Exhibit 10.7
LOAN AND SECURITY AGREEMENT
Phoenix Color Corp. and Alpha Systems, Inc.
with
CoreStates Bank, N.A., as Agent
and
Fleet Bank of Massachusetts, N.A., as Co-Agent
and
Those financial institutions now
or hereafter parties hereto
Dated as of February 1, 1996
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . 1
1.1 TERMS DEFINED. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 ACCOUNTING PRINCIPLES. . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 REVOLVING CREDIT - DESCRIPTION . . . . . . . . . . . . . . . . . 16
2.2 LETTERS OF CREDIT: . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 TERM LOAN A - DESCRIPTION. . . . . . . . . . . . . . . . . . . . 24
2.4 TERM LOAN B - DESCRIPTION. . . . . . . . . . . . . . . . . . . . 24
2.5 ADVANCES, CONVERSIONS, RENEWALS AND PAYMENTS . . . . . . . . . . 25
2.6 REVOLVING CREDIT INTEREST. . . . . . . . . . . . . . . . . . . . 28
2.7 TERM LOAN INTEREST . . . . . . . . . . . . . . . . . . . . . . . 31
2.8 ADDITIONAL INTEREST PROVISIONS.. . . . . . . . . . . . . . . . . 35
2.9 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.10 PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.11 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . 38
2.12 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.13 CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . . . . . . . . 39
2.14 INTEREST RATE PROTECTION . . . . . . . . . . . . . . . . . . . . 39
SECTION 3. COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.1 DESCRIPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.2 LIEN DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.3 OTHER ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.4 SEARCHES, CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 42
3.5 LANDLORD'S WAIVERS . . . . . . . . . . . . . . . . . . . . . . . 42
3.6 FILING SECURITY AGREEMENT. . . . . . . . . . . . . . . . . . . . 42
3.7 POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES . . . . . . . . . . 43
4.1 RESOLUTIONS, OPINIONS, AND OTHER DOCUMENTS . . . . . . . . . . . 43
4.2 ABSENCE OF CERTAIN EVENTS. . . . . . . . . . . . . . . . . . . . 44
4.3 WARRANTIES AND REPRESENTATIONS AT CLOSING. . . . . . . . . . . . 45
4.4 COMPLIANCE WITH THIS AGREEMENT . . . . . . . . . . . . . . . . . 45
4.5 OFFICERS' CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . 45
4.6 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.7 WAIVER OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 45
4.8 CONDITIONS FOR FUTURE ADVANCES . . . . . . . . . . . . . . . . . 45
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 46
5.1 CORPORATE ORGANIZATION AND VALIDITY. . . . . . . . . . . . . . . 46
5.2 PLACES OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . 47
5.3 PENDING LITIGATION . . . . . . . . . . . . . . . . . . . . . . . 47
5.4 TITLE TO PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . 47
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5.5 GOVERNMENTAL CONSENT . . . . . . . . . . . . . . . . . . . . . . 47
5.6 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.7 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 48
5.8 FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . 48
5.9 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.10 GUARANTEES, CONTRACTS, ETC.. . . . . . . . . . . . . . . . . . . 49
5.11 GOVERNMENT REGULATIONS, ETC. . . . . . . . . . . . . . . . . . . 49
5.12 BUSINESS INTERRUPTIONS . . . . . . . . . . . . . . . . . . . . . 50
5.13 NAMES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.14 OTHER ASSOCIATIONS . . . . . . . . . . . . . . . . . . . . . . . 51
5.15 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . 51
5.16 REGULATION O . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.17 CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.18 SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.19 INTERRELATEDNESS OF BORROWERS. . . . . . . . . . . . . . . . . . 53
5.20 STOCK PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . 53
5.21 MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . 54
6.1 PAYMENT OF TAXES AND CLAIMS. . . . . . . . . . . . . . . . . . . 54
6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE. . . . . . . . 54
