, proceeds of insurance covering the
Accounts and any and all Negotiable Collateral, contract rights, instruments,
documents and chattel paper, money, deposit accounts or other tangible and
intangible property resulting from the sale or other disposition of the
Collateral, and the proceeds and products thereof; provided, however, that the
Excluded Accounts shall not constitute Collateral hereunder.
"Commitment" means, as to any Lender, such Lender's commitment to make Loans,
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and to issue or participate in Letters of Credit, under this Agreement. The
initial amount of each Lender's Pro Rata Share of the Revolving Loan Commitment
is set forth on the signature page hereof.
"Commitments" means collectively the Revolving Loan Commitments.
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"Contingent Indemnification Obligations" means Obligations for the
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indemnification of the Agent and/or the Lenders arising under Section 2.20,
Section 9.12 or Section 19 or under similar substantive provisions of this
Agreement or any of the Loan Documents, with respect to which there is no claim
pending or threatened as of the date of determination.
"Contributing Sponsor" means any person described in Section 4001(a)(13) of
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ERISA with respect to a Benefit Plan.
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"Controlled Group" means all members of a controlled group of corporations and
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all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with Borrower, are treated as
a single employer under Section 414 of the Code or Section 4001 of ERISA.
"Default Rate" has the meaning set forth in Section 2.10(b) hereof.
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"Dollars", "dollars" and "$" each mean the lawful money of the United States.
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"EBITDA" means, as to Borrower and its Subsidiaries for any measurement period,
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the sum, reported on a consolidated basis, of (i) Net Income for that
measurement period, (ii) Interest Expense for that measurement period, (iii)
depreciation and amortization expenses for that measurement period and (iv)
Taxes for that measurement period, all determined in accordance with Generally
Accepted Accounting Principles consistently applied.
"Effective Date" means the date on which the conditions precedent for initial
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loans under Section 5 hereof have been satisfied and the initial Revolving Loans
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have been made.
"Environmental Claims" means all claims, however asserted, by any governmental,
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regulatory or judicial authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law.
"Environmental Laws" means any applicable laws, statutes, rules, regulations,
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orders, consent decrees, permits or licenses of any governmental authority,
relating to prevention, remediation, reduction or control of pollution, or
protection of the environment, natural resources and/or human health and safety,
including, without limitation, such applicable laws, statutes, rules,
regulations, orders, consent decrees, permits or licenses relating to (a) solid
waste and/or Hazardous Materials treatment, storage, disposal, general and
transactions, (b) air, water, and noise pollution, (c) soil, ground, water or
groundwater contamination, (d) the generation, handling, storage, transportation
or Release into the environment of Hazardous Materials, and (e) regulation of
underground and above ground storage tanks.
"Environmental Matters" means any matter arising out of or relating to health
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and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Materials.
"Equipment" means the machinery, apparatus and equipment of Borrower or its
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Subsidiaries, including without limitation processing equipment, data processing
and computer equipment with software and peripheral equipment, and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, molds, dies, attachments,
accessories, automotive equipment, trailers, trucks, tractors, motor vehicles,
vessels, aircraft and rolling stock, and other equipment of every kind and
nature, and trade fixtures and fixtures, and other tangible personal property
(other than Inventory) of every kind and description used in the business of
such Person or owned by such Person or in which such Person has an interest, all
whether now owned or hereafter acquired, and wheresoever situated, together with
all additions
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and accessions thereto, substitutions and replacements therefor, all parts
therefor, and all manuals, drawings, instructions, warranties, and rights with
respect thereto, and all products and proceeds of the foregoing, and
condemnation awards and insurance proceeds with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
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and all references to sections thereof shall include such sections and any
predecessor and successor provisions thereto.
"ERISA Affiliate" means each trade or business (whether or not incorporated)
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which, together with Borrower, would be treated as a single employer under
Section 4001(a)(14) of ERISA or IRC Section 414(b), (c), (m), (n) or (o), as
applicable.
"Eurodollar Loan" means any Loan with respect to which Borrower shall have
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selected an interest rate based on the Libor Rate in accordance with the
provisions of Section 2.2(a) of this Agreement; provided, however, that there
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shall not be in excess of five (5) Eurodollar Loans outstanding at any one time.
"Eurodollar Office" means with respect to any Lender the office or offices of
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such Lender which shall be making or maintaining the Eurodollar Loans of such
Lender hereunder. A Eurodollar Office of any Lender may be, at the option of
such Lender, either a domestic or foreign office.
"Event of Default" means the occurrence of any one or more of the events set
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forth in Section 12 of this Agreement.
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"Excluded Accounts" means the Accounts of Pinole Point.
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"Excluded Subsidiaries" means those Subsidiaries of Borrower that are not
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Guarantors.
"Fair Value" means assets and liabilities as determined in accordance with
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Generally Accepted Accounting Principles, except that assets shall be reflected
at present fair saleable value and liabilities shall reflect a complete
statement of liabilities, fixed or contingent, direct or indirect, disputed or
undisputed, whether or not required to be reflected on a balance sheet prepared
in accordance with Generally Accepted Accounting Principles.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
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"Fiscal Year" means with respect to Borrower, the fiscal year of Borrower ending
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on February 28 of each year.
"Fixed Charge Coverage Ratio" means the ratio resulting from dividing (I) a
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numerator consisting of EBITDA minus (a) Taxes, minus (b) Unfinanced Capital
Expenditures, by (II) a denominator consisting of the sum of (x) Principal
Payments and (y) Interest Expense, all for the subject time period.
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"Funded Debt" means all Indebtedness, including without limitation all
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Obligations, Unsecured Indebtedness, and Indebtedness with respect to Capital
Leases and Unfunded Pension Liabilities, minus Cash Balances; provided, that
Funded Debt shall not include Subordinated Debt.
"Generally Accepted Accounting Principles" or "GAAP" means, with respect to any
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date of determination, generally accepted accounting principles as used by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants consistently applied and maintained throughout the periods
indicated.
"Guarant(ies)" means the guaranties in the form of Exhibit F hereto.
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"Guarantor(s)" means individually and collectively MSC Pre Finish Metals Inc.,
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MSC Pre Finish Metals (EGV) Inc., MSC Pre Finish Metals (MV) Inc., MSC Pre
Finish Metals (MT) Inc., MSC Pre Finish Metals (PP) Inc., Pinole Point, MSC
Laminates and Composites Inc., MSC Laminates and Composites (EGV) Inc., and MSC
▇▇▇▇▇▇▇▇▇ Coatings Inc., as well as any Person that hereafter becomes a
Guarantor pursuant to Section 8.5(b) hereof.
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"Guarantor Funding Ratio" means, as of the end of any Fiscal Quarter, the ratio
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of the Outstandings (as defined in Section 11.5 hereof) for a particular
Guarantor divided by the sum of all Accounts attributable to such Guarantor.
"Hazardous Materials" means any flammable or explosive materials, petroleum
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(including crude oil and its fractions), radioactive materials, hazardous
wastes, toxic substances or related hazardous materials, including without
limitation polychlorinated biphenyls, friable asbestos, and any substances
defined as, or included in the definition of toxic or hazardous substances,
wastes, or materials under any Environmental Laws.
"Indebtedness" means, with respect to any Person, (a) indebtedness for borrowed
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money or for the deferred purchase price of property or services (other than
trade or account payables entered into in the ordinary course of business on
normal trade terms, payments under earn-out agreements and wages, benefits,
deferred compensation and other accrued benefits) in respect of which such
Person is liable, contingently or otherwise, as obligor or otherwise, including
without limitation accounts payable and accrued indebtedness owed by such Person
or any commitment by which such Person assures a creditor against loss,
including contingent reimbursement obligations with respect to letters of
credit, (b) indebtedness guaranteed in any manner by such Person, including
guarantees in the form of an agreement to repurchase or reimburse, (c)
obligations under leases which shall have been or should be, in accordance with
Generally Accepted Accounting Principles, recorded as Capital Leases, in respect
of which obligations such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss, (d) any Unfunded Pension Liabilities, (e) any
Permitted Swap Obligation (to the extent to be required to be marked to market
under GAAP) of such Person, and (f) all Suretyship Liabilities of such Person.
"Initial Term" has the meaning set forth in Section 3.1 hereof.
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"Interest Expense" means, for any period, for Borrower and its Subsidiaries and
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determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles, (i) gross interest expense on any Indebtedness for the
period (including that portion of Capital Leases attributable to interest), plus
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(ii) any payments made under interest rate Swap Contracts to the extent not
included in gross interest expense, less (iii) interest income, less (iv) the
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sum of any payments received under interest rate Swap Contracts.
"Interest Payment Date" means the last day of any Interest Period, and, with
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respect to any Interest Period for Eurodollar Loans of six months duration, also
the three-month anniversary of the first day of such Interest Period.
"Interest Period" means: (i) as to any Eurodollar Loan, the period commencing on
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the date of such Eurodollar Loan and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3 or 6 months thereafter, as Borrower may elect,
and (ii) as to any Prime Rate Loan, the period commencing on the date of such
Prime Rate Loan and ending on the earlier of (A) the last Business Day of each
calendar month, and (B) the expiration or earlier termination of this Agreement;
provided, however, that (i) if any Interest Period would end on a day that shall
not be a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, with respect to Eurodollar Loans only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day, (ii)
no Interest Period with respect to any Revolving Loan shall end later than the
expiration of the term of this Agreement, and (iii) interest shall accrue from
and including the first day of an Interest Period to and including the last day
of such Interest Period.
"Inventory" means all present and future inventory in which Borrower or any of
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its Subsidiaries has any interest, including, but not limited to, finished goods
intended for sale or lease by such Person, or to be furnished under a contract
of service, or for display or demonstration; all work in process, all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or consumed in
the business of such Person, or any inventory which has been returned or
repossessed or stopped in transit, wherever located, and any documents of title
representing any of the above.
"Investment" means, relative to any Person, any investment in another Person,
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whether by acquisition of any debt or equity security, by making any loan or
advance or by becoming obligated with respect to a Suretyship Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).
"IRC" means the Internal Revenue Code of 1986, as amended, and all references to
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sections thereof shall include such sections and any predecessor and successor
provisions thereto.
"Issuing Bank" means LaSalle in its capacity as the issuer of Letters of Credit
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hereunder and its successors and assigns in such capacity.
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"LaSalle" means LaSalle Bank National Association, a national banking
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association, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Lender" means the individual reference to any of the financial institutions
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from time to time party to this Agreement.
"Lenders" means collectively, the financial institutions from time to time party
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to this Agreement.
"Letters of Credit" means any standby or trade letters of credit which are now
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or hereafter at any time issued by Agent at the request of and for the account
of Borrower pursuant to the terms of this Agreement and which have not expired
or been canceled or terminated.
"Leverage Ratio" means Funded Debt divided by EBITDA.
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"Liabilities" means all liabilities under GAAP as such would appear on the
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consolidated balance sheet of Borrower and its Subsidiaries.
"Libor" means the London Interbank Offered Rate.
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"Libor Rate" means, with respect to any Eurodollar Loan for any Interest Period,
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the interest rate per annum equal to the quotient obtained by dividing (x) the
rate of interest determined by Agent to be the average of the rate per annum at
which deposits in U.S. dollars are generally offered in the London Interbank
Bank at 11:00 A.M. London time, two (2) Business Days before the first day of
such Interest Period, as set forth on the Dow ▇▇▇▇▇ Market Page 3750 (or any
successor page), for a period equal to such Interest Period and in the amount of
the applicable Eurodollar Loan, by (y) the difference between one hundred
percent (100%) and any applicable reserve requirements (rounded upward to the
nearest whole multiple of one sixteenth (1/16th) of one percent (1%) per annum),
including, without limitation, any statutory maximum requirement for Lenders to
hold reserves for "Eurocurrency Liabilities" under Regulation D of the Board of
Governors of the Federal Reserve System (or any similar reserves under any
successor regulation or regulations).
"Lien" means, with respect to any Person, any mortgage, deed of trust, pledge,
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fixed or floating charge, lien, security interest, or encumbrance or security
arrangement of any nature whatsoever, whether arising by agreement or by
operation of law, including without limitation any conditional sale or title
retention arrangement and any assignment, deposit arrangement or lease intended
as or having the effect of, security.
"Liquidity Ratio" means Accounts of Borrower and its Guarantors, minus the
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Excluded Accounts, divided by Outstandings.
"Loan(s)" means the collective reference to the Revolving Loans.
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"Loan Documents" means all agreements, instruments and documents, including
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without limitation security agreements, loan agreements (including without
limitation this Agreement), notes, pledges, affidavits, certificates, powers of
attorney, consents, assignments, opinions,
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collateral assignments, reimbursement agreements, contracts, notices, financing
statements, and all amendments, supplements, restatements and renewals thereof,
and all other written matter, whether heretofore, now or hereafter executed, by
or on behalf of Borrower or any other Person in connection with the Obligations
or the transactions contemplated hereby (including without limitation any
Guaranty), and delivered to Agent or Lenders, together with all agreements,
instruments and documents referred to therein or contemplated thereby whether
heretofore, now or hereafter executed by or on behalf of Borrower or any such
other Persons and delivered to Agent or Lenders, and all amendments,
supplements, restatements and renewals thereof, but not including any proposal
letter, commitment letter or other comparable documents delivered by Agent prior
to the date hereof and not expressly incorporated herein and made a part hereof.
"Majority Lenders" means, at any time, while no Obligations are outstanding, two
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or more Lenders having in excess of 50% of the aggregate amount of the
Commitments and, at any time while Obligations are outstanding, two or more
Lenders holding in excess of 50% of the outstanding aggregate principal amount
of the Obligations.
"Mandatory Prepayment Event" has the meaning set forth in Section 3.5 hereof.
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"Master Letter of Credit Agreement" means that certain Master Letter of Credit
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Agreement between Borrower and LaSalle attached hereto in the form of Exhibit A.
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"Material Adverse Effect" means (a) a material adverse change in, or a material
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adverse effect upon, the financial condition, operations, assets, business or
properties of the Borrower and its Subsidiaries, taken as a whole, or (b) a
material impairment of the ability of such Person to perform in any material
respect under any Loan Document, or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against Borrower or its
Subsidiaries of any Loan Document.
"Maximum Revolving Credit Facility" means $20,000,000.
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"Multiemployer Plan" means a plan described in Section 4001(a)(3) of ERISA which
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covers employees of Borrower or any ERISA Affiliate.
"Negotiable Collateral" means a letter of credit, advice of credit, instrument,
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money, negotiable document, warehouse receipt, ▇▇▇▇ of lading, certificated
security, certificate of title, certificate of deposit, chattel paper, or
similar property, and proceeds thereof.
"Net Cash Proceeds" means:
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1. with respect to any Asset Sale the aggregate cash proceeds
(including cash proceeds received by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only as and when
received) received by Borrower pursuant to such Asset Sale net of (i) the direct
costs relating to such sale, transfer or other disposition calculated in
accordance with Generally Accepted Accounting Principles (including, without
limitation, sales commissions and legal, accounting and investment banking
fees), (ii) taxes paid or reasonably estimated by Borrower to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and (iii) amounts required to be
applied to the repayment of any Indebtedness secured by a Lien on the asset
subject to such Asset Sale (other than the Loans);
2. with respect to any issuance of equity securities, the aggregate
cash proceeds received by Borrower pursuant to such issuance, net of the direct
costs relating to such issuance (including reasonable sales and underwriter's
commissions to unaffiliated third parties); and
3. with respect to any issuance of Indebtedness, the aggregate cash
proceeds received by Borrower pursuant to such issuance, net of the direct costs
of such issuance (including reasonable up-front fees and placement fees to
unaffiliated third parties).
"Net Income" means for a subject period, the Net Income (or loss) of Borrower
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and its Subsidiaries on a consolidated basis, for that period as determined in
accordance with Generally Accepted Accounting Principles, but excluding (i) any
gain or loss relating to a Strategic Transaction with respect to Pinole Point
and any gain or loss with respect to the discontinued operation of Pinole Point,
(ii) any gain or loss in excess of $100,000 individually on the sale of any
asset not in the ordinary course of business, (iii) any extraordinary income or
loss and (iv) any gain or loss on discontinued operations.
"Net Worth" means the sum of the total of all assets which, under Generally
---------
Accepted Accounting Principles, would appear as assets on the balance sheet of
Borrower and its Subsidiaries determined on a consolidated basis, less the
Liabilities, which, under Generally Accepted Accounting Principles, would appear
as liabilities on the balance sheet of Borrower.
"Note Agreement(s)" means all documents related to the Unsecured Indebtedness.
-----------------
"Notes" means the Revolving Loan Notes.
-----
"Obligations" means each and every promise, agreement, covenant, debt and all
-----------
other obligations and indebtedness of Borrower or of any Guarantor to Agent and
Lenders (and with respect to Permitted Swap Obligations, Lenders' affiliates),
their successors or assigns, whether primary, secondary, contingent, direct, or
indirect, howsoever incurred, created, arising or evidenced, whether presently
or hereafter existing, evidenced, arising or becoming due, in connection with
the Loans or under this Agreement, the Notes, any Loan Documents, any Permitted
Swap Obligations or any refinancings, substitutions, extensions, renewals,
replacements and modifications for or of the foregoing, and further including
without limitation all interest, all Out-
11
of-Pocket Fees and Costs which Borrower is required to pay or reimburse by this
Agreement or any other Loan Document, or by law.
"Operating Lease" means any lease of (or other agreement conveying the right to
---------------
use) any real or personal property by Borrower or any Subsidiary, as lessee,
other than any Capital Lease.
"Out-of-Pocket Fees and Costs" means those fees, costs and expenses payable
----------------------------
pursuant to Section 2.11(e) hereof.
---------------
"Outstandings" means all Indebtedness outstanding under this Agreement.
------------
"PBGC" means the Pension Benefit Guaranty Corporation or any successor agency.
----
"Participant" means any Person now or from time to time hereafter participating
-----------
with Lenders in any of the Loans and Letters of Credit made or issued by Lenders
to Borrower pursuant to this Agreement.
"Pension Plan" means a "pension plan" as such term is defined in Section 3(2) of
------------
ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Plan),
and to which Borrower or any of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under Section
4069 of ERISA.
"Permitted Liens" has the meaning set forth in Section 8.1 hereof.
--------------- -----------
"Permitted Swap Obligations" means all obligations (contingent or otherwise) of
--------------------------
Borrower or any Subsidiary existing or arising under Swap Contracts, provided
that each of the following criteria is satisfied: (i) such obligations are
entered in to by such Person in the ordinary course of business for the purpose
of directly mitigating risks associated with liabilities, commitments or assets
held or reasonably anticipated by such Person, or changes in the value of
securities issued by such Person in conjunction with a securities repurchase
program not otherwise prohibited hereunder, and not for purposes of speculation;
(ii) such Swap Contracts do not (a) contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party, or (b) contain, for any Swap Contract
entered into with any counterparty other than a Lender, any provisions creating
or permitting the declaration of an event of default, termination event or
similar event upon the occurrence of an Event of Default hereunder (other than
an Event of Default under subsection 12.1) and (iii) such Swap Contracts do not
exceed the Revolving Loan Termination Date, provided that forward contracts do
not exceed a term of one (1) year.
"Person" means any individual, sole proprietorship, partnership, joint venture,
------
trust, unincorporated organization, association, corporation, institution,
limited liability company, entity or governmental entity, whether acting in an
individual, fiduciary or other capacity.
"Pinole Point" means MSC Pinole Point Steel Inc.
------------
12
"Potential Default" means any event which solely through the passage of time,
-----------------
service of notice or both, would mature into an Event of Default.
"Principal Payments" means the sum of all payments of principal of any
------------------
Indebtedness of Borrower.
"Prime Rate" means for any day, the rate of interest in effect for such day as
----------
publicly announced from time to time by LaSalle as its prime rate (whether or
not such rate is actually charged by LaSalle). Any change in the Prime Rate
announced by LaSalle shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Prime Rate Loan" means any Loan with respect to which Borrower shall have
---------------
selected an interest rate based upon the Prime Rate in accordance with the
provisions of Section 2.3(a) of this Agreement.
--------------
"Prime Rate Option" means any Loan as to which interest accrues at the Prime
-----------------
Rate plus the corresponding appropriate Applicable Margin.
"Prohibited Transaction" means any transaction described in Section 406 of ERISA
----------------------
which is not exempt by reason of Section 408 of ERISA, and any transaction
described in Section 4975(c) of the IRC which is not exempt by reason of
Sections 4975(c)(2) or (d) of the IRC, and which could reasonably be expected to
result in any excise tax, fine, penalty or other liability (in any amount of at
least $100,000) being imposed on Borrower or any Guarantor.
"Property" means any kind of property or asset, whether real, personal or mixed,
--------
tangible or intangible, and any interest therein.
"Pro Rata Share" means, with respect to any Lender, a fraction (expressed as a
--------------
percentage), the numerator of which shall be the aggregate amount of such
Lender's Commitment and the denominator of which shall be the aggregate
Commitments.
"RCRA" means the Resource Conservation and Recovery Act.
----
"Regulation D" means Regulation D of the Board of Governors under Federal
------------
Reserve System.
"Regulation U" means Regulation U of the Board of Governors under the Federal
------------
Reserve System.
"Release" has the meaning specified in CERCLA including, but not limited to, any
-------
actual or threatened past, present or future releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, seeping, injecting, escaping,
leaching, dumping or disposing, whether intentional or not; and the term
"Disposal" (or "Disposed") has the meaning specified in RCRA; provided that in
--------
the event either CERCLA or RCRA is amended so as to change the meaning of any
term defined thereby, such amended meaning shall apply as of the effective date
of such amendment.
13
"Reportable Event" means a reportable event described in Section 4043 of ERISA
----------------
or the regulations thereunder, for which the thirty (30) day notice requirement
has not been waived.
"Revolving Loan Commitment" means as to each Lender, the amount set forth
-------------------------
opposite its name on the signature pages hereto under the heading "Revolving
Loan Commitment."
