SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated: September 20, 1999
$100,000,000 Senior Credit Facility
by and among
THE LENDERS NAMED HEREIN,
as Lenders,
FLEET CAPITAL CORPORATION,
as Agent,
and
EAGLE PACIFIC INDUSTRIES, INC.,
as Borrower
TABLE OF CONTENTS
PAGE
SECTION 1. CREDIT FACILITY................................................1
1.1 Revolving Credit Loans................................1
1.2 Term Loans............................................3
1.3 Letters of Credit; LC Guaranties......................4
SECTION 2. INTEREST, FEES AND CHARGES.....................................6
2.1 Interest..............................................6
2.2 Computation of Interest and Fees......................8
2.3 Letter of Credit and LC Guaranty Fees.................9
2.4 Unused Line Fee.......................................9
2.5 Collection Charges....................................9
2.6 Audit and Appraisal Expenses..........................9
2.7 Reimbursement of Expenses............................10
2.8 Bank Charges.........................................10
2.9 Capital Adequacy Charge..............................10
SECTION 3. LOAN ADMINISTRATION...........................................11
3.1 Manner of Borrowing Revolving Credit Loans...........11
3.2 Payments.............................................13
3.3 Mandatory Prepayments................................14
3.4 All Loans to Constitute One Obligation...............16
3.5 Loan Account.........................................16
3.6 Statements of Account................................16
SECTION 4. TERM AND TERMINATION..........................................17
4.1 Term of Agreement....................................17
4.2 Termination..........................................17
SECTION 5. SECURITY INTERESTS............................................18
5.1 Security Interest in Collateral......................18
5.2 Lien Perfection; Further Assurances..................19
5.3 Safekeeping of Collateral............................19
5.4 Lien on Realty.......................................19
SECTION 6. COLLATERAL ADMINISTRATION.....................................19
6.1 General..............................................19
6.2 Administration of Accounts...........................20
6.3 Administration of Inventory..........................22
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6.4 Administration of Equipment..........................22
6.5 Payment of Charges...................................23
SECTION 7. REPRESENTATIONS AND WARRANTIES................................23
7.1 General Representations and Warranties...............23
7.2 Continuous Nature of Representations and Warranties..30
7.3 Survival of Representations and Warranties...........30
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS...........................30
8.1 Affirmative Covenants................................30
8.2 Negative Covenants...................................33
8.3 Specific Financial Covenants.........................38
SECTION 9. CONDITIONS PRECEDENT..........................................38
9.1 Documentation........................................38
9.2 No Default...........................................39
9.3 Other Loan Documents.................................39
9.4 No Litigation........................................39
9.5 Acquisition..........................................39
9.6 Environmental Surveys................................39
9.7 Subordinated Notes and Cash Equity...................39
9.8 Transaction Fees.....................................39
9.9 Availability.........................................39
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT............40
10.1 Events of Default.....................................40
10.2 Acceleration of the Obligations.......................42
10.3 Other Remedies........................................42
10.4 Remedies Cumulative; No Waiver........................44
SECTION 11. AGENT........................................................44
11.1 Power of Attorney, Authorization and Action...........44
11.2 Agent's Reliance, Etc.................................44
11.3 FCC and Affiliates....................................45
11.4 Lender Credit Decision................................45
11.5 Indemnification.......................................45
11.6 Successor Agent.......................................46
SECTION 12. MISCELLANEOUS................................................46
12.1 Power of Attorney.....................................46
12.2 Indemnity.............................................47
12.3 Modification of Agreement; Sale of Interest...........47
12.4 Severability..........................................50
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12.5 Successors and Assigns................................51
12.6 Cumulative Effect; Conflict of Terms..................51
12.7 Execution in Counterparts.............................51
12.8 Notice................................................51
12.9 Agent and/or Required Lenders'Consent.................52
12.10 Credit Inquiries......................................52
12.11 Time of Essence.......................................52
12.12 Entire Agreement......................................52
12.13 Interpretation........................................53
12.14 GOVERNING LAW; CONSENT TO FORUM.......................53
12.15 WAIVERS BY BORROWER...................................54
12.16 Publicity.............................................54
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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made
this 20th day of September, 1999, by and among EAGLE PACIFIC INDUSTRIES, INC.
("Borrower"), a Minnesota corporation with its chief executive office and
principal place of business at 2430 ▇▇▇▇▇▇▇▇ Consulting Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the lenders who are signatories hereto
("Lenders") and FLEET CAPITAL CORPORATION ("FCC"), a Rhode Island corporation
having an office at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent for
the Lenders hereunder (FCC, in such capacity, being "Agent"). Capitalized terms
used in this Agreement have the meanings assigned to them in Appendix A, General
Definitions. Accounting terms not otherwise specifically defined herein shall be
construed in accordance with GAAP consistently applied.
RECITALS
A. FCC and Borrower entered into a certain Amended and Restated Loan
and Security Agreement dated as of December 31, 1997. Said Amended and Restated
Loan and Security Agreement is hereinafter referred to as the "Amended and
Restated Loan Agreement"; and
B. Borrower, FCC as Agent and a Lender and the other lender signatories
hereto desire to amend and restate the Amended and Restated Loan Agreement
pursuant to the terms hereof to provide for, inter alia, the addition of other
Lenders and for the extension of additional credit facilities to Borrower.
C. Accordingly, in consideration of the mutual agreements contained
herein, and subject to the terms and conditions hereof, the parties hereto agree
as follows:
SECTION 1 CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to One Hundred
Million Dollars ($100,000,000) available upon Borrower's request therefor, as
follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. The aggregate amount of the Revolving
Credit Loans to be made by each Lender (such Lender's "Revolving Credit Loan
Commitment"), pursuant to the terms hereof, shall be the amount set below such
Lender's name on the signature pages hereof. The aggregate principal amount of
the Revolving Credit Loan Commitments is Fifty Million Dollars ($50,000,000).
The percentage equal to the quotient of (x) each Lender's Revolving Credit Loan
Commitment, divided by (y) the aggregate of all Revolving Credit Loan
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Commitments, is that Lender's "Revolving Credit Percentage". Subject to all of
the terms and conditions of this Agreement, each Lender agrees, for so long as
no Default or Event of Default exists, to make Revolving Credit Loans to
Borrower from time to time, as requested by Borrower in accordance with the
terms of Section 3.1 hereof, up to a maximum principal amount at any time
outstanding equal to the product of (A) the Borrowing Base at such time,
multiplied by (B) such Lender's Revolving Credit Percentage. It is expressly
understood and agreed that Agent and Lenders may use the Borrowing Base as a
maximum ceiling on Revolving Credit Loans outstanding to Borrower at any time.
If the unpaid balance of the Revolving Credit Loans should exceed the ceiling so
determined or any other limitation set forth in this Agreement, such Revolving
Credit Loans shall nevertheless constitute Obligations that are secured by the
Collateral and entitled to all the benefits thereof. In no event shall Lenders
be required to make a Revolving Credit Loan at any time that there exists a
Default or an Event of Default. Agent shall have the right to establish reserves
in such amounts, and with respect to such matters, as Agent shall deem necessary
or appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this Section 1.1.1, including, without limitation, with
respect to (i) other sums chargeable against Borrower's Loan Account as
Revolving Credit Loans under any Section of this Agreement; (ii) amounts owing
by Borrower to any Person to the extent secured by a Lien on, or trust over, any
Property of Borrower and Borrower has not already established funded reserves
over which Agent, for its benefit and the ratable benefit of Lenders, has a
security interest; and (iii) such other matters, events, conditions or
contingencies as to which Agent, in its sole credit judgment, determines
reserves should be established from time to time hereunder.
(1) The Revolving Credit Loans shall be evidenced by promissory notes
to be executed and delivered by Borrower at the time of the initial Revolving
Credit Loan, the form of which is attached hereto and made a part hereof as
Exhibit A-1 (the "Revolving Credit Notes"). Each Revolving Credit Note shall be
payable to the order of a Lender and shall represent the obligation of Borrower
to pay the amount of such Lender's Revolving Credit Loan Commitment or, if less,
the aggregate unpaid principal amount of all Revolving Credit Loans made by such
Lender to Borrower with interest thereon as prescribed in Section 2.1.1.
(2) Insofar as Borrower may request and Lenders may be willing in their
sole and absolute discretion to make Revolving Credit Loans to Borrower at a
time when the unpaid balance of Revolving Credit Loans exceeds, or would exceed
with the making of any such Revolving Credit Loan, the Borrowing Base (any such
Loan or Loans being herein referred to individually as an "Overadvance" and
collectively as "Overadvances"), Agent shall enter such Overadvances as debits
in the Loan Account. All Overadvances shall be repaid on demand, shall be
secured by the Collateral and shall bear interest as provided in this Agreement
for Revolving Credit Loans generally. Any Overadvance to be made by Lenders
pursuant to the terms hereof shall be made by Lenders ratably in accordance with
their Revolving Credit Percentages. Overadvances in an aggregate amount of Five
Hundred Thousand Dollars ($500,000) or less may, prior to occurrence and
continuation of a Default or an Event of Default, be made in the sole and
absolute discretion of Agent. Overadvances in an aggregate amount of more than
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Five Hundred Thousand Dollars ($500,000) but less than One Million Dollars
($1,000,000) may, prior to the occurrence and continuation of a Default or an
Event of Default, be made in the sole and absolute discretion of Required
Lenders. Overadvances in an aggregate amount of One Million Dollars ($1,000,000)
or more and Overadvances to be made after the occurrence, and during the
continuation, of a Default or an Event of Default shall require the consent of
all Lenders. In no event shall any Lender be required to make Revolving Credit
Loans (including any Overadvances or Revolving Credit Loans in respect of
amounts paid by Agent or any Lender in connection with any Letter of Credit or
LC Guaranty) if, after giving effect thereto, the aggregate outstanding
principal amount of all Revolving Credit Loans made by such Lender would exceed
such Lender's Revolving Credit Loan Commitment. The forgoing notwithstanding, in
no event, unless otherwise consented to by all Lenders, (x) shall any
Overadvances be outstanding for more than sixty (60) consecutive days or (y)
after all outstanding Overadvances have been repaid, shall Agent or Lenders make
any additional Overadvances unless thirty (30) days or more have expired since
the last date on which any Overadvances were outstanding.
1.1.2 Swingline Loans. In order to reduce the frequency of
transfers from Lenders to Agent, Agent, in its sole discretion, may, from its
own funds, make Revolving Credit Loans on behalf of Lenders; provided that the
aggregate amount of any such Revolving Credit Loans so made by Agent shall not
at any time exceed Three Million Dollars ($3,000,000). Any such Revolving Credit
Loan made by Agent on behalf of Lenders is sometimes hereinafter referred to as
a "Swingline Loan." In such event, the Lenders on behalf of whom Agent made the
Revolving Credit Loan shall reimburse Agent for the amount of Revolving Credit
Loan so made on its behalf, on a weekly (or more frequent basis as determined by
Agent, in its sole discretion) basis and the entire amount of interest
attributable to such Revolving Credit Loan for the period from the date on which
said Revolving Credit Loan was made by Agent on such Lender's behalf until Agent
is reimbursed by such Lender, shall be paid to Agent. All Swingline Loans shall
be included in the Base Rate Revolving Portion of the Loans and shall bear
interest as provided in Section 2.1.1 (A) thereof.
1.1.3 Use of Proceeds. The Revolving Credit Loans shall be used
solely for the payment of the purchase price payable pursuant to the Purchase
Documents and of transaction costs related to the Acquisition and for Borrower's
general operating and capital needs in a manner consistent with the provisions
of this Agreement and all applicable laws.
1.2 Term Loans.
1.2.1 Term Loan A. As set forth in Section 1.2.1 of the Amended
and Restated Loan Agreement, certain term loans to Borrower's
predecessors-in-interest were consolidated into one term loan (the "Amended and
Restated Term Loan"). As of the Closing Date the principal balance of the
Amended and Restated Term Loan is $10,666,000. On the Closing Date, each Lender
shall be deemed to have purchased from FCC an interest in the Amended and
Restated Term Loan equal to the amount set forth below such Lender's name on the
signature pages hereof (such Lender's "Amended and Restated Term Loan
Commitment"). On the Closing Date, subject to the fulfillment or waiver of all
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conditions precedent to the effectiveness of this Agreement, each Lender shall
make new term loans (collectively the "Second Amended and Restated Term Loan")
to Borrower in the principal amount set forth below such Lender's name on the
signature pages hereof (such Lender's "Second Amended and Restated Term Loan
Commitment"). The aggregate amount of each Lender's Amended and Restated Term
Loan Commitment and Second Amended and Restated Term Loan Commitment is
hereinafter referred to as such Lender's "Term Loan A Commitment". The
percentage equal to the quotient of (x) each Lender's Term Loan A Commitment,
divided by (y) the aggregate of all Term Loan A Commitments, is such Lender's
"Term A Loan Percentage." The aggregate amount of the Term Loan A Commitments is
Thirty-Five Million Dollars ($35,000,000). The Amended and Restated Term Loan
and the Second Amended and Restated Term Loan Commitments are sometimes
hereinafter referred to as "Term Loan A." Term Loan A shall be evidenced by
promissory notes to be executed and delivered by Borrower to Lenders on the
Closing Date, the form of which is attached hereto and made a part hereof as
Exhibit A-2 ("Term Note(s)A"), shall bear interest as specified in Section 2.1
and shall be repayable in accordance with the terms of Term Notes A. The
proceeds of Term Loan A shall be used by Borrower, solely for purposes for which
the proceeds of the Revolving Credit Loans are authorized to be used.
1.2.2 Term Loan B. On the Closing Date, subject to the fulfillment
or waiver of all conditions precedent to the effectiveness of this Agreement,
each Lender shall make a term loan B (collectively "Term Loan B") to Borrower in
the aggregate principal amount equal to the amount set forth below such Lender's
name on the signature pages hereof (such Lender's "Term Loan B Commitment"). The
percentage equal to the quotient of (x) each Lender's Term Loan B Commitment,
divided by (y) the aggregate of all Term Loan B Commitments, is that Lender's
"Term Loan B Percentage." The aggregate amount of the Term Loan B Commitments is
Fifteen Million Dollars ($15,000,000). Term Loan B shall be evidenced by
promissory notes to be executed and delivered by Borrower to Lenders on the
Closing Date, the form of which is attached hereto and made a part hereof as
Exhibit A-3 ("Term Note(s) B"), shall bear interest as specified in Section 2.1
and shall be repayable in accordance with the terms of Term Notes B. Term Loan B
shall be funded upon the effectiveness of this Agreement on the Closing Date.
The proceeds of Term Loan B shall be used by Borrower solely for purposes for
which the proceeds of the Revolving Credit Loans are authorized to be used.
1.3 Letters of Credit; LC Guaranties.
(1) Subject to all of the terms and conditions of this Agreement, if
requested to do so by Borrower, Agent shall, on behalf of Lenders, issue its, or
cause to be issued Bank's Letters of Credit for the account of Borrower or shall
execute LC Guaranties by which Lenders shall guaranty the payment or performance
by Borrower of its reimbursement obligation with respect to Letters of Credit
issued for Borrower's account by Bank or Agent; provided that the aggregate face
amount of all Letters of Credit and LC Guaranties outstanding at any time shall
not exceed One Million Dollars ($1,000,000) and no Letter of Credit may have an
expiration date that is after sixty days prior to the Commitment Termination
Date, unless Borrower provides, on or prior to the Commitment Termination Date,
Agent with cash collateral for said Letter of Credit or LC Guaranty, in a manner
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and amount reasonably acceptable to Agent. Further, the expiration date of any
Trade Letter of Credit shall be not more than 180 days after the issuance
thereof and the expiration date of any Standby Letter of Credit shall not be
more than one year after the date of issuance thereof (although any such Standby
Letter of Credit shall be renewable for an additional one-year period in
accordance with the terms hereof). Any amounts paid by Agent or any Lender under
any LC Guaranty or in connection with any Letter of Credit (i) shall become part
of the Obligations, (ii) unless paid by Borrower pursuant to Section 1.3(C)
below, shall be paid from the proceeds of a Revolving Credit Loan requested
pursuant to Section 3.1.1 below, to the extent Lenders are required to make
Revolving Credit Loans pursuant to the terms hereof and (iii) otherwise, shall
be payable on demand. In no event shall Agent, Bank or Lenders be required to
issue or cause to be issued Letters of Credit or LC Guaranties at any time there
exists and is continuing a Default or an Event of Default.
(2) Immediately upon the issuance of each Letter of Credit by Agent or
Bank or LC Guaranty by Agent hereunder, each Lender shall be deemed to have
automatically, irrevocably and unconditionally purchased from Agent an undivided
interest and participation in and to such Letter of Credit or LC Guaranty, the
obligations of Borrower in respect thereof and the liability of Agent thereunder
in an amount equal to the amount available for drawing under such Letter of
Credit or, in the case of a LC Guaranty, the amount guaranteed thereunder,
multiplied by such Lender's Revolving Credit Percentage. Agent will notify each
Lender promptly upon presentation to it of a draw under a Letter of Credit or a
demand for payment under a LC Guaranty. On a weekly basis, or more frequently if
requested by Agent, each Lender shall make payment to Agent in immediately
available funds, of an amount equal to such Lender's pro rata share of the
amount of any payment made by Agent in respect to any Letter of Credit or LC
Guaranty. The obligation of each Lender to reimburse Agent under this Section
1.3 shall be unconditional, continuing, irrevocable and absolute, except in
respect of indemnity claims arising out of Agent's wilful misconduct or gross
negligence. In the event that any Lender fails to make payment to Agent of any
amount due under this Section 1.3, Agent shall be entitled to receive, retain
and apply against such obligation the principal and interest otherwise payable
to such Lender hereunder until Agent receives such payment from such Lender or
such obligation is otherwise fully satisfied; provided, however, that nothing
contained in this sentence shall relieve such Lender of its obligation to
reimburse the Agent for such amount in accordance with this Section 1.3(B).
(3) Borrower agrees, unconditionally, irrevocably and absolutely, to
pay immediately to Agent, for the account of Lenders, the amount drawn under a
Letter of Credit or paid pursuant to a LC Guaranty. If Borrower at any time
fails to make such payment in accordance with the terms of this Agreement,
Borrower shall be deemed to have elected to borrow from the Lenders on such date
Revolving Credit Loans equal in aggregate amount to the amount paid by Agent or
the issuing Lender, as the case may be, under such Letter of Credit or LC
Guaranty. The provisions of Section 1.3(A) and (B) notwithstanding, in the event
that any Lender is prohibited by any Legal Requirement from issuing or
participating in any LC Guaranty (or portion thereof), then Agent shall issue
such LC Guaranty (or such Lender's portion thereof) in lieu of such Lender and
such Lender shall not be deemed to have a participation therein. In such event,
any payments received by Agent pursuant to Section 1.3(C) of the Loan Agreement
which would otherwise be paid by Agent to such Lender shall be retained by Agent
to reimburse Agent for any amounts paid by Agent in respect to the LC Guaranty
(or portion thereof) Agent issued in lieu of such Lender.
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(4) Agent shall give prompt telephone, telex, or telecopy notice to
each Lender of each issuance of, or amendment to, a Letter of Credit specifying
the effective date of the Letter of Credit or amendment, the amount, the
beneficiary, and the expiration date of the Letter of Credit, in each case as
established originally or through the relevant amendment, as applicable, each
Lender's pro rata participation in such Letter of Credit and whether Agent has
classified the Letter of Credit as a commercial, performance, or financial
letter of credit for regulatory reporting purposes.
SECTION 1 INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest.
(1) Interest. (i) Interest shall accrue on the Base Rate
Revolving Credit Portion, the Base Rate Term A Portion and the Base
Rate Term B Portion outstanding at the end of each day (computed on the
basis of a calendar year of 360 days and actual days elapsed) at a
fluctuating rate per annum equal to the sum of the Applicable Margin
plus the Base Rate. After the date hereof, the foregoing rates of
interest shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day
that any such change in the Base Rate becomes effective. The Base Rate
in effect on the date hereof shall be the Base Rate effective on the
opening of business on the date hereof, but if this Agreement is
executed on a day that is not a Business Day, the Base Rate in effect
on the date hereof shall be the Base Rate effective as of the opening
of business on the last Business Day immediately preceding the date
hereof.
(1)
(2) Interest shall accrue on each LIBOR Revolving Credit
Portion, LIBOR Term A Portion and LIBOR Term B Portion outstanding at
the end of each day (computed on the basis of a calendar year of 360
days and actual days elapsed) at rates equal to the sum of the LIBOR
Rate applicable to each such LIBOR Revolving Credit Portion, LIBOR Term
A Portion and LIBOR Term B Portion plus the Applicable Margin.
(2) LIBOR Option.
(1) Conditions for Basing Interest on the LIBOR Rate. Upon the
condition that:
(1) Agent shall have received a LIBOR Request from
Borrower at least 3 Business Days prior to the first day of the LIBOR
Period requested;
(2) There shall have occurred no change in applicable law
which would make it unlawful for any Lender to obtain deposits of U.S.
dollars in the London interbank foreign currency deposits market;
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(3) As of the date of the LIBOR Request and the first day
of the LIBOR Period, there shall exist no Default or Event of Default
which has not been waived by Required Lenders; and
(4) Agent shall have determined in good faith that Agent
is able to determine the LIBOR Rate in respect of the Requested LIBOR
Period;
then interest on the LIBOR Portion requested during the LIBOR Period
requested will be based on the applicable LIBOR Rate. The foregoing
notwithstanding, Borrower acknowledges that there may not be more than
five LIBOR Portions outstanding at any one time.
(2) Indemnification for Funding and Other Losses. Each LIBOR
Request shall be irrevocable and binding on Borrower. Borrower shall
indemnify Agent and each Lender against any expense or loss suffered by
Agent or any Lender as a result of any failure on the part of Borrower
to fulfill, on or before the date specified in any LIBOR Request, the
applicable conditions set forth in this Agreement or as a result of the
prepayment of the applicable LIBOR Portion prior to the last day of the
applicable LIBOR Period, including, without limitation, any loss
(including loss of anticipated profits) or expense incurred by reason
of the liquidation or redeployment of deposits or other funds acquired
by Agent or any Lender to fund or maintain the requested LIBOR Portion.