6.3 BUSINESS CONDUCTED . . . . . . . . . . . . . . . . . . . . . . . 56
6.4 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.5 ISSUE TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.6 BANK ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.7 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . 56
6.8 FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 57
6.9 FINANCIAL AND BUSINESS INFORMATION . . . . . . . . . . . . . . . 59
6.10 OFFICERS' CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 60
6.11 AUDITS AND INSPECTION. . . . . . . . . . . . . . . . . . . . . . 61
6.12 TAX RETURNS AND REPORTS. . . . . . . . . . . . . . . . . . . . . 61
6.13 INFORMATION TO PARTICIPANT . . . . . . . . . . . . . . . . . . . 61
6.14 MATERIAL ADVERSE DEVELOPMENTS. . . . . . . . . . . . . . . . . . 62
6.15 ENGAGEMENT OF BIG "6" ACCOUNTING FIRM: . . . . . . . . . . . . . 62
6.16 PLACES OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . 62
6.17 FISCAL YEAR: . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.18 QUARTERLY IMPLEMENTATION:. . . . . . . . . . . . . . . . . . . . 62
6.19 ACCOUNT VERIFICATION . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7. BORROWERS' NEGATIVE COVENANTS: . . . . . . . . . . . . . . . . . 63
7.1 MERGER, CONSOLIDATION, DISSOLUTION OR LIQUIDATION. . . . . . . . 63
7.2 ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.3 LIENS AND ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . 63
7.4 TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES . . . . . . . . . . 64
7.5 GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.6 DISTRIBUTIONS, BONUSES AND OTHER INDEBTEDNESS. . . . . . . . . . 65
7.7 LOANS AND INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . 65
7.8 USE OF LENDERS' NAME . . . . . . . . . . . . . . . . . . . . . . 65
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7.9 MISCELLANEOUS COVENANTS. . . . . . . . . . . . . . . . . . . . . 65
SECTION 8. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 66
8.2 CURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.3 RIGHTS AND REMEDIES ON DEFAULT . . . . . . . . . . . . . . . . . 68
8.4 NATURE OF REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 70
8.5 SET-OFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9. AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.1 APPOINTMENT AND AUTHORIZATION. . . . . . . . . . . . . . . . . . 70
9.2 GENERAL IMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . 71
9.3 CONSULTATION WITH COUNSEL. . . . . . . . . . . . . . . . . . . . 71
9.4 DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.5 RIGHTS AS A LENDER . . . . . . . . . . . . . . . . . . . . . . . 71
9.6 RESPONSIBILITY OF AGENT. . . . . . . . . . . . . . . . . . . . . 72
9.7 COLLECTIONS AND DISBURSEMENTS. . . . . . . . . . . . . . . . . . 72
9.8 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 73
9.9 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.10 NO RELIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.11 REPORTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.12 REMOVAL OF AGENT . . . . . . . . . . . . . . . . . . . . . . . . 74
9.13 ACTION ON INSTRUCTIONS OF LENDERS. . . . . . . . . . . . . . . . 75
9.14 SEVERAL OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . 75
9.15 CONSENT OF LENDERS . . . . . . . . . . . . . . . . . . . . . . . 75
9.16 PARTICIPATION AND ASSIGNMENTS. . . . . . . . . . . . . . . . . . 76
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.1 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.2 INTEGRATED AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 78
10.3 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.5 TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.6 EXPENSES OF AGENT, CO-AGENT AND LENDERS. . . . . . . . . . . . . 79
10.7 BROKERAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.8 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.9 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.10 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.11 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . 82
10.12 DUPLICATE ORIGINALS. . . . . . . . . . . . . . . . . . . . . . . 82