"Revolving Loan Commitment Percentage" means as to any Lender, the percentage
------------------------------------
set forth opposite its name on the signature pages hereto under the heading
"Revolving Loan Commitment Percentage".
"Revolving Loan Notes" has the meaning set forth in Section 2.1 hereof.
-------------------- -----------
"Revolving Loan Termination Date" means October 11, 2004.
-------------------------------
"Revolving Loans" has the meaning set forth in Section 2.1 hereof.
--------------- -----------
"SEC" means the Securities and Exchange Commission or any other governmental
---
authority succeeding to any of the principal functions thereof.
"Security Agreement" means the security agreement(s) in the form of Exhibit G
------------------ ---------
hereto.
"Strategic Transaction" means a sale of substantially all assets of Pinole Point
---------------------
or any other strategic transaction (including a merger or a joint venture
involving such assets or a major component of the business of Pinole Point) or
the sale of the stock thereof.
"Subordinated Debt" means any Indebtedness that is subordinated, in form and
-----------------
substance satisfactory to Agent in all respects, to the Obligations.
"Subsidiary" means any corporation of which more than fifty percent (50%) of the
----------
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the time
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by Borrower, or any partnership or joint venture
of which more than fifty percent (50%) of the outstanding equity interests are
at the time, directly or indirectly, owned by Borrower.
"Suretyship Liability" means any agreement, undertaking or arrangement by which
--------------------
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to or otherwise to assure a creditor against loss)
any indebtedness, obligation or other liability of any other Person (other than
by endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation in respect of any Suretyship Liability
shall (subject to any limitation set forth therein) be deemed to be the
principal amount of the debt, obligation or other liability supported thereby.
14
"Swap Contract" means any agreement, whether or not in writing, relating to any
-------------
transaction that is a rate swap, basis swap, forward rate transaction, forward
exchange contract or strategy, commodity swap, equity or equity index swap,
interest rate option, cap, collar or floor transaction, currency swap, cross
currency rate swap, currency option or any other similar interest rate or
currency hedging transaction (including, the option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing all or
any of the foregoing.
"Tangible Net Worth" means Net Worth less all of the following of Borrower and
------------------
its Subsidiaries: (i) all prepaid expenses and (ii) the book value of all assets
which would be treated as general intangibles under Generally Accepted
Accounting Principles, including, without limitation, goodwill, trademarks,
tradenames, brands, copyrights, patents, licenses, deferred charges and
covenants not to compete and capitalized transaction fees.
"Taxes" means the provision or benefit for income taxes of Borrower and its
-----
Subsidiaries with respect to a subject time period.
"Uncured Default" means an Event of Default which shall be continuing.
---------------
"Unfinanced Capital Expenditures" means the sum of all Capital Expenditures of
-------------------------------
Borrower as to which Borrower has not incurred Indebtedness with a third party
(other than Lenders).
"Unfunded Pension Liabilities" means any unfunded obligation of any Person to
----------------------------
any Benefit Plan or Multiemployer Plan.
"Unsecured Indebtedness" means, collectively, Borrower's (i) Senior Notes
----------------------
totaling $50,000,000 due May 31, 2007, (ii) Senior Notes totaling $5,000,000 due
May 31, 2003, (iii) Senior Notes totaling $56,500,000 due May 31, 2010.
1.2 Accounting Terms. Any accounting terms used in this Agreement which are
----------------
not specifically defined herein shall have the meanings customarily given them
in accordance with Generally Accepted Accounting Principles. In the event that
changes in Generally Accepted Accounting Principles shall be mandated by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants or any similar accounting body of comparable standing, or
shall be recommended by Borrower's certified public accountants, to the extent
that such changes would modify such accounting terms or the interpretation or
computation thereof as contemplated by this Agreement at the time of execution
hereof, then in such event such changes shall be followed in defining such
accounting terms only after Borrower and Agent shall have agreed to amend this
Agreement to reflect the original intent of such terms in light of such changes,
and such terms shall continue to be applied and interpreted without such change
until such agreement.
1.3 Certain Matters of Construction. The terms "herein" "hereof" and
-------------------------------
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles and list of exhibits
appear as a matter of convenience only and shall not affect the
15
interpretation of this Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including, without
limitation, references to any of the Loan Documents shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof. The Recitals to this Agreement are incorporated into this Agreement in
their entirety and deemed to be a part hereof.
2. LOANS; LETTERS OF CREDIT; FEES; TERMS OF PAYMENT
2.1 Revolving Credit Facility. Subject to the terms and provisions of
-------------------------
this Agreement including without limitation, that no Event of Default or
Potential Default has occurred and all other conditions precedent to lending
under Section 5 hereof have been satisfied, upon the request of Borrower, made
---------
at any time and from time to time until the Revolving Loan Termination Date,
each of Lenders severally and not jointly agrees to make loans and advances
(hereinafter individually referred to as a "Revolving Loan" and collectively as
"Revolving Loans") to Borrower from time to time in the amount of each Lender's
Revolving Loan Commitment Percentage of the Revolving Loans requested by
Borrower so long as the aggregate amount of the Revolving Loans outstanding at
any time does not exceed the Maximum Revolving Credit Facility, minus the sum of
the aggregate undrawn face amount of any Letters of Credit outstanding at such
time and any unreimbursed drawings with respect to Letters of Credit, and in the
case of each Lender, up to but not exceeding each Lender's Revolving Loan
Commitment.
The Revolving Loans shall be evidenced by, and repayable in accordance with,
Revolving Loan Notes substantially in the form of Exhibit B hereto ("Revolving
---------
Loan Notes").
2.2 Borrowing Procedures. Agent shall have received, on or before
--------------------
12:00 p.m. Chicago time, on the day a Revolving Loan is to be made, if a Prime
Rate Loan, or two (2) Business Days prior to the date a Revolving Loan is to be
made, if a Eurodollar Loan, (i) a written, telephonic (promptly confirmed in
writing), e-mailed or telecopied request from Borrower for a Revolving Loan in a
specific amount (and a request in writing, which shall be delivered to Agent on
the same Business Day, executed by an Authorized Representative of Borrower),
(ii) designation whether the Revolving Loan is to be a Eurodollar Loan or a
Prime Rate Loan, and if such Revolving Loan is to be a Eurodollar Loan, the
Interest Period or Interest Periods with respect thereto, and (iii) copies of
all other documents which Borrower is required to deliver to Agent hereunder. If
such request for a Revolving Loan is received by Agent before 12:00 p.m. Chicago
time on the day a Prime Rate Loan is to be made or before 12:00 p.m. Chicago
time three (3) Business Days prior to the date a Eurodollar Loan is to be made,
subject to the other terms and conditions of this Agreement, Agent will pay over
the funds received from Lenders in accordance with the terms of this Agreement
on the applicable day on which such Revolving Loan is to be funded hereunder
with the funds received from Lenders, subject to any delays beyond Agent's
reasonable control, provided that Agent shall not be liable for any damages or
liabilities for the failure to so make any Revolving Loan on the day requested
unless such failure was due to Agent's gross negligence or willful misconduct.
If no election as to the type of Revolving Loan is specified in any such notice
by Borrower, then such Revolving Loan shall be a Prime Rate Loan. If no Interest
Period is specified with respect to a Eurodollar Loan in such notice, then
Borrower shall be deemed to have selected an Interest Period of one month's
duration. Each request for a
16
Prime Rate Loan shall be in a minimum amount of $100,000 and integral multiples
of $100,000 thereafter. Notwithstanding anything contained in this Agreement to
the contrary, Borrower may not have more than five (5) Eurodollar Loans
outstanding at any one time, and each request for a Eurodollar Loan shall be in
a minimum increment of $1,000,000 and integral multiples of $100,000 thereafter.
(a) Upon receipt by Agent of a notice from Borrower of a request for a
Revolving Loan, Agent shall promptly on the date of receipt, notify Lenders of
the amount, term and proportionate share of such Revolving Loan to be funded by
each Lender. Two (2) Business Days prior to the date specified for funding of
such Eurodollar Loan in the notice from Borrower provided above, Agent shall
notify Lenders and Borrower of the Libor Rate in effect for such Eurodollar
Loan. Each Lender shall make available its proportionate share of any Revolving
Loan, by federal funds wire transfer to Agent at Agent's Applicable Lending
Office, in immediately available funds, by not later than 1:30 p.m. Chicago
time, on the date specified for a Revolving Loan hereunder as provided above.
The amount of any Revolving Loan shall, subject to the terms of this Agreement,
be made available to Borrower by depositing same, in immediately available
funds, in an account of Borrower, as designated by Borrower, maintained at
Agent's Applicable Lending Office (or Applicable Lending Office of another
Lender), or by wiring the same, in immediately available funds, to any account
specified by Borrower in their notice of borrowing.
(b) The failure of any Lender to make any Revolving Loan to be made by it
on any date specified therefor shall not relieve any other Lender of its
obligation to make its Revolving Loan on such date, but neither Agent nor any
Lender shall be responsible for the failure of any other Lender to make a
Revolving Loan.
2.3 Payments and Prepayments. Borrower shall make each payment in respect
------------------------
of the principal of and interest on the Revolving Loans and any other payments
due under this Agreement not later than 12:00 p.m. Chicago time on the day when
due, in Dollars, to Agent for the account of each Lender at Agent's Applicable
Lending Office in Chicago, Illinois in immediately available funds.
(a) Upon the occurrence and during the continuance of an Event of Default,
any Lender for whose account any such payment is to be made may (but shall not
be obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of Borrower with such Lender and shall give
notice thereof to Agent and Borrower, provided the failure to give such notice
does not affect the validity of such debit.
(b) Borrower shall, at the time of making such payment under this Agreement
or any Revolving Loan Note, specify to Agent the Revolving Loans or other
amounts payable by Borrower hereunder to which such payment is to be applied
(and in the event that it fails to so specify, or if an Event of Default has
occurred and is an Uncured Default, Agent shall distribute such payment to
Lenders in such manner as Agent may determine to be appropriate, subject to
Section 2.4 hereof).
-----------
17
(c) Each payment received by Agent under this Agreement, or any Revolving
Loan Note, for account of a Lender shall be paid promptly to such Lender on the
same Business Day of receipt by Agent if received by 12:00 p.m. Chicago time, or
otherwise on the next successive Business Day, at the Applicable Lending Office
for the Revolving Loan or other obligation in respect of which such payment is
made.
(d) Subject to Sections 2.20 and 3.5 of this Agreement and except as
---------------------
otherwise provided herein, any prepayment of the Obligations by Borrower shall
be without premium or penalty.
2.4 Pro Rata Treatment. Except to the extent otherwise provided herein: (i)
------------------
each borrowing from Lenders, and each payment of any fee under Section 2.11
------------
hereof, shall be made for the account of Lenders, according to their respective
Pro Rata Shares; (ii) each payment of principal of the Loans by Borrower shall
be made for the account of Lenders pro rata in accordance with the respective
unpaid principal amounts of the Loans held by Lenders; and (iii) each payment of
interest by Borrower shall be made for the account of Lenders pro rata in
accordance with the amounts of interest due and payable to the respective
Lenders.
2.5 Funding Reliance.
----------------
(a) Unless Agent receives notice from a Lender by one p.m., Chicago time,
on the day of a proposed borrowing that such Lender will not make available to
Agent an amount equal to its Pro Rata Share of such borrowing, Agent may assume
that such Lender has made such amount available to Agent and, in reliance upon
such assumption, make a corresponding amount available to Borrower. If and to
the extent such Lender has not made such amount available to Agent, such Lender
and Borrower jointly and severally agree to repay such amount to Agent forthwith
on demand, together with interest thereon at the interest rate applicable to
Loans comprising such borrowing. Nothing set forth in this clause (a) shall
relieve any Lender of any obligation it may have to make any Loan hereunder.
(b) Unless Agent receives notice from Borrower prior to the due date for
any payment hereunder that Borrower does not intend to make such payment, Agent
may assume that Borrower has made such payment and, in reliance upon such
assumption, make available to each Lender its share of such payment. If and to
the extent that Borrower has not made any such payment to Agent, each Lender
which received a share of such payment shall repay such share (or the relevant
portion thereof) to Agent forthwith on demand, together with interest thereon at
the Prime Rate Option. Nothing set forth in this clause (b) shall relieve
Borrower of any obligation it may have to make any payment hereunder.
2.6 Sharing of Payments, Etc. Borrower agrees that, in addition to (and
------------------------
without limitation of) any right of set-off, bankers' lien or counterclaim a
Lender might otherwise have, each Lender shall be entitled, at its option upon
the occurrence and during the continuance of an Event of Default, to offset
balances held by it for the account of Borrower at any of its offices, against
any principal of or interest on any of such Lender's Loans or any other amount
payable to such Lender hereunder, which is not paid when due subject to any
applicable grace periods (regardless of whether such balances are then due to
Borrower), in which case it shall promptly
18
notify Borrower and Agent thereof, provided that such Lender's failure to notify
shall not affect the validity thereof.
(a) If any Lender (i) shall obtain payment of any principal of or interest
on any Loan made by it to Borrower under this Agreement through the exercise of
any right of set-off, banker's lien or counterclaim or similar right or
otherwise, whether or not under Section 2.6 above, and, as a result of such
-----------
payment, such Lender shall have received a greater percentage of the Obligations
with respect to the Loans then due hereunder by Borrower to such Lender than the
percentage of the Obligations received by the other Lender, or (ii) such
Lender's percentage of the outstanding Obligations relating to Loans is less
than its Pro Rata Share of such Obligations, it shall promptly purchase from
such other Lender participations in (or, if and to the extent specified by such
Lender, direct interests in) the Loans made by such other Lender (or in interest
due thereon or other Obligations with respect to the Loans due to such Lender,
as the case may be) in such amounts, and make such other adjustments from time
to time as shall be equitable, to the end that (x) each Lender shall have made
advances of Obligations relating to Loans according to its Pro Rata Share of its
Commitment of such Obligations, and (y) all of Lenders shall share the benefit
of such excess payment (net of any expense which may be incurred by such Lender
in obtaining or preserving such excess payment) pro rata in accordance with the
unpaid Obligations with respect to the Loans due to each of Lenders. All Lenders
shall accordingly make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(b) Borrower agrees that any Lender so purchasing a participation (or
direct interest) in the Obligations with respect to the Loans due to the other
Lender (or in interest due thereon, as the case may be) may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans in the
amount of such participation.
(c) Nothing contained herein shall require any Lender to exercise any such
right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower. If, under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a payment or set-off
to which this Section 2.6 applies, such Lender shall, to the extent practicable,
-----------
exercise its rights in respect of such secured claim in a manner consistent with
the rights of Lenders entitled under this Section 2.6 to share in the benefits
-----------
of any recovery on such secured claim.
19
2.7 Letters of Credit.
-----------------
(a) Subject to the terms and provisions of this Agreement, including
without limitation, that no Event of Default or Potential Default has occurred
and is continuing and all other conditions precedent to lending under Section 5
---------
and under the Master Letter of Credit Agreement have been satisfied, Issuing
Bank may, at Borrower's request and for the account of Borrower, issue Letters
of Credit; provided, that the aggregate undrawn face amount of the Letters of
Credit plus unreimbursed drawings for Letters of Credit shall not at any time
exceed Eight Million and No/100 Dollars ($8,000,000). The Letters of Credit
shall be in form and substance satisfactory to Agent. No Letter of Credit shall
have a term of more than one year (except with Issuing Bank's consent) or an
expiration date occurring after the Revolving Loan Termination Date.
(b) Borrower agrees to pay to (i) Issuing Bank upon the opening of a Letter
of Credit at Borrower's request, and thereafter on demand, Issuing Bank's
standard administrative and operating fees and charges in effect from time to
time for issuing and administering any Letters of Credit, plus (ii) Agent, for
the ratable benefit of Lenders in accordance with their Revolving Loan
Commitment Percentages, a fee, payable quarterly in arrears on the last day of
each fiscal quarter, on each standby or trade Letter of Credit accepted by Agent
but not yet paid in the amount set forth on Annex A. Agent may provide for the
-------
payment of any fees, charges or commissions due to Agent by advancing the amount
thereof to Borrower as a Revolving Loan. Borrower shall execute Issuing Bank's
customary form of application and related documents pursuant to the Master
Letter of Credit Agreement for each Letter of Credit requested by it, and such
applications shall be received at least three (3) Business Days prior to the
requested issue date of such Letter of Credit together with such other documents
in support thereof as Issuing Bank may reasonably require.
(c) Borrower agrees to reimburse Issuing Bank, within one (1) Business Day
after demand, for each payment made by Issuing Bank under or pursuant to any
Letter of Credit requested by Borrower. Borrower further agrees to pay to
Issuing Bank, on demand, interest at the Prime Rate Option on any amount paid by
Issuing Bank under or pursuant to any such Letter of Credit from the due date of
payment until the date of reimbursement to Issuing Bank. Agent shall, upon the
request of Borrower when no Event of Default exists (to the extent there is
additional availability for Revolving Loans but without regard to the other
conditions precedent set forth in Section 5), provide for the payment of any
---------
reimbursement obligations due to Issuing Bank and any interest accrued thereon
by advancing the amount thereof to Borrower as a Revolving Loan.
(d) Borrower's obligation to reimburse Issuing Bank for payments and
disbursements made by Issuing Bank under any Letter of Credit requested by
Borrower shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which Borrower
may have or have had against Issuing Bank (or any other Lender), including,
without limitation, any defense based on the failure of the demand for payment
under such Letter of Credit to conform to the terms of such Letter of Credit,
the legality, validity, regularity or enforceability of such Letter of Credit,
or the identity of the transferee of such Letter of Credit or the sufficiency of
any transfer if such Letter of Credit is
20
transferable; provided, however, that Borrower shall not be obligated to
reimburse Issuing Bank for any wrongful payment or disbursement made under any
Letter of Credit as a result of acts or omissions constituting gross negligence
or willful misconduct on the part of Issuing Bank or any of its officers,
employees or agents.
(e) Notwithstanding anything to the contrary herein, upon the occurrence
and during the continuance of an Event of Default or upon termination of this
Agreement whether by expiration of the term or otherwise, an amount equal to the
aggregate undrawn face amount of all outstanding Letters of Credit and all
unreimbursed draws under any Letter of Credit shall, at Agent's option and upon
written notice to Borrower, be deemed (as between Agent and Borrower) to have
been paid or disbursed by Issuing Bank under the Letters of Credit issued by
Issuing Bank (notwithstanding that such amounts may not in fact have been so
paid or disbursed), and a Revolving Loan to Borrower in the amount of such
aggregate undrawn face amount of all outstanding Letters of Credit and all
unreimbursed draws under any Letter of Credit to have been made and accepted,
which Loan shall be immediately due and payable. In lieu of the foregoing, at
the election of Agent at any time after an Event of Default has occurred and is
continuing, or upon termination of this Agreement, whether by expiration of the
term or otherwise, Borrower shall, upon Agent's demand, deliver to Agent cash
equal to the aggregate undrawn face amount of all outstanding Letters of Credit
and all unreimbursed draws under any Letter of Credit. Any such cash and/or any
amounts received by Agent in payment of the Revolving Loan made pursuant to this
paragraph shall be delivered to and held by Agent in a separate account
appropriately designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and shall be retained by Agent as collateral
security in respect of, first, such Borrower's Obligations under or in
connection with the Letters of Credit and then, all other Obligations. Such
amounts shall not be used by Agent to pay any amounts drawn or paid under or
pursuant to any Letter of Credit, but may be applied to reimburse Issuing Bank
for drawings or payments under or pursuant to Letters of Credit which Issuing
Bank has paid, or if no such reimbursement is required, to payment of such other
Obligations as Agent shall determine. Any amounts remaining in any cash
collateral account established pursuant to this paragraph following payment in
full of all Obligations shall be returned to Borrower.
(f) With respect to each Letter of Credit, each Lender (other than Issuing
Bank) hereby agrees to purchase a participation in such Letter of Credit,
effective simultaneously with the issuance thereof, in an amount equal to such
Lender's Pro Rata Share of the amount of such Letter of Credit. For the purposes
of this Agreement, the proportionate interest which Issuing Bank retains in each
Letter of Credit shall be referred to as its "participation" in such Letter of
Credit.
(g) If Issuing Bank shall fail to be reimbursed pursuant to clause (c) of
this Section 2.7 by Borrower (or from the proceeds of a Loan pursuant to the
-----------
last sentence of such clause (c)) for any payment or disbursement under a Letter
of Credit, the other Lenders shall, promptly upon the request of Issuing Bank,
provide Agent with immediately available funds for the account of Issuing Bank
in an amount equal to such Lender's Pro Rata Share of such payment or
disbursement. If Agent or Issuing Bank subsequently receives from Borrower any
reimbursement of such payment or disbursement, Agent or Issuing Bank, as the
case may be, shall promptly remit to each Lender its Pro Rata Share of such
reimbursement, including interest as provided herein.
21
(h) The obligation of each Lender to provide Agent with such Lender's Pro
Rata Share of the amount of any payment or disbursement made by Issuing Bank
under any outstanding Letter of Credit shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which such Lender may have or have had against Issuing Bank
(or any other Lender), including, without limitation, any defense based on the
failure of the demand for payment under such Letter of Credit to conform to the
terms of such Letter of Credit, the legality, validity, regularity or
enforceability of such Letter of Credit, or the identity of the transferee of
such Letter of Credit or the sufficiency of any transfer if such Letter of
Credit is transferable.
(i) In determining whether to make any payment under or pursuant to any
Letter of Credit, Issuing Bank shall have no obligation to Borrower, any Lender
or any other Person other than to confirm that any documents required to be
delivered have been delivered and that such documents comply on their face with
the requirements of such Letter of Credit. No other action taken or omitted by
Issuing Bank under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall put
Issuing Bank under any resulting liability to Borrower or any Lender.
(j) In the case of any inconsistency between the terms of this Agreement
and the Master Letter of Credit Agreement, the terms of the Master Letter of
Credit Agreement shall govern and control.