Upon request by Borrower, Agent or the applicable Lender shall provide
Borrower with a certificate of an officer of Agent or any applicable
Lender setting forth the calculation of the amount of any such loss and
the basis therefor, which calculation shall, in the absence of manifest
error be conclusive.
(3) Change in Applicable Laws, Regulations, etc. If (x) any
Legal Requirement shall make it unlawful for any Lender to fund through
the purchase of U.S. dollar deposits any LIBOR Portion, or otherwise to
give effect to its obligations as contemplated under this Section
2.1.1(B), or shall impose on any Lender any costs based on or measured
by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender which includes deposits by
reference to which the LIBOR Rate is determined as provided herein or a
category of extensions of credit or other assets of such Lender which
includes any LIBOR Portion, or shall impose on any Lender any
restrictions on the amount of such a category of liabilities of assets
which any such Lender may hold, or (y) any Lender shall determine in
good faith that such Lender is unable to obtain deposits of U.S.
dollars in the London interbank foreign currency deposits market in the
applicable amounts for the requested LIBOR Period, (a) Agent or such
Lender may by notice thereof to Borrower terminate the LIBOR Option,
with respect to the Loans made or to be made by such Lender, (b) any
LIBOR Portion subject thereto shall immediately bear interest
thereafter at the rate provided for in Section 2.1.1(A)(i) payable on
the dates provided for in Section 3.2.2(i) and (c) Borrower shall
indemnify such Lender against any out-of-pocket loss, penalty or
expense incurred by such Lender by reason of the liquidation or
7
redeployment of deposits or other funds acquired by such Lender or to
fund or maintain such LIBOR Portion. The applicable Lender shall
promptly give Borrower written notice of when such condition shall
cease to exist.
(4) Taxes. It is the understanding of Borrower, Agent and
Lenders that each Lender shall receive payments of amounts of principal
of and interest on the Revolving Credit Loans, Term Loan A and Term
Loan B with respect to the LIBOR Portions from time to time subject to
a LIBOR Option free and clear of, and without deduction for, any Taxes.
If (i) any Lender shall be subject to any such Tax in respect of any
such LIBOR Portion or any part thereof or (ii) Borrower shall be
required to withhold or deduct any such Tax from any such amount, the
LIBOR Rate applicable to such LIBOR Portion shall be adjusted by such
Lender to reflect all additional costs incurred by such Lender in
connection with the payments by such Lender or the withholding by
Borrower of such Tax and Borrower shall provide such Lender with a
statement detailing the amount of any such Tax actually paid by
Borrower. Determination by such Lender of the amount of such costs
shall, in the absence of manifest error, be conclusive, and at
Borrower's request, such Lender shall demonstrate the basis of such
determination. If after any such adjustment, any part of any Tax paid
by such Lender is subsequently recovered by Lender, such Lender shall
promptly reimburse Borrower to the extent of the amount so recovered. A
certificate of an officer of such Lender setting forth the amount of
such recovery and the basis therefor shall, in the absence of manifest
error, be conclusive.
2.1.2 Default Rate of Interest. Upon the occurrence and during the
continuance of an Event of Default at the option of Agent or Required Lenders
the principal amount of all Loans shall bear interest at a rate per annum equal
to two percent (2%) above the interest rate otherwise applicable thereto (the
"Default Rate").
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the Notes and charged or
collected pursuant to the terms of this Agreement or pursuant to the Notes
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If any
provisions of this Agreement, or the Notes are in contravention of any such law,
such provisions shall be deemed amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, unused line fees,
Letter of Credit fees, LC Guaranty fees, and collection charges hereunder shall
be calculated daily and shall be computed on the actual number of days elapsed
over a year of 360 days. For the purpose of computing interest hereunder, all
items of payment received by Agent shall be deemed applied by Agent on account
of the Obligations (subject to final payment of such items) on the first
Business Day after receipt by Agent of such items in Agent's account located in
Chicago, Illinois.
2.3 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Agent
for the ratable benefit of Lenders:
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(1) for Standby Letters of Credit and LC Guaranties of Standby
Letters of Credit, a fee equal to the annualized LC Percent of the
aggregate face amount of such Letters of Credit and LC Guaranties
outstanding from time to time during the term of this Agreement, plus
all normal and customary charges associated with the issuance thereof
as set forth on Exhibit S hereof. Said fees shall be payable on the
first calendar day of each month (for the immediately preceding month)
computed through the last day of the preceding month; provided that
such normal and customary charges shall be payable upon the issuance of
such Letter of Credit or LC Guaranty. All such fees and charges shall
be deemed fully earned and shall be due and payable upon issuance of
each such Letter of Credit or LC Guaranty and shall not be subject to
rebate or proration upon the termination of this Agreement for any
reason; and
(2) for Trade Letters of Credit and LC Guaranties of Trade
Letters of Credit, a fee equal to the annualized LC Percent of the face
amount of each such Letter of Credit or LC Guaranty, plus the normal
and customary charges associated with the issuance thereof as set forth
on Exhibit S hereof. Said fees shall be payable on the first calendar
day of each month (for the immediately preceding month) computed
through the last day of the preceding month; provided that such normal
and customary charges shall be payable upon the issuance of such Letter
of Credit or execution of such LC Guaranty. All of such fees and
charges shall be fully earned and due and payable upon issuance,
renewal or extension (as the case may be) of each such Letter of Credit
or LC Guaranty, and shall not be subject to rebate or proration upon
the termination of this Agreement for any reason.
2.4 Unused Line Fee. Borrower shall pay to Agent for the ratable
benefit of Lenders a fee equal to the Applicable Margin per annum of the average
daily amount by which the Maximum Revolving Loan Amount exceeds the sum of the
outstanding principal balance of Revolving Credit Loans (exclusive of Swingline
Loans) plus the LC Amount. The unused line fee shall be payable monthly in
arrears on the first day of each calendar month hereafter.
2.5 Collection Charges. If items of payment are received by Agent at a
time when there are no Revolving Credit Loans outstanding, such items of payment
shall be subject to a collection charge equal to one days' interest on the
amount thereof at the rate then applicable to the Base Rate Revolving Credit
Portion of the Revolving Credit Loans, which collection charges shall be payable
by Borrower to Agent on the first Business Day of each month.
2.6 Audit and Appraisal Expenses. Borrower shall pay to Agent all
out-of-pocket expenses incurred by Agent in connection with such audits and
appraisals of Borrower's books, records and assets and such other matters as
Agent shall deem appropriate. Such expenses shall be payable on the first day of
the month following the date of issuance by Agent of a request for payment
thereof to Borrower, which request shall itemize such fees and expenses in
reasonable detail.
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2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent or any Lender (in respect
to clauses (iii) and (iv) only) incurs legal or accounting expenses or any other
costs or out-of-pocket expenses in connection with (i) the negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents; (ii)
the administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Agent, any Lender,
Borrower or any other Person) in any way relating to the Collateral, this
Agreement or any of the other Loan Documents or Borrower's affairs; (iv) any
attempt to enforce any rights of Agent or any Lender against Borrower or any
other Person which may be obligated to Agent or Lenders by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the
Account Debtors; or (v) any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then all such legal and accounting expenses, other costs and out of
pocket expenses of Agent or Lenders shall be charged to Borrower. All amounts
chargeable to Borrower under this Section 2.7 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Agent or such Lender, as
the case may be, and shall bear interest from the date such demand is made until
paid in full at the rate applicable to the Base Rate Revolving Credit Portion
from time to time. Borrower shall also reimburse Agent for expenses incurred by
Agent in its administration of the Collateral to the extent and in the manner
provided in Section 6 hereof. The foregoing notwithstanding, Borrower shall not
be required to reimburse Agent or any Lender for any costs or expenses incurred
in any action where there is entered a final non-appealable court order pursuant
to which the Agent or the Lender is not granted its requested relief in whole or
in part.
2.8 Bank Charges. Borrower shall pay to Agent (for its benefit or the
benefit of a Lender, as applicable), on demand, any and all fees, costs or
expenses which Agent or any Lender pays to a bank or other similar institution
arising out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower, by Agent or any Lender, of proceeds of loans made
by Agent or any Lender to Borrower pursuant to this Agreement and (ii) the
depositing for collection, by Agent or any Lender, of any check or item of
payment received or delivered to Agent or any Lender on account of the
Obligations.
2.9 Capital Adequacy Charge. In the event that any Lender (an "Affected
Lender") shall have determined that the adoption (effected after the date
hereof) of any law, rule or regulation regarding capital adequacy, or any change
therein or in the interpretation or application thereof or compliance by any
such Affected Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or governmental
authority, does or shall have the effect of reducing the rate of return on such
Affected Lender's capital as a consequence of its obligations hereunder to a
level below that which such Affected Lender could have achieved but for such
adoption, change or compliance (taking into consideration such Affected Lender's
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policies with respect to capital adequacy) by an amount deemed by such Affected
Lender, in its reasonable discretion, to be material, then from time to time,
after submission by such Affected Lender to Borrower of a written demand
therefor, which demand shall be made within sixty (60) days of such reduction,
Borrower shall pay to such Affected Lender such additional amount or amounts as
will compensate such Affected Lender for such reduction. A certificate of such
Affected Lender claiming entitlement to payment as set forth above shall be
conclusive in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such payment, the additional amount
or amounts to be paid to such Affected Lender, and the method by which such
amounts were determined. In determining such amount, such Affected Lender may
use any reasonable averaging and attribution methods. Each Lender and Agent
agrees to allocate any such cost increase among its similarly situated customers
in good faith and on an equitable basis; provided, however, that any such
Affected Lender shall not be entitled to such amounts unless similar assessments
are imposed by such Affected Lender on other comparable borrowers of such
Affected Lender. In the event that the provisions of this Section 2.9 and/or
Section 2.1.1(B)(iv) result in the effective interest rates being charged to
Borrower by any Lender being increased, on a per annum basis, by more than one
quarter percent (1/4%), Borrower, at its option and expense, may obtain a
substitute Lender (who shall be reasonably acceptable to Agent) for such Lender.
In such event, Borrower shall provide written notice to any such Affected Lender
or other Lender and Agent that Borrower requires any such Affected Lender or any
Lender subject to a Tax under Section 2.1.1(B)(iv) to sell and transfer all its
interest in this Agreement and its Revolving Credit Note, Term Note A, Term Note
B, Revolving Credit Loan Commitments and interests and obligations in respect to
the LC Amount to a substitute Lender (who shall be reasonably acceptable to
Agent) for a price in cash equal to principal balance of such Affected Lender or
other Lender's outstanding Loans plus all accrued but unpaid interest thereon
plus all accrued but unpaid fees due any such Affected Lender or other Lender
under the terms hereof. Any such sale and transfer shall be made within thirty
(30) days after such Affected Lender or other Lender's and Agent's receipt of
Borrower's notice referred to hereunder pursuant to the terms of Section 12.3(c)
hereof. Any Lender who becomes an Affected Lender shall, within ten (10) days of
the circumstances giving rise to such fact, give Borrower written notice of such
fact.
SECTION 1 LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower may
give Agent a Notice of Revolving Credit Loan, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date,
provided, however, that no such request may be made at a time when there exists
and is continuing a Default or an Event of Default; and (ii) the becoming due of
any amount required to be paid under this Agreement, the Term Notes A or Term
Notes B, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation. As an accommodation to
Borrower, Agent may permit telephonic requests for loans and electronic
11
transmittal of instructions, authorizations, agreements or reports to Agent by
Borrower. Unless Borrower specifically directs Agent in writing not to accept or
act upon telephonic or electronic communications from Borrower, Agent shall have
no liability to Borrower for any loss or damage suffered by any Borrower as a
result of Agent's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Agent by
Borrower and Agent shall have no duty to verify the origin of any such
communication or the authority of the person sending it. Except as otherwise
provided in Section 2.1.1(B), each Revolving Credit Loan shall be made on
notice, given not later than 11:00 a.m. (Milwaukee time) on the Business Day of
the proposed Revolving Credit Loan, by Borrower to Agent, which shall give to
each Lender prompt written notice thereof by telecopier, telex or cable. Each
such notice (a "Notice of Revolving Credit Loan") shall be in writing or by
telephone to Agent at (▇▇▇) ▇▇▇-▇▇▇▇, confirmed immediately in writing,
specifying therein the requested date and amount of such Revolving Credit Loan.
Each Lender shall, not later than 2:00 p.m. (Milwaukee time) on each requested
date, wire to a bank designated by Agent the amount of that Lender's Revolving
Credit Percentage of the requested Revolving Credit Loan. Agent shall, before
2:30 P.M. (Milwaukee time) on the date of the proposed Revolving Credit Loan,
subject to the provisions hereof, wire to a bank designated by Borrower and
reasonably acceptable to Agent, the amount of such Revolving Credit Loan to the
extent received from the Lenders. The failure of any Lender to make the
Revolving Credit Loan to be made by it shall not relieve any other Lender of its
obligation hereunder to make its Revolving Credit Loan. Neither Agent nor any
other Lender shall be responsible for the failure of any other Lender to make
the Revolving Credit Loan to be made by such other Lender.
If at any time one or more Lenders refuse or fail to make a requested
Revolving Credit Loan when all conditions to a Revolving Credit Loan have been
satisfied or waived, then Agent may, at its option, but shall have no obligation
whatsoever to, purchase all, but not less than all, of the Revolving Credit
Note, Term Note A, Term Note B and interests and obligations in respect to the
LC Amount held by the Lender(s) (a "Defaulting Lender") who so fail or refuse,
and to assume such Lender's commitments to make Revolving Credit Loans and each
such Lender shall be obligated to sell and transfer such Revolving Credit Note,
Term Note A, Term Note B and interests and obligations in respect to the LC
Amount to Agent for a price in cash equal to the principal balance outstanding
plus all accrued but unpaid interest thereon plus all accrued but unpaid fees
due any such Defaulting Lender under the terms hereof, and the foregoing
provisions of this Section will be applicable to Agent with respect to the
Revolving Credit Notes so purchased by it. In the event that Agent does not so
purchase the interest of any such Defaulting Lender, then Borrower, at its
option and expense, may obtain a substitute Lender (who shall be reasonably
acceptable to Agent) for the Defaulting Lender. In such event, Borrower shall
provide written notice to the Defaulting Lender and Agent that Borrower requires
such Defaulting Lender to sell and transfer all of its interest in this
Agreement and its Revolving Credit Note, Term Note A, Term Note B, Revolving
Credit Loan Commitments and interests and obligations in respect to the LC
Amount to such substitute Lender for a price in cash equal to the principal
balance plus all accrued by unpaid interest thereon plus all accrued but unpaid
fees due any such Defaulting Lender under the terms hereof, and the foregoing
provisions of this Section will be applicable to such substitute Lender with
respect to the Revolving Credit Notes purchased by it. Upon such purchase, the
Defaulting Lender shall be relieved of any further liability or obligation under
the Loan Documents, however such purchase by either Agent or a substitute
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Lender, shall not relieve any such Defaulting Lender from any breach of contract
claims available to Agent and/or Borrower against such Lender as a result of its
failure to make any such Revolving Credit Loan.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of Term Loan A, Term Loan B and each Revolving Credit Loan
requested, or deemed to be requested, pursuant to this Section 3.1.2 as follows:
(i) the proceeds of Term Loan A, Term Loan B and each Revolving Credit Loan
shall be disbursed by Agent in lawful money of the United States of America in
immediately available funds, in the case of Term Loan A, Term Loan B and the
initial Revolving Credit Loan, in accordance with the terms of the written
disbursement letter from Borrower, and in the case of each subsequent borrowing,
by wire transfer to such bank account as may be agreed upon by Borrower and
Agent from time to time or elsewhere if pursuant to a written direction from
Borrower; and (ii) the proceeds of each Revolving Credit Loan requested under
Section 3.1.1(ii) shall be disbursed by Agent by way of direct payment of the
relevant interest or other Obligation.
3.1.3 Letter of Credit and LC Guaranty Requests. A request for a
Letter of Credit or LC Guaranty shall be made in the following manner: Borrower
may give Agent and Bank a written notice of its request for the issuance of a
Letter of Credit or LC Guaranty, not later than 11:00 a.m. Milwaukee time, one
Business Day before the proposed issuance date thereof, in which notice Borrower
shall specify the proposed issuer and issuance date; provided, that no such
request may be made at a time when there exists and is continuing a Default or
Event of Default. Such request shall be accompanied by an executed application
and reimbursement agreement in form and substance satisfactory to the Person
being asked to issue the Letter of Credit or LC Guaranty, as well as any
required corporate resolutions.
3.2 Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lenders and accepted by Lenders specifically
containing payment provisions which are in conflict with this Section 3.2 (in
which event the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Agent for the ratable benefit of Lenders
immediately upon the earliest of (i) the receipt by Agent or Borrower of any
proceeds of any of the Collateral other than Equipment or real Property, to the
extent of said proceeds, except that, so long as no Event of Default exists and
is continuing, if, after application of the proceeds to the Base Rate Revolving
Credit Portion, any remaining Loans outstanding at the time of receipt by any
Borrower or Agent of any such proceeds are LIBOR Revolving Credit Portions, then
Borrower may at its option direct that such proceeds be held by Agent in a
non-interest bearing cash collateral account maintained by Agent to be applied
to the payment of principal on the last day of the LIBOR Period applicable to
each LIBOR Portion in the order of maturity or Borrower may place such proceeds
in an interest bearing account provided that such account is pledged to Agent,
for its benefit and the ratable benefit of Lenders, in a manner reasonably
satisfactory to Agent; (ii) the occurrence of an Event of Default in consequence
of which Agent or Required Lenders elect(s) to accelerate the maturity and
13
payment of the Obligations, or (iii) termination of this Agreement pursuant to
Section 4 hereof; provided, however, that if an Overadvance shall exist at any
time, Borrower shall, on demand, repay the Overadvance.
3.2.2 Interest.
(1) Base Rate Portion. Interest accrued on Base Rate Portions
shall be due and payable on the earliest of (a) the first calendar day
of each month (for the immediately preceding month), computed through
the last calendar day of the preceding month, (b) the occurrence of an
Event of Default in consequence of which Agent or Required Lenders
elect(s) to accelerate the maturity and payment of the Obligations or
(c) termination of this Agreement pursuant to Section 4 hereof.
(2) LIBOR Portion. Interest accrued on each LIBOR Portion
shall be due and payable on each LIBOR Interest Payment Date and on the
earliest of (1) the last day of the LIBOR Period applicable to such
LIBOR Portion, (2) the occurrence of an Event of Default in consequence
of which Required Lenders elect to accelerate the maturity and payment
of the Obligations or (3) termination of this Agreement pursuant to
Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Agent for its benefit and/or the ratable benefit of Lenders
or to any other Person designated by Agent in writing.
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Agent for its
benefit and/or the ratable benefit of Lenders as and when provided in this
Agreement, the Notes, the Other Agreements or the Security Documents, or on
demand, whichever is later.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Provided Section 4.2.3 is not applicable, except as provided below
or in Section 6.4.2 hereof, if Borrower sells any of the Equipment or real
Property, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrower shall pay to Agent for the ratable benefit of Lenders,
unless otherwise agreed by Required Lenders, as and when received by Borrower
and as a mandatory prepayment of Term Loan A and Term Loan B, as herein
provided, a sum equal to the net cash proceeds (including insurance payments)
received by Borrower from such sale, loss, destruction or condemnation. The
applicable prepayment shall be applied first to the installments of principal
due under Term Note(s) B in the inverse order of their maturities until paid in
full and second to the installments of principal due under Term Note(s) A in
14
inverse order of their maturities until paid in full and third to reduce the
outstanding principal balance of the Revolving Credit Loans and finally to
cash-collateralize any LC Amount. To the extent that the Collateral sold, lost,
destroyed or condemned consists of Accounts, Inventory or other Property other
than Equipment or real Property, the applicable prepayment shall be applied to
reduce the outstanding principal balance of the Revolving Credit Loans.
Notwithstanding the foregoing, if the proceeds of condemnation or insurance with
respect to any loss or destruction of Equipment, Inventory or real Property are
less than $500,000, Agent and Lenders shall apply such proceeds to the
outstanding principal balance of the Revolving Credit Loans and shall, provided
no Default or Event of Default shall have occurred and be continuing, permit
Borrower within 180 days (or such longer period as reasonably consented to by
Agent) after the receipt by the Borrower of such proceeds to reborrow such
proceeds in accordance with the terms of this Agreement for use in replacing or
repairing the damaged or lost Collateral. If such damaged or lost Collateral is
not replaced or repaired within such 180 day (or such longer period as
reasonably consented to by Agent) period, all such proceeds shall be applied to
installments of principal due under the Term Notes A or Term Notes B in the
manner specified in the second sentence of this Section 3.3.1 until payment
thereof in full.
3.3.2 Other Mandatory Prepayments.
(1) Provided Section 4.2.3 is not applicable, Borrower shall make a
mandatory prepayment of the Term Loan A and Term Loan B in the amount of the net
proceeds received by Borrower from any offering or sale of its debt or equity
Securities.
(2) Any applicable prepayment made pursuant to Section 3.3.2 (a)
above shall be applied, first, to the installments of principal due under Term
Note(s) B in inverse order of their maturities until paid in full and, second,
to the installments of principal due under Term Note(s) A in inverse order of
their maturities until paid in full.