2.8 All Loans One Obligation. All Loans by Lenders to Borrower under this
------------------------
Agreement shall constitute Obligations of Borrower, secured by Agent's Lien on
the Collateral, and by any Lien heretofore, now or at any time or times
hereafter granted by Borrower to Agent or Lenders hereunder or under any other
Loan Documents.
2.9 Payment of Over Advances. If, at any time and for any reason, the
------------------------
outstanding Revolving Loans plus the aggregate undrawn face amount of any
Letters of Credit and any unreimbursed drawings with respect thereto exceed the
Maximum Revolving Credit Facility, any such excess shall immediately be due and
payable by Borrower to Agent, and Borrower shall, upon telephonic notice or
other notice from Agent, immediately pay to Agent, in cash, the amount of such
excess, and prior to such repayment such over advances shall bear interest at
the Default Rate.
2.10 Interest.
--------
(a) Rate. All Obligations owed by Borrower to Lenders (except for
----
Eurodollar Loans, or covered by any other Section of this Agreement or other
agreement which specifically provides for a rate of interest different from that
provided for herein) shall bear interest, on the unpaid principal balance
thereof, at the Prime Rate Option (computed on the basis of the actual number of
days over a 365/366-day year), payable on the applicable Interest Payment Date.
Subject to the provisions of Section 2.22 of this Agreement, each
------------
Eurodollar Loan shall bear interest on the unpaid principal balance thereof at a
rate per annum (computed on the
22
basis of the actual number of days elapsed over a 360-day year) equal to the
Libor Rate for the Interest Period in effect plus the Applicable Margin (the
"Eurodollar Rate Option"). Interest on Eurodollar Loans for 1, 2, 3 and 6-month
Interest Periods shall be payable in arrears on the last day of the applicable
Interest Period on the applicable Interest Payment Date.
Notwithstanding any other provisions hereof, the Applicable Margins
set forth on Annex A for Level III shall be in effect from the Closing until
February 28, 2002; thereafter interest shall accrue and Applicable Margins shall
apply as determined as set forth in Section 2.26 hereof.
------------
In addition to calculations of the Prime Rate Option as provided
above, in the event that the Prime Rate announced is, from time to time
hereafter, changed, adjustment in the Prime Rate Option shall be made on the
effective date of such change in the Prime Rate. The Prime Rate Option, as
adjusted, shall apply to all Obligations (except as provided above with respect
to Eurodollar Loans or where otherwise specifically provided) owed on the date
following the date on which the adjustment is made and shall continue to apply
to such Obligations owed during succeeding months until the Prime Rate is
adjusted again. Agent shall use reasonable efforts to notify Borrower of each
change in the Prime Rate as soon as practicable, but Borrower's obligation to
pay all interest at the Prime Rate Option and Default Rate as provided in this
Agreement shall not be affected by, nor shall Agent have any liability for, any
failure to so notify Borrower.
(b) Default Rate. Notwithstanding the foregoing, the Revolving Loans
------------
and any accrued interest shall bear interest, from and after written notice by
Agent to Borrower of the occurrence of an Event of Default and at the request of
the Majority Banks and for so long as an Event of Default shall be an Uncured
Default and without constituting a waiver of any such Event of Default, on the
balances owing from time to time, at a rate per annum equal to two (2)
percentage points above the Prime Rate Option (the "Default Rate"), payable
monthly in arrears on the first day of each month.
(c) Maximum Interest. It is the intention of Agent and Borrower to
----------------
comply with the laws of the State of Illinois, and notwithstanding any provision
to the contrary contained herein or in the other Loan Documents, Borrower shall
not be required to pay, and Agent shall not be permitted to collect, any amount
in excess of the maximum amount of interest permitted by applicable law ("Excess
Interest"). If any Excess Interest is provided for or determined to have been
provided for by a court of competent jurisdiction in this Agreement or in any of
the other Loan Documents, then in such event (i) the provisions of this Section
shall govern and control; (ii)Borrower shall not be obligated to pay any Excess
Interest; (iii) any Excess Interest that Agent may have received hereunder shall
be, at Agent's option, (A) applied as a credit against either the outstanding
principal balance of the Loans or accrued and unpaid interest hereon, (B)
refunded to the payor thereof, or (C) any combination of the foregoing; (iv) the
interest rate(s) provided for herein shall be automatically reduced to the
maximum rate allowed under applicable law, and this Agreement and the other Loan
Documents shall be deemed to have been, and shall be, reformed and modified to
reflect such reduction; and (v) Borrower shall not have any action against Agent
for any damages arising out of the payment or collection of any Excess Interest.
Notwithstanding the foregoing, if any interest payment or other charge or fee
payable hereunder or under any of the
23
other Loan Documents exceeds the maximum amount then permitted by applicable
law, then to the extent permitted by law, Borrower shall be obligated to pay the
maximum amount then permitted by applicable law and Borrower shall continue to
pay the maximum amount from time to time permitted by applicable law until all
such interest payments and other charges and fees otherwise due hereunder or
under any of the other Loan Documents (in the absence of such restraint imposed
by applicable law) have been paid in full.
(d) Charges to Loan Account. Agent may, at its option, charge any
-----------------------
interest and fees payable hereunder or under any of the other Loan Documents to
Borrower's Loan Account, and any amounts so charged shall thereupon constitute
Obligations hereunder and, except for Out-of-Pocket Fees and Costs, shall
thereafter accrue interest as provided in this Agreement. Out-of-Pocket Fees and
Costs shall accrue interest as provided in this Agreement if not paid within
thirty (30) days after such costs are due.
2.11 Fees. In consideration of Lender's establishing the Maximum
----
Revolving Credit Facility hereunder and making of the Loans and the Letters of
Credit hereunder, Borrower shall pay to Agent for the benefit of Agent or
Lenders, as applicable, the following fees and charges:
(a) Unused Line Fee. An unused line fee for the ratable benefit of
---------------
Lenders as provided hereunder of the applicable percentage set forth on Annex A
-------
hereto (computed on the basis of a year of three hundred sixty five/six (365/6)
days for the actual number of days elapsed) of the amount by which the Maximum
Revolving Credit Facility exceeds the average quarterly balance of the Revolving
Loans plus the average quarterly face amount of outstanding Letters of Credit,
payable quarterly in arrears, on the last day of each fiscal quarter commencing
September 30, 2001 and continuing on the last day of each calendar quarter
thereafter.
(b) Upfront Fees For the account of each Lender on the Closing Date,
------------
an upfront fee in the amount of $15,000 (and Agent agrees to promptly forward to
each Lender a portion of such upfront fee in the amount previously agreed to
between Agent and such Lender).
(c) Agent's Fees. For the sole benefit of Agent and not for
------------
distribution to Lenders, an annual agency fee of $5,000 until repayment in full
of all Obligations (other than Contingent Indemnification Obligations) and
termination of this Agreement, which annual fee shall be payable "in advance" at
Closing and upon each annual anniversary thereof.
(d) Letter of Credit Fees. Fees in connection with Letter of Credit as
---------------------
provided in Section 2.7(b) hereof.
--------------
(e) Out-of-Pocket Fees, Costs and Expenses. (i) Whether or not the
--------------------------------------
transactions hereby are consummated and within fifteen (15) Business Days after
demand, for all reasonable costs and expenses incurred by LaSalle (including in
its capacity as Agent and Issuing Bank) in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not consummated)
this Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including
24
reasonable attorneys' fees incurred by LaSalle (including in its capacity as
Agent and Issuing Bank) with respect thereto; and (b) within five (5) Business
Days after demand for all reasonable costs and expenses (including attorneys'
fees) incurred by Agent and each Lender in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any appellate
proceeding, any "workout" or restructuring regarding the Loans or any proceeding
or case described in Section 12.7(iv) hereof). All Out-of-Pocket Fees and Costs
----------------
incurred prior to the Closing shall be paid no later than fifteen (15) Business
Days after the Closing.
2.12 Depository Account. Borrower shall continue to maintain at
------------------
LaSalle a depository account ("Depository Account"). Upon the occurrence of an
Event of Default, Agent may require all Depository Accounts to be in the name of
Agent and under its sole control and direction, and shall apply all proceeds
therefrom to the Obligations.
2.13 Agent Rights to Collect Directly. Agent or Agent's designee may,
--------------------------------
after the occurrence and during the continuance of an Event of Default which has
been declared by Agent by notice to Borrower, (i) notify customers or Account
Debtors of Borrower or its Subsidiaries that the Accounts have been assigned to
Agent and that Agent has a Lien thereon, and (ii) collect the Accounts directly,
and charge the collection costs and expenses to Borrower's account.
2.14 Disputes and Allowances. Allowances, if any, as between Borrower
-----------------------
or its Subsidiaries and their customers, will be on the same basis and in
accordance with the usual customary practices of Borrower. Upon the request of
Agent, Borrower shall promptly notify Agent of all recoveries and promptly
notify Agent of all disputes and claims other than in the ordinary course of
business. After the occurrence of an Event of Default which shall be an Uncured
Default, no discount, credit or allowance shall be granted by Borrower or its
Subsidiaries to any Account Debtor without Agent's consent except in the
ordinary course of business. Agent may, in its discretion, after the occurrence
of an Event of Default which is an Uncured Default, settle or adjust disputes
and claims directly with Account Debtors for amounts and upon terms which Agent
considers advisable, and in such cases, Agent will credit Borrower's account
with only the net amounts received by Agent in payment of such disputed
Accounts, after deducting all Out-of-Pocket Fees and Costs incurred or expended
in connection therewith.
2.15 Monthly Statements. Agent or LaSalle shall render monthly
------------------
statements of the Obligations owing by Borrower to Lenders, including statements
of all principal, interest, and Out-of-Pocket Fees and Costs owing, and such
statements shall be prima facie evidence to be correct and accurate and
----- -----
constitute an account stated between Borrower and Lenders unless, within sixty
(60) days after receipt thereof by Borrower, Borrower shall deliver to Agent, by
registered or certified mail or by a nationally recognized overnight courier, at
Agent's place of business indicated on the signature page hereto, written
objection thereto specifying the error or errors, if any, contained in any such
statement. Any balance credited to Borrower's account, less monies remitted,
paid or otherwise advanced by Agent to or for Borrower's account and any amounts
that Agent may be obligated to pay in the future, and less any other sums due to
Agent or Lenders as provided in this Agreement, shall be remitted to Borrower
when all Obligations owed by Borrower to Agent or Lenders have been paid in
full.
25
2.16 Recordkeeping. Each Lender shall record in its records, or at
-------------
its option on the schedule attached to its Note, the date and amount of each
Loan made by such Lender, each repayment or conversion thereof and, in the case
of each Eurodollar Loan, the dates on which each Interest Period for such Loan
shall begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record any such amount or any error in so recording any
such amount shall not, however, limit or otherwise affect the obligations of
Borrower hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon.
2.17 Payment Dates. Any payment due under this Agreement on any day
-------------
other than a Business Day shall be due on the next succeeding Business Day, and
such payment shall bear interest in accordance herewith until actually received.
2.18 Regulations Affecting Loans; Increased Cost and Reduced Return.
--------------------------------------------------------------
If (a) Regulation D or any other regulation of the Board of Governors of the
Federal Reserve System or any other Federal regulation, or (b) if on or after
the date hereof, the adoption of any applicable law, rule or regulation, or any
change, amendment to, deletion from or revision, modification or any other
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or by any court, compliance by any
Lender (or its Applicable Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Lender (or its Applicable Lending Office or
Eurodollar Office) to any tax, duty or other charge with respect to its
Eurodollar Loans, its Revolving Loan Note, or its obligation to make Eurodollar
Loans, or shall change the basis of taxation of payments to any Lender (or its
Applicable Lending Office or Eurodollar Office) of the principal of or interest
on its Eurodollar Loans or any other amounts due under this Agreement in respect
of its Eurodollar Loans or its obligation to make Eurodollar Loans (except for
changes in the rate of tax on the overall net income of such Lender or its
Applicable Lending Office or Eurodollar Office imposed by the jurisdiction in
which such lender's principal executive office or Applicable Lending Office or
Eurodollar Office is located); or
(ii) shall impose, modify or deem applicable any reserve (except for
reserves used in calculating the Libor Rate), special deposit, special
assessment or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
against assets of, deposits with or for the account of, or credit extended by,
any Lender (or its Applicable Lending Office or Eurodollar Office) or shall
impose on any Lender (or its Applicable Lending Office or Eurodollar Office) or
on the interbank market any other condition affecting its Eurodollar Loans, its
Revolving Loan Note, or its obligation to make Eurodollar Loans; or
(iii) shall impose on Agent, Lenders or any Participant any other
condition affecting the Loans;
26
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office or Eurodollar Office) of making or maintaining
any Eurodollar Loan, or to reduce the amount of any sum received or receivable
by such Lender (or its Applicable Lending Office or Eurodollar Office) under
this Agreement or under its Revolving Loan Note with respect thereto (unless
such increased cost is a direct result of an increase required by a regulatory
body in Agent, Lender's or any Participant's capital and Borrower promptly
notifies Agent in writing of its intention to prepay the Obligations in full
within ninety (90) days of such demand, and makes payment to Agent of the
Obligations within such ninety (90) day period), then Borrower shall, within
fifteen (15) days after demand by such Lender (with a copy to Agent), be
obligated to pay such Lender, subject to the limitation on receipt of
compensation by Participants set forth in Section 18.2 hereof, such additional
amount or amounts as will compensate such Lender for such increased cost or
reduction (computed commencing on the effective date of any event mentioned
herein). Each Lender agrees to use its reasonable efforts to give Borrower and
Agent notice of the occurrence of any event mentioned herein. Lenders may then,
upon notice to Borrower (with a copy to Agent), elect to increase the interest
rate applicable to all Eurodollar Loans made subsequent thereto, to compensate
Lenders for such increased cost or reduced yield. The foregoing notwithstanding,
Lenders and Agent shall use their reasonable efforts to mitigate any such
increased costs or reduction.
2.19 Renewals: Conversion and Continuation of Loans.
-----------------------------------------------
(a) Upon maturity of any Eurodollar Loan, Borrower may renew all or
any part of any Eurodollar Loan with a Loan of the same or a different type from
Lenders, subject to the conditions and limitations set forth herein and
elsewhere in this Agreement. Any Eurodollar Loan or part thereof so renewed
shall be deemed to be repaid in accordance with this Section 2 with the proceeds
---------
of a new borrowing hereunder and the proceeds of the new Loan, to the extent
such proceeds do not exceed the principal amount of the Eurodollar Loan being
renewed, shall not be paid by Lenders to Borrower.
(b) Borrower shall have the right at any time, upon notice to Agent
given in the manner and at the times specified in this Agreement with respect to
the Loans into which conversion or continuation is to be made, to convert its
Eurodollar Loans into Prime Rate Loans, to convert its Prime Rate Loans into
Eurodollar Loans (specifying the Interest Period to be applicable thereto), to
convert the Interest Period applicable to any of their Eurodollar Loans to
another permissible Interest Period, and to continue any of its Eurodollar Loans
into a subsequent Interest Period of any permissible duration, subject to the
terms and conditions of this Agreement, and to the following:
(i) each conversion shall be effected by Agent by applying the
proceeds of the new Prime Rate Loan or Eurodollar Loan, as the
case may be, to the Eurodollar Loan or Prime Rate Loan (or
portion thereof) being converted; accrued interest on a Loan (or
portion thereof) being converted or continued shall be paid by
Borrower at the time of conversion or continuation; and
27
(ii) If any Eurodollar Loan is converted at any time other than the
end of an Interest Period applicable thereto, Borrower shall make
such payments associated therewith as are required pursuant to
Section 2.20 at the time such Eurodollar Loan shall be converted
------------
to a Prime Rate Loan.
The Interest Period applicable to any Eurodollar Loan resulting from a
conversion or continuation shall be specified by Borrower in the notice of
conversion or continuation delivered pursuant to this Section 2.19; provided,
------------
however, that if no such Interest Period shall be specified, Borrower shall be
deemed to have selected a Prime Rate Loan.
2.20 Indemnity. Borrower shall indemnify Agent and Lenders against any
---------
loss, fee, claim, damage, liability or expense which Agent or Lenders may
sustain or incur as a consequence of (i) any failure by Borrower to fulfill on
the date of any borrowing hereunder the applicable conditions set forth in this
Agreement, (ii) any failure by Borrower to borrow hereunder after notice of
borrowing pursuant to this Agreement has been given, (iii) any payment,
prepayment or conversion of a Eurodollar Loan required by any provision of this
Agreement, other than Section 2.21 of this Agreement, or otherwise made on a
------------
date other than the last day of the applicable Interest Period, or (iv) the
occurrence of any Event of Default, including, but not limited to, any loss or
reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan. Such loss or
reasonable expense shall include, without limitation, an amount equal to the
excess, if any, as reasonably determined by Agent or any Lender of its cost of
obtaining the funds for the Eurodollar Loan being paid, prepaid or converted or
not borrowed (based on the Libor Rate applicable thereto) for the period from
the date of such payment, prepayment or conversion or failure to borrow to the
last day of the Interest Period for such Eurodollar Loan (or, in the case of a
failure to borrow, the Interest Period for such Eurodollar Loan which would have
commenced on the date of such failure to borrow) over the amount of interest (as
reasonably determined by Agent or such Lender) that could be realized by Agent
and Lenders in re-employing during such period the funds so paid, prepaid or
converted or not borrowed. A certificate of Agent or any Lender setting forth
any amount or amounts which Agent is entitled to receive pursuant to this
Section 2.20 shall be conclusive absent demonstrable or manifest error.
------------
2.21 Change in Legality.
------------------
(a) Notwithstanding anything to the contrary herein contained, if
any change in any law or regulation or in the interpretation thereof by any
governmental authority charged with the administration or interpretation thereof
shall make it unlawful for any Lender or Agent to make or maintain any
Eurodollar Loan or to give effect to its obligations as contemplated hereby (an
"Illegality"), or if Agent or Majority Lenders determine that maintenance of
Eurodollar Loans would cause Lenders to implement or modify any reserve (other
than reserves which are used in calculating the Libor Rate), special deposit or
assessment or other requirement, or impose any other condition on Lenders
affecting the Revolving Loans (each of the foregoing circumstances called a
"Regulatory Action"), then, by written notice to Borrower, Agent shall:
28
(i) declare that Eurodollar Loans will not thereafter be made by
Lenders hereunder, whereupon Borrower shall be prohibited from
requesting Eurodollar Loans from Agent hereunder unless such
declaration is subsequently withdrawn; provided, however, that
if after the date of any such declaration there shall occur any
change in law or regulation or in the interpretation thereof by
any government authority charged with the administration or
interpretation thereof that shall eliminate such Illegality,
Agent shall as promptly as reasonably practicable notify
Borrower and each of Lenders of such occurrence and withdraw
such declaration; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted, at Borrower's expense, to Prime Rate Loans, in which
event (1) all such Eurodollar Loans shall be automatically
converted to Prime Rate Loans as of the effective date of such
notice as provided in paragraph (b) below, and (2) all payments
and prepayments of principal which would otherwise have been
applied to repay the converted Eurodollar Loans shall instead
be applied to repay the Prime Rate Loans resulting from the
conversion of such Eurodollar Loans.
(b) For purposes of this Section 2.21, a notice to Borrower by
------------
Agent pursuant to paragraph (a) above shall be effective on the date of receipt
by Borrower.
2.22 Unavailability of Deposits or Inability to Ascertain, or
--------------------------------------------------------
Inadequacy of Libor Rate. If on or prior to the first day of any Interest Period
------------------------
for any borrowing of Eurodollar Loans:
(a) Agent advises Borrower that deposits in Dollars (in the
applicable amounts) are not being offered to it in the off-shore Dollar
interbank market for such Interest Period, or
(b) the Majority Lenders advise Agent that the Libor Rate as
determined by Agent will not adequately and fairly reflect the cost to such
Lenders of funding their Eurodollar Loans for such Interest Period due to the
fact that the Libor market ceases to exist, then Agent shall forthwith give
notice thereof to Borrower and Lenders, whereupon until Agent notifies Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligations of Lenders to make Eurodollar Loans shall be suspended without
liability to Agent or Lenders.
2.23 Discretion of Lenders as to Manner of Funding. Notwithstanding
---------------------------------------------
any other provision of this Agreement, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Lender had actually funded and
maintained each Eurodollar Loan through the purchase of deposits in the
interbank market having a maturity corresponding to each Eurodollar Loan's
Interest Period and bearing an interest rate equal to the Libor Rate for such
interest period.
2.24 Right of Lenders to Fund through Other Offices; Right of Banks
--------------------------------------------------------------
to Fund through Other Offices. Each Lender may, if it so elects, fulfill its
-----------------------------
commitment as to any Eurodollar Loan by causing a foreign branch or Affiliate of
such Lender to make such Loan;
29
provided that in such event for the purposes of this Agreement such Loan shall
be deemed to have been made by such Lender and the obligation of Borrower to
repay such Loan shall nevertheless be to such Lender and shall be deemed held by
it, to the extent of such Loan, for the account of such branch or Affiliate.
2.25 Mitigation of Circumstances; Replacement of Lenders; Mitigation
---------------------------------------------------------------
of Circumstances; Replacement of Banks.
--------------------------------------
(a) Each Lender shall promptly notify Borrower and Agent of any event
of which it has knowledge which will result in, and will use reasonable
commercial efforts available to it to mitigate or avoid, (i) any obligation by
Borrower to pay any amount pursuant to Section 2.21, or (ii) the occurrence of
------------
any circumstances described in Section 2.21 or 2.22 (and, if any Lender has
------------ ----
given notice of any such event described in subclause (i) or (ii) above and
------------- ----
thereafter such event ceases to exist, such Lender shall promptly so notify
Borrower and Agent). Without limiting the foregoing, each Lender will designate
a different funding office if such designation will avoid (or reduce the cost to
Borrower of) any event described in clause (i) or (ii) of the preceding
---------- ----
sentence.
(b) If Borrower becomes obligated to pay additional amounts to any
Lender pursuant to Sections 2.18 or 2.21, or any Lender gives notice of the
---------------------
occurrence of any circumstances described in Section 2.21 or 2.22, Borrower may
------------ ----
designate another bank which is reasonably acceptable to Agent and Issuing Bank
(such other bank being called a "Replacement Lender") to purchase the Loans of
------------------
such Lender and such Lender's rights hereunder, without recourse to or warranty
by, or expense to, such Lender, for a purchase price equal to the outstanding
principal amount of the Loans payable to such Lender plus any accrued but unpaid
interest on such Loans and all accrued but unpaid fees owed to such Lender and
any other amounts payable to such Lender under this Agreement, and to assume all
the obligations of such Lender hereunder, and, upon such purchase and assumption
pursuant to an assignment agreement ("Assignment Agreement"), such Lender shall
no longer be a party hereto or have any rights hereunder (other than rights with
respect to indemnities and similar rights applicable to such Lender prior to the
date of such purchase and assumption) and shall be relieved from all obligations
to Borrower hereunder, and the Replacement Lender shall succeed to the rights
and obligations of such Lender hereunder.
2.26 Adjustments to Applicable Margin. The Prime Rate Option, the
--------------------------------
Eurodollar Rate Option, the unused line fee, and the standby and trade Letter of
Credit fees shall be adjusted as to the Applicable Margin based on changes in
ratio set forth on Annex A hereto. Such adjustments shall be made by Agent
-------
without notice to Borrower, based on such ratio as of the end of a Fiscal
Quarter. The Applicable Margin shall be reduced to a specified level only in the
-----------
event that (A) no Potential Default or Event of Default exists as of the date of
----------
determination and (B) the required ratio set forth in Annex A has been
-------
satisfied. All adjustments shall be effective as follows:
30
(a) Agent shall make its Applicable Margin determination within five
(5) Business Days of the receipt by Agent (the "Review Period") of Borrower's
quarterly financial statements received at the end of February, May, August or
November, or annual financial statements and Compliance Certificate indicating
that an adjustment in the Applicable Margin is warranted;
(b) any reduction or increase in the Applicable Margin after the
Review Period with respect to a Eurodollar Loan or a Prime Rate Loan shall be
effective on the day following the end of any Review Period; and
(c) if any Financial Statements necessary for calculation of the
ratio provided for in this Section 2.26 are not delivered to Agent within the
------------
time periods specified in Section 10.2, and such statements when ultimately
------------
delivered give rise to an increase in the Applicable Margin, such increase shall
be retroactive to the date such Financial Statements were required to be
delivered pursuant to Section 10.2.
------------
3. TERMS OF THIS AGREEMENT; PREPAYMENTS
3.1 Initial Term and Renewal Terms. This Agreement shall have a term
------------------------------
(the "Initial Term") commencing on the Effective Date and expiring on the
Revolving Loan Termination Date, and shall not be extended thereafter except by
written agreement of the parties hereto.
3.2 Agent Right to Terminate. Notwithstanding the foregoing, upon
------------------------
the occurrence of an Event of Default which is an Uncured Default, Agent may in
accordance with Sections 13.1 and 17 of this Agreement terminate this Agreement
--------------------
without notice, except that this Agreement shall terminate automatically upon an
Event of Default under Section 12.7.
------------
3.3 Effects of Termination. On the date of termination or expiration
----------------------
of this Agreement and subject to Section 12.2(a), all Obligations owed by
---------------
Borrower shall become immediately due and payable without notice or demand and
shall be repaid in cash or by a wire transfer of immediately available funds.
Notwithstanding termination, until all Obligations (other than Contingent
Indemnification Obligations) have been fully repaid (including without
limitation all Obligations in connection with the Letters of Credit), Agent
shall retain its Lien on the Collateral.
3.4 Voluntary Prepayment. Borrower may borrow, repay and reborrow
--------------------
Revolving Loans subject to the terms of this Agreement.
3.5 Mandatory Prepayments. (a) Borrower shall make a prepayment of
---------------------
the Revolving Loans upon the occurrence of any of the following (each a
"Mandatory Prepayment Event") at the following times and in the following
--------------------------
amounts (such applicable amounts being referred to as "Designated Proceeds"):
-------------------
31
(i) Concurrently with the receipt by Borrower of any Net Cash
Proceeds from any Asset Sale, in an amount equal to 100% of
such Net Cash Proceeds to the extent not reinvested in
accordance with the terms of Section 8.1 hereof.
-----------
(ii) Concurrently with the receipt by Borrower of any Net Cash
Proceeds from any issuance of equity securities of Borrower
(excluding (x) any issuance of shares of capital stock
pursuant to any employee or director stock option program,
benefit plan or compensation program and (y) any issuance by a
Subsidiary to Borrower or another Subsidiary), in an amount
equal to 100% of such Net Cash Proceeds.
(iii) Concurrently with the receipt by Borrower of any Net Cash
Proceeds from any issuance of any Indebtedness or permitted
issuance of equity of Borrower in an amount equal to 100% of
such Net Cash Proceeds.
Notwithstanding the foregoing, neither the occurrence of a Mandatory Prepayment
Event nor the prepayment of Designated Proceeds pursuant thereto shall in and of
itself, result in a reduction of the Commitment.
3.6 Reductions of the Revolving Loan Commitment. All reductions of
-------------------------------------------
the Revolving Loan Commitment, if any, shall reduce the Commitments pro rata
among Lenders according to their respective Pro Rata Shares.
3.7 Termination; Reduction of Maximum Credit Facility. Subject to
-------------------------------------------------
the terms of Section 3.5 of this Agreement and this Section 3.7, Borrower may,
----------- -----------
at any time, on five (5) Business Days written notice prior to the end of any
month, prepay in full the Loans and terminate this Agreement by paying to Agent,
in cash or by a wire transfer of immediately available funds, the Obligations.
Concurrently with any reduction of the Revolving Loan Commitment to zero,
Borrower shall pay all accrued interest on the Revolving Loans, all unused line
fees and all Letter of Credit fees. If any Letters of Credit are outstanding on
the effective date of termination, Borrower shall deliver to Agent cash
collateral in an amount equal to the aggregate undrawn face amount of such
Letters of Credit (plus the projected amount of all reasonable fees associated
therewith). After termination of this Agreement and receipt by Agent of payment
in full of all Obligations, Agent shall at Borrower's expense execute a
termination of all Liens given by Borrower to Agent; provided, that the
indemnifications set forth in Section 20 and elsewhere in this Agreement shall
----------
survive such termination.
32
4. CREATION OF LIEN AND COLLATERAL
4.1 Security Interest. Borrower hereby grants to Agent on behalf of
-----------------
Lenders, a continuing lien and security interest in all presently existing and
hereafter arising Collateral which Borrower now or hereafter owns or has an
interest in, wherever located, to secure prompt repayment of any and all
Obligations owed and to be owed by Borrower to Agent or Lenders (and their
Affiliates with respect to Permitted Swap Obligations) and to secure prompt
performance by Borrower of each and all of its covenants and obligations under
this Agreement and the other Loan Documents. Agent's lien and security interest
in the Collateral shall attach to all Collateral without further act on the part
of Agent or Borrower. In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral in excess of $50,000, Borrower
shall, immediately upon receipt thereof, endorse and assign such Negotiable
Collateral over to Agent (or in blank if requested by Agent) and deliver actual
physical possession of the Negotiable Collateral to Agent or to an agent, on
behalf of Agent.
4.2 Preservation of Collateral and Perfection of Security Interests.
---------------------------------------------------------------
Borrower shall execute and deliver to Agent, concurrent with Borrower's
execution of this Agreement, and at any time or times hereafter promptly at the
request of Agent, all financing statements, amendments or continuations of
financing statements, security agreements, assignments, affidavits, reports,
notices, schedules of accounts, letters of authority and all other documents
that Agent may reasonably request, in form reasonably satisfactory to Agent, to
perfect and maintain perfected Agent's Liens and security interests in the
Collateral and to fully consummate all of the transactions contemplated under
this Agreement. Photocopies of this Agreement or any other Loan Agreement
constituting a security agreement may be filed by Agent as a financing
statement. Borrower authorizes the filing of any Financing Statements deemed
appropriate by Agent without the signature of Borrower.
4.3 Inspection; Appointment as Attorney-in-Fact. Agent or any of
-------------------------------------------
Lenders (through any of their officers, employees or agents) shall have the
right, at any reasonable time or times after the occurrence of an Event of
Default which is an Uncured Default, and otherwise upon three (3) Business Day's
prior notice, during Borrower's usual business hours, or during the usual
business hours of any third party having control over the records of Borrower,
to inspect and verify Borrower's Books and other items in connection with the
Collateral in order to verify the amount or condition of, or any other matter
relating to, the Collateral and Borrower's business, affairs, operations, or
financial condition. Prior to the occurrence of an Event of Default (and
thereafter except in connection with the exercise of remedies), Agent and
Lenders shall treat such information as confidential and shall not disclose such
information unless required by laws, banking regulation, or court order. In
addition, Borrower hereby appoints Agent (and any of Agent's officers, employees
or agents designated by Agent), with full power of substitution by Agent, as
Borrower's attorney, with power upon the happening or occurrence and during the
continuation of an Event of Default which is an Uncured Default hereunder, upon
simultaneous written notice to Borrower: to endorse Borrower's name on any
checks, notes, acceptances, money orders, drafts or other forms of payment or
security that may come into Agent's possession; to sign Borrower's name on any
invoice or ▇▇▇▇ of lading relating to any Accounts, on drafts against Account
Debtors, on schedules and assignments of Accounts, on verifications of Accounts
and on notices to Account Debtors; after an occurrence of an Event of Default
which is an Uncured
33
Default, to notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by Agent, to receive and
open all mail addressed to Borrower, and to retain all mail relating to the
Collateral and promptly forward all other mail to Borrower; and to send, whether
in writing or by telephone, request for verifications of Accounts and request
for verifications of trade and other Indebtedness of Borrower; and to do all
things necessary to carry out this Agreement. Borrower ratifies and approves all
acts of the attorney and neither Agent nor any other Person acting as Borrower's
attorney hereunder will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law made in good faith except as a result of
gross negligence or willful misconduct. The appointment of Agent as Borrower's
attorney, and each and every one of Agent's rights and powers, being coupled
with an interest, subject to the provisions herein, are irrevocable so long as
any Accounts in which Agent has a Lien remain unpaid and until all of the
Obligations (other than Contingent Indemnification Obligations) have been fully
repaid and this Agreement shall have expired or been terminated.
5. CONDITIONS PRECEDENT
5.1 Closing; Conditions to Initial Loan and Closing. The initial
-----------------------------------------------
Revolving Loan hereunder shall be made upon the Effective Date hereunder at the
offices of Agent's counsel ("Closing"). In addition to those conditions set
forth hereunder in Section 5.2 with respect to all Loans and Letters of Credit
-----------
hereunder, prior to or contemporaneously with the making of the initial
Revolving Loan hereunder at Closing, Lenders shall be satisfied that all of the
following conditions precedent shall have been satisfied in a manner
satisfactory to Lenders.
(a) Satisfactory Due Diligence. Lenders shall have completed and
--------------------------
shall be satisfied with the results of (i) due diligence by Lenders and their
counsel, (ii) Borrower's and Guarantors' most recent interim financial
statements; and (iii) any governmental approvals, waivers or consents.
(b) No Adverse Change. There shall have been no Material Adverse
-----------------
Effect since June 30, 2001.
(c) Senior Loan. Lenders shall have received evidence satisfactory to
-----------
them that Agent has a first priority perfected Lien on the Collateral and all
financing statements and other documents Lenders deem necessary to perfect such
lien shall have been filed and recorded.
(d) Required Documents. Agent shall have received all of the
------------------
following documents, each in form and substance reasonably satisfactory to Agent
and its counsel, duly executed and dated the Effective Date (or such other date
prior thereto as shall be satisfactory to Agent and Borrower):
(i) Agreement. Multiple copies of this Agreement as reasonably
---------
requested by Agent.
(ii) Revolving Loan Notes. The Revolving Loan Notes.
--------------------
34
(iii) Search Results; Lien Terminations. Certified copies of Uniform
---------------------------------
Commercial Code Requests for Information or Copies (Form
UCC-11), or a similar search report certified by a party
acceptable to Agent, dated a date reasonably near to the
Closing Date, listing all effective financing statements which
name Borrower and each Guarantor (under their present names and
any previous names) as debtors and which are filed in the
jurisdictions in which filings are to be made, together with
(i) copies of such financing statements, (ii) copies of proper
Uniform Commercial Code amendments, if any, necessary to
release all Liens and other rights of any Person previously
granted by any Person (other than Liens permitted by Section
-------
8.1), and (iii) such other Uniform Commercial Code amendments
---
that serve as terminations as Agent may reasonably request.
(iv) Filings, Registrations and Recordings. Agent shall have
-------------------------------------
received each document (including Uniform Commercial Code
financing statements) required under law or reasonably
requested by Agent to be filed, registered or recorded in order
to create in favor of Agent, for the benefit of Lenders, a
perfected Lien on the collateral described therein, prior and
superior to any other Person (other than in connection with
Permitted Liens), in proper form for filing, registration or
recording.
(v) Officers' Certificates. A certificate of an officer of Borrower
----------------------
and of each Guarantor, in the form attached hereto as Exhibit C
---------
and dated as of the date hereof.
(vi) Organizational Documents. Copies, certified no earlier than
------------------------
thirty days before the Closing, by the respective Secretary of
State of the State of incorporation or formation of the
Articles or Certificates of Incorporation, and any amendments
thereto, of Borrower and each of the Guarantors.
(vii) Certificate of Existence. A certificate of the Secretary of
------------------------
State of the State of incorporation or formation of Borrower
and each of the Guarantors, dated no earlier than thirty days
before the Closing, as to the good standing of each such Person
in the State of its incorporation and in each other State
listed on Schedule 7.2 hereof.
------------
(viii) Opinion of Counsel. The written opinion, in a form reasonably
------------------
acceptable to Agent, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, as counsel for
Borrower, dated as of the date hereof and addressed to Agent on
behalf of Lenders.
(ix) Certificate of Insurance. Certificates or other evidence from an
------------------------
insurance company or companies acceptable to Agent as to the
policies of insurance, binders and endorsements thereto and such
other insurance coverage to be maintained by Borrower and its
Subsidiaries pursuant to Section 9.3 hereof, each of which shall
-----------
name, to the extent of any credit insurance, Lender as lender's
loss payee and additional insured;
35
(x) Financial Statements. All information, Financial Statements,
--------------------
or notices to be delivered to Agent pursuant to Section 10(b)
-------------
hereof, including, without limitation, Borrower's Financial
Statements for Borrower's Fiscal Years ending February 28,
1999, 2000, 2001, Borrower's unaudited interim consolidated
Financial Statements for the quarterly period ended August 31,
2001;
(xi) Letter of Direction. Copies of a letter of direction with wire
-------------------
transfers or other appropriate instructions directing Agent,
on behalf of Lenders to disburse funds in appropriate amounts
to specific accounts;
(xii) Directors' Consents. Certified copies of the unanimous written
-------------------
consents, or resolutions duly adopted at meetings, of the
Boards of Directors of Borrower and each Guarantor in the form
attached hereto as Exhibit D hereto authorizing the execution,
---------
delivery and performance by such Person, of this Agreement,
the Notes and the other Loan Documents.
(xiii) Solvency Certificates. Solvency certificates from the chief
---------------------
financial officer of Borrower and of each arantor, in form and
substance reasonably satisfactory to Agent and Lenders.
(xiv) Projections. Projected income statements, balance sheets and
-----------
cash flow statements of Borrower and its Subsidiaries prepared
by Borrower giving effect to the Revolving Loans and the use
of the proceeds therefrom, in form and substance satisfactory
to Agent in its reasonable discretion.
(xv) Payoff Letter. Payoff Letter of Bank of America pursuant to
-------------
the Credit Agreement dated December 12, 1997 among Borrower,
Bank of America and The Northern Trust Company.
(xvi) Guaranty and Security Agreement. A Guaranty and a Security
-------------------------------
Agreement, each duly executed and delivered by the respective
Guarantor.
(xvii) Master Letter of Credit. A Master Letter of Credit in the form
-----------------------
of Exhibit A.
(xviii) Borrower's Deliveries. In form and substance reasonably
---------------------
satisfactory to Agent, each and every agreement, document,
note, release, certificate, notice, affidavit, exhibit,
schedule, legal opinion, assignment, security agreement or
financing statement, which Agent may reasonably request from
Borrower to effect the intent of this Agreement.
5.2 Condition to All Loans and Letters of Credit.
-------------------------------------------
Notwithstanding any other provisions contained in this Agreement, the making of
each Loan and the issuance of each Letter of Credit provided for in this
Agreement shall be conditioned upon the satisfaction of the matters set forth in
this Section 5.2, and each request by Borrower for a Revolving Loan or Letter of
36
Credit shall constitute a representation to Agent and Lenders that each such
condition set forth below has been met or satisfied.
(a) Warranties and Representations. All of the warranties and
------------------------------
representations contained in this Agreement or any other Loan Document shall be
true and correct in all material respects on and as of the date of such
Revolving Loan or Letter of Credit as if made on such date and each request for
a Revolving Loan or Letter of Credit shall constitute an affirmation by Borrower
that such warranties and representations are then true and correct in all
material respects.
(b) Borrower's Request. Agent shall have received on or before 12:00
------------------
p.m. central standard time on the day a Prime Rate Loan is to be made (or two
(2) Business Days before a Letter of Credit is to be issued or a Eurodollar Loan
is to be made) a written (including via e-mail) or telephonic request from an
officer of Borrower (or any other Person reasonably believed by Agent to be
authorized by Borrower pursuant to Section 2.1), for a Revolving Loan (or a
-----------
Letter of Credit) in a specific amount. In addition, with respect to a request
for a Revolving Loan (or a Letter of Credit), Agent shall have received copies
of all other documents required to have been delivered to Agent hereunder. Agent
shall be entitled, but not required, to rely on oral requests for Revolving
Loans from officers from time to time designated by Borrower to Agent in
writing, and shall be fully protected in doing so.
(c) No Default. No Potential Default shall have occurred or will
----------
result from such Revolving Loan or Letter of Credit and no Event of Default
which shall be an Uncured Default shall have occurred or will result from such
Revolving Loan or Letter of Credit.
(d) No Litigation. (i) Except as set forth on Schedule 7.7, no
------------- ------------
litigation, investigation or proceeding before any court or other governmental
authority shall be pending or threatened against Borrower or any officer,
director, or employee of Borrower which, in the reasonable opinion of Agent, is
likely to have a Material Adverse Effect; and (ii) no injunction, writ,
restraining order, judgment, decree, or other order of any nature which could
reasonably have a Material Adverse Effect shall have been issued or threatened
by any court or other governmental authority.
(e) Other Requirements and Other Documents. Lenders shall have
--------------------------------------
received, in form and substance reasonably satisfactory to Lenders, all
certificates, orders, authorizations, consents, affidavits, schedules,
instruments, security agreements, financing statements, and other documents
which are provided for hereunder, or which Lenders may at any time reasonably
request.
6. WARRANTIES, REPRESENTATIONS, AND COVENANTS - COLLATERAL
Borrower warrants, represents, covenants and agrees that:
6.1 Collateral Warranties Generally. Borrower and each Guarantor
-------------------------------
have and will continue to have good and marketable title to the respective
Collateral of each; the Collateral is free and clear of all Liens, except (i) as
may be consented to in writing by Lenders, (ii) as held by Agent, or (iii) other
Permitted Liens.
37
6.2 Account Warranties and Covenants. With respect to the Accounts
--------------------------------
scheduled, listed or referred to from time to time on any Financial Statement,
Borrower warrants and represents to Lenders that as of the date of such
Financial Statement: (a) such Accounts are genuine, are in all respects what
they purport to be, and are not evidenced by a judgment; (b) subject to
Permitted Liens, such Accounts are assignable and a security interest may be
granted therein and such Accounts are subject to the first and prior perfected
Lien and security interest of Lenders; (c) such Accounts represent bona fide
transactions not subject to material disputes and completed in material
compliance with the terms and provisions of the documents related thereto as
delivered to Lenders if so requested; (d) the Equipment or Inventory sold or
leased, or the services rendered, which resulted in the creation of such
Accounts have been delivered or rendered to the applicable Account Debtor; (e)
with the exception of disputes of a nonmaterial nature, the amounts shown on the
books and records and all invoices and statements delivered to Lenders, when and
if so requested, with respect to such Accounts are actually and absolutely owing
and are not contingent; (f) subject to progress ▇▇▇▇▇▇▇▇ in the ordinary course
of business, no payments have been made upon such Accounts; (g) other than
set-offs, counterclaims or disputes of a non-material nature, there are no
set-offs, counterclaims or disputes existing or, to Borrower's knowledge,
asserted with respect to such Accounts and there is not any agreement with any
applicable Account Debtor for any deduction or discount from any such Account,
except discounts allowed in the ordinary course of business; (h) to the
knowledge of Borrower, there are no facts, events or occurrences which in any
way impair the validity or the enforceability of such Accounts or tend to reduce
the amounts payable under such Accounts as shown on Borrower's Books or the
books and records of its Subsidiaries and the invoices and statements delivered
to Lenders, when and if so requested, with respect thereto; (i) to the best
knowledge of Borrower without independent inquiry, all of the applicable Account
Debtors with respect to such Accounts have the capacity to contract and are
solvent; (j) such Accounts and the Equipment, or Inventory sold or leased or the
services rendered giving rise to said Accounts are not subject to any lien,
security interest, claim, charge or any other encumbrance, except for the first
and prior perfected security interest of Lenders and except those of holders of
the Permitted Liens; and (k) to the knowledge of Borrower, there are no
proceedings or actions which are threatened or pending against any of the
applicable Account Debtors which might result in any Material Adverse Effect in
such Account Debtor's financial condition. Agent shall have the right, at all
times after the occurrence of an Event of Default and otherwise upon three (3)
Business Day's prior notice to Borrower on a reasonable basis, during Borrower's
usual business hours, to inspect and examine and to check the Collateral as to
quality, quantity, value, and condition.