3.3.3 Optional Prepayments. Borrower may, at its option from time
to time, prepay installments of Term Notes A or Term Notes B in the inverse
order of maturity, provided that the aggregate amount of all such prepayments
made within any fiscal year shall not exceed Five Million Dollars ($5,000,000)
without the prior written consent of Agent and Required Lenders. Any such
optional prepayment shall be applied first to installments of principal due
under Term Notes(s) B in inverse order of their maturities until paid in full
and second to the installments of principal due under Term Note(s) A in inverse
order of their maturities until paid in full. Any such optional prepayment shall
be accompanied by the amount required by Section 2.1.1(B)(ii), if any. Borrower
shall not be required to pay any prepayment or other fee in connection with any
such optional prepayment. In respect to proposed optional prepayments in excess
of Five Million Dollars ($5,000,000), Agent and Required Lenders may grant or
withhold their consent to any such prepayment in their sole discretion and may
condition such consent upon the payment by Borrower of a prepayment fee
acceptable to Agent and Required Lenders; provided, however, that no such
consent or discretionary prepayment fee shall be required in connection with
prepayment in full of the Total Credit Facility and Section 4.2.3 shall be
applicable to such prepayments.
3.3.4 Application of Payments and Collections. All items of payment
received by Agent by 12:00 noon, Chicago time, on any Business Day shall be
15
deemed received on that Business Day. All items of payment received after 12:00
noon, Chicago time, on any Business Day shall be deemed received on the
following Business Day. For the purpose of computing interest hereunder, all
items of payment received by Agent shall be deemed applied by Agent on account
of the Obligations (subject to final payment of such items) on the first
Business Day after receipt of such item in immediately good funds. If an Event
of Default exists and is continuing, Borrower irrevocably waives the right to
direct the application of any and all payments and collections received by Agent
from or on behalf of Borrower, and Borrower does hereby irrevocably agree that
Agent shall, after the occurrence and during the continuation of an Event of
Default, have the continuing exclusive right to apply and reapply any and all
such payments and collections received at any time or times hereafter by Agent
or its agent against the Obligations, in such manner as Agent may deem
advisable, notwithstanding any entry by Agent upon any of its books and records.
If as the result of collections of Accounts as authorized by Section 6.2.6
hereof a credit balance exists in the Loan Account, such credit balance shall
not accrue interest in favor of Borrower, but shall be available to Borrower at
any time or times for so long as no Default or Event of Default exists. Such
credit balance shall not be applied or be deemed to have been applied as a
prepayment of Term Loan A or Term Loan B, except that Agent may, at its option,
offset such credit balance against any of the Obligations upon and after the
occurrence of an Event of Default.
3.4 All Loans to Constitute One Obligation. The Loans shall constitute
one general obligation of Borrower, and shall be secured by Agent's Lien for its
benefit and the ratable benefit of Lenders upon all of the Collateral.
3.5 Loan Account. Agent shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are finally paid to
Agent or any Lender, and may record therein, in accordance with customary
accounting practice, other debits and credits, including interest and all
charges and expenses properly chargeable to Borrower.
3.6 Statements of Account. Agent will account to Borrower monthly with
a statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive,
absent manifest error, upon Borrower unless Agent is notified by Borrower in
writing to the contrary within 30 days of the date each accounting is mailed to
Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
SECTION 1 TERM AND TERMINATION
4.1 Term of Agreement. Subject to Agent's and Lenders' right to cease
making Loans to Borrower upon or during the continuation of any Default or Event
of Default, this Agreement shall be in effect for a period of five (5) years
from the Closing Date, through and including September 20, 2004 (the "Original
Term"), unless terminated as provided in Section 4.2 hereof.
4.2 Termination.
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4.2.1 Termination by Agent or Required Lenders. Agent or Required
Lenders may terminate this Agreement with notice (or in respect to Events of
Default arising under Section 10.1.10 without notice) after the occurrence of an
Event of Default resulting in the Obligations being declared due and payable.
4.2.2 Termination by Borrower. Upon at least 90 days prior written
notice to Agent, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Agent's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Required Lenders otherwise agree in writing, and Lenders
shall have no obligation to make any Loans or issue or procure any Letters of
Credit or LC Guaranties on or after the termination date stated in such notice.
Borrower may elect to terminate this Agreement in its entirety only. No section
of this Agreement or type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of
this Agreement for any reason, Borrower shall pay to Agent for its benefit and
the ratable benefit of Lenders (in addition to the then outstanding principal,
accrued interest and other charges owing under the terms of this Agreement and
any of the other Loan Documents) as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to (i) one percent (1%) of the
Total Credit Facility less permanent principal payments applied on the Term
Loans (the "Reduced Facility"), if termination occurs during the first
twelve-month period of the Original Term (September 20, 1999 through September
19, 2000); (ii) one-half percent (1/2%) of the Reduced Facility, if termination
occurs during the second 12-month period of the Original Term (September 20,
2000 through September 19, 2001); or (iii) one-quarter of one percent (1/4%) of
the Reduced Facility, if termination occurs within the third 12-month period of
the Original Term (September 20, 2001 through September 19, 2002). If
termination occurs on or after September 20, 2002, no termination charge shall
be payable.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Agent for its benefit and the ratable benefit
of Lenders shall retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents notwithstanding such termination until
Borrower has paid the Obligations to Agent and Lenders, in full, in immediately
available funds, together with the applicable termination charge, if any.
Notwithstanding the payment in full of the Obligations, Agent shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Agent or Lenders may incur as a result of
dishonored checks or other items of payment received by Agent or any Lender from
Borrower or any Account Debtor and applied to the Obligations, Agent shall, at
its option, (i) have received a written agreement, executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Agent and Lenders from any such
17
loss or damage; or (ii) have retained such monetary reserves and Liens on the
Collateral for such period of time as Agent, in its reasonable discretion, may
deem necessary to protect Agent and/or Lenders from any such loss or damage.
SECTION 1 SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and Lenders of the Obligations, Borrower hereby grants to
Agent for its benefit and the ratable benefit of Lenders a continuing Lien upon
all of Borrower's assets, including all of the following Property and interests
in Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(1) Accounts;
(2) Inventory;
(3) Equipment;
(4) General Intangibles;
(5) Investment Property;
(6) All monies and other Property of any kind now or at any
time or times hereafter in the possession or under the control of Agent
or any Lender or a bailee or Affiliate of Agent or any Lender;
(7) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (A) through (F) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(8) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other
computer materials and records) of Borrower pertaining to any of (A)
through (G) above.
5.2 Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Agent's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Agent's Lien upon the Collateral.
Unless prohibited by applicable law, Borrower hereby authorizes Agent to execute
and file any such financing statement on Borrower's behalf. The parties agree
that a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof. At Agent's request, Borrower shall also promptly execute or
cause to be executed and shall deliver to Agent any and all documents,
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instruments and agreements deemed necessary by Agent to give effect to or carry
out the terms or intent of the Loan Documents.
5.3 Safekeeping of Collateral. Agent shall not be liable or responsible
in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto (except for reasonable care in the custody thereof while any
Collateral is in Agent's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency, or other person whomsoever, but the same shall be at Borrower's sole
risk.
5.4 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages. If
Borrower shall acquire at any time or times hereafter any interest in other real
Property (other than leasehold interests in sales offices), Borrower agrees
promptly to execute and deliver to Agent, for its benefit and the ratable
benefit of Lenders, as additional security and Collateral for the Obligations,
deeds of trust, security deeds, mortgages or other collateral assignments
reasonably satisfactory in form and substance to Agent and its counsel (herein
collectively referred to as "New Mortgages") covering such real Property. The
Mortgages and each New Mortgage shall be duly recorded (at Borrower's expense)
in each office where such recording is required to constitute a valid Lien on
the real Property covered thereby. In respect to each Mortgage and each New
Mortgage, Borrower shall deliver to Agent, at Borrower's expense, mortgagee
title insurance policies issued by a title insurance company reasonably
satisfactory to Agent insuring Agent, as mortgagee; such policies shall be in
form and substance reasonably satisfactory to Agent and shall insure a valid
first Lien in favor of Agent for its benefit and the ratable benefit of Lenders,
on the Property covered thereby, subject only to those exceptions reasonably
acceptable to Agent and its counsel. Borrower shall also deliver to Agent such
other documents, including, without limitation, ALTA Surveys of the real
Property, as Agent and its counsel may reasonably request relating to the real
Property subject to any such New Mortgage.
SECTION 1 COLLATERAL ADMINISTRATION
6.1 General.
6.1.1 Location of Collateral. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by Borrower and its
Subsidiaries at one or more of the business locations set forth in Exhibit B
hereto and shall not, without the prior written approval of Agent, be moved
therefrom except, prior to an Event of Default and Agent's and/or Required
Lenders' acceleration of the maturity of the Obligations in consequence thereof,
for (i) sales of Inventory in the ordinary course of business; and (ii) removals
in connection with dispositions of Equipment that are authorized by subsection
6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
19
such amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrower shall deliver the originals of such policies to Agent with
satisfactory lender's loss payable endorsements, naming Agent for its benefit
and the ratable benefit of Lenders as sole loss payee, assignee or additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than 30 days prior written notice
to Agent in the event of cancellation of the policy for any reason whatsoever
and a clause specifying that the interest of Agent shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Agent may,
at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Agent, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of
the sale thereof shall be borne and paid by Borrower. If Borrower fails to
promptly pay any portion thereof when due, Agent may, at its option, but shall
not be required to, pay the same and charge Borrower therefor. Agent shall not
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Agent's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be
at Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower
shall execute and deliver to Agent a Borrowing Base Certificate in the form
attached hereto as Exhibit C on a monthly basis or, if requested by Agent, more
frequently. Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall submit to Agent on such
periodic basis as Agent shall request a sales and collections report for the
preceding period, in form satisfactory to Agent. On or before the fifteenth day
of each month from and after the date hereof, Borrower shall deliver to Agent,
in form acceptable to Agent, a detailed aged trial balance of all of its
Accounts existing as of the last day of the preceding month, specifying the
names, addresses, face value, dates of invoices and due dates for each Account
Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon
Agent's request therefor, copies of proof of delivery and the original copy of
all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. If requested by Agent, Borrower shall execute and deliver to
Agent formal written assignments of all of its Accounts weekly or daily, which
shall include all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice registers related
thereto. Agent agrees to promptly deliver to Lenders the Borrowing Base
Certificates, Schedules of Accounts or other Reports delivered to it by Borrower
pursuant to Sections 6.2.1, 6.2.2, 6.3.1 and 6.4.1.
20
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $150,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Agent with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and during the continuation of an
Event of Default, Agent shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Agent may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including reasonable attorney's fees, to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable
to any governmental taxing authority, Agent is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor, provided, however, that
Agent shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower. Borrower will be given notice of, and will be
consulted with respect to, such payment if no Event of Default has occurred and
is continuing.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Agent's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Agent, any designee of
Agent or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. Borrower shall
cooperate fully with Agent in an effort to facilitate and promptly conclude any
such verification process. So long as no Event of Default has occurred and is
continuing, Agent will verify accounts using an anonymous name or some third
party service.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account(s) pursuant to a lockbox arrangement acceptable to Agent with
such banks as may be selected by Borrower and be acceptable to Agent. Borrower
shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the lockbox
to the Dominion Account for application on account of the Obligations. All funds
deposited in the Dominion Account shall immediately become the property of
Agent, for its benefit and the ratable benefit of Lenders, and Borrower shall
obtain the agreement by such banks in favor of Agent to waive any offset rights
against the funds so deposited. Agent assumes no responsibility for such lockbox
arrangement, including, without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Agent. All remittances received by Borrower on account of
21
Accounts, together with the proceeds of any other Collateral, shall be held as
Agent's property by Borrower as trustee of an express trust for Agent's benefit
and Borrower shall immediately deposit same in kind in the Dominion Account.
Agent retains the right at all times during the continuance of a Default or an
Event of Default to notify Account Debtors that Accounts have been assigned to
Agent and to collect Accounts directly in its own name and to charge the
collection costs and expenses, including attorneys' fees to Borrower.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory. Borrower shall furnish Agent
Inventory reports in form and detail satisfactory to Agent at such times as
Agent may request, but at least once each month, not later than the fifteen
day of such month. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Agent a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Agent shall request.
6.3.2 Returns of Inventory. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which generated
an Account on which such Account Debtor is obligated in excess of $100,000.
Borrower shall immediately notify Agent of the same, specifying the reason for
such return and the location, condition and intended disposition of the returned
Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with Section
6.4.2 hereof, and shall furnish Agent with a current schedule containing the
foregoing information on at least an annual basis and more often if requested
by Agent. Immediately on request therefor by Agent, Borrower shall deliver to
Agent any and all evidence of ownership, if any, of any of the Equipment.
6.4.2 Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Agent; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $250,000 or less, provided that all proceeds thereof are
remitted to Agent for application to the Loans in accordance with Section 3.3.1
hereof, or (ii) replacements of Equipment that is substantially worn, damaged or
obsolete with Equipment of like kind, function and value, provided that the
replacement Equipment shall be acquired prior to or concurrently with any
disposition of the Equipment that is to be replaced, the replacement Equipment
shall be free and clear of Liens other than Liens in favor of Agent, and
Borrower shall have given Agent at least 5 days' prior written notice of such
disposition.
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6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to the Base Rate Revolving Credit
Portion from time to time.
SECTION 1 REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and Lenders
to enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Agent and Lenders that:
7.1.1 Organization and Qualification. Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Borrower and
each of its Subsidiaries is duly qualified and is authorized to do business and
is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit D hereto and in all other states and jurisdictions in which
the failure of Borrower or any Subsidiary to be so qualified would have a
material adverse effect on the financial condition, business or Properties of
Borrower or any Subsidiary.
7.1.2 Corporate Power and Authority. Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents and the Purchase
Documents to which it is a party. The execution, delivery and performance of
this Agreement and each of the other Loan Documents have been duly authorized by
all necessary corporate action and do not and will not (i) require any consent
or approval of the shareholders of Borrower or any of its Subsidiaries; (ii)
contravene Borrower's or any of its Subsidiaries' charter, articles or
certificate of incorporation or by-laws; (iii) violate, or cause Borrower or any
of its Subsidiaries to be in default under, any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award in
effect having applicability to Borrower or any of its Subsidiaries; (iv) result
in a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Borrower or any
of its Subsidiaries is a party or by which Borrower or any of its Subsidiaries
or its or such Subsidiary's Properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than Permitted
Liens) upon or with respect to any of the Properties now owned or hereafter
acquired by Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each
of the other Loan Documents and the Purchase Documents when delivered under this
Agreement will be, a legal, valid and binding obligation of Borrower and each of
its Subsidiaries (to the extent a party thereto) enforceable against each of
them in accordance with its respective terms.
7.1.4 Capital Structure. Exhibit E hereto states (i) the correct
name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by Borrower, (ii) the name of
23
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of each Subsidiary of Borrower and (iv) the number of authorized, issued and
treasury shares of Borrower and each Subsidiary of Borrower. Borrower has good
title to all of the shares it purports to own of the stock of each of its
Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. Except as disclosed on Exhibit E hereto, there are no
outstanding options to purchase, or any rights or warrants to subscribe for, or
any commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of any of Borrower's Subsidiaries.
7.1.5 Corporate Names. Neither Borrower nor any of Borrower's
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on Exhibit F hereto. Except as set forth on Exhibit F,
neither Borrower or any of Borrower's Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
7.1.6 Business Locations; Agent for Process. Borrower's and each
of its Subsidiaries' chief executive office and other places of business are as
listed on Exhibit B hereto. During the preceding one-year period, neither
Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on Exhibit B. Except as shown
on Exhibit B, no inventory is stored with a bailee, warehouseman or similar
party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Borrower and each of
its Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Borrower has
paid or discharged all lawful claims which, if unpaid, might become a Lien
against any of Borrower's Properties that is not a Permitted Lien. The Liens
granted to Agent for its benefit and the ratable benefit of Lenders under
Section 5 hereof are first priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Agent, with respect to each Account:
(1) It is genuine and in all respects what it purports to be,
and it is not evidenced by a judgment;
(2) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and
forming a part of the contract between Borrower and the Account Debtor;
24
(3) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy
of which has been furnished or is available to Agent;
(4) Such Account, and Agent's security interest therein, is
not, and will not (by voluntary act or omission of Borrower) be in the
future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes
resulting in returned goods where the amount in controversy is deemed
by Agent to be immaterial, and each such Account is absolutely owing to
Borrower and is not contingent in any respect or for any reason;
(5) Borrower has made no agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of
any such Account or any deduction therefrom, except discounts or
allowances which are granted by Borrower in the ordinary course of its
business for prompt payment and which are reflected in the calculation
of the net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Agent pursuant to
Section 6.2.1 hereof;
(6) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce
the amount payable thereunder from the face amount of the invoice and
statements delivered to Agent with respect thereto;
(7) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) is
Solvent; and
(8) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the
collectability of such Account.
7.1.9 Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted. Borrower will not permit any of
the Equipment to become affixed to any real Property leased to Borrower so that
an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form acceptable to Agent, and
Borrower will not permit any of the Equipment to become an accession to any
personal Property other than Equipment that is subject to first priority (except
for Permitted Liens) Liens in favor of Agent, for its benefit and the ratable
benefit of Lenders.
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7.1.10 Financial Statements; Fiscal Year. (a) The Consolidated and
consolidating balance sheets of Borrower and such other Persons described
therein (including the accounts of all Subsidiaries of Borrower for the
respective periods during which a Subsidiary relationship existed) as of June
30, 1999, and the related statements of income, changes in stockholder's equity,
and changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP (except for year-end adjustments, which shall
not be material, and the absence of footnotes), and present fairly the financial
position of Borrower at such dates and the results of Borrower's operations for
such periods. Since June 30, 1999, there has been no material change in the
condition, financial or otherwise, of Borrower and such other Persons as shown
on the Consolidated balance sheet as of such date and no change in the aggregate
value of Equipment and real Property owned by Borrower or such other Persons,
except changes in the ordinary course of business, none of which individually or
in the aggregate has been materially adverse. The fiscal year of Borrower and
each of its Subsidiaries ends on December 31st of each year.
(1) The balance sheets of Pacific Western Extruded Plastics Company as
of June 27, 1999 and the related statements of income and cash flow for the
periods ended on such dates, have been prepared in accordance with GAAP (except
for year-end adjustments, which shall not be material, and the absence of
footnotes), and present fairly, in all material respects, the financial position
of Pacific Western Extruded Plastics Company at such dates and the results of
Pacific Western Extruded Plastics Company's operations for such periods (subject
to normal year-end non-material adjustments). Since June 27, 1999, there has
been no material change in the condition, financial or otherwise, of Pacific
Western Extruded Plastics Company as shown on the balance sheet as of such date
and no change in the aggregate value of equipment and real property owned by
Pacific Western Extruded Plastics Company, except changes in the ordinary course
of business, none of which individually or in the aggregate has been materially
adverse. Pacific Western Extruded Plastics Company had no Subsidiaries that are
active.
(2) The pro forma unaudited balance sheet of the Borrower delivered to
the Agent and the Lenders pursuant to Section 7.1.10(a) has been prepared on a
basis in conformity with GAAP (except for the omission of footnotes and prior
period comparative data required by GAAP and for variations from GAAP which in
the aggregate are not material and for reallocations of values with respect to
categories of assets acquired in connection with, and adjustment for actual
fees, expenses and transaction costs incurred in connection with, the
Acquisition) and presents fairly the financial condition of the Borrower,
assuming consummation of the Acquisition.
(3) The Projections provided to the Agent and the Lenders pursuant to
Section 8.1.5 have been prepared on the basis of the assumptions which are set
forth therein. Such projections have been prepared in good faith and represent,
on the date of this Agreement, the good faith opinion of the Borrower's
management as to the most probable course of business of the Borrower on the
basis of the assumptions which are set forth therein. .
7.1.11 Full Disclosure. The financial statements referred to in
Section 7.1.10 hereof do not, nor does this Agreement or any other written
26
statement of Borrower to Agent or any Lender, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. The financial statements referred to in
Section 7.1.10 hereof do not contain any untrue statement of material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower or any other Credit Party
has failed to disclose to Agent and Lenders in writing which materially affects
adversely or, so far as Borrower can now foresee, will materially affect
adversely the Properties, business, prospects, profits or condition (financial
or otherwise) of Borrower or any of its Subsidiaries or the ability of Borrower
or its Subsidiaries to perform this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Borrower and each of its
Subsidiaries is now and, after giving effect to the Loans at all times will be,
Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of
any Person.
7.1.14 Taxes. Borrower's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. The federal tax identification number of each of Borrower's
Subsidiaries is shown on Exhibit G hereto. Borrower and each of its Subsidiaries
have filed all federal, state and local tax returns and other reports any of
them is required by law to file and has paid, or made provision for the payment
of, all taxes, assessments, fees, levies and other governmental charges upon any
of them, any of their income and Properties as and when such taxes, assessments,
fees, levies and charges that are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrower maintains reasonable reserves on its books therefor.
The provision for taxes on the books of Borrower and its Subsidiaries are
adequate for all years not closed by applicable statutes, and for its current
fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement except for a fee payable to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ in an amount not to exceed amounts previously disclosed to Agent.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Borrower and
each of its Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights are listed on Exhibit H hereto.
7.1.17 Governmental Consents. Borrower and each of its Subsidiaries
has, and is in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
27
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it.
7.1.18 Compliance with Laws. Borrower and each of its Subsidiaries
has duly complied with, and its Properties, business operations and leaseholds
are in compliance in all material respects with, the provisions of all federal,
state and local laws, rules and regulations applicable to Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business and
there have been no citations, notices or orders of noncompliance issued to
Borrower or any of its Subsidiaries under any such law, rule or regulation,
which in any case could reasonably be expected to have a material adverse effect
on Borrower's business, assets or prospects. Borrower and each of its
Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in material compliance with all federal, state and local
laws, rules and regulations applicable to it. No Inventory has been produced in
violation of the Fair Labor Standards Act (29 U.S.C. ss.201 et seq.) as amended.
7.1.19 Restrictions. Neither Borrower nor any of its Subsidiaries
is a party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its Properties. Neither Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit I hereto, none
of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by Borrower or any of its Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit J hereto, there
are no material actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower or any of its
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of Borrower or any of its Subsidiaries. Neither Borrower nor any of
its Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither Borrower nor any of its Subsidiaries are or is in default, and no event
has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness to any Person for Funded Debt.
7.1.22 Leases. Exhibit K hereto is a complete listing of all
capitalized leases of Borrower and its Subsidiaries and Exhibit L hereto is a
complete listing of all operating leases of Borrower and its Subsidiaries.
Borrower and each of its Subsidiaries is in full compliance with all of the
terms of each of its respective capitalized and operating leases.
28
7.1.23 Pension Plans. Except as disclosed on Exhibit M hereto,
neither Borrower nor any of its Subsidiaries has any Plan. Borrower and each of
its Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower or any of its Subsidiaries exists in connection with any
Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal liability
in connection with a Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and there exists no present condition or state of
facts or circumstances which would materially affect adversely Borrower or any
of its Subsidiaries or prevent Borrower or any of its Subsidiaries from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
7.1.25 Labor Relations. Except as described on Exhibit N hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or any of
its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.
7.1.26 Representations and Warranties under Transaction Documents.
All representations and warranties made by the Borrower in any of the Purchase
Documents or in the certificates delivered in connection therewith are true and
correct in all material respects as of the date hereof with the same force and
effect as though made on and as of the date hereof, and such representations and
warranties of the Borrower are hereby confirmed to the Agent and the Lenders and
made representations and warranties of the Borrower hereunder as fully as if set
forth herein. The Borrower has no knowledge that any of the representations and
warranties made in the Purchase Documents by or on behalf of any party thereto
other than the Borrower are untrue or incorrect.
7.1.27 Year 2000. Borrower has conducted an assessment of all
material computer software programs used in its business (collectively, the
"Software") in order to determine whether the Software is Year 2000 Ready (as
defined below). Based on such assessment, the Software is Year 2000 Ready,
except where the failure to be Year 2000 Ready could not reasonably be expected
either individually or in the aggregate to have a material adverse effect.
"Year 2000 Ready" means that the Software (i) is capable of correctly
processing, providing and/or receiving date data within and between the 20th
and 21st centuries; and (ii) operates or is expected to operate on a basis
comparable to its current operation during and after calendar year 2000 A.D.,
including, but not limited to recognizing and properly processing leap years,
provided that all other products, i.e., software, firmware and hardware, used
with the Software properly exchange date data with the Software.
29
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or its Subsidiaries' business or operations
that would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as Agent have consented to such
changes or such changes are expressly permitted by this Agreement.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 1 COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by Required Lenders in
writing, it each shall:
8.1.1 Visits and Inspections. Permit representatives of Agent or
any Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Properties of Borrower
and each of its Subsidiaries, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Borrower's and each of its Subsidiaries' business, assets,
liabilities, financial condition, business prospects and results of operations.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.
8.1.3 Financial Statements. Keep, and cause each of its
Subsidiaries to keep, adequate records and books of account with respect to its
business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions; and cause to be prepared and
furnished to Agent and Lenders the following (all to be prepared in accordance
with GAAP applied on a consistent basis, unless Borrower's certified public
accountants concur in any change therein and such change is disclosed to Agent
and Lenders and is consistent with GAAP):
(1) not later than 90 days after the close of each fiscal year
of Borrower, unqualified audited (in respect to the Consolidated
financial statements only) financial statements of Borrower and its
Subsidiaries and operating divisions as of the end of such year, on a
Consolidated and consolidating basis, certified (in respect to the
30
Consolidated financial statements only) by a firm of independent
certified public accountants of recognized standing selected by
Borrower but acceptable to Agent (except for a qualification for a
change in accounting principles with which the accountant concurs);
(2) not later than 30 days after the end of each month
hereafter, including the last month of Borrower's fiscal year,
unaudited interim financial statements of Borrower and its Subsidiaries
and operating divisions as of the end of such month and of the portion
of Borrower's fiscal year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Borrower
and its Subsidiaries for such month and period subject only to changes
from audit and year-end adjustments and except that such statements
need not contain notes;
(3) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which Borrower has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange;
(4) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan; and
(5) such other data and information (financial and otherwise)
as Agent or any Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's and each of its
Subsidiaries' financial condition or results of operations.
The foregoing notwithstanding, Agent and Lenders agree that in
respect to operating divisions, Borrower shall only be required to deliver
income statements pursuant to clauses (i) and (ii) above.
Concurrently with the delivery of the financial statements
described in clause (i) of this Section 8.1.3, Borrower shall forward to Agent
and Lenders a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Agent and Lenders a certificate of the aforesaid
certified public accountants certifying to Agent and Lenders that, based upon
their examination of the financial statements of Borrower and its Subsidiaries
performed in connection with their examination of said financial statements,
they are not aware of any Default or Event of Default relating to accounting
matters, or, if they are aware of such Default or Event of Default, specifying
the nature thereof, and acknowledging, in a manner satisfactory to Agent, that
they are aware that Agent and Lenders are relying on such financial statements
in making their decisions with respect to the Loans. Concurrently with the
delivery of the financial statements described in clauses (i) and (ii) of this
Section 8.1.3, or more frequently if requested by Agent, Borrower shall cause to
31
be prepared and furnished to Agent a Compliance Certificate in the form of
Exhibit O hereto executed by the Chief Financial Officer of Borrower.
Borrower authorizes Agent or its designated representatives to
communicate directly with its independent certified public accountants and
authorize those accountants to disclose to Agent any and all financial
statements and other supporting financial documents and schedules. Further
within five (5) days after the earlier of the last day of each fiscal year of
Borrower and the date Borrower engaged independent certified public accountants
to audit Borrower's financial statements, Borrower shall deliver to such
independent certified public accountants a letter from Borrower addressed to
such independent certified public accountants indicating that it is a primary
intention of Borrower in engaging such accountants that Agent and Lenders rely
upon such financial statements of Borrower and its Subsidiaries.
8.1.4 Landlord and Storage Agreements. Provide Agent with copies of all
agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory or Equipment may,
from time to time, be kept. In respect to any lease existing on or entered into
after the Closing Date (other than leases for sales offices), Borrower shall
provide Agent with landlord waivers or bailee letters with respect to such
leased premises. Such landlord waivers or bailee letters shall be in a form
supplied by Agent to Borrower with such reasonable revisions as are customarily
accepted by Agent or by similar financial institutions in similar financial
transactions.
8.1.5 Projections. No later than 30 days prior to the end of each
fiscal year of Borrower, deliver to Agent and Lenders Projections of Borrower,
each Subsidiary of Borrower and each of its operating divisions on a
Consolidated and unconsolidated basis for the forthcoming fiscal year, month by
month, except that for the fiscal year ending in 2000, Borrower shall be
permitted to deliver such projections not later than January 10, 2000. The
foregoing notwithstanding, Agent and Lenders agree that, in respect to operating
divisions, Borrower shall only be required to deliver projected profit and loss
statements pursuant to this section.
8.1.6 Interest Rate Protection. Prior to the date which is sixty (60)
days after the Closing Date, Borrower shall have entered into and shall maintain
until at least the third anniversary date of the Closing Date, interest rate
protection agreements with any of Bank, Agent, any Lender, any of their
Affiliates or a Person who has been approved by Agent, which approval shall not
be unreasonably withheld, in form and substance reasonably acceptable to Agent,
which interest rate protection agreements shall fix or cap interest rates on at
least one half (1/2) of the outstanding principal balance of Term Loan A and
Term Loan B. In the event that the interest payable under the Subordinated Notes
is based on a floating rate, then on the Closing Date, Borrower shall have
entered into and shall maintain until at least the third anniversary date of the
Closing Date, additional interest rate protection agreements with any of Bank,
Agent, any Lender, any of their Affiliates or a Person who has been approved by
Agent, which approval shall not be unreasonably withheld, in form and substance
reasonably acceptable to Agent, which interest rate protection agreements shall
fix or cap interest rates on the outstanding principal balance of the
Subordinated Notes. Agent reserves the right to establish a reserve against the
Borrowing Base against which to assess differences arising upon the ▇▇▇▇- to-
market practice in connection with such interest rate protection agreements. To
32
the extent that any such interest rate protection agreement is with Bank or
Agent or any Lender or their Affiliates, Borrower's obligations thereunder shall
be an Obligation secured by the Collateral. If any such interest rate protection
is with a Person other than Bank, Agent or any Lender or their Affiliates,
Borrower's obligations thereunder shall be unsecured. Any portion of the
Obligations owed to Bank, Agent or any Lender under any interest rate protection
agreements shall be paid, (i) absent a Default or Event of Default hereunder, in
accordance with the applicable interest rate protection agreement or (ii) upon
and during the continuance of a Default or Event of Default hereunder, pro-rata
with the other Obligations.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless Required Lenders have first consented thereto in
writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Except in respect to
the Acquisition, merge or consolidate, or permit any Subsidiary of Borrower to
merge or consolidate, with any Person; nor acquire, nor permit any of its
Subsidiaries to acquire, all or any substantial part of the Properties of any
Person, unless prior to the consummation of any such merger, consolidation or
acquisition, Required Lenders have consented in writing to such transaction,
which consent shall not be unreasonably withheld or delayed; provided that, in
respect to any such transaction involving a purchase price of $1,000,000 or
more, the consent of all Lenders shall be required.
8.2.2 Loans. Except as provided in Section 8.2.7 hereof, make, or
permit any Subsidiary of any Borrower to make, any loans or other advances of
money (other than for salary, travel, advances, advances against commissions and
other similar advances in the ordinary course of business) to any Person, except
that if after giving effect to any such loans or advance there is no existing
and continuing Default or Event of Default, Borrower may make loans and advances
to its officers and executives for the purpose of financing the purchase by such
officers and executives in the open market of shares of Borrower's common stock;
provided that the aggregate amount of such loans and advances under this clause
does not exceed at any point in time Two Million Dollars ($2,000,000).
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist,
any Indebtedness, except:
(1) Obligations owing to Agent and Lenders;
(2) Subordinated Debt outstanding in respect to the
Subordinated Debt Documents;
(3) Indebtedness of any Subsidiary of Borrower to Borrower;
33
(4) accounts payable to trade creditors and current operating
expenses (other than for Funded Debt) which are not aged more than 30
days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being
actively contested in good faith and by appropriate and lawful
proceedings; and Borrower or such Subsidiary shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by Borrower or such Subsidiary and its independent
accountants;
(5) Obligations to pay Rentals permitted by Section 8.2.13;
(6) Permitted Purchase Money Indebtedness;
(7) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business;
(8) Indebtedness outstanding under the Hastings Documents;
(9) Indebtedness outstanding under the Promissory Note and
Stock Pledge Agreement;
(10) Indebtedness under Capitalized Leases listed on Exhibit
K;
(11) Indebtedness incurred in connection with the acquisition
of approximately 30 acres of vacant land in ▇▇▇▇▇▇▇, Oregon, in a
principal amount not to exceed One Hundred Three Thousand Dollars
($103,000);
(12) Indebtedness owing under interest rate protection
agreements to the extent Borrower is required to enter into such
interest rate protection agreements by the terms of Section 8.1.6;
(13) Indebtedness incurred in connection with performance
bonds, workmen's compensation bonds or the like;
(14) Indebtedness under the Lease of Borrower's manufacturing
plant at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇;
(15) Indebtedness under the lease of real property at ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; and
(16) Indebtedness not included in paragraphs (i) through (xv)
above which does not exceed at any time, in the aggregate, the sum of
$1,000,000.
34
8.2.4 Affiliate Transactions. Enter into, or be a party to, or
permit any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's or
such Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Agent and are no less favorable to Borrower than what would be
obtainable in a comparable arm's length transaction with a Person not an
Affiliate or stockholder of Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(1) Liens at any time granted in favor of Agent for its
benefit and the ratable benefit of Lenders;
(2) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in Section 7.1.14 hereto, but only if in Agent's
judgment such Lien does not adversely affect Agent's or Lenders' rights
or the priority of Agent's Lien in the Collateral;
(3) Liens arising in the ordinary course of Borrower's
business by operation of law or regulation or to secure the performance
of contracts (other than for Funded Debt), statutory obligations,
surety, appeal bonds or the like, but only if payment in respect of any
such Lien is not at the time required and such Liens do not, in the
aggregate, materially detract from the value of the Property of
Borrower or materially impair the use thereof in the operation of
Borrower's business;
(4) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(5) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(6) such other Liens as appear on Exhibit P hereto;
(7) Liens on approximately 30 acres of vacant land in ▇▇▇▇▇▇▇,
Oregon, securing the Indebtedness described in Section 8.2.3(xi);
(8) Liens securing Indebtedness outstanding under the Hastings
Documents;
(9) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
property or minor irregularities of title (and with respect to
35
leasehold interest, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
Property, with or without consent of the lessee) which do not in the
aggregate impair the use of any Property material to the operation of
the business of Borrower or its Subsidiaries or the value of such
Property for the purpose of the business of Borrower or its
Subsidiaries;
(10) such other Liens as Required Lenders may hereafter
approve in writing; and
(11) extensions, renewals and replacements of the Liens
referred to in paragraphs (i) through (x) hereof.
8.2.6 Subordinated Debt and Other Indebtedness. Make, or permit any
Subsidiary of Borrower to make, any payment or repurchase of any part or all of
any Subordinated Debt or take any other action or omit to take any other action
in respect of any Subordinated Debt, except in accordance with any applicable
subordination agreement or the subordination provisions of the Subordinated Note
Documents; provided, however that Borrower shall not make any optional
prepayment of the Subordinated Notes without the prior written consent of
Required Lenders. In addition Borrower may not exercise its option to pay in
cash any portion of the interest due on the Subordinated Notes which otherwise
is paid-in-kind, unless all Lenders have, in advance, consented to such cash
payment. Except for regularly scheduled (as of the Closing Date) payments of
principal and interest, make or permit any Subsidiary of any Borrower to make
any payment or repurchase of any part or all of any of the Indebtedness
outstanding under the Hastings Documents or the Promissory Note and Stock Pledge
Agreement. Amend or modify any of the Subordinated Note Documents, the Hastings
Documents or the Promissory Note and Stock Pledge Agreement in any manner
adverse to Borrower or Agent or Lenders.
8.2.7 Distributions. Declare or make, or permit any Subsidiary of
any Borrower to declare or make, any Distributions; provided, however, that:
(a) If after giving effect to any such Distribution there
would be no existing and continuing Default or Event of Default,
Borrower may make regularly scheduled quarterly dividends on its Series
A Stock and Preferred Stock.
(b) Borrower may make repurchases of stock from departing
officers and directors not in excess of $1,500,000 during any fiscal
year provided Borrower shall have Availability over the 60 days prior
to such repurchase of at least $10,000,000 on average and no Default or
Event of Default shall have occurred and be continuing.
8.2.8 Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as to
36
Borrower and its Subsidiaries during any fiscal year of Borrower exceeds the
amount set forth opposite such fiscal year in the following schedule
-----------------------------------------------------------------------------
Fiscal Year Ending Permitted Capital Expenditure
-----------------------------------------------------------------------------
December 31, 1999
$2,750,000
-----------------------------------------------------------------------------
December 31, 2000 $6,250,000
plus the Carryover Amount
-----------------------------------------------------------------------------
December 31, 2001 $5,250,000
plus the Carryover Amount
-----------------------------------------------------------------------------
December 31, 2002 $4,500,000
and each subsequent fiscal year plus the Carryover Amount
-----------------------------------------------------------------------------
For any fiscal year, Carryover Amount shall be the lesser of $1,000,000 or the
amount of permitted Capital Expenditures for the previous fiscal year without
giving effect to any Carryover Amount minus the actual amount of Capital
Expenditures made within such fiscal year.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of
any of, or permit any Subsidiary of Borrower to sell, lease or otherwise dispose
any of, its Properties, including any disposition of Property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of
Borrower, or (iii) dispositions expressly authorized by this Agreement
including, without limitation, Section 6.4.2.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to
issue any additional shares of its capital stock except director's qualifying
shares.
8.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Except as otherwise permitted by
Section 8.2.2, make or have, or permit any Subsidiary of Borrower to make or
have, any Restricted Investment.
8.2.13 Leases. Become, or permit any of its Subsidiaries to become,
a lessee under any operating lease (other than a lease under which Borrower or
any of its Subsidiaries is lessor) of Property if the aggregate Rentals payable
during any current or future period of 12 consecutive months under the lease in
question and all other leases under which Borrower or any of its Subsidiaries is
37
then lessee would exceed $1,000,000. The term "Rentals" means, as of the date of
determination, all payments which the lessee is required to make by the terms of
any lease.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower.
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Agent and/or Lenders,
Borrower covenants that it will be in full compliance with each of the financial
covenants set forth on Exhibit Q hereto. If GAAP changes from the basis used in
preparing the audited financial statements delivered to Agent by Borrower on or
before the Closing Date, Borrower will provide Agent with certificates
demonstrating compliance with such financial covenants and will include, at the
election of Borrower or upon the request of Agent, calculations setting forth
the adjustments necessary to demonstrate how Borrower is in compliance with such
financial covenants based upon GAAP as in effect on the Closing Date.
SECTION 1 CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any
of the other Loan Documents, and without affecting in any manner the rights of
Agent or any Lender under the other sections of this Agreement, Lenders shall
not be required to make any Loan or issue or cause to be issued any Letter of
Credit or incur any LC Guaranty under this Agreement unless and until each of
the following conditions has been and continues to be satisfied:
9.1 Documentation. Agent shall have received, in form and substance
satisfactory to it and its counsel, a duly executed copy of this Agreement and
the other Loan Documents, together with such additional documents, instruments
and certificates as Agent and its counsel shall require in connection therewith
from time to time, including all documents, instruments, agreements and
schedules listed in the Schedule of Documents attached hereto and incorporated
herein as Exhibit R, all in form and substance satisfactory to Agent and its
counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.5 Acquisition. The Acquisition shall have been consummated, or will
be consummated simultaneously with the closing of the transactions contemplated
hereby, substantially in accordance with the terms of the Purchase Documents,
38
the terms and conditions of which are acceptable to Agent and Required Lenders,
and pursuant to which Pacific Western Extruded Plastics Company shall have been
merged into Borrower.
9.6 Environmental Surveys. The results of the Phase I Environmental
Survey (and, if applicable Phase II Environmental Surveys) obtained in respect
to the real Property to be acquired by Borrower pursuant to the Acquisition
shall be acceptable to Agent and the Lenders existing as of the Closing Date.
9.7 Subordinated Notes and Cash Equity. Agent shall have received
evidence satisfactory to it that Borrower shall have received at least
Thirty-Two Million Five Hundred Thousand Dollars ($32,500,000) from the sale of
the Subordinated Notes. The terms and conditions of the Subordinated Note
Documents shall be acceptable to Agent and the Lenders existing as of the
Closing Date.
9.8 Transaction Fees. Agent shall have determined to its satisfaction
that the amount of transaction fees payable in connection with the transactions
contemplated hereby shall not exceed Seven Million Dollars ($7,000,000).
9.9 Availability. Agent shall have determined to its sole satisfaction
that immediately after the Acquisition has been consummated, Lenders have made
the initial Loans and issued the initial Letters of Credit and LC Guaranties
contemplated hereby and all closing and other transaction fees payable in
connection with the transactions contemplated hereby and by the Purchase
Documents have been paid or reserved for, Availability shall equal or exceed Ten
Million Dollars ($10,000,000).
SECTION 1 EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Interest, Principal and Fees. Borrower shall fail
to pay any interest or principal due in respect to outstanding Revolving Credit
Loans, Term Loan A, Term Loan B or any fees payable in respect to unused
Revolving Credit Loans on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise).
10.1.2 Payment of Other Obligations. Borrower shall fail to pay any
of the Obligations (other than interest and principal due in respect to
outstanding Revolving Credit Loans, Term Loan A, Term Loan B or any fees payable
in respect to unused Revolving Credit Loans) on or within five (5) days after
the due date for such Obligation (whether due at stated maturity, on demand,
upon acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent or Lenders by or on behalf of Borrower or
39
any Subsidiary of Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.4 Breach of Specific Covenants. Borrower or any Subsidiary of
Borrower shall fail or neglect to perform, keep or observe any covenant
contained in Sections 5.2, 5.4, 6.1.1, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on
the date that Borrower is required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower or any Subsidiary of
Borrower shall fail or neglect to perform, keep or observe any covenant
contained in this Agreement (other than a covenant which is dealt with
specifically elsewhere in Section 10.1 hereof) and the breach of such other
covenant is not cured to Required Lenders' satisfaction within five (5) days
after the sooner to occur of Borrower's receipt of notice of such breach from
Agent or any Lender or the date on which such failure or neglect first becomes
known to any officer of Borrower or any Subsidiary of any Borrower; provided,
however, that if a cure cannot be effected within such five (5) day period,
Borrower shall have ten (10) additional days to effect such cure if during such
ten-day period Borrower is diligent in pursuing such a cure.
10.1.6 Default Under Security Documents/Other Agreements. Any event
of default shall occur under, or Borrower or any Subsidiary of Borrower shall
default in the performance or observance of any term, covenant, condition or
agreement contained in, any of the Security Documents or the Other Agreements
and such default shall continue beyond any applicable grace period.
10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower under (x) the Subordinated Note Documents or the
Hastings Documents or (y) any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its Property is bound, which
other agreement, document or instrument creates or relates to any Indebtedness
(other than the Obligations) with a principal balance of $750,000 or more,
including, if the payment or maturity of such Indebtedness referred to in this
clause (y) is accelerated in consequence of such event of default or demand for
payment of such Indebtedness referred to in this clause (y) is made.
10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance.
10.1.9 Intentionally Omitted.
10.1.10 Insolvency and Related Proceedings. Borrower shall cease to
be Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
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any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower or any Subsidiary, the continuation of
such proceeding for more than 30 days), or Borrower or any Subsidiary shall make
any offer of settlement, extension or composition to its unsecured creditors
generally.