38
7. GENERAL CONTINUING WARRANTIES AND REPRESENTATIONS.
Borrower warrants, represents, covenants and agrees that:
7.1 Office. The respective chief executive office or principal place
------
of business of Borrower and each Subsidiary is at the address indicated on
Schedule 7.1 hereof and such Persons covenant and agree not to during the term
------------
of this Agreement, relocate such chief executive office or principal place of
business, without at least five (5) Business Days' prior written notification to
Agent and the delivery to Agent if requested, of Code financing statements in
form reasonably acceptable to Agent.
7.2 Existence. Borrower and each Subsidiary is and shall at all times
---------
hereafter be a corporation duly organized, validly existing, and in good
standing under the laws of the state of its organization and is qualified and
licensed to do business, and is in good standing, in any state in which the
failure to qualify could reasonably be expected to have a Material Adverse
Effect, which states include, as of the Closing Date, the states listed on
Schedule 7.2 (provided that inclusion on said Schedule 7.2 does not mean that
------------ ------------
failure to qualify in such state would have a Material Adverse Effect).
7.3 Authority. Except as could not reasonably be expected to result
---------
in a Material Adverse Effect, Borrower and each Subsidiary has all corporate
power and authority to own its property and assets and to carry on and engage in
its business as it is now conducted and as is presently proposed to be
conducted, and each such Person has all material licenses, permits, franchises,
consents, approvals and authorizations (collectively, "Licenses") required in
connection with the foregoing, all of which Licenses are in full force and
effect and no action or claim is pending, nor, to any such Person's knowledge,
is threatened, to revoke or terminate any of the Licenses or declare any License
invalid. Except as could not reasonably be expected to result in a Material
Adverse Effect, no consent, approval or authorization of, or filing,
registration or qualification with, any Person, governmental, regulatory, or
otherwise, is required to be obtained or effected by Borrower or Guarantors or
any Affiliates thereof in connection with the execution, issuance, delivery and
performance of this Agreement, the Notes and the Loan Documents to which any of
them is a party or signatory or the incurrence or performance of the Obligations
or, if so required, it has been duly obtained or effected before the date
hereof. The execution, issuance, delivery and performance of this Agreement, the
Notes and the Loan Documents to which Borrower and the Guarantors or any of
their Affiliates is a signatory and the incurrence or performance of the
Obligations and indebtedness hereunder (a) has been duly and properly authorized
by all necessary corporate, director, shareholder and other action of each such
Person and (b) has not resulted in and will not result in:
(i) the creation or imposition of any Lien (except in favor of Agent)
upon any of any such Person's property or assets, or
(ii) the violation or contravention of, or the occurrence of a
Potential Default or Event of Default under, any material term or
provision of its articles or certificate of incorporation, any
certificates of authority to do or transact business, any order
of any court, or any material contract, agreement,
39
mortgage,indenture, instrument, judgment or laws to which any
such erson is a party or signatory or by which any such Person
is bound.
7.4 Validity. This Agreement and all of the other Loan Documents are
--------
the legal, valid and binding obligations of Borrower and each Guarantor,
enforceable in accordance with their terms, except as limited by applicable
bankruptcy, reorganization, insolvency or similar laws affecting the enforcement
of creditor's rights generally.
7.5 Solvency. On the Effective Date both prior to and after the
--------
transactions contemplated in connection with the Closing, and at all times
thereafter, the Fair Value of Borrower's and each Subsidiary's respective assets
is and shall be greater than the respective liabilities thereof; such Persons
are and shall be able to pay their debts as they mature and such Persons do not
and will not have an unreasonably small amount of capital. Each such Person at
all times hereafter will have sufficient capital to carry on its business and
transactions as now conducted and as planned to be conducted in the future.
7.6 Compliance With Laws. Borrower and each Subsidiary is in
--------------------
compliance in all material respects with all applicable laws, rules and
regulations of any governmental authority, including but not limited to the
Securities Act of 1933, the Securities Exchange Act of 1934, the Fair Labor
Standards Act, Environmental Laws, laws relating to income, unemployment,
payroll or social security taxes and employee benefit plans (as defined in
Section 3(3) of ERISA) as required by ERISA, except for those laws, rules and
regulations the violation of which would not have a Material Adverse Effect.
7.7 Actions or Proceedings. Except as disclosed on Schedule 7.7,
---------------------- ------------
there are no actions or proceedings pending by or against Borrower or any
Subsidiary before any court, administrative agency or other governmental entity
and neither Borrower nor Subsidiary have any knowledge of any pending,
threatened or imminent litigation, governmental investigations or claims,
complaints, actions or prosecutions involving any such Person, or any breaches
by any such Person or any other Person of any agreement to which any such Person
is a party, except for actions, proceedings, litigation, investigations, claims,
complaints, actions, prosecutions and breaches that would not have a Material
Adverse Effect.
7.8 Trademarks, Licenses, Etc. Borrower and each Subsidiary owns or
-------------------------
possesses rights to use all material licenses, patents, patent applications,
copyrights, service marks, trademarks and trade names required to continue to
conduct its respective business as presently conducted. To any such Person's
knowledge, no such license or trademark has been declared invalid, been limited
by order of any governmental authority or by agreement, or is the subject of any
infringement, interference or similar proceeding or challenge, except for those
licenses or trademarks which if challenged, limited or rendered invalid, would
not have a Material Adverse Effect.
7.9 Financial Statements. Except as otherwise disclosed on Schedule
-------------------- --------
7.9, All financial statements relating to Borrower and to its Subsidiaries which
---
have been or may hereafter be delivered by Borrower to Agent fairly present the
financial condition of each such Person and have been prepared in accordance
with Generally Accepted Accounting Principles, subject to
40
year-end adjustments and the absence of footnotes with respect to interim
financial statements, and there has been no Material Adverse Effect since the
submission of such financial information to Agent.
7.10 Conduct of Business. Except as set forth on Schedule 7.10, since
-------------------
June 30, 2001 through the Closing, neither Borrower nor any Subsidiary has: (i)
incurred any debts, obligations, or liabilities (absolute, accrued, or
contingent and whether due or to become due) except current liabilities incurred
in the ordinary course of business and non-ordinary course liabilities less than
$100,000 in the aggregate, none of which (individually or in the aggregate)
materially and adversely affects the business or properties of such Person; (ii)
paid any obligation or liability in excess of $100,000 other than current
liabilities in the ordinary course of business, or discharged or satisfied any
liens or encumbrances other than those securing current liabilities, in each
case in the ordinary course of business; (iii) declared or made any payment to
or distribution to its stockholders as such, or purchased or redeemed any of its
shares of capital stock, or obligated itself to do so, except as permitted
hereunder; (iv) mortgaged, pledged, or subjected to any Lien any of its assets
(tangible or intangible), except for Permitted Liens; (v) sold, transferred or
leased any of its assets except in the usual and ordinary course of business;
(vi) suffered any physical damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the properties or business of
such Person; (vii) entered into any transaction other than in the usual and
ordinary course of business and other than as contemplated hereby; (viii) to the
best knowledge of the senior executive officers of Borrower, encountered any
labor difficulties or labor union organizing activities; (ix) issued or sold any
shares of capital stock or other securities or granted any options (other than
stock options granted to employees in the ordinary course of business) or
similar rights with respect thereto other than pursuant hereto; or (x) agreed to
do any of the foregoing other than pursuant hereto. As of the Closing, there has
been no Material Adverse Effect in the business, financial condition, operations
or results of operations of any such Person since the date of June 30, 2001.
7.11 Environmental Laws. Except as set forth on Schedule 7.11, (i)
------------------ -------------
Borrower and each Subsidiary and all properties owned or operated by each such
Person materially comply in all material respects with all applicable
Environmental Laws; (ii) no such Person is subject to any actual or, to any such
Person's knowledge, threatened judicial or administrative proceeding,
investigation or inquiry into the possibility of material violation of any
Environmental Laws; (iii) each such Person and their properties are not the
subject of actual or threatened investigation or inquiry of any governmental
authority evaluating whether any material remedial action is needed to respond
to a Release of any Hazardous Material or other substance into the environment,
and no such Person has knowledge or notice of the presence on or under any
property owned or operated by any of them, or of the Release of, any Hazardous
Material in material violation of applicable Environmental Laws; (iv) there are
no material Environmental Claims pending or, to any such Person's knowledge,
threatened against any such Person relating to damage, contribution, cost
recovery compensation, loss, or injury resulting from the Release of, or
exposure to, any Hazardous Material, which Hazardous Material is stored in or
under any such Person's property in the ordinary course of its business in
accordance with Environmental Laws; and (v) no such Person has filed, nor were
required to file, any notice under any law, regulation or rule indicating
material past or present generation, transportation, treatment, storage or
disposal of a Hazardous
41
Material or reporting a material Release of a Hazardous Material into the
environment and have not engaged in such material activity other than in
accordance with Environmental Laws.
7.12 Permits and Licenses. Borrower and each Subsidiary has been and
--------------------
is current and in good standing with respect to all material governmental
approvals, permits, certificates, licenses, inspections, consents and franchises
(collectively, the "Licenses") necessary to continue to conduct its business and
to own or lease and operate its properties as heretofore conducted, owned,
leased or operated, including, without limitation, any and all Licenses related
to Environmental Laws.
7.13 ERISA. Except as could not reasonably be expected to result in a
-----
loss, liability or cost in excess of $1,000,000, neither Borrower nor any
Subsidiary, any ERISA Affiliate of any such Person, nor any Benefit Plan is in
violation in any material respect of any of the provisions of ERISA or any of
the qualification requirements of Section 401(a) of the IRC; no Prohibited
Transaction or Reportable Event has occurred with respect to any Benefit Plan,
nor has any Benefit Plan been the subject of a waiver of the minimum funding
standard under Section 412 of the IRC; nor has any Benefit Plan experienced an
accumulated funding deficiency under Section 412 of the IRC; nor has any lien
been imposed upon any such Person or any ERISA Affiliate of such Person under
Section 412(n) of the IRC; nor has any Benefit Plan been amended in such a way
that the security requirements of Section 401(a)(29) of the IRC apply; no notice
of intent to terminate a Benefit Plan has been distributed to affected parties
or filed with the PBGC under Section 4041 of ERISA, nor has any Benefit Plan
been terminated under Section 4041(e) of ERISA; the PBGC has not instituted
proceedings to terminate, or appoint a trustee to administer, a Benefit Plan and
no event has occurred or condition exists which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; no such Person nor any ERISA Affiliate of such
Person would be liable for any amount pursuant to Sections 4062, 4063 or 4064 of
ERISA if all Benefit Plans terminated as of the most recent valuation dates of
such Benefit Plans except as set forth on Schedule 7.13, no such Person nor any
-------------
ERISA Affiliate of such Person maintains any employee welfare benefit plan, as
defined in Section 3(1) of ERISA, which provides any benefits to an employee or
the employee's dependents with respect to claims incurred after the employee
separates from service other than is required by applicable law; and no such
Person nor any ERISA Affiliate of such Person has incurred or expects to incur
any withdrawal liability to any Multiemployer Plan.
7.14 Public Utility Holding Company Act. Neither Borrower nor any
----------------------------------
Subsidiary thereof is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935.
7.15 Insurance. Set forth on Schedule 7.15 is a complete and accurate
--------- -------------
summary of the property and casualty insurance program of Borrower and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention, and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving Borrower or any
Subsidiary).
42
7.16 Full Disclosure. To the best knowledge of the senior executive
---------------
officers of Borrower and its Subsidiaries after diligent inquiry, this
Agreement, the financial statements delivered in connection herewith, and the
representations and warranties of any such Person herein and in any other
document delivered or to be delivered by or on behalf of or prepared by or at
the request of any such Person, do not and will not contain any untrue statement
of a material fact or omit a material fact necessary to make the statements
contained therein or herein, in light of the circumstances under which they were
made, not misleading. To the best knowledge of the senior executive officers of
Borrower and its Subsidiaries after diligent inquiry and investigation, there is
no material fact which any such Person has not disclosed to Agent in writing
which materially and adversely effects or, so far as any such Person can
foresee, could reasonably be expected to materially and adversely affect the
assets, business, prospects, profits, or condition (financial or otherwise) of
any such Person, the rights of Agent or the ability of any such Person to
perform this Agreement. (With respect to this Section 7.16, Agent and Lenders
------------
recognize that any projections and forecasts provided by Borrower or any
Subsidiary are based on good faith estimates and assumptions believed by
Borrower to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may materially differ from projected or
forecasted results.)
7.17 No Default. No Event of Default or Potential Default exists or
----------
would result from the incurring by Borrower or Guarantors of any Indebtedness
hereunder.
7.18 Customer and Trade Relations. Except as disclosed on Schedule
---------------------------- --------
7.18, there exists no termination, cancellation or limitation of, or any adverse
----
modification or change in, the business relationship between Borrower or any of
its Subsidiaries and any customer or any group of customers, or with any
material supplier, where the termination, cancellation, limitation, modification
or change individually or in the aggregate could materially and adversely affect
the business of such Person, and there exists no present condition or state of
facts or circumstances which would materially affect adversely any such Person
or prevent such Person from conducting such business after the consummation of
the transactions contemplated by this Agreement in substantially the same manner
in which it has heretofore been conducted.
7.19 Other Names. As of the Closing, the businesses conducted by
-----------
Borrower and by its Subsidiaries have not been conducted under any corporate,
trade or fictitious name other than those names listed on Schedule 7.19 hereto.
-------------
7.20 Tax Obligations. Borrower and each Subsidiary have filed all
---------------
federal, material state and material local tax reports and returns required to
be filed thereby, and except for extensions duly obtained, have either duly paid
all material taxes, duties and charges owed thereby, or made adequate provision
for the payment thereof, unless such Person is contesting in good faith, by an
appropriate proceeding, the validity, amount or imposition of the above while
maintaining adequate reserves to cover the above, and such contest does not have
or cause a Material Adverse Effect.
7.21 Employee Controversies. Borrower and each Subsidiary has withheld
----------------------
all material amounts required by law or agreement to be withheld by it from the
wages, salaries and other payments to its employees, and is not liable for any
material arrears or wages or any material
43
taxes or penalties for failure to comply with the foregoing. Except as set forth
on Schedule 7.21 hereto, as of the date hereof no such Person is a party to any
-------------
collective bargaining agreements; provided, that Borrower shall promptly notify
Lenders if any such Person hereinafter becomes a party to any such agreement.
Except in cases where the potential liability, cost or expense could not
reasonably be expected to exceed $1,000,000, there are no pending, threatened or
anticipated (i) employment discrimination or unfair labor practice charges or
complaints against or involving any such Person before any federal, state or
local board, department, commission or agency, (ii) material grievances,
disputes or controversies with any union or any other organization of any such
Person's employees, (iii) pending or threatened strikes, slowdowns, work
stoppages or lockouts. As of date hereof, there are no asserted pending demands
for collective bargaining by any union or organization or efforts to organize
any of the employees of any such Person; provided, that Borrower shall promptly
notify Lenders if such demands or efforts hereinafter occur.
7.22 Investment Company Act. Neither Borrower nor any Subsidiary is an
----------------------
"investment company" or a company "controlled" by an investment company within
the meaning of the Investment Company Act of 1940, as amended.
7.23 Subsidiaries. As of the Closing, neither Borrower nor any
------------
Guarantor has any Subsidiaries other than those specifically disclosed on
Schedule 7.23 hereto, and neither Borrower nor any Guarantor has equity
-------------
investments in any other Person other than those specifically disclosed on
Schedule 7.23 hereto.
-------------
7.24 Regulation U. Neither Borrower nor any Subsidiary is engaged in
------------
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any of the Loans
made hereunder will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.
7.25 Capital Stock. The authorized capital stock of Borrower and each
-------------
Guarantor is set forth on Schedule 7.25 hereof. As of the Closing: (i) except as
-------------
set forth on Schedule 7.25, Borrower has no shares of common stock held as
-------------
treasury shares; (ii) all outstanding shares of capital stock of Borrower and
each Guarantor have been duly authorized and validly issued and are fully paid
and non-assessable; (iii) all of the outstanding securities of Borrower and each
Guarantor were issued in compliance with all applicable federal and state
securities laws; and (iv) none of the outstanding securities of Borrower or any
Guarantor have been issued in violation of any preemptive rights, rights of
first refusal or similar rights. As of the Closing, there are no outstanding
obligations, contingent or otherwise, of Borrower or any Guarantor to purchase,
redeem or otherwise acquire any capital stock of such Person.
44
7.26 Occupational Safety and Health. Except as could not reasonably be
------------------------------
expected to result in a loss, liability or cost in excess of $1,000,000, neither
Borrower nor any Subsidiary of Borrower has, nor, to Borrower's knowledge, has
any Affiliate of such Person received any notice, citation, claim, assessment or
proposed assessment as to or alleging any material violation by any such Person
or any such Affiliate from any division of any Federal or state occupational
safety and health administrations or agencies and no such violation presently
exists. As of Closing, neither any such Person is, nor, to the best of the
knowledge of any such Person, no Affiliate thereof is a party to any pending
dispute with respect to such Person's or any such Affiliate's compliance with
any Federal or state occupational safety and health laws.
7.27 Swap Obligations. Neither Borrower nor any of its Subsidiaries has any
----------------
outstanding obligations under any Swap Contracts, other than Permitted Swap
Obligations. Borrower has undertaken its own independent assessment of its
consolidated assets, liabilities and commitments and has considered appropriate
means of mitigating and managing risks associated with such matters.
7.28 Property. The Borrower and each of its Subsidiaries has ownership of
--------
or sufficient rights to use all Property required for the conduct of their
business, and such Property is in good working condition (ordinary wear and tear
excepted) and is not subject to any lien, claim, security interest, mortgage,
pledge, charge or other encumbrance (other than Permitted Liens).
8. NEGATIVE COVENANTS.
Borrower will not take or allow to be taken any of the following actions,
without the Majority Lenders' prior written consent:
8.1 Disposition or Encumbrance of Assets.
------------------------------------
(a) Sell, assign, lease, convey, transfer or otherwise dispose of (whether
in one or a series of transactions) any Property, except as follows: (i)
dispositions of Inventory, or used, worn-out or surplus Equipment, all in the
ordinary course of business; (ii) the sale of Equipment to the extent that such
Equipment is exchanged for credit against the purchase price of a similar
replacement thereof, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement; (iii) during any period that
no Obligations for Loans are outstanding hereunder, dispositions of Property in
connection with leases arising from sale/lease-back transactions entered into by
Borrower relating to real property and fixtures and based upon its business
needs, and otherwise during any period that Obligations are outstanding
hereunder, such transactions as to which the proceeds thereof are utilized to
pay down the Obligations outstanding; (iv) transfers of equipment and licenses
of patents, technology and know-how associated therewith to joint ventures
permitted under this Agreement, provided that the fair market value of such
equipment shall not exceed $5,000,000 during the term of this Agreement; and (v)
dispositions of Property by the Borrower or any Guarantor to the Borrower or any
Guarantor; and (vi) other dispositions but in any event not involving the sale
or transfer of Accounts, provided that (A) at the time of any disposition, no
Event of Default or Potential Default shall exist or shall result from such
disposition, (B) the aggregate sales price from such disposition shall be paid
in cash, and (C)
45
the aggregate value of all assets sold by the Borrower and its Subsidiaries,
together, shall not exceed in any Fiscal Year $2,000,000.
(b) Directly or indirectly make, create, incur, assume or suffer to exist
any Lien upon or with respect to any of its Property, whether now owned or
hereafter acquired, other than Permitted Liens. For purposes of this Agreement,
"Permitted Liens" shall mean any or all of the following: (i) any Lien existing
on Property of Borrower or any Subsidiary as of the Closing and as set forth on
Schedule 8.1; (ii) any Lien created under any Loan Document; (iii) Liens for
------------
taxes, fees, assessments or other governmental charges which are not delinquent
or remain payable without penalty, or to the extent that non-payment thereof is
otherwise permitted hereunder; (iv) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable without
penalty or which are being contested in good faith or by the appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto; (v) Liens (other than any Lien imposed by
ERISA) consisting of pledges or deposits required in the ordinary course of
business in connection with workers' compensation, unemployment insurance or
other social security legislation; (vi) Liens on the Property of Borrower or any
Subsidiary securing (A) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), leases or statutory obligations; (B) contingent
obligations on surety or appeal bonds; and (C) other non-delinquent obligations
of a like nature; in each case, incurred in the ordinary course of business,
provided all such Liens in the aggregate would not (even if enforced) cause a
Material Adverse Effect; (vii) Liens consisting of judgment or judicial
attachment liens, provided that such Liens have been in existence less than
thirty (30) days and the enforcement of such Liens is effectively stayed and all
such liens in the aggregate at any time outstanding for Borrower and its
Subsidiaries to the extent not covered by insurance do not exceed $1,000,000;
(viii) Liens on assets which are the subject of Acquisitions after the date
hereof or Liens on assets of Persons which become Subsidiaries after the
Closing; provided, that (A) such Liens existed at the time of such Acquisition
or at the time the respective Persons became Subsidiaries, were not created in
anticipation thereof and attach only to property or assets so acquired or of
such Subsidiary, as the case may be, and (B) if such Acquisition had occurred or
such Person had become a Subsidiary, as the case may be, on the last day of the
most recent fiscal period for which Agent has received financial statements
pursuant to Sections 10.2(a) and 10.2(b) hereof, as the case may be, no Event of
----------------------------
Default or Potential Default would have occurred or resulted therefrom; (ix)
purchase money security interests on any property acquired or held by Borrower
or its Subsidiaries in the ordinary course of business, securing Indebtedness
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such property; provided, that (A) any such Lien attaches to such
property concurrently with or within 90 days after the acquisition thereof, (B)
such Lien attaches solely to the property so acquired in such transaction, (C)
the principal amount of the debt secured thereby does not exceed 100% of the
cost of such property, and (D) the principal amount of the Indebtedness secured
by any and all such purchase money security interests shall not at any time
exceed $5,000,000; (x) Liens securing obligations in respect to capital leases
on assets subject to such leases, provided that such capital leases are
otherwise permitted hereunder; (xi) Liens arising solely by virtue of any
statutory or common law provision relating to banker's liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided, that (A) such deposit account
is not a dedicated cash collateral account and is not subject to restrictions
46
against access by Borrower in excess of those set forth by regulations
promulgated by the Board of Governors of the Federal Reserve System or of any
successor governmental authority thereof, and (B) such deposit account is not
intended by Borrower or any Subsidiary to provide collateral to the depository
institution; (xii) Liens consisting of pledges of cash collateral or government
securities to secure on a ▇▇▇▇-to-market basis Permitted Swap Obligations only,
provided that (A) the counterparty to any Swap Contract relating to such
Permitted Swap Obligation is under a similar requirement to deliver similar
collateral from time to time to Borrower or the Subsidiary party thereto on a
▇▇▇▇-to-market basis; and (B) the aggregate value of such collateral so pledged
by Borrower and the Subsidiaries together in favor of any counterparty does not
at any time exceed $1,000,000; (xiii) Liens consisting of leases or subleases
granted to third Persons not interfering in any material respect with the
business of Borrower and its Subsidiaries or any interest or title of a lessor
or sublessor under any lease permitted by this Agreement; (xiv) Liens arising
from Code financing statements regarding leases permitted by this Agreement or
from precautionary Code financing statements with respect to Borrower or any of
its Subsidiaries as lessee, bailee or in a similar capacity; (xv) with respect
to real property (A) those liens, encumbrances and other matters affecting title
to any property listed in any applicable title insurance policies in respect
thereof but not securing any obligation for borrowed money, (B) easements,
encroachments, covenants, rights of way, restrictions, minor defects,
irregularities and encumbrances on title and other similar charges and
encumbrances that do not, individually or in the aggregate, interfere in any
material respect with the ordinary conduct of the business of Borrower and its
Subsidiaries, and (C) municipal and zoning ordinances that are not violated by
the existing improvements and the present and proposed uses by Borrower and its
Subsidiaries; (xvi) "netting rights" and setoff rights of counterparties under
Swap Contracts or similar hedging agreements; and (xvii) Liens of banks arising
under Article 4 of the Code on items of collection and accompanying documents
and proceeds.