10.1.11 Business Disruption: Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower or any Subsidiary of
Borrower for a period which significantly affects Borrower's capacity to
continue the business of Borrower and its Subsidiaries, taken as a whole, on a
profitable basis; or Borrower or any Subsidiary of Borrower shall suffer the
loss or revocation of any license or permit now held or hereafter acquired by
Borrower or such Subsidiaries which is necessary to the continued or lawful
operation of its business; or Borrower or any Subsidiary of Borrower shall be
enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which Borrower or such
Subsidiary leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term; or any part of the Collateral shall
be taken through condemnation or the value of such Property shall be impaired
through condemnation.
10.1.12 Change of Ownership or Control. Either (i) the Spell Group
shall cease to own and control, beneficially, at least ten percent (10%) of the
issued and outstanding capital stock of Borrower, on a fully diluted basis after
giving effect to the exercise of all options and warrants or (ii) a Change of
Control occurs.
10.1.13 ERISA. A Reportable Event shall occur which Agent or
Required Lenders, in its or their sole discretion, shall determine in good faith
constitutes grounds for the termination by the Pension Benefit Guaranty
Corporation of any Plan or for the appointment by the appropriate United States
district court of a trustee for any Plan, or if any Plan shall be terminated or
any such trustee shall be requested or appointed, or if Borrower or any
Subsidiary of Borrower is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's or such Subsidiary's complete or partial withdrawal from such Plan.
10.1.14 Challenge to Agreement. Borrower, any Subsidiary of
Borrower, or any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement, or
any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent, for its
benefit and the ratable benefit of Lenders.
10.1.15 Criminal Forfeiture. Borrower or any Subsidiary of Borrower
shall be criminally indicted or convicted under any law that could lead to a
forfeiture of any Property of Borrower or any Subsidiary of Borrower.
10.1.16 Judgments. Final judgment or judgments (after the
expiration of all times to appeal therefrom) for the payment of money in excess
of $250,000 in the aggregate shall be rendered against Borrower or any
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Subsidiary of Borrower and the same shall not (i) be fully covered by insurance
or other comparable bond, or (ii) within thirty days after the entry thereof,
have been discharged or execution thereof stayed pending appeal, or shall not
have been discharged within five days after the expiration of any such stay.
10.2 Acceleration of the Obligations. Upon the occurrence of an Event
of Default and during the continuance thereof, Agent may and shall, at the
request of Required Lenders, (i) without notice, terminate this facility with
respect to further Revolving Credit Loans and Letters of Credit and LC
Guaranties, whereupon no Revolving Credit Loans may be made hereunder and no
Letters of Credit or LC Guaranties may be issued hereunder, and/or (ii) with
notice, declare all Obligations to be forthwith due and payable, whereupon all
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower; provided, however, that upon the occurrence of an Event of Default
specified in Section 10.1.10 hereof, the Obligations shall become due and
payable without declaration, notice or demand by Agent.
Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Lenders; provided that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and in the best
interests of Agent and Lenders taken as a whole, including any action (or the
failure to act) pursuant to the Loan Documents.
10.3 Other Remedies. Upon and after the occurrence and continuation of
an Event of Default, Agent and/or Lenders shall have and may exercise from time
to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Agent or Lenders may be entitled, all of which rights and remedies shall
be cumulative and shall be in addition to any other rights or remedies contained
in this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Agent at a place designated by Agent which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Agent for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Agent, in its sole discretion,
may deem advisable. Borrower agrees that 10 days written notice to Borrower of
any public or private sale or other disposition of Collateral shall be
42
reasonable notice thereof, and such sale shall be at such locations as Agent may
designate in said notice. Agent shall have the right to conduct such sales on
Borrower's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Agent shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Agent and Lenders may purchase all
or any part of the Collateral at public or, if permitted by law, private sale
and, in lieu of actual payment of such purchase price, may set off the amount of
such price against the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing 2 Business Days for collection, first
to the costs, expenses and attorneys' fees incurred by Agent in collecting the
Obligations, in enforcing the rights of Agent under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to unpaid fees and
reimbursable costs and expenses, third to the interest due upon any of the
Obligations, fourth, to the principal of the Obligations and to any amounts due
under any interest rate protection agreements, and fifth to any other unpaid
Obligations. If any deficiency shall arise, Borrower shall remain liable to
Agent and Lenders therefor, and for any other unpaid Obligations.
10.3.4 Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Agent's and Lenders' benefit.
10.3.5 Agent or Required Lenders may, at its or their option,
require Borrower to deposit with Agent funds equal to the LC Amount and, if
Borrower fails to promptly make such deposit, Lenders may advance such amount
as a Revolving Credit Loan (whether or not an Overadvance is created thereby).
Each such Revolving Credit Loan shall be secured by all of the Collateral and
shall bear interest and be payable at the same rate and in the same manner as
Base Rate Revolving Credit Portions. Any such deposit or advance shall be held
by Agent as a reserve to fund future payments on such LC Guaranties and future
drawings against such Letters of Credit. At such time as all LC Guaranties have
been paid or terminated and all Letters of Credit have been drawn upon or
expired any amounts remaining in such reserve shall be applied against any
outstanding Obligations, or, if all Obligations have been indefeasibly paid in
full, returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Agent or any Lenders or contained in any other
agreement between Agent and/or Lenders and Borrower, heretofore, concurrently,
or hereafter entered into, shall be deemed cumulative to and not in derogation
or substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent or Lenders to require
strict performance by Borrower of any provision of this Agreement or to exercise
or enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent and/or Lenders shall have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
43
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement or any other
Loan Documents shall be deemed to have been suspended or waived by Agent or
Lenders, unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by a duly authorized
representative of Agent, Lenders or Required Lenders (as applicable) and
directed to Borrower.
SECTION 1 AGENT
11.1 Power of Attorney, Authorization and Action. Each Lender hereby
appoints and authorizes Agent to take such action on its behalf and to exercise
such powers under this Agreement, and the other Loan Documents as are expressly
delegated to Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. As to any matters not expressly provided for
by this Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lenders; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal liability or which
is contrary to this Agreement or the other Loan Documents or applicable law.
Agent agrees to give each Lender promptly a copy of each notice given to it by
Borrower pursuant to the terms of this Agreement and the other Loan Documents.
11.2 Agent's Reliance, Etc. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (i)
may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Agent; (ii) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representations to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (iv) shall not have any duty beyond
Agent's customary practices to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of Borrower or to inspect the property
(including the books and records) of Borrower; (v) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; and
(vi) shall incur no liability under or in respect of this Agreement or the other
Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopy, telegram, cable or telex)
believed in good faith by it to be genuine and signed or sent by the proper
party or parties.
11.3 FCC and Affiliates. With respect to its commitment hereunder to
make Revolving Credit Loans, Term Loan A and Term Loan B and to issue or procure
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Letters of Credit and LC Guaranties, FCC shall have the same rights and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include FCC in its
individual capacity. FCC and its Affiliates may lend money to, and generally
engage in any kind of business with, Borrower, any of its Subsidiaries and any
Person who may do business with or own securities of Borrower or any such
Subsidiary, all as if FCC were not Agent and without any duty to account
therefor to Lenders.
11.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in Section 7.1.10 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
11.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower), ratably according to the respective principal
amounts of the Notes then held by each of them, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by Agent under this Agreement, provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or wilful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable shares of any out-of-pocket expenses (including reasonable counsel 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 and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Borrower.
11.6 Successor Agent. Agent may resign at any time by giving written
notice thereof to Lenders and Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent which shall be
reasonably acceptable to Borrower. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or financial institution organized under the laws of
the United States of America or of any state thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000) and
which shall be reasonably acceptable to Borrower. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 11 shall inure to its benefit as to any actions taken
45
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
SECTION 1 MISCELLANEOUS
12.1 Power of Attorney.
Borrower hereby irrevocably designates, makes, constitutes and appoints
Agent (and all Persons designated by Agent) as Borrower's true and lawful
attorney (and agent-in-fact) and Agent, or Agent's agent, may, without notice to
Borrower and in Borrower's or Agent's name, but at the cost and expense of
Borrower for the limited purposes specified in Sections 12.1.1 and 12.1.2 below:
12.1.1 At such time or times after the occurrence and during the
continuance of a Default or an Event of Default as Agent or said agent, in its
sole discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Agent or under Agent's
control.
12.1.2 At such time or times upon or after the occurrence and
during the continuance of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral, each in a commercially
reasonable manner under the circumstances; (iii) sell or assign any of the
Accounts and other Collateral upon such terms, for such amounts and at such time
or times as Agent deems advisable; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive, open
and dispose of all mail addressed to Borrower and notify postal authorities to
change the address for delivery thereof to such address as Agent may designate;
(vii) endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Agent's
determination, to fulfill Borrower's obligations under this Agreement.
The power of attorney granted hereby shall constitute a power coupled
with an interest and shall be irrevocable.
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12.2 Indemnity. Borrower hereby agrees to indemnify Agent and Lenders
and hold Agent and Lenders harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by Agent and
Lenders (including reasonable attorneys fees and legal expenses) as the result
of Borrower's failure to observe, perform or discharge Borrower's duties
hereunder. In addition, Borrower shall defend Agent and Lenders against and save
them harmless from all claims of any Person with respect to the Collateral
(except those resulting from the negligence or intentional misconduct of Agent
or any Lender). Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Agent or any Lender by
any Person under any Environmental Laws or similar laws by reason of any
Borrower's or any other Person's failure to comply with laws applicable to solid
or hazardous waste materials or other toxic substances. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 12.2 shall survive the payment in full of the Obligations and the
termination of this Agreement.
12.3 Modification of Agreement; Sale of Interest.
(1) The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and may not be modified,
altered or amended except by an agreement in writing signed by Borrower,
Required Lenders or all Lenders as required by the terms hereof, and, if
required by the terms hereof, Agent. Borrower may not sell, assign or transfer
any of the Loan Documents or any portion thereof, including without limitation,
Borrower's rights, title, interests, remedies, powers and duties hereunder or
thereunder. Borrower hereby consents to Agent's and any Lender's sale of
participations, assignment, transfer or other disposition in accordance with the
terms hereof, at any time or times, of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation, Agent's and
any Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced in writing or not; Borrower agrees that it will use
commercially reasonable efforts to assist and cooperate with Agent and any
Lender in any manner reasonably requested by Agent or such Lender to effect the
sale of participations in or assignment of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation, review of
appropriate disclosure documents or placement memoranda and executing
appropriate amendments to the signature pages hereto to reflect the addition of
any Lender and such Lender's respective commitments. In addition, Borrower will
make its management available to meet with potential Lenders or Participating
Lenders from time to time as reasonably requested by Agent. The foregoing
notwithstanding, except with respect to sales, assignments or transfers to
Affiliates under common control pursuant to which the selling, assigning or
transferring Lender retains its voting rights, no Lender shall sell, assign,
transfer or otherwise dispose (except as otherwise permitted by Section 12.3(d))
of any of the Loan Documents or any portion thereof or interest therein, without
the prior written consent of Agent (which shall not be unreasonably withheld or
delayed). Any Lender who desires to sell or assign any of its rights and
interests hereunder shall, if no Event of Default is existing and continuing,
consult with Borrower as to the identify of any such potential assignee, but
Borrower shall not have the right to approve any such assignee.
(2) In respect to any assignment by a Lender of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Loan Commitments, the Revolving Credit Loans owed to it
47
and the Revolving Credit Note held by it, Term Loan A owed to it and Term Loan A
Note held by it and Term Loan B owed to it and Term Note B held by it) (i) each
such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations, except in respect to assignments by Fleet until such
time as Fleet has a uniform percentage interest in the Revolving Loan
Commitment, Term Loans A and Term Loans B (ii) except in the case of an
assignment of all of a Lender's rights and obligations under this Agreement, (A)
the aggregate amount of the Revolving Loan Commitment, Term Loan A and Term Loan
B of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000, and in integral multiples
of $1,000,000 thereafter, or such lesser amount as to which Borrower and Agent
may consent to, which consent shall not be unreasonably withheld, or delayed,
and (B) after giving effect to each such assignment, the amount of the Revolving
Loan Commitment, Term Loan A and Term Loan B of the assigning Lender shall in no
event be less than $5,000,000, (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance, an Assignment and
Acceptance in the form of Exhibit T hereto (an "Assignment and Acceptance"),
together with any Revolving Credit Note, or Term Note A and Term Note B subject
to such assignment and a processing and recordation fee of $3,500, and (iv) any
Lender may without the consent of Borrower or the Agent, and without paying any
fee, assign to any Affiliate of such Lender that is a bank or financial
institution all of its rights and obligations under this Agreement. The
foregoing notwithstanding, no Person may become a Lender or a Participating
Lender hereunder, unless such Person is a financial institution having
stockholders' equity (or the equivalent) of at least One Hundred Million Dollars
($100,000,000). Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto). If, pursuant to this Section
12.3, any interest in this Agreement or any Revolving Credit Loan, Term Loan A
or Term Loan B, any Note, Letter of Credit or LC Guaranty is transferred to any
transferee which is organized under the laws of any jurisdiction other than the
United States or any state thereof, the transferor Lender shall cause such
transferee (other than any Participating Lender), and shall cause any
Participating Lender, concurrently with the effectiveness of such transfer, (a)
to represent to the transferor Lender (for the benefit of the transferor Lender,
Agent, and Borrower) that under applicable law and treaties no Taxes will be
required to be withheld by Agent, Borrower or the transferor Lender with respect
to any payments to be made to such transferee in respect of the Revolving Credit
Loans, Term Loan A, Term Loan B, any Note, Letters of Credit or LC Guaranties,
(b) to furnish to the transferor Lender, Agent and Borrower either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such transferee claims entitlement to complete exemption form U.S. federal
withholding tax on all interest payments hereunder), and (c) to agree (for the
benefit of the transferor Lender, Agent and Borrower) to provide the transferor
Lender, Agent and Borrower a new Form 4224 or Form 1001 upon the obsolescence of
any previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
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(3) In the event any Lender assigns or otherwise transfers all or any
part of its Revolving Credit Note, Term Note A or Term Note B, any such Lender
shall so notify Borrower and Borrower shall, upon the request of such Lender,
issue new Revolving Credit Notes, Term Notes A and Term Notes B in exchange for
the old Revolving Credit Note, Term Note A and Term Note B.
(4) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Borrower (a
"Participating Lender") participating interests in any Loans, the commitments of
that Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrower and the Agent shall continue to deal solely
and directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall grant any participation under which the
Participating Lender shall have rights to approve any amendment to or waiver of
this Agreement or the Loan Documents, except to the extent such amendment or
waiver would: (A) extend the final maturity date for payment of the Loans in
which such Participating Lender is participating; (B) reduce the interest rate
or the amount of principal or fees applicable to the Loans in which such
Participating Lender is participating; or (C) release all or substantially all
of the Collateral, except as expressly provided herein. In those cases in which
an originating Lender grants rights to a Participating Lender to approve any
amendment to or waiver of this Agreement or the other Loan Documents respecting
the matters described in clauses (A) through (C) of the preceding sentence, the
relevant participation agreements shall provide for a voting mechanism whereby a
majority of the amount of such Lender's portion of the Loans (irrespective of
whether held by such Lender or a Participating Lender) shall control the vote
for all of such Lender's portion of the Loans. In the case of any participation,
the Participating Lender shall not have any rights under this Agreement or any
of the other Loan Documents entered into in connection herewith (the
Participating Lender's right against such Lender in respect of such
participation to be those set forth in the participation or other agreement
executed by such Lender and the Participating Lender relating thereto). All
amounts payable by the Borrower hereunder shall be determined as if the
originating Lender had not sold any such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participating Lender shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
(5) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board or U.S. Treasury Regulation 31
CFR ss.203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
49
(6) No amendment or waiver of any provision of this Agreement or the
Notes or any other Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however: (a) that no amendment, waiver or consent shall, unless
in writing and signed by each Lender affected thereby do any of the following:
(i) increase the aggregate Revolving Loan Commitments or subject any Lender to
any additional obligations, (ii) reduce the principal of, or decrease the rate
of interest on, the Notes or other amount payable hereunder other than those
payable only to FCC in its capacity as Agent which may be reduced by FCC
unilaterally, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or other amounts payable hereunder, other than those
payable only to FCC in its capacity as Agent which may be postponed by FCC
unilaterally, (iv) reduce the aggregate unpaid principal amount of the Notes, or
the number of Lenders which shall be required for the Lenders or any of them to
take any action hereunder, (v) release or discharge any Person liable for the
performance of any obligations of Borrower hereunder or under any of the Loan
Documents except in accordance with the terms of such Loan Documents or as
otherwise permitted herein, (vi) increase the advance rates contained in the
definition of the Borrowing Base or otherwise amend the definition of the
Borrowing Base or amend the definitions of Eligible Accounts or Eligible
Inventory, (vii) to the extent Agent's or Lenders' consent is required by the
terms hereof, release all or substantially all of the Collateral or (viii)
amend, modify, supplement, or grant any waiver or consent under this Section
12.3 or (ix) waive any Event of Default of the nature described in Section
10.1.12; (b) that no amendment, waiver or consent shall be effective unless in
writing and signed by either Required Lenders or all Lenders, as required by the
terms hereof and, if such amendment, waiver or consent affects Agent or its
rights hereunder, Agent.
(7) The foregoing notwithstanding, provided that no Event of Default
has occurred and is continuing, no Lender shall effect any transfer, assignment
or participation of its interests hereunder if the effect of any such transfer,
assignment or participation is to increase, in any material amount, Borrower's
costs hereunder.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Agent and Lenders permitted under Section
12.3 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
50
12.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
(A) If to Agent: Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower: Eagle Pacific Industries, Inc.
2430 ▇▇▇▇▇▇▇▇ Consulting Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President and COO
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Eagle Pacific Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
51
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ West and ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(C) If to any Lender, at its address indicated on the
signature pages hereof or in a notice to Borrower of
an assignment of a Note.
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent or Lenders pursuant to Section 3.1.1 or 4.2.2
hereof shall not be effective until received by Agent.
12.9 Agent and/or Required Lenders' Consent. Except as may be otherwise
expressly provided, whenever Agent or Required Lenders' consent is required to
be obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Agent or Required Lenders shall be authorized to give or withhold such consent
in its or their sole and absolute discretion and to condition its consent upon
the giving of additional collateral security for the Obligations, the payment of
money or any other matter.
12.10 Credit Inquiries. Borrower hereby authorizes and permits Agent or
any Lender to respond to usual and customary credit inquiries from third parties
concerning Borrower or any of its Subsidiaries.
12.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
2.12 Entire Agreement. This Agreement and other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral and written.
12.13 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN
CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS,
THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
52
FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S
OR LENDERS' OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR
AGENT OR LENDERS, BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF
▇▇▇▇ COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 BUSINESS DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR LENDERS TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR
LENDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
12.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH AGENT AND LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED FOR HEREIN, PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY AGENT OR ANY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND
HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD;
(iii) NOTICE PRIOR TO AGENT OR ANY LENDER TAKING POSSESSION OR CONTROL OF THE
53
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING AGENT OR LENDERS TO EXERCISE ANY OF AGENT'S OR LENDERS' REMEDIES; (iv)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF
ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE EACH
MATERIAL INDUCEMENT TO AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND
THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
12.16 Publicity. Borrower hereby consents to Agent's use of the name or
tradestyle of Borrower in any announcements or advertisements relating to the
completion of the transactions contemplated hereby and the role played by Agent
in providing financing to Borrower hereunder in such media and in such manner as
Agent, in its sole discretion, determines.
54
IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.
EAGLE PACIFIC INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
Accepted in Chicago, Illinois:
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Revolving Loan Commitment: $35,000,000
Amended and Restated Term Loan Commitment:
Second Amended and Restated Term Loan
Total Term Loan A Commitment: $28,000,000
Term Loan B Commitment: $12,000,000
▇▇▇▇▇▇ TRUST AND SAVINGS BANK ("Lender")
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Revolving Loan Commitment: $10,000,000
Amended and Restated Term Loan
Commitment: $2,133,200
Second Amended and Restated Term Loan
Commitment: $4,866,800
Total Term Loan A Commitment:
$7,000,000
Term Loan B Commitment: $3,000,000
APPENDIX A
GENERAL DEFINITIONS
When used in the Second Amended and Restated Loan and Security
Agreement dated as of September 20, 1999, by and among Eagle Pacific Industries,
Inc. ("Borrower"), the lenders signatories thereto ("Lenders") and Fleet Capital
Corporation ("FCC") as agent for such Lenders (FCC, in such capacity, "Agent"),
the following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated
under or on account of an Account.
Accounts - all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has or hereafter acquired
any interest.
Acquisition - the acquisition by merger or otherwise by
Borrower of Pacific Western Extruded Plastics Company pursuant to the
Purchase Documents.
Acquisition Agreement - shall have the meaning contained in
the definition of Purchase Documents.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock
of a Person; or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by a Person or a Subsidiary of a
Person.
Agreement - the Second Amended and Restated Loan and Security
Agreement referred to in the first sentence of this Appendix A, all
Exhibits thereto and this Appendix A.
ALTA Survey - a survey prepared in accordance with the
standards adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1986, known as the
"Minimum Standard Detail Requirements of Land Title Surveys". The ALTA
Survey shall be in sufficient form to satisfy the requirements of
Chicago Title Insurance Company to provide extended coverage over
survey defects and shall also show the location of all easements,
utilities, and covenants of record, dimensions of all improvements,
encroachments from any adjoining property, and certify as to the
location of any flood plain area affecting the subject real estate. The
ALTA Survey shall contain the following certification: "To Eagle
Pacific Industries, Inc., Fleet Capital Corporation, as Agent and
Chicago Title Insurance Company. This is to certify that this map of
plat and the survey on which it is based were made in accordance with
the "Minimum Standard Detail Requirements for Land Title Surveys"
jointly established and adopted by ALTA and ACSM in 1986. (signed
(SEAL) License No. __________".
A-1
Amended and Restated Loan Agreement - as defined in Recital A.
Amended and Restated Term Loan Commitment - as defined in
Section 1.2.1 of the Agreement.
Amended and Restated Term Loan Percentage - as defined in
Section 1.2.1 of the Agreement.
Applicable Margin - the percentages set forth below with
respect to the Base Rate Revolving Credit Portion, the Base Rate Term A
Portion, the Base Rate Term B Portion, the LIBOR Revolving Credit
Portion, the LIBOR Term A Portion, the LIBOR Term B Portion and unused
line fees:
Applicable Margin
LIBOR LIBOR LIBOR Base Rate Base Rate Base Rate
Revolving Term A Term B Revolving Term A Term B Unused
Credit Portion Portion Portion Credit Portion Portion Portion Line Fee
------------------- ------------ ------------ ----------------- ------------- ------------ ----------------
2.50% 2.75% 3.25% .50% .75% 1.25% .50%
The foregoing notwithstanding, if Borrower's EBITDA, for any
twelve-month period ending on or after December 31, 2000, as evidenced
by the financial statements delivered to Agent pursuant to Section
8.1.3(ii), equals or exceeds $30,000,000, the Applicable Margin shall
be reduced for the subsequent twelve-month period to the percentage set
forth below with respect to the Base Rate Revolving Credit Portion, the
Base Rate Term A Portion, the Base Rate Term B Portion, the LIBOR
Revolving Credit Portion, the LIBOR Term A Portion, the LIBOR Term B
Portion and unused line fees.
LIBOR LIBOR LIBOR Base Rate Base Rate Base Rate
Revolving Term A Term B Revolving Term A Term B Unused
Credit Portion Portion Portion Credit Portion Portion Portion Line Fee
------------------- ------------ ------------ ----------------- ------------- ------------ ----------------
2.25% 2.50% 3.00% .25% .50% 1.00% .375%
Any change in Applicable Margin shall be effective
prospectively as of the first day of the fiscal month of Borrower next
following the fiscal month during which the applicable Consolidated
financial statements to Borrower for the twelve-month period referred
to above are delivered to Agent pursuant to Section 8.1.3(ii).
Availability - the aggregate amount of money which Borrower is
entitled to borrow from time to time as Revolving Credit Loans, such
amount being the difference derived when the sum of the principal
A-2
amount of Revolving Credit Loans then outstanding (including any
amounts which Lender may have paid for the account of Borrower pursuant
to any of the Loan Documents and which have not been reimbursed by
Borrower) is subtracted from the Borrowing Base. If the amount
outstanding is equal to or greater than the Borrowing Base,
Availability is 0.
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether or
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if such prime rate for commercial loans is discontinued
by Bank as a standard, a comparable reference rate designated by Bank
as a substitute therefor shall be the Base Rate.
Base Rate Portions - collectively, the Base Rate Revolving
Credit Portion, the Base Rate Term A Portion and the Base Rate Term B
Portion.
Base Rate Revolving Credit Portion - that portion of the
Revolving Credit Loan not subject to a LIBOR Option.
Base Rate Term A Portion - that portion of Term Loan A not
subject to a LIBOR Option.
Base Rate Term B Portion - that portion of Term Loan B not
subject to a LIBOR Option.
Board - the Board of Governors of the Federal Reserve System
of the United States of America.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(i) the Maximum Revolving Loan Amount; or
(ii) an amount equal to:
(a) the sum of eighty-five percent (85%) of
the net amount of Eligible Accounts (other than
Eligible Accounts with dating terms) outstanding at
such date, plus eighty-five percent (85%) of the
lesser of Eight Million Dollars ($8,000,000) or the
net amount of Eligible Accounts with dating terms
outstanding at such date;
PLUS
(b) the lesser of (1) Twenty-Seven Million
Five Hundred Thousand Dollars ($27,500,000); or (2)
the sum of (x) fifty-five percent (55%) of the value
of Eligible Inventory at such date calculated on the
A-3
basis of the lower of cost or market with the cost of
raw materials and finished goods calculated on a
first-in, first-out basis; plus (y) the lesser of One
Million Three Hundred Seventy-Five Thousand Dollars
($1,375,000) or fifty-five percent (55%) of the value
of Eligible In-Transit Inventory at such date
calculated on the basis of the lower of cost or
market with the cost of raw materials and finished
goods calculated on a first-in, first-out basis.
MINUS (subtract from the lesser of (i) or (ii) above)
(iii) an amount equal to the sum of (a) the LC Amount
plus (b) the amount of any reserve established by Agent
pursuant to Section 1.1.1 above.
For purposes hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Agent's option, be calculated on
shortest terms), credits, allowances or excise taxes of any nature at any time
issued, owing, claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time.
Business Day - (i) when used with respect to the LIBOR Option,
shall mean a day on which dealings may be effected in deposits of
United States dollars in the London interbank foreign currency deposits
market and on which the Agent is conducting business and on which banks
may conduct business in London, England, Chicago, Illinois, and New
York, New York and (ii) when used with respect to the other provisions
of this Agreement, shall mean any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed either
in the State of Illinois or in the State of Wisconsin.
Change of Control - means the occurrence of any of the
following events: (i) all or substantially all of the Borrower's
assets, on a consolidated basis, are sold as an entirety to any Person
or related group of Persons or there shall be consummated any
consolidation or merger of the Borrower (A) in which the Borrower is
not the continuing or surviving company (other than a consolidation or
merger with a wholly owned Subsidiary in which all shares of Common
Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant
to which the Common Stock would be converted into cash, securities or
other property, in any case, other than a sale of assets or
consolidation or merger of the Borrower in which the holders of the
Common Stock immediately prior to the sale of assets or consolidation
or merger have, directly or indirectly, at least a majority of the
Common Stock of the transferee or continuing or surviving company
immediately after such sale of assets or consolidation or merger, (ii)
any "person"(as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than the Spell Group, is or becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act provided
that such person shall be deemed to have "beneficial ownership" of all
shares that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the
outstanding voting securities of the Borrower; (iii) during any period
of two consecutive years, individuals who at the beginning of such
period constituted the Board (together with any new directors whose
election by such Board of Directors or whose nomination for election by
the shareholders of the Borrower, as the case may be, was approved by a
A-4
vote of at least a majority of the directors of the Company then still
in office) who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved
cease for any reason to constitute a majority of the Board of Directors
of the Borrower then in office; or (iv) a "Change of Control" (as
defined in the Subordinated Debt Documents) shall occur.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful
life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied.
Code - the Uniform Commercial Code as adopted and in force in
the State of Illinois, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Commitment Termination Date - the earliest of (i) September
20, 2004; (ii) the date of termination of the Commitment to make
further Revolving Credit Loan pursuant to Section 4.2.1 or 4.2.2
hereof; and (iii) the date of termination of the Commitment to make
further Revolving Credit Loans pursuant to Section 10.2 hereof.
Common Stock - means (i) the Common Stock, $.01 par value of
the Borrower, (ii) the Class B Common Stock and (iii) and other class
of capital stock of the Borrower hereafter authorized that is not
limited to a fixed sum or percentage of par or stated or liquidation
value with respect to the rights of the holders thereof to participate
in dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of the Borrower.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - as defined in Section 2.1.2 of the Agreement.
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Distribution - in respect of any corporation means and
includes: (I) the payment of any dividends or other distributions on
capital stock of the corporation (except distributions in such stock)
and (ii) the redemption or acquisition of Securities unless made
contemporaneously from the net proceeds of the sale of Securities.
Dominion Account - a special account of Agent, for its benefit
and the ratable benefit of Lenders, established by Borrower pursuant to
the Agreement at a bank selected by Borrower, but acceptable to Agent
in its reasonable discretion, and over which Agent shall have sole and
exclusive access and control for withdrawal purposes.
Eligible Account - an Account arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services
which Agent, in its reasonable credit judgment, deems to be an Eligible
Account. Without limiting the generality of the foregoing, no Account
shall be an Eligible Account if:
(1) it arises out of a sale made by Borrower to a Subsidiary
or an Affiliate of Borrower or to a Person controlled by an Affiliate
of Borrower; or
(2) in respect to Accounts without dating terms, it is unpaid
for more than 60 days after the original due date shown on the invoice;
or
(3) in respect to Accounts without dating terms, it is due or
unpaid more than 90 days after the original invoice date; or
(4) in respect to Accounts with dating terms, it is due or
unpaid for more than 240 days after the original invoice date;
provided, however, that invoices qualifying for dating hereunder cannot
be issued prior to December 1 or after March 31 of the subsequent year,
and any invoice issued with dating must be paid on or before the next
July 31;
(5) 25% or more of the Accounts from the Account Debtor are
not deemed Eligible Accounts hereunder; or
(6) the total unpaid Accounts of the Account Debtor exceed 20%
of the net amount of all Eligible Accounts, to the extent of such
excess; or
(7) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; or
(8) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with respect to
such Account, or the Account Debtor has made any claim with respect to
any other Account due from such Account Debtor to Borrower, or the
Account otherwise is or may become subject to any right of setoff by
the Account Debtor; or
(9) the Account Debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
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or made an assignment for the benefit of creditors, or a decree or
order for relief has been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or any other petition or other application for relief under the federal
bankruptcy laws has been filed against the Account Debtor, or if the
Account Debtor has failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator or custodian
to be appointed for it or for all or a significant portion of its
assets or affairs; or
(10) it arises from a sale to an Account Debtor outside the
United States or Canada (other than Quebec), unless the sale is on
letter of credit, guaranty or acceptance terms in each case acceptable
to Agent in its sole discretion; or
(11) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
(12) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns
its right to payment of such Account to Agent, for its benefit and the
ratable benefit of Lenders, in a manner satisfactory to Agent so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. ss.203 et
seq., as amended); or
(13) the Account is subject to a Lien other than a Permitted
Lien; or
(14) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by Borrower and accepted
by the Account Debtor or the Account otherwise does not represent a
final sale; or
(15) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(16) Borrower has made any agreement with the Account Debtor
for any deduction therefrom, except for discounts or allowances which
are made in the ordinary course of business for prompt payment and
which discounts or allowances are reflected in the calculation of the
face value of each invoice related to such Account; or
(17) the Account is not at all times subject to Agent's duly
perfected, first priority security interest and no other Lien except a
Permitted Lien; or
(18) Borrower has made an agreement with the Account Debtor to
extend the time of payment thereof.
In addition, no Account with dating terms shall be an Eligible
Account if the original invoice date therefor is any date between April 1
through and including November 30 of an applicable year.
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Eligible Inventory - such Inventory of Borrower (other than
packaging materials and supplies) which Agent in its reasonable credit
judgments deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory
if:
(19) it is not raw materials or finished goods that is, in
Agent's opinion, readily marketable in its current form; or
(20) it is not in good, new and saleable condition; or
(21) it is slow-moving, obsolete or unmerchantable; or
(22) it does not meet all standards imposed by any
governmental agency or authority; or
(23) it does not conform in all respects to the warranties and
representations set forth in the Agreement,
(24) it is not at all times subject to Agent's duly perfected,
first priority security interest and no other Lien except a Permitted
Lien;
(25) it is not situated at a location in compliance with the
Agreement or is in transit; or
(i) is not situated at a location in the United States of
America.
Eligible In-Transit Inventory - such Inventory of Borrower
that is in transit and that, except for the fact that it is in transit,
would qualify as Eligible Inventory. In addition to the foregoing, no
Inventory shall be Eligible In-Transit Inventory, unless such UCC and
other filings, acceptable to Agent in its sole discretion, have been
made against such Inventory in such locations as are acceptable to
Agent in its sole discretion to perfect Agent's security interest
thereon.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an
interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
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Event of Default - as defined in Section 10.1 of the
Agreement.
Funded Debt- as defined in Exhibit Q to the Agreement.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower,
including, without limitation, all choses in action, causes of action,
corporate or other business records, deposit accounts, inventions,
designs, patents, patent applications, trademarks, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to
Borrower to secure payment of any of the Accounts by an Account Debtor,
all rights to indemnification and all other intangible property of
every kind and nature (other than Accounts).
Hastings Documents - that certain Redevelopment Contract with
the City of Hastings, Nebraska and related Promissory Notes.
Indebtedness - as applied to a Person means, without
duplication
(26) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness is
to be determined, including, without limitation, Capitalized Lease
Obligations,
(27) all obligations of other Persons which such Person has
guaranteed,
(28) all reimbursement obligations in connection with letters
of credit or letter of credit guaranties issued for the account of such
Person, and
(29) in the case of Borrower (without duplication), the
Obligations.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended
for sale or lease by Borrower, 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 manufacture, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or
consumed in Borrower's business; and all documents evidencing any
General Intangibles relating to any of the foregoing, whether now owned
or hereafter acquired by Borrower.
Investment Property - all of Borrower's investment property,
whether now owned or hereinafter acquired by Borrower, including,
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without limitation, all securities (certificated or uncertificated),
securities accounts, securities entitlements, commodity accounts and
contracts.
LC Amount - at any time, the aggregate undrawn face amount of
all Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which any Lender or any
Affiliate of any Lender shall guaranty the payment or performance by
Borrower of its reimbursement obligation under any letter of credit.
LC Percent - the Applicable Margin in respect to the LIBOR
Revolving Credit Portion.
Legal Requirement - any requirement imposed upon any Lender or
any Participating Lender by any law of the United States of America or
the United Kingdom or by any regulation, order, interpretation, ruling
of official directive (whether or not having the force of law) of the
Board, the Bank of England or any other board, central bank or
governmental or administrative agency, institution or authority of the
United States of America, the United Kingdom or any political
subdivision of either thereof.
Letter of Credit - any letter of credit issued by Agent or
Bank for the account of Borrower.
LIBOR Interest Payment Date - with respect to any LIBOR
Portion, the first day of each calendar month during the applicable
LIBOR Period.
LIBOR Option - the option granted pursuant to Section 2.1.1(B)
to have the interest on all or any portion of the principal amount of
Term Loan A, Term Loan B and/or Revolving Credit Loans based on a LIBOR
Rate.
LIBOR Period - any period of one month, two months, three
months or six months commencing on a Business Day, selected as provided
in Section 2.1.1(B); provided, however that no LIBOR Period shall
extend beyond the last day of the Original Term, unless Borrower, Agent
and Lenders have agreed to an extension of the Original Term beyond the
expiration of the LIBOR Period in question and that, with respect to
any LIBOR Term A or LIBOR Term B Portion, no applicable LIBOR Period
shall extend beyond the scheduled installment payment date for such
LIBOR Term A or LIBOR Term B Portion. If any LIBOR Period so selected
shall end on a date that is not a Business Day, such LIBOR Period shall
instead end on the next preceding or succeeding Business Day as
determined by Agent in accordance with the then current banking
practice in London; provided, that Borrower shall not be required to
pay double interest, even though the preceding LIBOR Period ends and
the new LIBOR Period begins on the same day. Each determination by
Agent of the LIBOR Period shall, in the absence of manifest error, be
conclusive.
LIBOR Portion - a LIBOR Revolving Credit Portion, a LIBOR Term
A Portion or a LIBOR Term B Portion.
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LIBOR Rate - with respect to any LIBOR Portion for the related
LIBOR Period, an interest rate per annum (rounded upwards, if
necessary, to the next higher 1/8 of 1%) equal to the product of (a)
the Base LIBOR Rate (as hereinafter defined) and (b) Statutory
Reserves. For purposes of this definition, the term "Base LIBOR Rate"
shall mean the rate (rounded to the nearest 1/8 of 1% or, if there is
no nearest 1/8 of 1%, the next higher 1/8 of 1%) at which deposits of
U.S. dollars approximately equal in principal amount to the LIBOR
Portion specified in the applicable LIBOR Request are offered to Bank,
in the London interbank foreign currency deposits market at
approximately 11:00 a.m., London time, two (2) Business Days prior to
the commencement of such LIBOR Period, for delivery on the first day of
such LIBOR Period. Each determination by Agent of any LIBOR Rate shall
in the absence of manifest error, be conclusive, and at Borrower's
request, Agent shall demonstrate the basis of such determination.
LIBOR Request - a notice in writing (or by telephone confirmed
by telex, telecopy or other facsimile transmission on the same day as
the telephone request) from Borrower to Agent requesting that interest
on a portion of the Revolving Credit Loan, Term Loan A or Term Loan B
be based on the LIBOR Rate, specifying: (i) the first day of the LIBOR
Period; (ii) the length of the LIBOR Period consistent with the
definition of that term; and (iii) the dollar amount of the LIBOR
Revolving Credit Portion, LIBOR Term A Portion or LIBOR Term B Portion
consistent with the definition of such terms.
LIBOR Revolving Credit Portion - that portion of the Revolving
Credit Loans specified in a LIBOR Request (including any portion of
Revolving Credit Loans which is being borrowed by Borrower concurrently
with such LIBOR Request) which is not less than $1,000,000 and is an
integral multiple of $100,000, which does not exceed the outstanding
balance of Revolving Credit Loans not already subject to a LIBOR Option
and, which, as of the date of the LIBOR Request specifying such LIBOR
Revolving Credit Portion, has met the conditions for basing interest on
the LIBOR Rate in Section 2.1.1(B) of the Agreement and the LIBOR
Period of which was commenced and not terminated.
LIBOR Term A Portion - that portion of Term Loan A specified
in a LIBOR Request which is not less than $1,000,000 and is an integral
multiple of $100,000, which does not exceed the outstanding balance of
Term Loan A not already subject to a LIBOR Option and, which, as of the
date of the LIBOR Request specifying such LIBOR Term A, has met the
conditions for basing interest on the LIBOR Rate in Section 2.1.1(B) of
the Agreement and the LIBOR Period of which was commenced and not
terminated.
LIBOR Term B Portion - that portion of Term Loan B specified
in a LIBOR Request which is not less than $1,000,000 and is an integral
multiple of $100,000, which does not exceed the outstanding balance of
Term Loan B not already subject to a LIBOR Option and, which, as of the
date of the LIBOR Request specifying such LIBOR Term B Portion, has met
the conditions for basing interest on the LIBOR Rate in Section
2.1.1(B) of the Agreement and the LIBOR Period of which was commenced
and not terminated.
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Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account established on the books of
Agent pursuant to Section 3.5 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by Lenders
pursuant to the Agreement.
Maximum Revolving Loan Amount - shall mean Forty-Five Million
Dollars ($45,000,000) unless, at the Closing Date, Lenders with
aggregate Revolving Loan Commitments, Term Loans A and Term Loans B of
Twenty-Five Million Dollars ($25,000,000) or more are parties to this
Agreement, in which event the Maximum Revolving Loan Amount shall be
Fifty Million Dollars ($50,000,000). In addition, the Maximum Revolving
Loan Amount shall be automatically increased without any action by any
party hereto to Fifty Million Dollars ($50,000,000) after the Closing
Date at such time as Lenders with aggregate Revolving Loan Commitments
of $50,000,000 or more are parties to the Agreement.
Mortgages - the mortgages, deeds of trust, security deeds
and/or leasehold mortgages (x) executed by a predecessor-in-interest to
Borrower by merger on or about the Original Closing Date of the
Original Loan Agreement in favor of FCC (and amended as of the Closing
Date to reflect the terms and provisions of the Agreement) and by which
one of Borrower's predecessors-in-interest granted and conveyed to FCC,
as security for the Obligations, a Lien upon the real Property of
Borrower located in or at (i) Hastings, Nebraska, (ii) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and (iii) West Jordan, Utah and (y)
executed by Borrower on or about the Closing Date in favor of Agent for
its benefit and the ratable benefit of Lenders, and by which Borrower
shall grant and convey to Agent for its benefit and the ratable benefit
of Lenders, as security for the Obligations, a Lien upon Borrower's
interest in one or more parcels of real property located in or at (i)
Visalia, California; (ii) Perris, California; (iii) Cameron Park,
California; (iv) Eugene, Oregon; (v) Tacoma, Washington; and (vi)
Sunnyside, Washington.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
New Mortgages - as defined in Section 5.4 of the Agreement.
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Notes - collectively, the Revolving Credit Notes, Term Notes A
and Term Notes B.
Notice of Revolving Credit Loan - as defined in Section 3.1.1
of the Agreement.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or
payable from Borrower to Agent, any Lender or Bank of any kind or
nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement, any
of the other Loan Documents, any interest rate protection agreement,
swaps or caps or otherwise, whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising and however
acquired.
Original Closing Date - May 10, 1996.
Original Loan Agreement - as defined in Recital A of the
Amended and Restated Loan Agreement.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by Borrower, any Subsidiary of
Borrower or any other third party and delivered to Agent or any Lender
in respect of the transactions contemplated by the Agreement.
Overadvance - the amount, if any, by which the outstanding
principal amount of Revolving Credit Loans exceeds the Borrowing Base.
Participating Lender - each Person who shall be granted the
right by any Lender to participate in any of the Loans described in the
Agreement and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.
Patent Assignment - the Amended and Restated Patent Security
Agreement executed by Borrower on or about the Closing Date in favor of
Agent and by which Borrower assigned to Agent and granted to Agent a
security interest in, as security for all of the Obligations, all of
Borrower's rights, title and interest in and to all of its patents.
Permitted Liens - any Lien of a kind specified in subsection
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other such Indebtedness and Capitalized Lease
Obligations of Borrower at the time outstanding, does not exceed One
Million Two Hundred Fifty Thousand Dollars ($1,250,000). For the
purposes of this definition, the principal amount of any Purchase Money
Indebtedness consisting of capitalized leases shall be computed as a
Capitalized Lease Obligation.
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Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Preferred Stock - Borrower's 8% convertible preferred stock,
$0.01 par value.
Projections - Borrower's forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, (c)
cash flow statements, and (d) capitalization statements, all prepared
on a consistent basis with Borrower's historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions.