8.2 Name or Identity Change. Change or allow any Subsidiary to change its
-----------------------
name, state of incorporation, form of business entity, business structure, or
identity, or add any new fictitious name or create Subsidiaries without fifteen
(15) days notice to Agent.
8.3 Guaranties. Except as in the ordinary course of business and subject to
----------
the provisions of Section 8.5 hereof, guarantee or otherwise become or allow any
-----------
Subsidiary to guarantee or become in any way liable with respect to the
obligations of any third party except by endorsement of instruments or items of
payments for deposit to the general account of Borrower or its Subsidiaries or
which are transmitted or turned over to Agent; provided, that Borrower and any
Guarantor may guarantee such obligations on behalf of Borrower (in the case of a
Guarantor) or any other Guarantor.
8.4 Change in Business. Enter into or allow any Guarantor to enter into any
------------------
business not related to Borrower's or its Subsidiaries' present businesses or
make any change in any such Person's financial structure or in any of its
business objectives, purposes, or operations, in each case which could
reasonably be expected to materially and adversely affect the ability of such
Person to repay the Obligations, the value of the Collateral or Agent's rights
and remedies hereunder.
47
8.5 Loans and Investments. Make or allow any Subsidiary to make any
---------------------
advance, loan, investment or material acquisition of assets other than (without
duplication, the following):
(a) the purchase from time to time during the term of this Agreement of
shares of Borrower; notwithstanding the foregoing, provided no Obligation for
any Loan is outstanding hereunder, Borrower may purchase it shares, (i) so long
as no Event of Default or Potential Event of Default exists and (ii) so long as
doing so would not otherwise cause an Event of Default or Potential Default
hereunder.
(b) Acquisitions, or investments in joint ventures or partnerships, not
exceeding $10,000,000 in the aggregate during the term of this Agreement;
provided, that: (a) immediately after giving effect to the Acquisition, there
shall exist no Potential Default or Event of Default and (b) immediately after
giving effect to such acquisition, Borrower is in pro forma compliance with all
the financial ratios and restrictions set forth in Section 11. Any
----------
Subsidiar(ies) wherein Borrower and/or any Guarantors have invested and/or
advanced amounts, whether pursuant to an Acquisition or otherwise, in an
aggregate amount in excess of $10,000,000 shall be required to become a
Guarantor hereto and, pursuant thereto, such Subsidiary shall execute and
deliver to Agent a Guaranty and a Security Agreement pursuant to Section 9.18
------------
hereof. The restriction on Acquisitions shall apply only for such period as any
Obligations for Loans are outstanding hereunder.
(c) contributions by a Borrower to the capital of any of its Subsidiaries,
or by any such Subsidiary to the capital of any of its Subsidiaries;
(d) Investments by Borrower in any Guarantor or by any Guarantor in
Borrower or any other Subsidiary, by way of intercompany loans, advances or
guaranties;
(e) extensions of credit in the nature of Accounts arising from the sale or
lease of goods or services in the ordinary course of business;
(f) Cash Equivalent Investments;
(g) bank deposits in the ordinary course of business; provided that the
aggregate amount of all such deposits (excluding amounts in payroll accounts or
for accounts payable, in each case to the extent that checks have been issued to
third parties) which are maintained with any bank other than a Lender shall not
at any time exceed $100,000;
(h) short term loans to officers and employees of Borrower and its
Subsidiaries not to exceed $750,000 in the aggregate at any time outstanding,
and travel and other advances to employees in the ordinary course of business;
(i) Investments in securities of Account Debtors received pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such Account Debtors;
48
(j) Investments listed on Schedule 8.5;
------------
(k) Capital Expenditures;
(l) Investments constituting Permitted Swap Obligations or payments or
advances under Swap Contracts related to Permitted Swap Obligations;
(m) Investments in ▇▇▇▇▇▇▇▇▇ Coatings, or guarantees in and other
obligations, in each case after the date hereof, of MSC ▇▇▇▇▇▇▇▇▇ Coatings Inc.
arising solely as a result of its status as a general partner of ▇▇▇▇▇▇▇▇▇
Coatings; provided that the aggregate amount of such Investments, guarantees and
obligations shall not at any time exceed $10,000,000; and
(n) without duplication, Investments (i) constituting Indebtedness
(including contingent obligations) permitted hereunder; (ii) in connection with
a joint venture permitted hereunder; or (iii) consisting of purchases,
redemption or other acquisition of Borrower's common stock permitted hereunder;
provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b)
shall be permitted to be made if, immediately before or after giving effect
thereto, any Event of Default or Potential Default exists.
During such time as any Obligations (other than undrawn L/Cs) are outstanding
hereunder, the aggregate amount of all advances or loans to any Excluded
Subsidiary shall not exceed $10,000,000.
8.6 Indebtedness. Incur or allow any Subsidiary to incur or refinance any
------------
Indebtedness, other than (i) the Obligations hereunder; (ii) additional
Indebtedness shown on Schedule 8.6 hereto; (iii) Indebtedness arising or
------------
accruing in the ordinary course of business which Indebtedness does not give
rise to a Lien or other security interest, other than a Permitted Lien; (iv)
Indebtedness arising under a Swap Contract; (v) the Unsecured Indebtedness; (vi)
Indebtedness incurred in connection with Operating Leases or Capital Leases;
provided that the aggregate principal amount of all such Indebtedness shall not
exceed at any time $15,000,000; (vi) purchase money Indebtedness secured by
Liens permitted hereunder; (vii) guaranties permitted hereunder; (viii)
renewals, extensions, refinancings and refundings of Indebtedness permitted by
this Section 8.6; provided, however, that any such renewal, extension,
refinancing or refunding is in an aggregate principal amount not greater than
the principal amount of, and is on terms no less favorable to Borrower or such
Subsidiary, including as to weighted average maturity, than the Indebtedness
being renewed, extended, refinanced or refunded; and (ix) Indebtedness incurred
in connection with loans permitted by Section 8.5(d), subject to the last
paragraph of Section 8.5.
8.7 Affiliate Transactions. Except for transactions between Borrower and
----------------------
any Guarantor or between any Guarantor and any other Guarantor, enter or allow
any Subsidiary to enter into any transaction, directly or indirectly, with an
Affiliate, or provide services or sell goods to, or for the benefit of, or pay
or otherwise distribute monies, goods or other valuable
49
consideration to, an Affiliate, except upon fair and reasonable terms no less
favorable than terms in a comparable arm's length transaction with an
unaffiliated Person and except for existing intercompany debt.
8.8 Consolidations; Mergers. Except as otherwise permitted under this
-----------------------
Agreement, merge or consolidate with or into any other Person, and Borrower
shall not, nor permit any material Subsidiary, other than Pinole Point, to,
dissolve, enter into any joint venture entity or become a partner in any
partnership, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or a series of transactions) all or substantially all of its assets
(whether now owed or hereafter acquired) to or in favor of any Person except:
(a) any Subsidiary may merge with Borrower, provided that Borrower shall be the
continuing or surviving corporation, or with any one or more other Subsidiaries,
provided that if any transaction shall be between a wholly-owned Subsidiary and
a non-wholly-owned Subsidiary, the wholly-owned Subsidiary shall be the
continuing or surviving corporation; and (b) any Subsidiary may sell all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
Borrower or another wholly-owned Subsidiary.
8.9 Liquidations. Undertake or allow any material Subsidiary to undertake
------------
a plan of liquidation or dissolution, except as permitted under Section 8.8.
8.10 Suspension of Business. Suspend or terminate or allow any Guarantor to
----------------------
suspend or terminate the transaction of its business.
8.11 Distributions. Pay, directly or indirectly, any cash dividends or
-------------
distributions to its shareholders, or, except in connection with normal employee
stock repurchase programs, purchase, redeem, retire or otherwise acquire for
value any shares of its capital stock or any warrants, rights or options to
acquire such shares; provided, however, that such restrictions under this
Section 8.11 shall apply only during periods that Obligations for Loans are
------------
outstanding hereunder.
8.12 ERISA. Adopt or agree to contribute to or allow any Subsidiary to
-----
adopt or agree to contribute to any Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC, except for those Plans currently
in effect on the date hereof and listed on Schedule 8.12.
-------------
8.13 Change of Control. Undergo a Change of Control.
-----------------
8.14 Inconsistent Agreements. Enter into or allow any Subsidiary to enter
-----------------------
into any agreement containing any provision which would (a) be violated or
breached by any borrowing by Borrower hereunder or by the performance by
Borrower or Guarantors of any of their obligations hereunder or under any other
Loan Document, (b) prohibit Borrower or its Subsidiaries from granting to Agent,
for the benefit of Lender, a Lien on any of their assets constituting Collateral
or (c) except as required pursuant to the Unsecured Debt, create or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to (i) pay dividends or make other distributions to Borrower or any
other applicable Subsidiary, or pay
50
any Indebtedness owed to Borrower or any of its Subsidiaries, (ii) make loans or
advances to Borrower or (iii) transfer any of its Collateral to Borrower .
8.15 Business Activities. Engage in or allow any Guarantor to engage in any
-------------------
line of business other than the businesses engaged in on the date hereof and
businesses reasonably related thereto.
8.16 Accounting Changes. Without Lenders' consent not unreasonably
------------------
withheld, make or permit any Subsidiary to make any significant change in
accounting treatment or reporting practices, except as required by GAAP and as
would affect the Collateral or the financial covenants set forth in Section 10,
or change the Fiscal Year of Borrower or of any Subsidiary.
9. AFFIRMATIVE COVENANTS - GENERAL.
So long as any Obligations (other than Contingent Indemnification
Obligations) are outstanding or any Commitment remains outstanding, Borrower
covenants and agrees that:
9.1 Payments. Borrower shall pay, or cause to be paid, when due all
--------
principal and interest under the Notes and all other Obligations in respect of
this Agreement, the Notes and the Loan Documents.
9.2 Taxes. All material assessments and taxes, whether real, personal or
-----
otherwise, due or payable by, or imposed, levied or assessed against, Borrower
or any of its property or the property of any Subsidiary have been paid, and
shall hereafter be paid in full, before delinquency, except those assessments
and taxes the validity of which is being contested in good faith by appropriate
proceedings, do not impair the priority of Agent's liens on the collateral and
as to which Borrower shall have caused the set aside of adequate reserves (as
determined in accordance with GAAP). Borrower will make and cause its
Subsidiaries to make timely payment or deposit of all material FICA payments and
withholding taxes required of them by applicable laws, and will, upon request,
furnish Agent with proof satisfactory that such payments or deposits have been
made.
9.3 Insurance. Borrower shall, at its own expense, maintain and provide
---------
and cause its Subsidiary to maintain and provide satisfactory evidence to
Lenders as to, insurance on the Collateral and other business properties, all in
such form, substance and amounts and with such insurance companies or
associations acceptable to Agent in its discretion, reasonably exercised, and
any insurance policies so issued in connection with the Collateral shall contain
endorsements which name Agent as additional insured and lender loss payee, as
its interest may appear, with respect to all of the Collateral and which provide
that said policies shall not be cancelled, terminated, amended or modified
without thirty (30) days' prior written notice to Agent and that no act or
default of Borrower, its Subsidiaries or any other Person shall affect the right
of Agent to recover under such policies in case of loss or damage. Borrower
shall deliver to Agent a copy of the insurance policies and certificates for
each such policy of insurance. Borrower shall notify Agent within thirty (30)
days of obtaining any new policy or increase of coverage under any existing
policy. Borrower hereby irrevocably appoints, designates and constitutes Agent
and its officers, employees and agents, as Borrower's attorney-in-fact for the
purpose of making, settling
51
and adjusting, in good faith, claims in excess of $100,000 under any and all
such insurance policies and of endorsing Borrower's name or the name of any
insured hereunder on any checks, drafts, instruments or other items of payment
received pursuant to such insurance policies. If Borrower or any Subsidiary
fails to maintain any insurance or policies of insurance as required above, or
fails to pay any premium related thereto, Agent may obtain or pay the same, but
shall be under no obligation to do so. In the event Agent obtains such
insurance, all sums so paid and any expenses incurred in connection therewith
shall be part of the Obligations payable by Borrower to Agent on demand as an
Out-of -Pocket Expense. Borrower shall also maintain or cause its Subsidiaries
to maintain in effect, in addition to the above mentioned insurance covering the
Collateral, such other insurance in such amounts with such insurers and covering
such risks as now maintained thereby and shall, upon request by Agent, provide
Agent with certificates or policies evidencing such insurance, with Agent named
as "Lender's Loss Payee". In the event that any insurance proceeds received by
Agent pursuant to this Section 9.3 exceed the amounts necessary to repay all
-----------
Indebtedness of Agent with respect to the Collateral to which such insurance
proceeds relate, Agent shall return to Borrower the amount of such excess.
9.4 Litigation. Borrower shall notify Agent in writing within five (5)
----------
Business Days of (i) any suit in law or equity or administrative proceeding as
to which Borrower or any Subsidiary is an adverse party and which involves money
or property or seeks damages in excess of $1,000,000, and (ii) otherwise which
could reasonably be expected to have a Material Adverse Effect.
9.5 Books and Records. Borrower at all times hereafter shall keep and cause
-----------------
each of its Subsidiaries to keep proper books of record and account in which
full and true entries will be made of all dealings or transactions with respect
to or in relation to the business and affairs of such Person, and shall maintain
a standard and modern system of accounting, in accordance with Generally
Accepted Accounting Principles with ledger and account cards and/or computer
tapes, discs, printouts, and records pertaining to the Collateral which contain
information as may from time to time be reasonably requested by Agent. Borrower
shall notify Agent in writing if any such Person modifies or changes its method
of accounting or enters into, modifies, or terminates any agreement presently
existing, or at any time hereafter entered into with any third party accounting
firm and/or service bureau for the preparation and/or storage of such Person's
accounting records; provided, that such accounting firm and/or service bureau
agrees to provide to Agent information regarding the Collateral and the
financial condition of such Person.
9.6 Compliance with Laws. Borrower shall materially comply and cause its
--------------------
Subsidiaries to comply in all material respects with all Federal, State, local
and foreign laws, rules and regulations, including, but not limited to the
Securities Act of 1933, the Securities Exchange Act of 1934, the Fair Labor
Standards Act, Environmental Laws, laws relating to income, unemployment,
payroll or social security taxes and pension funds and retirement benefit
programs as required by ERISA, except such as may be contested in good faith or
as to which a bona fide dispute may exist.
52
9.7 Expense Reimbursements. Borrower shall within fifteen (15) Business
----------------------
Days after demand, reimburse Agent for all sums expended by Agent which
constitute Out-of-Pocket Fees and Costs, and Borrower hereby authorizes and
approves all advances and payments by Agent for items constituting Out-of-Pocket
Fees and Costs. Agent shall make all good faith reasonable attempts to notify
Borrower of such reimbursement, but the failure of Agent to so notify Borrower
shall impose no obligation or liability of any kind upon Agent. Borrower shall
pay all costs and expenses of Agent or Lender, including, without limitation,
attorney's fees and expenses, incurred in connection with enforcing this
Agreement or any Loan Document. Agent may charge any or all of such amounts
expended to Borrower's Loan Account and such amounts shall be part of the
Obligations subject to interest at the Prime Rate Option or Default Rate, as
applicable.
9.8 ERISA Reportable Events. Borrower shall furnish to Agent: (a) as soon
-----------------------
as possible, but in no event later than thirty (30) days after Borrower knows or
has reason to know that any material Reportable Event with respect to any
Benefit Plan of Borrower or of any Subsidiary has occurred, a statement of the
chief financial officer of such Person setting forth the details concerning such
Reportable Event and the action which Borrower proposes to take with respect
thereto, together with a copy of the notice of such Reportable Event given to
the PBGC, if a copy of such notice is available to Borrower; (b) promptly after
the filing thereof with the United States Internal Revenue Service or the PBGC,
copies of each annual report with respect to each Benefit Plan; (c) promptly
after receipt thereof, a copy of any notice of any potential material liability,
adverse determination letter, ruling or opinion received from the PBGC or the
Internal Revenue Service with respect to any Benefit Plan; (d) when the same is
made available to participants in a Benefit Plan, all notices of a significant
reduction in the rate of benefit accrual or plan termination to the participants
by the administrator of such Benefit Plan; and (e) promptly after receipt
thereof, any notice from any Multiemployer Plan to which Borrower or any ERISA
Affiliate of Borrower or its Subsidiaries contributes which quantifies any
actual or potential withdrawal liability which will or may be imposed upon the
withdrawal of Borrower or any ERISA Affiliate of such Borrower or its
Subsidiaries from such Multiemployer Plan.
9.9 Preservation of Corporate Existence. Borrower shall preserve and
-----------------------------------
maintain, and shall cause each Guarantor to preserve and maintain, in full force
and effect: (i) its corporate existing and good standing under the laws of the
state of its incorporation; and (ii) all material governmental rights,
privileges, qualifications, permits, licenses and franchises, including without
limitation all of its registered patents, trademarks and service marks,
necessary in the normal conduct of its business.
9.10 Instruments and Chattel Paper. Upon the written request of Agent,
-----------------------------
Borrower will stamp or otherwise ▇▇▇▇ or cause its Subsidiaries to stamp or
otherwise ▇▇▇▇ all chattel paper and instruments now owned or hereafter acquired
in which Agent has a first and prior perfected security interest, to reflect
that the same are subject to Agent's security interest and will immediately
thereafter deliver or cause such chattel paper and instruments to be delivered
to Agent or its agent, with appropriate endorsement, assignment or stock power
transfer or assignment, with full recourse to Borrower, to vest title and
possession in Agent.
53
9.11 Defense of Collateral. Borrower shall pay or cause to be paid by its
---------------------
Subsidiaries when due, all material Indebtedness, lawful claims or demands with
respect to the Collateral which, if unpaid, could reasonably be expected to
result in any Lien on the Collateral. In addition, subject to Permitted Liens,
such Persons shall at all times defend Agent's rights and interests in and to
the Collateral, and the priority position of said rights and interests against
any and all claims of any person adverse to Agent and take all necessary or
appropriate actions to give effect to Agent's priority of rights and interests
contemplated by this Agreement and the other Loan Documents.
9.12 Environmental Matters - Indemnification. Borrower shall take and cause
---------------------------------------
its Subsidiaries to take all actions which are reasonably necessary to comply in
all material respects with the requirements of all Environmental Laws including,
without limitation, all filing and reporting requirements thereof. Borrower
hereby agrees to indemnify, hold harmless and reimburse and cause Guarantors to
indemnify, hold harmless and reimburse Agent and Lenders for any and all loss,
damage, expenses or costs of any kind or nature arising out of or incurred in
connection with any prior, existing or future violations by Borrower or any
Subsidiaries of any Environmental Laws.
9.13 Ownership. Except as provided on Schedule 9.13, Borrower shall at all
--------- -------------
times own, beneficially and of record one hundred percent (100%) of the issued
and outstanding stock of each Guarantor listed on Schedule 9.13 and as to all
-------------
other Guarantors have majority ownership.
9.14 SEC Filings. Borrower shall make all filings required by the SEC no
-----------
later than the due date of each such required filing, subject to any extensions
received from the SEC.
9.15 Employee Benefit Plans. Borrower shall maintain or cause its
----------------------
Subsidiaries to maintain the respective Pension Plan of each in substantial
compliance with all applicable requirements of law and regulations.
9.16 Environmental Matters. (a) If any Release or Disposal of Hazardous
---------------------
Materials shall occur or shall have occurred on any real property or any other
assets of Borrower or its Subsidiaries, Borrower shall cause the prompt
containment and removal of such Hazardous Materials and the remediation of such
real property or other assets as necessary to comply, in all material respects,
with all Environmental Laws and to preserve the value of such real property or
other assets. Without limiting the generality of the foregoing, Borrower shall
comply and cause its Subsidiaries to comply, in all material respects, with any
valid Federal or state judicial or administrative order requiring the
performance at any real property of Borrower or any Subsidiary of activities in
response to the Release or threatened Release of a Hazardous Materials.