Promissory Note and Stock Pledge Agreement - that certain
Promissory Note and Stock Pledge Agreement dated as of July 10, 1995
between Pacific Acquisition Corp., Pacific Plastics, Inc. (a
predecessor-in-interest to Borrower) and the selling shareholder
signatories thereto, as in effect on the Original Closing Date.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Documents - the Stock Purchase Agreement
("Acquisition Agreement") by and between Borrower, Mitsubishi Chemical
America, Inc. ("MCA") and Mitsubishi Plastics, Inc. ("MPI"), pursuant
to which Borrower purchased from MCA and MPI all of the outstanding
common stock of Pacific Western Extruded Plastics Company ("Western
Pacific"). Subsequently, Western Pacific was merged into Borrower.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within 10 days
prior to or after the acquisition of any fixed assets for the purpose
of financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any increases
in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Reduced Facility - as defined in Section 4.2.3.
Rentals - as defined in Section 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
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Required Lenders - as of any date, the Lenders with at least
fifty and one tenth percent (50.1%) of the aggregate principal amount
of the Revolving Loan Commitments, Term Loan A and Term Loan B;
provided, that if any time there are two or fewer Lenders, Required
Lenders shall mean all Lenders; and further provided that any decision
to foreclose upon any real Property shall require the consent of the
Lenders holding seventy-five percent (75%) of the aggregate principal
amount of the Revolving Loan Commitments, Term Loan A and Term Loan B.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(2) investments in one or more Subsidiaries of Borrower to the
extent existing on the Closing Date;
(3) Property to be used in the ordinary course of business;
(4) Current Assets arising from the sale of goods and services
in the ordinary course of business of Borrower and its Subsidiaries;
(5) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one
year from the date of acquisition thereof;
(6) investments in certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000; and
(7) investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than 270 days
from the date of creation thereof.
Revolving Credit Loan - a Loan made by a Lender as provided in
Section 1.1 of the Agreement.
Revolving Credit Loan Commitments - as defined in Section
1.1.1 of the Agreement.
Revolving Credit Note - the Revolving Credit Note(s) to be
executed by Borrowers in favor of Lenders to evidence the Revolving
Credit Loans, which shall be in the form of Exhibit A-1 to the
Agreement.
Revolving Credit Percentage - as defined in Section 1.1.1 of
the Agreement.
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Schedule of Accounts - as defined in subsection 6.2.1 of the
Agreement.
Second Amended and Restated Term Loan Commitment - as defined
in Section 1.2.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Documents - the Mortgages, any New Mortgage, the
Patent Assignment, the Trademark Assignments and all other instruments
and agreements now or at any time hereafter securing the whole or any
part of the Obligations.
Series A Stock - Borrower's Series A 7% Convertible Preferred
Stock, $0.01 par value.
Solvent - as to any Person, such Person (I) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.
Spell Group - shall mean collectively (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
(ii) ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and, in
either case, any of their spouses or any family trust which is
controlled by any of the foregoing.
Standby Letter of Credit - any Letter of Credit issued by
Agent or Bank for the account of Borrower which is not a Trade Letter
of Credit.
Statutory Reserves - a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the
Board and any other banking authority to which Bank, Agent or any
Lender is subject for Eurocurrency Liabilities (as defined in
Regulation D of the Board or any successor thereto). Such reserve
percentages shall include, without limitation, those imposed under such
Regulation D. LIBOR Portions shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to Bank or any Lender
under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any
reserve percentage, provided that no adjustment shall reduce Statutory
Reserves below the amount in effect on the Closing Date. At Borrower's
request, Agent or the applicable Lender shall provide Borrower with
Agent's or the applicable Lender's calculations of Statutory Reserves.
Subordinated Debt - Indebtedness of Borrower that is
subordinated to the Obligations in a manner satisfactory to Agent.
A-16
Subordinated Note Documents - that certain Securities Purchase
Agreement dated on or about the Closing Date by and between Borrower
and the holders of the Subordinated Notes and all schedules, exhibits
and other documents and agreements executed and/or delivered in
connection therewith.
Subordinated Notes - those certain subordinated promissory
notes dated on or about the Closing Date in the original aggregate
principal amount of $32,500,000 executed by Borrower in favor of the
purchasers thereof.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Swingline Loan(s) - as defined in Section 1.1.2 of the
Agreement.
Tax - in relation to any LIBOR Portion and the applicable
LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required by any Legal Requirement (i) to be
paid by Agent or any Lender and/or (ii) to be withheld or deducted from
any payment otherwise required hereby to be made by Borrower to Agent
or any Lender; provided, that the term "Tax" shall not include any
taxes imposed upon the net income of Agent or any Lender.
Term Loan - collectively, Term Loan A and Term Loan B.
Term Loan A - the Loan described in Section 1.2.1 of the
Agreement.
Term Loan A Commitment - as defined in Section 1.2.1 of the
Agreement.
Term Loan A Percentage - as defined in Section 1.2.1 of the
Agreement.
Term Loan B - the Loan described in Section 1.2.2 of the
Agreement.
Term Loan B Commitment - as defined in Section 1.2.2 of the
Agreement.
Term Loan B Percentage - as defined in Section 1.2.2 of the
Agreement.
Term Note - collectively, Term Note A and Term Note B.
Term Note A - the Secured Promissory Note(s) to be executed by
Borrower in favor of Lenders to evidence Term Loan A, which shall be in
the form of Exhibit A-2 to the Agreement.
Term Note B - the Secured Promissory Note(s) to be executed by
Borrower in favor of Lenders to evidence Term Loan B, which shall be in
the form of Exhibit A-3 to the Agreement.
Total Credit Facility - One Hundred Million Dollars
($100,000,000).
A-17
Trade Letter of Credit - a Letter of Credit issued by Bank or
Agent for the account of Borrower in connection with the purchase of
Inventory by Borrower.
Trademark Assignment - the Amended and Restated Trademark
Security Agreement executed by Borrower on or about the Closing Date in
favor of Agent and by which Borrower assigned to Agent, and granted to
Agent a security interest in, as security for the Obligations all of
Borrower's right, title and interest in and to all of its trademarks.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the 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, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing.
A-18
LIST OF EXHIBITS
Exhibit A-1 Form of Revolving Credit Notes
Exhibit A-2 Form of Term Note A
Exhibit A-3 Form of Term Note B
Exhibit B Borrower's and each Subsidiary's of Borrower Business
Locations
Exhibit C Form of Borrowing Base Certificate
Exhibit D Jurisdictions in which Borrower and each Subsidiary of
Borrower is Authorized to do Business
Exhibit E Capital Structure of Borrower
Exhibit F Corporate Names
Exhibit G Tax Identification Numbers of Subsidiaries
Exhibit H Patents, Trademarks, Copyrights and Licenses
Exhibit I Contracts Restricting Borrower's Right to Incur Debts
Exhibit J Litigation
Exhibit K Capitalized Leases
Exhibit L Operating Leases
Exhibit M Pension Plans
Exhibit N Labor Contracts
Exhibit O Compliance Certificate
Exhibit P Permitted Liens
Exhibit Q Financial Covenants
Exhibit R Schedule of Documents
Exhibit S Letter of Credit Charges
Exhibit T Form of Assignment and Acceptance Agreement
EXHIBIT A-1
REVOLVING CREDIT NOTE
[$50,000,000] September __, 1999
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, (hereinafter "Borrower"), hereby
PROMISES TO PAY to the order of ____________________________, a ________________
corporation ("Lender"), or its registered assigns, at the principal office of
Fleet Capital Corporation, as agent for such Lender, or at such other place in
the United States of America as the holder of this Note may designate from time
to time in writing, in lawful money of the United States of America and in
immediately available funds, the principal amount of [aggregate amount of Fifty
Million Dollars ($50,000,000)], or such lesser principal amount as may be
outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect
to the Revolving Credit Loan, together with interest on the unpaid principal
amount of this Note outstanding from time to time.
This promissory note (the "Note") is one of the Revolving Credit Notes
referred to in, and issued pursuant to, that certain Second Amended and Restated
Loan and Security Agreement dated as of September ___, 1999 by and among
Borrower, the lender signatories thereto (including Lender) and Fleet Capital
Corporation ("FCC"), as agent for said lenders (FCC in such capacity "Agent")
(hereinafter, as amended from time to time, the "Loan Agreement"), and is
entitled to all of the benefits and security of the Loan Agreement. All of the
terms, covenants and conditions of the Loan Agreement and the Security Documents
are hereby made a part of this Note and are deemed incorporated herein in full.
All capitalized terms used herein, unless otherwise specifically defined in this
Note, shall have the meanings ascribed to them in the Loan Agreement.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Loan Agreement and, if
not sooner paid in full, on the Commitment Termination Date, unless the term
hereof is extended in accordance with the Loan Agreement. Interest thereon shall
be paid until such principal amount is paid in full at such interest rates and
at such times as are specified in the Loan Agreement.
Upon and after the occurrence, and during the continuation, of an Event
of Default, this Note shall or may, as provided in the Loan Agreement, become or
be declared immediately due and payable.
The right to receive principal of, and stated interest on, this Note
may only be transferred in accordance with the provisions of the Loan Agreement.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
This Note shall be interpreted, governed by, and construed in
accordance with, the internal laws of the State of Illinois.
EAGLE PACIFIC INDUSTRIES, INC.,
a Minnesota corporation ("Borrower")
By:________________________________
Name:___________________________
Title:__________________________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SECURED PROMISSORY NOTE
(Term Note A)
[$35,000,000] September __, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of ______________________, a ______________
corporation (hereinafter "Lender"), or its registered assigns at the office of
Fleet Capital Corporation, as agent for such Lender, or at such other place in
the United States of America as the holder of this Note may designate from time
to time in writing, in lawful money of the United States, in immediately
available funds, at the time of payment, the principal sum of [Thirty-Five
Million Dollars ($35,000,000)], together with interest from and after the date
hereof on the unpaid principal balance outstanding from time to time.
This Secured Promissory Note (the "Note") is the one of the Term Notes
A referred to in, and is issued pursuant to, that certain Second Amended and
Restated Loan and Security Agreement among Borrower, the lender signatories
thereto (including Lender) and Fleet Capital Corporation ("FCC") as agent for
said lenders (FCC, in such capacity, "Agent") dated the date hereof
(hereinafter, as amended from time to time, the "Loan Agreement"), and is
entitled to all of the benefits and security of the Loan Agreement. All of the
terms, covenants and conditions of the Loan Agreement and the Security Documents
are hereby made a part of this Note and are deemed incorporated herein in full.
All capitalized terms used herein, unless otherwise specifically defined in this
Note, shall have the meanings ascribed to them in the Loan Agreement.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from
time to time shall be paid at such interest rates and at such times as
are specified in the Loan Agreement;
(b) Principal shall be due and payable quarterly commencing on
December 31, 1999, and continuing on the last day of each March, June,
September and December thereafter to and including the last day of the
quarter immediately preceding the Commitment Termination Date, in
installments of [One Million Two Hundred Fifty Thousand Dollars
($1,250,000)] each; and
(c) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder, shall be due and
payable on the Commitment Termination Date.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower may also terminate
the Loan Agreement and, in connection with such termination, prepay this Note in
the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence, and during the continuation, of an Event of
Default, this Note shall or may, as provided in the Loan Agreement, become or be
declared immediately due and payable.
The right to receive principal of, and stated interest on, this Note
may only be transferred in accordance with the provisions of the Loan Agreement.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
This Note and the other Term Notes A amend and restate, and are issued
in substitution for, and in replacement of, that certain Secured Promissory Note
dated December 31, 1997 executed by Eagle Pacific Industries, Inc. in favor of
Fleet Capital Corporation having a current principal amount of Ten Million Six
Hundred Sixty-Six Thousand Dollars ($10,666,000). This Note also evidences
additional advances made by Lender on the date hereof under Term Loan A. The
replacement of the Prior Note with this Note shall not be construed (i) to deem
paid or forgiven the unpaid principal amount of, or unpaid accrued interest on,
the Prior Note outstanding at the time of replacement, or (ii) to release,
cancel, terminate or otherwise adversely affect all or any part of any lien,
mortgage, deed of trust, security interest or other encumbrance heretofore
granted as security for the obligations, liabilities or indebtedness of Borrower
under or in respect of the Prior Note which has not otherwise been expressly
released.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
and delivered in Chicago, Illinois, on the date first above written.
EAGLE PACIFIC INDUSTRIES, INC.,
a Minnesota corporation ("Borrower")
By:____________________________________
Name:_______________________________
Title:______________________________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SECURED PROMISSORY NOTE
(Term Note B)
[$15,000,000]
September __, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of ______________________, a ______________
corporation (hereinafter "Lender"), or its registered assigns at the office of
Fleet Capital Corporation, as agent for such Lender, or at such other place in
the United States of America as the holder of this Note may designate from time
to time in writing, in lawful money of the United States, in immediately
available funds, at the time of payment, the principal sum of [Fifteen Million
Dollars ($15,000,000)], together with interest from and after the date hereof on
the unpaid principal balance outstanding from time to time.
This Secured Promissory Note (the "Note") is one of the Term Notes B
referred to in, and is issued pursuant to, that certain Second Amended and
Restated Loan and Security Agreement dated as of September ___, 1999 by and
among Borrower, the lender signatories thereto (including Lender) and Fleet
Capital Corporation ("FCC") as agent for said lenders (FCC in such capacity
"Agent") (hereinafter, as amended from time to time, the "Loan Agreement"), and
is entitled to all of the benefits and security of the Loan Agreement. All of
the terms, covenants and conditions of the Loan Agreement and the Security
Documents are hereby made a part of this Note and are deemed incorporated herein
in full. All capitalized terms used herein, unless otherwise specifically
defined in this Note, shall have the meanings ascribed to them in the Loan
Agreement.
For so long as no Event of Default shall have occurred and be
continuing the principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from
time to time shall be paid at such interest rates and at such times as
are specified in the Loan Agreement; and
(b) Principal shall be due and payable quarterly commencing on
December 31, 1999 and continuing on the last day of each March, June,
September and December thereafter to and including September 30, 2002
in equal quarterly installments of $[1,250,000].
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon any
termination of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower may also prepay
this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence, and during the continuation, of an Event of
Default, this Note shall or may, as provided in the Loan Agreement, become or be
declared immediately due and payable.
The right to receive principal of, and stated interest on, this Note
may only be transferred in accordance with the provisions of the Loan Agreement.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.
EAGLE PACIFIC INDUSTRIES, INC.,
a Minnesota corporation ("Borrower")
By:_______________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT O
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
_______________, 19__
_______________________________
_______________________________
_______________________________
The undersigned, the chief financial officer of Eagle Pacific
Industries, Inc., a Minnesota corporation ("Borrower"), gives this certificate
to Fleet Capital Corporation ("FCC"), as Agent, in accordance with the
requirements of subsection 8.1.3 of that certain Second Amended and Restated
Loan and Security Agreement ("Loan Agreement") dated as of September ___, 1999,
by and among Borrower, the lender signatories thereto ("Lenders") and FCC, as
agent for Lenders (FCC, in such capacity ("Agent") . Capitalized terms used in
this Certificate, unless otherwise defined herein, shall have the meanings
ascribed to them in the Loan Agreement.
1. Based upon my review of the [consolidated] balance sheets and
statements of income of Borrower for the [fiscal year] [quarterly period] ending
____________________, 19__, copies of which are attached hereto, I hereby
certify that:
(a) The Consolidated Net Worth is $_________________;
(b) The Fixed Charge Coverage Ratio is $______________;
(c) The Interest Coverage Ratio is $_________________;
(d) The Funded Debt to EBITDA Ratio is $______________;
(e) Availability is $_________________;
(e) Capital Expenditures during the period and for the fiscal year to
date total $__________ and $__________, respectively.
2. No Default exists on the date hereof, other than:
______________________ _________________________________________ [if none, so
state]; and
3. No Event of Default exists on the date hereof, other than
___________________ _________________________________________ [if none, so
state].
Very truly yours,
-------------------------------
Chief Financial Officer
EXHIBIT Q
FINANCIAL COVENANTS
Consolidated Net Income means, with respect to Borrower and its
Subsidiaries for any fiscal period, the net income (or loss) of Borrower and its
Subsidiaries for such period taken as a whole (determined in accordance with
GAAP on a consolidated basis), but excluding in any event: (a) any gains or
losses on the sale or other disposition of Investments or fixed or capital
assets or from any transaction classified as extraordinary under GAAP, any taxes
on such excluded gains and any tax deductions or credits on account of any such
excluded losses; (b) the proceeds of any life insurance policy; (c) net earnings
and losses of any business entity, substantially all the assets of which have
been acquired in any manner by Borrower, realized by such business entity prior
to the date of such acquisition, (d) net earnings and losses of any business
entity which shall have merged into Borrower earned or incurred prior to the
date of such merger, (e) net earnings of any business entity (other than a
Consolidated Subsidiary) in which Borrower has an ownership interest unless such
net earnings shall have been received by Borrower in the form of cash
distributions; (f) earnings resulting from a reappraisal, revaluation or
write-up of assets; (g) any charge to net earnings resulting from the
amortization of the value of stock options given to employees to the extent
required by FASB 25; (h) any increase or decrease of net income arising from a
change in Borrower's accounting methods; (i) any gains resulting from the
forgiveness of Funded Debt or the retirement of Funded Debt at a discount; (j)
any gain arising from the acquisition of any Securities of Borrower; and (k) any
reversal of any contingency reserve, except that provision for such contingency
reserve shall have been made from income arising during such period.
EBITDA - With respect to any fiscal period, the sum of Borrower's
Consolidated Net Income plus amounts deducted in determining Consolidated Net
Income in respect of: (a) any provision for (or less any benefit from) income
taxes whether current or deferred; (b) amortization and depreciation expense;
(c) Interest Expense for such period, and (d) prior to December 31, 1999, that
portion of cost of goods sold resulting from the write-up of Inventory in
connection with the Acquisition pursuant to APB 16; provided that the aggregate
amount added to EBITDA pursuant to this clause (d) shall not exceed $3,000,000.
Fixed Charge Coverage Ratio - With respect to any period of
determination, the ratio of (i) EBITDA of Borrower for such period minus income
taxes paid in cash and non-financed Capital Expenditures during such period to
(ii) Fixed Charges.
Fixed Charges - For any period of determination, the sum of (a)
scheduled principal payments of Funded Debt (including the principal portion of
scheduled payments of Capital Lease Obligations), (b) Interest Expense paid in
cash included in the determination of Consolidated Net Income, and (c) dividends
paid on Borrower's capital stock.
Funded Debt - means (i) Indebtedness arising from the lending of money
by any Person to Borrower, including, without limitation, the Obligations; (ii)
Indebtedness, whether or not in any such case arising from the lending by any
Person of money to Borrower (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii) Indebtedness
that constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations
with respect to letters of credit or guaranties of letters of credit and (v)
Indebtedness of Borrower under any guaranty of obligations that would constitute
Funded Debt under clauses (i) through (iii) hereof if owed directly by Borrower
or any guaranty having the economic effect of guaranteeing any of the
obligations of any other Person. In computing the amount of Funded Debt, the
Subordinated Notes will be valued at full face value (less any payments thereon)
without giving effect to any original issue discount.
Funded Debt to EBITDA Ratio - With respect to any date, the ratio of
(i) total funded Funded Debt as of such date to (ii) EBITDA. For purposes of the
Funded Debt to EBITDA Ratio, (i) for the period from 10/1/99 through 12/31/99,
EBITDA shall be actual EBITDA for such period multiplied by four (4); (ii) for
the period from 10/1/99 through 3/31/2000, EBITDA for such period shall be
actual EBITDA for such period multiplied by two (2); and (iii) for the period
from 10/1/99 through 6/30/00, EBITDA for such period shall be actual EBITDA for
such period multiplied by four-thirds (4/3).
Interest Coverage Ratio - With respect to any period of determination,
the ratio of (i) EBITDA for such period to (ii) Interest Expense paid in cash
for such period, all as determined in accordance with GAAP.
Interest Expense - With respect to any fiscal period, the interest
expense incurred for such period excluding interest income as determined in
accordance with GAAP.
Investment - All investments in the property or assets of any person,
in cash or property, whether by way of advance, loan, extension of credit by
Borrower or any of its Subsidiaries (by way of guaranty or otherwise) or capital
contribution, or purchase of stock, bonds, notes, debentures or other securities
or any assets constituting the purchase of a business or line of business.
Net Worth - Book net worth of the Borrower as determined in accordance
with GAAP. For purposes of this Exhibit Q, Net Worth shall include any
unamortized value assigned to the Warrants issued in connection with the
Subordinated Notes which value was calculated in accordance with GAAP and is
contained in Borrower's Consolidated Financial Statements.
Interest Coverage Ratio - Borrower shall not permit the Interest
Coverage Ratio as of the last date of the period set forth below to be less than
the ratio set forth opposite such period below:
-----------------------------------------------------------
Period Ratio
-----------------------------------------------------------
From 10/1/99 to December 31, 1999 2.65 to 1
-----------------------------------------------------------
For 6 months ending 3/31/2000 3.25 to 1
-----------------------------------------------------------
For 9 months ending 6/30/2000 3.25 to 1
-----------------------------------------------------------
For 12 months ending 9/30/2000 3.25 to 1
-----------------------------------------------------------
-----------------------------------------------------------
Period Ratio
-----------------------------------------------------------
For 12 months ending 12/31/2000 3.50 to 1
-----------------------------------------------------------
Trailing 12 month periods ending on
March 31, 2001, June 30, 2001, 3.35 to 1
September 30, 2001 and
December 31, 2001
-----------------------------------------------------------
Trailing 12 month periods ending on
each March 31, June 30, September 30 4.00 to 1
and December 31 thereafter.