To the extent that the transportation of "hazardous waste" as defined by RCRA is
permitted by this Agreement, Borrower shall cause the disposal of such hazardous
waste only at licensed disposal facilities operating in compliance with
Environmental Laws.
9.17 Reports to the SEC and to Shareholders. Borrower shall provide within
--------------------------------------
ten (10) Business Days of the filing or sending thereof, copies of all regular,
periodic or special
54
reports of Borrower or any Subsidiary filed with the SEC; copies of all
registration statements of such Persons filed with the SEC (other than on Form
S-8); and copies of all proxy statements or other communications made to
security holders generally.
9.18 Guaranties. Borrower shall cause each Guarantor in conjunction
----------
herewith, or within thirty (30) days of the creation of such Guarantor pursuant
to Section 8.5(b) hereof, to (i) execute and deliver to Agent a guaranty, in the
--------------
form of Exhibit F hereto and a Security Agreement, which shall be accompanied by
---------
such supporting documentation, including resolutions, an incumbency certificate,
and an opinion of counsel, as Agent may reasonably require, and (ii) keep such
guaranty and Security Agreement in full force and effect.
9.19 Use of Proceeds. Borrower shall use the proceeds of the Loans for
---------------
working capital and other general corporate purposes.
10. AFFIRMATIVE COVENANTS - REPORTING.
Borrower shall furnish or cause its Subsidiaries to furnish to Agent and
Lenders the following:
10.1 Compliance Certificate. As soon as practicable and in any event within
----------------------
forty-five (45) days following the end of each Fiscal Quarter, a certificate
reflecting Borrower's compliance with the financial covenants set forth in
Section 11 of this Agreement. Such certificate shall be in a form and with such
----------
specificity as is reasonably satisfactory to Agent and shall contain such
additional information as Agent may reasonably require concerning financial
covenant calculations included, described or referred to in such certificate and
any other documents in connection therewith requested by Agent.
10.2 Financial Statements. Borrower shall further cause to be furnished to
--------------------
Agent:
(a) Quarterly Financial Statements. As soon as practicable and in any
------------------------------
event within forty-five (45) days following the end of each Fiscal Quarter
(other than the fourth Fiscal Quarter): (i) statements of income and statements
of cash flow for each such Fiscal Quarter and for the period from beginning of
the then current Fiscal Year to the end of such Fiscal Quarter; (ii) balance
sheets as of the end of such Fiscal Quarter; and (iii) with respect to such
statements of income and balance sheets, which shall be prepared on a
consolidating and consolidated basis with those of all Subsidiaries of Borrower,
all setting forth in comparative form, figures for the corresponding periods in
the preceding Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Borrower that such statements fairly present the financial
condition of Borrower and its Subsidiaries in accordance with Generally Accepted
Accounting Principles, subject to changes resulting from normal year-end
adjustments and the absence of footnotes, together with detailed computations of
Borrower's compliance with the covenants set forth in this Agreement.
(b) Yearly Financial Statements. As soon as practicable and in any event
---------------------------
within 120 days after the end of each Fiscal Year of Borrower, each of the
following: (i) statements of
55
income for such Fiscal Year, and a balance sheet as of the end of such Fiscal
Year, and (ii) statements of cash flow for such Fiscal Year, (iii) with respect
to such statements of income and balance sheets, which shall be prepared on a
consolidating and consolidated basis with those of all Subsidiaries of Borrower,
all setting forth in comparative form, corresponding figures for the period
covered by the preceding annual audit and as of the end of the preceding Fiscal
Year, all in reasonable detail and in scope in accordance with audits performed
for Borrower in prior years and examined and certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
other nationally recognized independent certified public accountants reasonably
satisfactory to Agent, whose opinion shall be unqualified and shall be in scope
in accordance with audits performed for Borrower in prior years, together with a
copy of Borrower's 10-K, as filed with the SEC.
(c) Form 10-Q. As soon as practicable and, in any event, within
---------
forty-five (45) days after the end of each Fiscal Quarter (other than the fourth
Fiscal Quarter), beginning with the quarter ended August 31, 2001, a copy of
Borrower's 10-Q, as filed with the Securities and Exchange Commission.
(d) Interim Reports. (i) As soon as practicable and in any event
---------------
within 30 days after the end of each fiscal month, the unaudited income
statements and balance sheets prepared by Borrower on a consolidated basis with
those of all Subsidiaries of Borrower, which financial statements shall be
certified by the chief financial officer of Borrower, a sales and income summary
showing results by Subsidiary, and a report reconciling Accounts of each
Guarantor to the consolidated balance sheet; (ii) promptly upon receipt and, in
any event, within thirty (30) days after receipt thereof, copies of all interim
and supplemental financial reports (other than confidential tax information),
submitted to Borrower or its Subsidiaries by independent certified public
accountants in connection with any interim review of the books and records of
Borrower made by such accountants, if any. Such information may be provided by
e-mail.
(e) Events of Default. Together with the financial statements for each
-----------------
Fiscal Year, a certificate of Borrower executed by an authorized officer of
Borrower stating whether any Event of Default, or Potential Default, currently
exists and is continuing and what action, if any, Borrower is taking or propose
to take with respect thereto.
(f) Budget. As soon as practicable after approved by the Borrower's
------
Board of Directors, and, in any event not later than thirty (30) days after the
beginning of each Fiscal year of Borrower, an annual operating plan (containing
income statements, balance sheets and cash flow statements) of Borrower and of
its Subsidiaries for that Fiscal Year.
(g) Notice of Events of Default. Promptly after the occurrence and
---------------------------
during the continuance thereof, notice, in writing, of any Event of Default, or
Potential Default, and what action, if any, Borrower is taking or propose to
take with respect thereto.
(h) Change in Location. Notice of any change in location of the chief
------------------
executive office, or state of incorporation or organization of Borrower or of
any material Subsidiary at least five (5) Business Days prior to such change.
56
(i) Adverse Change. Promptly after the occurrence thereof, notice, in
--------------
writing, of any other matter which has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
(j) Other Information. With reasonable promptness, such other
-----------------
information respecting the business, properties or the condition or operations,
financial or otherwise, of Borrower or its Subsidiaries, as Lenders may from
time to time reasonably request in writing.
All financial statements delivered to Agent and Lenders pursuant to the
requirements of this Section 10.2 (except where otherwise expressly indicated)
------------
shall be prepared in accordance with Generally Accepted Accounting Principles as
provided in this Agreement.
10.3 Accounting Information. Borrower authorizes Agent and Lenders to
----------------------
discuss the financial condition of Borrower and its Subsidiaries with Borrower's
independent public accountants and agrees that such discussion or communication
shall be without liability to either Agent or Borrower's independent public
accountants. Prior to the occurrence of a Potential Default or Event of Default,
Agent and any Lender shall use its best efforts to notify Borrower of Agent's
and such Lender's discussions with Borrower's accountants. Borrower shall
deliver a letter addressed to such accountants authorizing them to comply with
the provisions of this subsection, and authorizing Agent to rely on financial
statements of Borrower issued by such accountants, which letter shall be
acknowledged and consented to in writing by such accountants.
11. AFFIRMATIVE COVENANTS - FINANCIAL.
11.1 Fixed Charge Coverage Ratio. Borrower shall have a Fixed Charge
---------------------------
Coverage Ratio of not less than 1.00:1.00 measured on a rolling basis as of the
end of each Fiscal Quarter, including such Fiscal Quarter and the three (3)
consecutive Fiscal Quarters immediately preceding such Fiscal Quarter,
commencing February 28, 2002 and at all times thereafter.
11.2 Liquidity Ratio. Borrower shall have a minimum Liquidity Ratio of
---------------
not less 1.50:1.00 on November 30, 2001, measured on a quarterly basis as of the
end of the Fiscal Quarter.
11.3 Leverage Ratio. Borrower shall have a Leverage Ratio, measured on
--------------
a quarterly basis, of not more than (i) 4.00:1.00 as of November 30, 2001; (ii)
3.50:1.00 as of each of February 28, 2002, May 31, 2002, August 31, 2002 and
November 30, 2002; (iii) 3.00:1.00 as of each of February 28, 2003, May 31,
2003, August 31, 2003 and November 30, 2003, and (iv) 2.50:1.00 as of February
28, 2004 and thereafter.
11.4 Net Worth. Borrower shall maintain at all times, measured on a
---------
quarterly basis, a Net Worth of not less than (i) $140,000,000 plus (ii) fifty
percent (50%) of Borrower's positive cumulative Net Income for each Fiscal Year
ending on and after November 30, 2001; provided, however, that (x) the Net
Income requirement in (ii) above shall only be required for such periods that
Borrower's Balance Sheet Leverage exceeds 2.00:1.00 and (y) the Financial
Covenant under this Section 11.4 shall be adjusted upon the completion of a
------------
Strategic Transaction.
57
11.5 Guarantor Funding Ratio. Borrower shall not permit any Guarantor
-----------------------
to have for any two Fiscal Quarters in any Fiscal Year a Guarantor Funding Ratio
of less than 0.75:1.0. For the purposes of the calculation of the Guarantor
Funding Ratio under this Section 11.5, the term "Outstandings" shall mean all
Indebtedness outstanding under this Agreement which has been transferred to or
used for the direct benefit of a Guarantor.
12. EVENTS OF DEFAULT
Any one or more of the following shall constitute an Event of Default by
Borrower under this Agreement:
12.1 Non-Payment. If Borrower or any Guarantor fails to pay when due
-----------
and payable or when declared due and payable, all or any portion of the
Obligations owing to Agent or Lenders (whether of principal, interest, taxes,
reimbursement of Out-of-Pocket Fees and Costs) which is not cured within five
(5) days of when due and payable.
12.2 Non-Compliance with Loan Documents.
----------------------------------
(a) Failure by Borrower to comply with or to perform any covenant set
forth in Sections 8.1, 8.5, 8.6, 8.8, 8.11, 8.14, 9.4, 9.6, 9.8, 9.9, 10 or 11;
provided, however, that such failure with respect to any of the covenants set
forth in Section 11 shall not constitute an Event of Default in the event that
----------
Borrower, at Borrower's option and within fifteen (15) days of the initial
occurrence of the failure, fully Cash Collateralizes the full amount of the
Obligations then in existence and Borrower continually Cash Collateralizes such
full amount as said amount increases at any time(s) thereafter; provided,
however, that failure by Borrower to so Cash Collateralize within such fifteen
(15) day period shall constitute an immediate Event of Default.
(b) Failure by Borrower or any party to the Loan Documents to comply
with or to perform any other provision of this Agreement or any other Loan
Document (and not constituting an Event of Default under any other provision of
this Section 12) and continuance of such failure described in this clause (b)
for 30 days.
12.3 Breach of Representation. If any warranty or representation now
------------------------
or hereafter made by Borrower or any of its Subsidiaries or affiliates hereunder
or under the Loan Documents, is untrue or incorrect in any material respect or
fails to state a material fact necessary to make such warranty or representation
not misleading in light of the circumstances in which it was made, or any
schedule, certificate, statement, report, financial data, notice or writing
furnished to Agent at any time by Borrower or by a party or signatory to the
Loan Documents is untrue or incorrect in any material respect or fails to state
a material fact needed to make the foregoing not misleading in light of the
circumstances in which the foregoing were furnished, on the date as of which the
facts set forth therein are stated or certified.
12.4 Other Material Obligations. Subject to applicable grace periods
--------------------------
or notice requirements under the following, default in the payment when due, or
in the performance or observance of any obligation of, or condition agreed to
by, Borrower or any Subsidiary with
58
respect to any of the following: (A) the Unsecured Indebtedness; (B) any other
Indebtedness in excess of $5,000,000; (C) any material purchase or lease of
goods or services where such default, singly or in the aggregate with all other
such defaults, could reasonably be expected to have a Material Adverse Effect;
or (D) any other material agreement, document or instrument, whether for
borrowed money or otherwise, the effect of which default shall be to cause any
obligations thereunder to become due prior to its stated maturity or to be
otherwise accelerated.
12.5 Pension Plans. (i) Institution of any steps by Borrower or any
-------------
other Person to terminate a Pension Plan if as a result of such termination
Borrower or any Subsidiary could reasonably be expected to be required to make a
contribution to such Pension Plan, or could reasonably be expected to incur a
liability or obligation to such Pension Plan, in excess of $1,000,000; (ii) a
contribution failure in excess of $1,000,000 occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii)
there shall occur any withdrawal or partial withdrawal from a Multiemployer
Pension Plan resulting in a liability, loss or cost in excess of $1,000,000.
12.6 Judgments. If any judgment or order requiring payment of monies
---------
in excess of $1,000,000 which is not covered by insurance, shall be rendered
against Borrower or any Guarantor, and such judgment or order shall remain
unsatisfied or undischarged and in effect for thirty (30) consecutive days
without a stay of enforcement or execution thereof or posting of a bond pending
appeal.
12.7 Insolvency and Related Proceedings. If Borrower or any Subsidiary
----------------------------------
(i) authorizes or makes an assignment for the benefit of creditors; (ii)
generally shall not pay its debts as they become due; (iii) shall admit in
writing its inability to pay its debts generally as they come due; or (iv) shall
authorize or commence (whether by the entry of an order for relief or the
appointment of a receiver, trustee, examiner, custodian or other similar
official therefor or for any material part of its property) any proceeding or
voluntary case under any bankruptcy, reorganization, insolvency, dissolution,
liquidation, adjustment or arrangement of debt, receivership or similar laws or
if such proceedings are commenced or instituted, or an order for relief or
approving any petition commencing such proceedings is entered against any such
Person, and such Person, by any action or failure to act, authorizes, approves,
acquiesces, or consents to the commencement or institution of such proceedings,
and such proceedings are not dismissed within sixty (60) days after the date of
filing, commencement or institution.
12.8 State Action. If any proceeding is instituted or commenced by any
------------
state or officer thereof, including the States of Illinois or Delaware, the
Secretary of State of Illinois or the State of Delaware, or the Secretary of
State of or any commission or other instrumentality of the State of Illinois or
Delaware, seeking a forfeiture of Borrower's or any Guarantor's Articles or
Certificate of Incorporation, and such Person shall fail to vacate any order
entered in such proceeding within thirty (30) days.
59
12.9 Tax Liens. If a notice of lien, levy or assessment other than a
---------
Permitted Lien, is filed or recorded with respect to all or a substantial part
of the Collateral owned by Borrower or its Subsidiaries by the United States, or
any department, agency or instrumentality thereof, or by any state, county,
municipality or other governmental agency, or any taxes or debts owing at any
time or times hereafter to any one or more of the foregoing become a lien other
than a Permitted Lien, upon all or a substantial part of the Collateral owned by
such Person unless such notice or lien is removed within thirty (30) days after
filing or recording of such notice or becoming such lien.
12.10 Insurance. If any insurer of any policy of insurance respecting
---------
a material portion of the assets or Borrower or any Guarantor issues any notice
of cancellation of such a policy, or any such policy is allowed to lapse, and in
either case, is not replaced by a substitute policy having an effective date
prior to or contemporaneous with such cancellation or lapse.
12.11 Change of Control. If a Change of Control occurs.
-----------------
12.12 Guarantor Defaults. Any Guarantor fails to perform or observe
------------------
any term, covenant or agreement in any Guaranty; or any Guaranty is for any
reason partially (including with respect to future advances) or wholly revoked
or invalidated, or otherwise ceases to be in full force and effect, or any
Guarantor contests in any manner the validity or enforceability thereof or
denies that it has any further liability or obligation thereunder.
13. RIGHTS AND REMEDIES
13.1 Rights and Remedies Generally. Upon the occurrence of an Event
-----------------------------
of Default under this Agreement and notice thereof by Agent to Borrower, except
as hereinafter provided, Agent may, with the consent of the Majority Lenders or
under Section 17(c) hereof, and shall at the direction of the Majority Lenders,
-------------
at its sole election, without notice of its election and without demand, do any
one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by
Notes, or otherwise, immediately due and payable; provided, that all Obligations
shall be immediately due and payable without notice or demand upon an Event of
Default under Section 12.7;
------------
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, or any other agreement between Borrower and
Agent or Lenders; provided that Lenders shall cease advancing money or extending
credit immediately without notice upon an Event of Default under Section 12.7;
------------
(c) Terminate this Agreement as to any future liability or
obligation of Agent or Lenders but without affecting Agent or Lender's rights
and Lien in the Collateral and without affecting the Obligations owing by
Borrower to Agent or Lenders;
(d) Without notice to or demand upon Borrower, make such payments
and do such acts as Agent considers necessary or reasonable to protect its Lien
in the Collateral. Borrower agrees to assemble the Collateral if Agent so
requires, and to make the Collateral available to
60
Agent as Agent may designate. Borrower authorizes Agent to take and control the
Collateral, or any part of it, and to pay, purchase, contest or compromise any
Lien which in the opinion of Agent appears to be prior or superior to its Lien
and to pay all expenses incurred in connection therewith;
(e) Recover, prepare for sale, advertise for sale and sell (in the
manner provided for herein) the Collateral;
(f) Sell some or all of the Collateral at either public or private
sales, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including the premises of Borrower or
its Subsidiaries) as is commercially reasonable in the opinion of Agent. It is
not necessary that the Collateral be present at any such sale;
(g) Give notice of the disposition of the Collateral as follows:
(i) Agent shall give Borrower and each holder of a Lien in the
Collateral who is entitled to notice under the Code, a notice in
writing of the time and place of public sale, or, if the sale is
a private sale or some other disposition other than a public
sale is to be made of the Collateral, the time on or after which
the private sale or other disposition is to be made;
(ii) The notice to Borrower shall be personally delivered or mailed,
postage prepaid, as provided in Section 16, at least ten (10)
----------
calendar days before the date fixed for the sale, or at least
ten (10) calendar days before the date on or after which the
private sale or other disposition is to be made, unless the
Collateral is perishable or threatens to decline speedily in
value. Notice to Persons other than Borrower or its Subsidiaries
claiming an interest in the Collateral shall be sent as required
under the Code; and
(iii) If the sale is to be a public sale, Agent shall also give notice
of the time and place by publishing a notice one time at least
ten (10) calendar days before the date of the sale in a
newspaper of general circulation in the county in which the sale
is to be held;
Agent may bid in any way permitted by applicable law and purchase at any public
sale;
Agent is hereby granted a non-exclusive license or other right to use, without
charge, any labels, copyrights, rights of use of any name, logo, trade names,
trademarks, customer lists and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and rights of Borrower and its
Subsidiaries under all licenses and all franchise agreements shall inure to
Agent's benefit.
Borrower shall pay all Out-of-Pocket Fees and Costs incurred in connection with
Agent's or any Lenders' enforcement and exercise of any of their rights and
remedies as herein provided, whether or not suit is commenced by Agent. Any
deficiency which exists after disposition of the Collateral as provided above
will be paid immediately by Borrower. Any excess will be returned, without
interest and subject to the rights of third parties, to Borrower by Agent.
61
13.2 Rights Cumulative. Agent's and Lenders' rights and remedies under
-----------------
this Agreement, all other Loan Documents and all other agreements with Borrower
and Guarantors shall be cumulative. Agent and Lenders shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No exercise by Agent or Lenders of one right or remedy shall
be deemed an election, and no waiver by Agent or Lenders of any default on
Borrower's or any Guarantors part shall be deemed a continuing waiver. No delay
by Agent or Lenders shall constitute a waiver, election or acquiescence by it.
14. TAXES AND EXPENSES REGARDING THE COLLATERAL
If Borrower fails to pay promptly when due to any other Person, monies
which Borrower is required to pay by reason of any provision in this Agreement
(including without limitation for any tax, expense or with respect to any Lien),
or to promptly contest same by proper proceedings diligently pursued, provided
such contest will not result in the impairment of the validity or priority of
Agent's lien on the Collateral, upon notice to Borrower, Agent may, but need
not, pay the same and charge Borrower's account therefor, and Borrower shall
promptly reimburse Agent. All such sums shall become additional Obligations
owing to Agent, shall bear interest at the applicable interest rate hereunder
and shall be secured by the Collateral. Any payments made by Agent shall not
constitute: (i) an agreement by Agent to make similar payments in the future, or
(ii) a waiver by Agent of any Event of Default under this Agreement. Agent need
not inquire as to, or contest the validity of, any such expense, tax or Lien and
the receipt of the usual official notice for the payment thereof shall be
presumptive evidence that the same was validly due and owing, and the receipt of
any other notice with respect to all other such monies due hereunder shall be
prima facie evidence that the same was validly due and owing.
----- -----
15. CERTAIN WAIVERS
15.1 Application of Payments. Borrower waives the right to direct the
-----------------------
application of any and all payments at any time or times hereafter received by
Agent on account of any Obligations owed by Borrower, including without
limitation amounts received which are the proceeds of any insurance policy, and
Borrower agrees that Agent shall have the continuing exclusive right to apply
and reapply such payments in any manner as Agent may deem advisable,
notwithstanding any entry by Agent upon its books.
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15.2 Demand, Etc. Except as otherwise provided herein, Borrower waives
-----------
demand, protest, notice of protest, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, notice of nonpayment at maturity,
notice of intent to accelerate, and notice of acceleration, notice prior to
Agent's taking possession or control of any of the Collateral, or any bond or
security which might be required by any court prior to allowing Agent to
exercise any of Agent's remedies, including the issuance of an immediate writ of
possession, the release, compromise, settlement, extension or renewal of any or
all commercial paper, accounts, documents, instruments, chattel paper, and
guarantees at any time held by Agent on which Borrower may in any way be liable,
the benefit of all valuation, appraisement and exemption laws, and any right to
require a marshaling of assets by Agent or to require that Agent first resort to
some or any portion of any Collateral before sale, foreclosure or realization on
any other portion thereof.