-----------------------------------------------------------
Fixed Charge Coverage Ratio - Borrower shall not permit the Fixed
Charge Coverage Ratio as of the last date of the period set forth below to be
less than the ratio set forth opposite such period below:
-----------------------------------------------------------------
Period Ratio
-----------------------------------------------------------------
From 10/1/99 to December 31, 1999 1.10 to 1
-----------------------------------------------------------------
For 6 months ending 3/31/2000 1.20 to 1
-----------------------------------------------------------------
For 9 months ending 6/30/2000 1.20 to 1
-----------------------------------------------------------------
For 12 months ending 9/30/2000 1.20 to 1
-----------------------------------------------------------------
For 12 months ending 12/31/2000 1.20 to 1
-----------------------------------------------------------------
Trailing 12 month periods ending on 1.15 to 1
March 31, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001
-----------------------------------------------------------------
Trailing 12 month periods ending on 1.20 to 1
each March 31, June 30, September 30
and December 31 thereafter
-----------------------------------------------------------------
Net Worth - Borrower shall achieve Net Worth as of the last day of each
period set forth below of not less than the amount set forth opposite such
period below:
-----------------------------------------------------
Period Ratio
-----------------------------------------------------
At the Closing Date $15,000,000
-----------------------------------------------------
For Quarter ending 12/31/99 18,000,000
-----------------------------------------------------
For Quarter ending 3/31/99 19,800,000
-----------------------------------------------------
-----------------------------------------------------
For Quarter ending 6/30/2000 22,500,000
-----------------------------------------------------
For Quarter ending 9/30/2000 25,200,000
-----------------------------------------------------
For Quarter ending 12/31/2000 27,000,000
-----------------------------------------------------
For Quarter ending 3/31/2001 28,500,000
-----------------------------------------------------
For Quarter ending 6/30/2001 30,700,000
-----------------------------------------------------
For Quarter ending 9/30/2001 32,900,000
-----------------------------------------------------
For Quarter ending 12/31/2001 34,400,000
-----------------------------------------------------
For Quarter ending 3/31/2002 35,800,000
and each Quarter thereafter
-----------------------------------------------------
Funded Debt to EBITDA Ratio - Borrower shall not permit the Funded Debt
to EBITDA Ratio for any period set forth below to be greater than the ratio set
forth opposite such period below:
-----------------------------------------------------
Period Ratio
-----------------------------------------------------
Quarter Ended 12/31/99 3.85 to 1
-----------------------------------------------------
6 months ending 3/31/2000 3.25 to 1
-----------------------------------------------------
9 months ended 6/30/2000 3.25 to 1
-----------------------------------------------------
For 12 months ended 9/30/2000 3.00 to 1
-----------------------------------------------------
For 12 months ended 12/31/2000 3.00 to 1
-----------------------------------------------------
Trailing twelve month periods ending 2.75 to 1
3/31/2001, 6/30/2001, 9/30/2001
and 12/31/2001
-----------------------------------------------------
Trailing 12 month periods ending on 2.50 to 1
each March 31, June 30, September 30
and December 31 thereafter
-----------------------------------------------------
EXHIBIT R
SCHEDULE OF DOCUMENTS
(A) Certified copies of Borrower's casualty insurance policies, together
with loss payable endorsements on Agent's standard form of Loss Payee
Endorsement naming Agent as loss payee, and certified copies of Borrower's
liability insurance policies, together with endorsements naming Agent as a
co-insured;
(B) Copies of all filing receipts or acknowledgments issued by any
governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Agent, for its benefit and the ratable benefit of Lenders,
in the Collateral and evidence in a form acceptable to Agent that such Liens
constitute valid and perfected security interests and Liens, having the Lien
priority specified herein;
(C) Landlord or warehouseman agreements with respect to all premises
leased by Borrower and which are disclosed on Exhibit B attached hereto. Such
landlord agreements shall be in the form supplied by Agent to Borrower, with
such reasonable revisions as customarily accepted by Agent or by similar
financial institutions in similar financial transactions;
(D) A copy of the Articles or Certificate of Incorporation of Borrower,
and all amendments thereto, certified by the Secretary of State or other
appropriate official of the jurisdiction of incorporation;
(E) Good standing certificates for Borrower issued by the Secretary of
State of Minnesota and each jurisdiction where the conduct of Borrower's
business activities or the ownership of its Properties necessitates
qualification;
(F) Amendments to the Security Documents reflecting the transactions
contemplated by the Agreement duly executed, accepted and acknowledged by or on
behalf of each of the signatories thereto;
(G) The Other Agreements duly executed and delivered by Borrower;
(H) A Certificate of the Secretary of Borrower, together with true and
correct copies of the Certificate or Articles of Incorporation and Bylaws of
Borrower, and all amendments thereto, true and correct copies of the resolutions
of the Board of Directors of Borrower authorizing or ratifying the execution,
delivery and performance of this Agreement, the Security Documents, the Other
Agreements and the documents, agreements and contracts evidencing or effecting
the Acquisition and the names of the officer or officers of each Borrower
authorized to sign this Agreement, the Security Documents (or amendments
thereto), the Other Agreements and the documents, agreements and contracts
evidencing or effecting the Acquisition together with a sample of the true
signature of each such officer;
R-1
(I) The favorable, written opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., counsel
to Borrower, as to the transactions contemplated by this Agreement and any of
the other Loan Documents;
(J) Duly executed agreement establishing the Dominion Account with a
financial institution acceptable to Lender for the collection or servicing of
the Accounts;
(K) Pay-off statements, releases and UCC-3 termination statements from
Pacific Western Extruded Plastics Company's existing senior lenders;
(L) Fully paid mortgagee title insurance policies (or binding
commitments to issue title insurance policies, marked to Agent's satisfaction to
evidence the form of such policies to be delivered after the Closing Date), in
standard ALTA form, issued by a title insurance company satisfactory to Agent,
each in an amount equal to not less than the fair market value of the real
Property or leasehold interest acquired in the Acquisition, subject to the
Mortgages, insuring the Mortgages to create a valid Lien on all real Property
and valid Liens on the leasehold interest described therein with no exceptions
which Agent shall not have approved in writing and not survey exceptions;
(M) ALTA Surveys in respect to each parcel of real Property described
in (L) above;
(N) Purchase Documents;
(O) Phase I environmental assessments (and, if applicable Phase II
environmental assessments) in respect to each location acquired in the
Acquisition;
(P) Subordinated Note Subordination Agreement;
(Q) Subordinated Debt Documents; and
(R) Such other documents, instruments and agreements as Agent shall
reasonably request in connection with the foregoing matters.
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EXHIBIT S
LETTER OF CREDIT CHARGES
FEE SCHEDULE - TRADE LETTERS OF CREDIT
-------------------------------------- ---------------------------------------
Issuance $250.00
-------------------------------------- ---------------------------------------
Amendment $85.00 - a maximum of six amendments
per LC will be allowed. An amendment to
increase and/or extend the LC will
be treated as an issuance.
-------------------------------------- ---------------------------------------
LC Fee LC Percent - as defined in the Loan
Agreement
-------------------------------------- ---------------------------------------
Negotiation / Payment 1/4% flat (minimum $150.00)
-------------------------------------- ---------------------------------------
Acceptance / Deferred Payment 2.75% p.a. (minimum $150.00)
-------------------------------------- ---------------------------------------
Cancellation of Unused Credits $100.00
-------------------------------------- ---------------------------------------
Transfer / Assignment of LC 1/4% flat (minimum $250.00)
-------------------------------------- ---------------------------------------
Shipping Guaranty / Airway Release $100.00
-------------------------------------- ---------------------------------------
Wire Transfer $35.00 per transfer
-------------------------------------- ---------------------------------------
plus any and all out-of-pocket expenses such as courier, postage and telexes,
etc.
FEE SCHEDULE -STANDBY LETTERS OF CREDIT
-------------------------------------- ---------------------------------------
Issuance $150.00
--------------------------------------- --------------------------------------
Amendment $150.00 inclusive of automatic renewal
of LC
--------------------------------------- --------------------------------------
LC Fee LC Percent - as defined in the Loan
Agreement
--------------------------------------- --------------------------------------
Negotiation / Payment 1/4% flat (minimum $150.00)
--------------------------------------- --------------------------------------
Transfer of LC 1/4% flat (minimum $2000.00)
--------------------------------------- --------------------------------------
Wire Transfer $35.00 per transfer
--------------------------------------- --------------------------------------
plus any and all out-of-pocket expenses such as courier, postage and telexes,
etc.
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EXHIBIT T
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement") made as of
______________, 199__, by and between ________________ ("Assignee") and
______________ ("Assignor"). Eagle Pacific Industries, Inc., a _______________
corporation ("Borrower"), the lenders signatory thereto ("Lenders") and Fleet
Capital Corporation ("FCC") as agent for such Lenders (FCC in such capacity
"Agent") entered into a certain Second Amended and Restated Loan and Security
Agreement dated as of September __, 1999 (the "Loan Agreement") pursuant to
which Lenders extended credit to Borrower in an aggregate principal amount not
to exceed at any time outstanding ___________________ Dollars ($__________). The
parties are entering into this Agreement to provide for the transfer by Assignor
of a portion of its rights and obligations under the Loan Agreement to Assignee.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Loan Agreement.
NOW THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Assignee and Assignor agree as
follows:
1. Assignment.
(1) Assignor hereby sells, assigns and transfers to Assignee, and Assignee
hereby purchases and assumes from the Assignor as of the Effective Date (as
defined in Section 4 hereof) subject to the terms and conditions set forth in
Section 12.3(b) of the Loan Agreement (x) (i) ___________ Dollars ($_________)
Revolving Loan Commitment, including without limitation, an equivalent undivided
interest and participation in and to all Letters of Credit and LC Guaranties,
whether outstanding on the Effective Date or issued thereafter, (ii) __________
Dollars ($______) Term Loan A and (iii) ____________ Dollars ($______) Term Loan
B (collectively, the "Assigned Commitment"), which shall be evidenced by a
Revolving Credit Note, in the form of Exhibit A hereto (the "____________
Revolving Credit Note"), a Term Note A, in the form of Exhibit B hereto (the
"____________ Term Note A") and a Term Note B, in the form of Exhibit C hereto
(the "___________ Term Note B") and (y) a proportional ________ percent (___%)
portion of the Revolving Credit Loans, Term Loan A and Term Loan B outstanding
as of the Effective Date (the "Assigned Loans"), also evidenced by the
____________ Revolving Credit Note, the ___________ Term Note A and the _____
Term Note B. As of the date hereof, the face amount of all outstanding Letters
of Credit and LC Guaranties is ______________________ ($_________).
(2) The Assignee hereby irrevocably purchases, takes and assumes,
effective on the Effective Date, all duties, liabilities, obligations, rights
and interests assigned and delegated to it by the Assignor (including, without
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limitation, the obligation to make Revolving Credit Loans or to incur
obligations in respect to Letters of Credit and LC Guaranties up to the amount
of the Assignee's Assigned Commitment) and agrees to perform and assume all such
duties, liabilities and obligations, and shall have all such rights and
interests on and after the Effective Date as if it had been an original party to
the Loan Agreement and each of the other Loan Documents having a Revolving
Credit Loan Commitment, Term Loan A Commitment and Term Loan B Commitment equal
to ____________ (____%) of the total Revolving Credit Loan Commitments, Term
Loan Commitments and Term Loan B Commitments under the Loan Agreement as is more
specifically set forth in Section 1(a) hereof.
(3) Assignor makes no representation or warranty and assumes no
responsibility with respect to (x) any statements, warranties or representations
made in or in connection with the Loan Agreement or the other Loan Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement and the other Loan Documents, other than that it is
the legal and beneficial owner of the interests being assigned by it hereunder,
that such interests are free and clear of any adverse claim, that it is legally
authorized to enter into this Agreement and that this Agreement constitutes its
legal, valid and binding obligations and (y) the financial condition of Borrower
or the performance or observance by Borrower of any of their respective
obligations under the Loan Agreement or any of the other Loan Documents.
(4) The Assignee (i) represents and warrants that it is legally
authorized to enter into this Agreement, that the same constitutes its legal,
valid and binding obligations and that all necessary consents, licenses,
approvals, authorizations of, and all registrations or declarations with, any
governmental or regulatory authority or body (collectively, the "Consents" and
individually, a "Consent") presently required in connection with its execution,
delivery and performance of this Agreement or for the enforcement of this
Agreement against it have been obtained or made and are in full force and
effect, and agrees that it shall (x) use its best efforts to obtain any
additional Consents that become necessary for such execution, delivery,
performance or enforcement, (y) comply in all material aspects with the terms of
each such Consent and (z) notify the Agent promptly upon any such Consent being
withdrawn, suspended or otherwise limited in effect or ceasing to be in full
force and effect or of any such additional Consent becoming necessary; (ii)
confirms that it has received a copy of the Loan Agreement and each of the other
Loan Documents, together with copies of financial statements which Assignor has
identified as the most recent financial statements delivered in accordance with
the terms of the Loan Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement; (iii) agrees that it will, independently and without
reliance upon Agent, Assignor or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Agreement and
each of the other Loan Documents; (iv) appoints and authorizes Agent to take
such action as Agent on its behalf and to exercise such powers under the Loan
Agreement and each of the other Loan Documents as are delegated to Agent by the
terms thereof; (v) confirms that it is purchasing and assuming the interests in
the Assigned Commitment, the Assigned Loans, the Loan Agreement and each of the
other Loan Documents hereunder in the course of making loans in the ordinary
course of its commercial lending business and not with any present intention of
distributing or selling such interests (except as permitted under the Loan
Agreement); and (vi) agrees that it will perform in accordance with their terms
all the Obligations which by the terms of the Loan Agreement and each of the
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other Loan Documents are required to be performed by it as a Lender under the
Loan Agreement and each of the other Loan Documents.
(5) Assignee agrees to indemnify Assignor from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Assignor in any way relating to or
arising out of Assignee's failure to perform Assignee's obligations under the
Assigned Commitment on or after the Effective Date.
2. Payment for Assigned Revolving Credit Loans.
(1) On or before 11:00 a.m. on the Effective Date, Assignee shall
deliver to Assignor in immediately available funds (the "Purchase Price") equal
to __________ percent (____%) of the principal amount of all of the Revolving
Credit Loans, Term Loan A and the Term Loan B outstanding on the Effective Date.
(2) Notwithstanding the terms of the Loan Agreement or the ___________
Revolving Credit Note, the __________ Term Note A or the __________ Term Note B
with respect to: (a) the first interest payments due after the Effective Date on
the LIBOR Portion or the Base Rate Portion, (b) the first unused line fee due
after the Effective Date and (c) fees received by Agent prior to the Effective
Date in respect to Letters of Credit or LC Guaranties outstanding on the
Effective Date:
(1) Whenever Agent receives a payment of such interest, Agent
will promptly pay over to Assignee interest on the LIBOR Portion(s) and
the Base Rate Portion at the interest rates provided for in the Loan
Agreement calculated from the Effective Date;
(2) Whenever Agent receives a payment of such unused line fee,
it will promptly pay over to Assignee its proportionate share of said
fee calculated from the Effective Date in accordance with the terms of
the Loan Agreement; and
(3) Whenever Agent receives a payment of such fees in respect
to Letters of Credit or LC Guaranties outstanding on the Effective
Date, it will promptly pay over to the Assignee its proportionate share
of said fees calculated from the Effective Date in accordance with the
terms of the Loan Agreement.
Agent shall pay over to Assignor (or to another applicable
Lender) (x) the difference between the total amount of the first interest
payments due after the Effective Date in respect to the LIBOR Portion or the
Base Rate Portion and the amounts paid to Assignee pursuant to 2(b)(i) above,
(y) the difference between the first payment of unused line fee due after the
Effective Date and the amounts paid to Assignee pursuant to Section 2(b)(ii)
above and (z) the difference between the first payment of fees in respect to
Letters of Credit or LC Guaranties outstanding on the Effective Date and the
amounts paid to Assignee pursuant to Section 2(b)(iii) above.
3. Delivery of Amendment.
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On the Effective Date, Assignor and Assignee shall execute an
amendment to the Loan Agreement in the form of Schedule I hereto (the
"Amendment"). Assignor will use its best efforts to cause Borrower to promptly
deliver to Assignee the Amendment and the ______________ Revolving Credit Note,
the _______ Term Note A and the _______ Term Loan B, each executed by Borrowers.
4. Effective Date.
(1) This Agreement shall become effective on the first date (the
"Effective Date") when each of the following conditions precedent is satisfied
in full:
(1) Agent shall have received counterparts of this Agreement
which, when taken together, bear the signature of all of the parties
hereto;
(2) Agent shall have received for and on behalf of Assignor
and Assignee, the Amendment executed by all parties thereto, the
__________ Revolving Credit Note, the ____ Term Note A and the _______
Term Loan B, and the Notes to be delivered to Assignor pursuant to the
Amendment; and
(3) Assignee shall have delivered to the Assignor in
immediately available funds the Purchase Price, and Assignor shall have
delivered to Assignee in immediately available funds amounts due
Assignee pursuant to Section 2 above; and
(4) Agent shall have received the fee payable to it pursuant
to Section 12.3(b) of the Loan Agreement.
(2) All notices shall be delivered to the Assignee, at the following
address:
Attention: ________________________
___________________________________
___________________________________
Attention:_________________________
Telephone No.: (___) ___-_________
Telecopier No.: (___) ___-________
5. Governing Law.
This Agreement and the obligations arising hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws.
6. Counterparts.
This Agreement may be executed in any number of counterparts,
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
T-4
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
________________________, as Assignor
By:_________________________________
Name:_______________________________
Title:______________________________
________________________, as Assignor
By:_________________________________
Name:_______________________________
Title:______________________________
Accepted and Agreed to as of
this ______ day of ____________, _______
T-5
SCHEDULE I
FORM OF AMENDMENT TO LOAN AND SECURITY AGREEMENT
AMENDMENT, dated as of __________________, to the Loan and Security
Agreement, dated as of ________________, ____, among Eagle Pacific Industries,
Inc. ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital
Corporation, as Agent (the "Loan Agreement"). The terms used herein and not
otherwise defined shall have the meanings attributed to them in the Loan
Agreement.
WHEREAS, pursuant to the Loan Agreement, inter alia, Lenders: (i) have
committed to make Revolving Credit Loans to Borrower in the principal amount of
up to Fifty Million Dollars ($50,000,000); (ii) have committed to incur certain
obligations on behalf of Borrower in respect to Letters of Credit and LC
Guaranties; (iii) have made a Term Loan A to Borrower in the principal amount of
Thirty-Five Million Dollars ($35,000,000); and (iv) have made a Term Loan B to
Borrower in the aggregate amount of Fifteen Million Dollars ($15,000,000);
WHEREAS, ________________________________ has sold, transferred and
assigned the following Revolving Credit Loans, the Revolving Credit Loan
Commitment, Term Loan A and Term Loan B to the following parties:
(a) [LENDER NO. 1]
(i) Assigned Revolving Credit Loans: ____________________ Dollars
($__________);
(ii) Assigned Revolving Credit Loan Commitment: _________________
Dollars ($__________);
(iii) Assigned Term Loan A: _________________ Dollars ($__________);
and
(iv) Assigned Term Loan B: _________________ Dollars ($__________).
(b) [LENDER NO. 2]
(i) Assigned Revolving Credit Loans: _________________ Dollars
($__________);
(ii) Assigned Revolving Credit Loan Commitment: _________________
Dollars ($__________);
(iii) Assigned Term Loan A: _________________ Dollars ($__________);
and
(iv) Assigned Term Loan B: _________________ Dollars ($__________).
WHEREAS, as a result of such sale, assignment and transfer each of
LENDER NO. 1 and LENDER NO. 2 has become a Lender with a Revolving Credit Loan
Commitment, Term Loan A and Term Loan B under the Loan Agreement; and
T-6
WHEREAS, the parties hereto desire to amend the Loan Agreement to add
LENDER NO. 1 and LENDER NO. 2 as Lenders.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained and contained in the Loan Agreement, the parties
hereto hereby agree as follows:
1. The signature block to the Loan Agreement is hereby amended to read
as the signature block to this Amendment.
2. Borrower hereby confirms that the representations and warranties of
Borrower contained in the Loan Documents are correct in all material respects on
the date hereof, except (i) to the extent that any such representation or
warranty expressly relates to an earlier date, and (ii) for changes therein
permitted or contemplated by the Loan Agreement.
3. Borrower represents and warrants that no Default or Event of Default
exists as of the date hereof.
4. On the date hereof, Borrower shall issue and deliver to Agent
Revolving Credit Notes, Term Notes A and Term Notes B to each of LENDER NO. 1,
LENDER NO. 2 and [Assigning Lender] in the amount of each Lender's respective
Revolving Credit Loan Commitment, outstanding Term Loan A and outstanding Term
Loan B. Upon the delivery to Agent of such Notes, Agent shall deliver to
Borrower for cancellation the Notes previously delivered to [Assigning Lender].
5. Notices to LENDER NO. 1 and LENDER NO. 2 shall be addressed as
follows:
(a) LENDER NO. 1
(b) LENDER NO. 2
6. Except as otherwise specifically set out herein, the provisions of
the Loan Agreement shall remain in full force and effect.
7. This Amendment and the obligations arising hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws.
T-7
8. This Amendment may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute one
agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
EAGLE PACIFIC INDUSTRIES, INC. LENDER NO. 1
By:________________________________ By:_______________________________
Name:______________________________ Name:_____________________________
Title:_____________________________ Title:____________________________
FLEET CAPITAL CORPORATION, as Agent Revolving Credit Loan Commitment:
$_____________
By:________________________________ Outstanding Term Loan A: $__________
Name:______________________________
Title:_____________________________ Outstanding Term Loan B: $__________
ASSIGNING LENDER LENDER NO. 2
By:________________________________ By:_______________________________
Name:______________________________ Name:_____________________________
Title:_____________________________ Title:____________________________
Revolving Credit Loan Commitment: Revolving Credit Loan Commitment:
$__________ $___________
Outstanding Term Loan A: $__________ Outstanding Term Loan A: $__________
Outstanding Term Loan B: $__________ Outstanding Term Loan B: $__________
T-8