15.3 Risk of Loss Regarding Collateral. Neither Agent nor Lenders
---------------------------------
shall in any way or manner be liable or responsible for: (a) the safekeeping of
the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion from any cause, including without limitation, lost profits,
incidental or consequential damages; or (c) any diminution in the value thereof.
Except where occasioned by gross negligence or willful misconduct of Agent or
Lenders, all risk of loss, damage or destruction of the Collateral shall be
borne by Borrower.
16. NOTICES
Except as otherwise expressly provided herein, any notice required or
desired to be served, given or delivered hereunder shall be in the form and
manner specified below, and shall be addressed to the party to be notified as
follows:
If to Agent at: LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
If to LaSalle at: LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
With copies to: Jenner & Block, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
63
If to Northern Trust: The Northern Trust Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
If to Borrower at: Material Sciences Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as each party designates to the other by notice in the
manner herein prescribed. Notice shall be deemed given hereunder if (i)
delivered personally or otherwise actually received, (ii) sent by overnight
delivery service, (iii) mailed by first-class United States mail, postage
prepaid, registered or certified, with return receipt requested, or (iv) sent
via telecopy machine with a duplicate signed copy sent on the same day as
provided in clause (ii) above. Notice mailed as provided in clause (iii) above
------------
shall be effective upon the expiration of three (3) Business Days after its
deposit in the United States mail, and notice telecopied as provided in clause
------
(iv) above shall be effective upon receipt of such telecopy if the duplicate
----
signed copy is sent under clause (iii) above. Notice given in any other manner
------------
described in this section shall be effective upon receipt by the addressee
thereof; provided, however, that if any notice is tendered to an addressee and
--------
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice.
17. AGENT
17.1 Appointment and Authorization.
-----------------------------
(a) Each Lender hereby irrevocably (subject to Section 17.9)
appoints, designates and authorizes 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. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duty or responsibility except those expressly
set forth herein, nor shall Agent have or
64
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 Agent.
(b) Issuing Bank shall act on behalf of Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith. Issuing
Bank shall promptly upon receipt provide to The Northern Trust Company for
informational purposes a copy of the first Application (as defined in the Master
Letter of Credit Agreement). Issuing Bank shall have all of the benefits and
immunities (i) provided to Agent in this Section 17 with respect to any acts
taken or omissions suffered by Issuing Bank in connection with Letters of Credit
issued by it or proposed to be issued by it and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term "Agent", as used in this Section 17, included Issuing Bank with respect to
such acts or omissions and (ii) as additionally provided in this Agreement with
respect to Issuing Bank.
17.2 Delegation of Duties. 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. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
17.3 Liability of Agent. None of Agent nor any of its directors,
------------------
officers, employees or agents 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 Lenders for any recital, statement, representation or warranty
made by Borrower or any Guarantor or any Subsidiary or Affiliate thereof, 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 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 Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. Agent shall not be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of Borrower or any
Guarantors or any of the Subsidiaries or Affiliates thereof.
17.4 Reliance by Agent. 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 Borrower),
independent accountants and other experts selected by Agent. 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 Majority Lenders (or all of Lenders if so required by Section
-------
20.3) as it deems appropriate and, if it so requests, confirmation
----
65
from Lenders of their obligation to indemnify Agent against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. 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 Majority Lenders (or all
of Lenders if so required by Section 20.3) and such request and any action taken
------------
or failure to act pursuant thereto shall be binding upon all of Lenders.
17.5 Notice of Default. Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Event of Default or Uncured Default except with
respect to defaults in the payment of principal, interest and fees required to
be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Event of Default or Uncured Default and stating that such notice is a
"notice of default". Agent will notify Lenders of its receipt of any such
notice. Agent shall take such action with respect to such Event of Default or
Uncured Default as may be requested by the Majority Lenders in accordance with
Section 13; provided that unless and until Agent has received any such request,
----------
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or Uncured Default as
it shall deem advisable or in the best interest of Lenders.
17.6 Credit Decision. Each Lender acknowledges that Agent has not made
---------------
any representation or warranty to it, and that no act by Agent hereafter taken,
including any review of the affairs of Borrower, its Subsidiaries and
Guarantors, shall be deemed to constitute any representation or warranty by
Agent to any Lender. Each Lender represents to Agent that it has, independently
and without reliance upon Agent 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 Borrower, its Subsidiaries and Guarantors, and made its own
decision to enter into this Agreement and to extend credit to Borrower
hereunder. Each Lender also represents that it will, independently and without
reliance upon Agent 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 Borrower. Except for notices, reports and
other documents expressly herein required to be furnished to Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial or other condition or creditworthiness of Borrower, its
Subsidiaries or the Guarantors which may come into the possession of Agent.
17.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby are consummated, Lenders shall indemnify upon demand Agent and its
directors, officers, employees and agents (to the extent not reimbursed by or on
behalf of Borrower and without limiting the obligation of Borrower to do so),
pro rata, from and against any and all losses, claims, damages, costs, expenses
and liabilities ("Losses"); provided that no Lender shall be liable for any
payment to any such Person of any portion of the Losses resulting from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for its ratable share
of any costs or out-of-pocket expenses (including reasonable
66
attorneys' fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower or the Guarantors. The undertaking in this Section shall survive
repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit, any foreclosure under, or modification, release or
discharge of, any or all of the Collateral, termination of this Agreement and
the resignation or replacement of Agent.
17.8 Agent in Individual Capacity. LaSalle 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 Borrower and their
Subsidiaries and Affiliates as though LaSalle were not Agent or Issuing Bank
hereunder and without notice to or consent of Lenders. Lenders acknowledge that,
pursuant to such activities, LaSalle or its Affiliates may receive information
regarding Borrower, its Affiliates and Guarantors (including information that
may be subject to confidentiality obligations in favor of such Persons) and
acknowledge that Agent shall be under no obligation to provide such information
to them. With respect to their Loans (if any), LaSalle and its Affiliates shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though LaSalle were not Agent and Issuing Bank, and the
terms "Lender" and "Lenders" include LaSalle and its Affiliates, to the extent
applicable, in their individual capacities.
17.9 Successor Agent. Agent may resign as Agent upon 30 days' notice
---------------
to Lenders and Borrower. If Agent resigns under this Agreement, the Majority
Lenders shall, with (so long as no Event of Default exists) the consent of
Borrower (which shall not be unreasonably withheld or delayed), appoint from
among Lenders a successor agent for Lenders. If no successor agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with Lenders and Borrower, a successor agent from among
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 Section 17 and Sections 2.11 and 20 shall inure to its benefit as to any
---------- --------------------
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
Lenders shall reasonably perform all of the duties of Agent hereunder until such
time, if any, as the Majority Lenders appoint a successor agent as provided for
above.
17.10 Collateral Matters. Lenders irrevocably authorize Agent, at its
------------------
option and in its discretion, (a) to release any Lien granted to or held by
Agent pursuant to the Collateral (i) upon termination of the Commitments and
payment in full of all Loans and all other obligations (other than Contingent
Indemnification Obligations) of Borrower hereunder and the expiration or
termination of all Letters of Credit; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; or (iii) subject to Section 20.3,
------------
67
if approved, authorized or ratified in writing by the Majority Lenders; or (b)
to subordinate its interest in any collateral to any holder of a Lien on such
collateral which is permitted by clause (vii) of Section 8.1 (it being
-----------
understood that Agent may conclusively rely on a certificate from Borrower in
determining whether the Debt secured by any such Lien is permitted by Section
-------
8.6). Upon request by Agent at any time, Lenders will confirm in writing Agent's
----
authority to release, or subordinate its interest in, particular types or items
of collateral pursuant to this Section 17.10.
-------------
18. ASSIGNMENTS; PARTICIPATIONS
18.1 Assignments. Any Lender may, with the prior written consents of
-----------
Issuing Bank and Agent and (so long as no Event of Default exists) Borrower
(which consents shall not be unreasonably delayed or withheld and, in any event,
shall not be required for an assignment by a Lender to one of its Affiliates),
at any time assign and delegate to one or more commercial banks or other Persons
(any Person to whom such an assignment and delegation is to be made being herein
called an "Assignee") all or any fraction of such Lender's Loans and Commitment
--------
(which assignment and delegation shall be of a constant, and not a varying,
percentage of all the assigning Lender's Loans and Commitment) in a minimum
aggregate amount equal to the lesser of (i) the amount of the assigning Lender's
Pro Rata Share of the Revolving Commitment and (ii) $5,000,000; provided that
--------
(a) no assignment and delegation may be made to any Person if, at the time of
such assignment and delegation, Borrower would be obligated to pay any greater
amount under Sections 2.18, 2.20, 2.21, or 2.22 to the Assignee than Borrower is
----------------------------------
then obligated to pay to the assigning Lender under such Sections (and if any
assignment is made in violation of the foregoing, Borrower will not be required
to pay the incremental amounts) and (b) Borrower, the Guarantors and Agent shall
be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as Agent and the
assigning Lender shall agree) shall have passed after written notice
of such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee, shall
have been given to Borrower, the Guarantors and Agent by such
assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall have executed and
delivered to Borrower and Agent an assignment agreement substantially
in the form of Exhibit E (an "Assignment Agreement"), together with
--------- --------------------
any documents required to be delivered thereunder, which Assignment
Agreement shall have been accepted by Agent, and
(z) except in the case of an assignment by a Lender to one of its
Affiliates, the assigning Lender or the Assignee shall have paid Agent
a processing fee of $3,500.
From and after the date on which the conditions described above have been
met, (x) such Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee pursuant to such Assignment Agreement,
shall have the rights and obligations of a Lender hereunder and
68
(y) the assigning Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it pursuant to such Assignment Agreement,
shall be released from its obligations hereunder. Within five Business Days
after effectiveness of any assignment and delegation, (i) Borrower shall execute
and deliver to Agent (for delivery to the Assignee and the Assignor, as
applicable) a new Note in the principal amount of the Assignee's Pro Rata Share
of the Revolving Loan Commitment and, if the assigning Lender has retained a
Commitment hereunder, a replacement Note in the principal amount of the Pro Rata
Share of the Revolving Loan Commitment retained by the assigning Lender (such
Note to be in exchange for, but not in payment of, the predecessor Note held by
such assigning Lender), and (ii) if requested, Borrower shall have each
Guarantor similarly execute and deliver a new Guaranty or reaffirmation of
Guaranty to the appropriate Assignee or Assignor. Each such Note shall be dated
the effective date of such assignment. The assigning Lender shall ▇▇▇▇ the
predecessor Note "exchanged" and deliver it to Borrower. Accrued interest on
that part of the predecessor Note being assigned shall be paid as provided in
the Assignment Agreement. Accrued interest and fees on that part of the
predecessor Note not being assigned shall be paid to the assigning Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted assignment
and delegation not made in accordance with this Section 18.1 shall be null and
------------
void.
Notwithstanding the foregoing provisions of this Section 18.1 or any other
------------
provision of this Agreement, any Lender may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Lender from any of its obligations hereunder).
18.2 Participations. Any Lender may at any time sell to one or more
--------------
commercial banks or other Persons participating interests in any Loan owing to
such Lender, the Note held by such Lender, the Commitment of such Lender, the
direct or participation interest of such Lender in any Letter of Credit or any
other interest of such Lender hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In the event of a
-----------
sale by a Lender of a participating interest to a Participant, (x) such Lender
shall remain the holder of its Note for all purposes of this Agreement, (y)
Borrower and the Guarantors and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
hereunder and (z) all amounts payable by Borrower and the Guarantors shall be
determined as if such Lender had not sold such participation and shall be paid
directly to such Lender. No Participant shall have any direct or indirect voting
rights hereunder except with respect to any of the events described in Section
-------
20.3(b). Each Lender agrees to incorporate the requirements of the preceding
-------
sentence into each participation agreement which such Lender enters into with
any Participant. Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement, any
Note and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement or such Note; provided that such right of setoff shall be subject
--------
to the obligation of each Participant to share with Lenders, and Lenders agree
to share with each Participant, as provided in Section 2.6. Borrower also agrees
-----------
that each Participant shall be entitled to the benefits of Sections 2.18, 2.20,
--------------------
2.21, and 2.22 as if it were a Lender (provided that no Participant shall
-------------- --------
receive any greater compensation
69
pursuant to Sections 2.18, 2.20, 2.21, or 2.22 than would have been paid to the
----------------------------------
participating Lender if no participation had been sold).
19. INDEMNITY.
Borrower shall indemnify, hold harmless and defend Agent, Lenders and
their directors, officers, agents, counsel and employees ("Indemnified Persons")
from and against all Losses, whether such Losses arise or notice thereof is
received by Agent or Lenders during the Initial Term or any renewal term or
after termination of this Agreement, incurred by any of them arising principally
out of or relating to this Agreement or any other transaction contemplated
hereby other than arising out of any intercreditor relationship between Agent
and Lenders or between Lenders and any Participant and except for any such
losses caused by the gross negligence or willful misconduct of such Indemnified
Persons, and shall reimburse Agent or Lenders and each other Indemnified Person
for any expenses including in connection with the investigation of, preparation
for or defense of any actual or threatened claim, action or proceeding arising
therefrom (including any such costs of responding to discovery requests or
subpoenas), regardless of whether any Indemnified Person is a party thereto.
Each Indemnified Person may select its own counsel with respect to any Losses,
in addition to Borrower's counsel, and shall be indemnified therefor hereunder.
20. GENERAL PROVISIONS.
20.1 Acceptance. This Agreement shall be binding and deemed effective
----------
when executed by Borrower and accepted and executed by Agent and Lenders.
20.2 Binding Agreement. This Agreement shall bind and inure to the
-----------------
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights
--------
hereunder without Lenders' prior written consent and any prohibited assignment
shall be absolutely void. No consent to an assignment by Agent shall release
Borrower or Guarantors from their Obligations to Agent or Lenders.
20.3 Waiver and Amendment.
--------------------
(a) Agent's or Lenders' failure, at any time or times hereafter, to
require strict performance by Borrower of any provisions of this agreement or
the Revolving Loan Notes shall not waive, affect or diminish any right of Agent
or Lenders thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Agent or Lenders of a Potential Default or Event of
Default by Borrower under this Agreement or the Revolving Loan Notes shall not
suspend, waive or affect any other Potential Default or Event of Default by
Borrower under this Agreement, or the Revolving Loan Notes whether the same is
prior or subsequent thereto and whether of the same or a different kind or
character.
(b) No amendment or modification of any provision of this Agreement
or the Notes relating to (i) any increase of the Commitments of any Lender, (ii)
any change in the final maturity of the Loans or any payment date for interest
and fees due hereunder, (iii) the reduction of interest rates applicable to the
Loans or fees payable under this Agreement, or (iv) release of a
70
material portion of the Collateral, shall be effective without the written
agreement of all of the Lenders and Borrower. No amendment or modification of
any other provision of this Agreement shall be effective without the written
agreement of the Majority Lenders and Borrower and no termination or waiver of
any other single provision of this Agreement, or consent to any departure by
Borrower therefrom, shall in any event be effective without the written
concurrence of the Majority Lenders. Whenever a consent is required, any of the
Lenders shall have the right to grant or withhold same at their sole discretion.
(c) Notwithstanding the provisions of this Section, no amendment,
modification, termination or waiver of any provision of Section 17 or any other
----------
provision referring to Agent's rights hereunder shall be effective without the
written concurrence of Agent. Agent may, but shall have no obligation to, with
the concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of such Lender.
20.4 Section Headings. Section headings and section numbers have been
----------------
set forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each paragraph applies equally to this entire
Agreement.
20.5 Construction. Neither this Agreement nor any uncertainty or
------------
ambiguity herein shall be construed or resolved against Agent, Lenders or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of the parties hereto.
20.6 Severability. Each provision of this Agreement shall be severable
------------
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.
20.7 Entire Agreement. This Agreement cannot be changed or terminated
----------------
orally. All prior agreements, understandings, representations, warranties, and
negotiations, if any, are merged into this Agreement. This Agreement may be
amended only by a written agreement signed by duly authorized officers of
Borrower, Agent and Lenders (or Majority Lenders in accordance with Section 20.3
hereof).
20.8 No Fiduciary Relationship or Joint Venture. No provision herein
------------------------------------------
or in any of the other Loan Documents and no course of dealing between the
parties hereto shall be deemed to create any fiduciary relationship between
Lenders and Borrower or Agent and Borrower nor to create any partnership or
joint venture between Lenders and Borrower or Agent and Borrower.
20.9 Publicity. Lenders shall have the right, upon consent of Borrower
---------
(which consent shall not be unreasonably withheld or delayed) to issue or
disseminate to the public information generally describing the credit
accommodations entered into pursuant to this Agreement (as it may be amended,
modified and supplemented from time to time) including without limitation the
names and addresses of Borrower and its Subsidiaries, a general description of
their businesses and the use of their names and logos in connection therewith.
71
20.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same instrument.
20.11 Conflict. In the event of a conflict between the terms of this
--------
Agreement and the terms of any Notes or other Loan Documents, the terms of this
Agreement shall be controlling.
21. CONFIDENTIALITY.
Each of the Agent and the Lenders shall hold all non-public
information obtained pursuant to the requirements of this Agreement in
accordance with such Agent's or Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Borrower that in any event
the Agent or a Lender may make disclosures (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such information and
instructed to keep such information confidential), (b) subject to the applicable
limitations set forth herein, to the extent requested by any government
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 21, to any Assignee of or Participant in, or any
prospective Assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of Borrower, (h) to the extent such
information (1) becomes publicly available other than as a result of a breach of
this Section 21 or (2) becomes available to Agent or any Lender on a
nonconfidential basis from a source other than Borrower or (i) to the National
Association of Insurance Commissioners or any other similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's or its Affiliates' investment portfolio in connection with ratings
issued with respect to such Lender or its Affiliates; provided that no
information that is or is designated as privileged or as attorney work product
may be disclosed to any Person unless such Person is a Lender or a Participant
hereunder; and provided further that, unless specifically prohibited by
applicable law or court order, the Agent and each Lender shall notify Borrower
of any request by any government authority or representative thereof (other than
any such request in connection with any examination of the financial condition
of Agent or such Lender by such government authority) for disclosure of any such
non-public information prior to disclosure of such information and shall use its
reasonable efforts to afford Borrower the opportunity to object to such
disclosure.
22. CHOICE OF LAW; WAIVER OF JURY TRIAL.
72
22.1 Choice of Law; Forum Selection; Consent to Jurisdiction. This
-------------------------------------------------------
Agreement shall be deemed to have been made in the State of Illinois and the
validity of this Agreement, its construction, interpretation and enforcement,
and the rights of parties hereunder and concerning the Collateral, shall be
determined under, governed by and construed in accordance with the laws of the
State of Illinois. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Nothing contained in this Section 22.1 shall affect the right of Agent or
------------
Lenders to serve legal process in any other manner permitted by law or affect
the right of Agent or Lenders to bring any action or proceeding against Borrower
or its property in the courts of any other jurisdiction.
22.2 Waiver of Jury Trial. BORROWER, AGENT AND EACH LENDER HEREBY
--------------------
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
73
IN WITNESS WHEREOF, Borrower has executed and delivered this
Agreement.
MATERIAL SCIENCES CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------
Title: Chief Financial Officer
----------------------------------
ACCEPTED this 11th day of October, 2001, at Agent's place of business
in the City of Chicago, State of Illinois.
LASALLE BANK NATIONAL ASSOCIATION, a
national banking association, as Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: SVP
----------------------------------
Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: June ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ BANK NATIONAL ASSOCIATION
Revolving Loan Commitment:
$10,000,000
Percentage: 50.00000%
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: SVP
----------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
THE NORTHERN TRUST COMPANY
Revolving Loan Commitment:
$10,000,000.00
Percentage: 50.00000%
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
74
ANNEX A
-------
Applicable Margin
-------------------------------------------------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
------- -------- --------- -------- -------
-------------------------------------------------------------------------------------------------------------------------
Funded Debt to EBITDA Ratio **3.50 ***3.0 ****3.5 ***2.5 ****3.0 ***2.0 ****2.5 ****2.0
-------------------------------------------------------------------------------------------------------------------------
LIBOR Margin 3.00% 2.50% 2.25% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------------------
Prime Rate Margin 1.50% 1.00% 0.75% 0.50% 0.25%
-------------------------------------------------------------------------------------------------------------------------
Unused Fee 0.50% 0.375% 0.375% 0.25% 0.25%
-------------------------------------------------------------------------------------------------------------------------
Standby L/C Fee Rate 3.00% 2.50% 2.25% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------------------
Trade L/C Fee Rate 3.00% 2.50% 2.25% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------------------
** denotes more than or equal to
*** denotes more than
**** denotes less than or equal to
*From the Closing Date until February 28, 2002, the applicable rates shall be
those set forth under the column titled "Level III".
During any period Borrower Cash Collaterizes the Obligations, interest on such
Cash Collateralized Obligations shall accrue as follows: (a) Prime Rate Loans at
the Prime Rate; (b) LIBOR Loans at the Libor Rate plus 0.75%; (c) the Unused Fee
described in Section 2.11(a) at 0.25%; and (d) Standby L/C Fee Rate or Trade L/C
Fee Rate at 1.75%.
75
EXHIBITS
--------
Exhibit A Master Letter of Credit Agreement
Exhibit B Revolving Loan Notes
Exhibit C Officers' Certificates
Exhibit D Directors' Consents
Exhibit E Assignment Agreement
Exhibit F Guaranty
Exhibit G Security Agreement
SCHEDULES
---------
7.1 Offices
7.2 Existence
7.7 Actions or Proceedings
7.9 Financial Statements
7.10 Conduct of Business
7.11 Environmental Laws
7.13 Employee Welfare Benefit Plans
7.15 Insurance
7.18 Customer and Trade Relations
7.19 Other Names
7.21 Employee Matters
7.23 Subsidiaries
7.25 Capital Stock
8.1 Permitted Liens
8.5 Permitted Investments
8.6 Permitted Indebtedness
8.12 Employee Benefits
9.13 Stock of Guarantors Not Owned