10.13 MODIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.14 SIGNATORIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.15 THIRD PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.16 DISCHARGE OF TAXES, BORROWERS' OBLIGATIONS, ETC. . . . . . . . . 82
10.17 WITHHOLDING AND OTHER TAX LIABILITIES. . . . . . . . . . . . . . 82
10.18 CONSENT TO JURISDICTION. . . . . . . . . . . . . . . . . . . . . 83
10.19 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 83
10.20 CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . 83
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EXHIBIT LIST
------------
Exhibit A -- Intentionally Omitted
Exhibit B -- Form of Intercreditor Agreement
Exhibit C -- Projections
Exhibit D -- Form of Stock Pledge Agreement
Exhibit E -- Form of Surety Agreement
Exhibit F -- Intentionally Omitted
Exhibit G -- Form of Revolving Credit Note
Exhibit H -- Form of Term Loan A Note
Exhibit I -- Form of Term Loan B Note
Exhibit J -- Form of Borrowing Advance Request
Exhibit K -- Phoenix's Stock Purchase Agreement
Exhibit L -- Merger Agreement
Exhibit M -- Form of Quarterly Compliance Certificate
Exhibit N -- Form of Assignment and Acceptance
SCHEDULES
---------
Schedule A -- Schedules of Lenders
Schedule B -- Sureties
Schedule 5.1 -- Borrowers' States of Qualifications
Schedule 5.2 -- Places of Business
Schedule 5.3 -- Judgments, Proceedings, Litigation and Orders
Schedule 5.4 -- Existing Liens and Claims
Schedule 5.7 -- Borrowers' Federal Tax Identification Numbers
Schedule 5.9 -- Subsidiaries and Affiliates
Schedule 5.10(a) -- Existing Guaranties, Investments and Borrowings, Leases
and Employment Agreements
Schedule 5.11 -- Employee Benefit Plans
Schedule 5.13(a) -- Schedule of Names
Schedule 5.13(b) -- Trademarks, Patents and Copyrights
Schedule 5.14 -- Other Associations
Schedule 5.15 -- Environmental Matters
Schedule 5.17 -- Capital Stock
Schedule 7.6 -- Existing Indebtedness
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LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement ("Agreement") is dated this 1st day
of February 1996, by and among PHOENIX COLOR CORP., formerly known as Phoenix
Merger Corp., a Delaware corporation (successor by merger to Phoenix Color
Corp., a New York corporation) and ALPHA SYSTEMS, INC., a Connecticut
corporation (collectively, "Borrowers" and singly, a "Borrower"), the lending
institutions listed from time to time on Schedule A attached hereto and
incorporated herein that are parties to this Agreement (collectively, "Lenders"
and singly, a "Lender"), CORESTATES BANK, N.A., a national banking association,
as issuer of letters of credit hereunder (in such capacity, "Issuer"),
CORESTATES BANK, N.A., as administrative agent for the Issuer and Lenders
hereunder, (in such capacity, "Agent") and FLEET BANK OF MASSACHUSETTS, N.A. as
Co-Agent.
BACKGROUND
----------
A. Borrowers desire to establish financing arrangements with
Lenders and Lenders are willing to make loans and extensions of credit to
Borrowers under the terms and provisions hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship in writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 TERMS DEFINED: As used in this Agreement, the following terms
have the following respective meanings:
ACCOUNT - All of the "accounts" (as that term is defined in
Section 9106 of the UCC) of the Borrowers, whether now existing or hereafter
arising.
ACCOUNT DEBTOR - Any Person obligated on any Account owing to
Borrowers.
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ADJUSTED LIBOR RATE - For any LIBOR Interest Period, as applied
to a LIBOR Based Rate Loan, the rate per annum (rounded upwards, if necessary to
the next 1/16 of 1%) determined pursuant to the following formula:
Adjusted Libor Rate = Libor Rate
------------------------
(1 - Reserve Percentage)
For purposes hereof, "Libor Rate" shall mean the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary to the next 1/16 of 1%) at
which Agent is offered deposits of United States Dollars in the London interbank
market on or about eleven o'clock (11:00) a.m. London time two (2) Business Days
prior to the commencement of such LIBOR Interest Period on amounts substantially
equal to such LIBOR Based Rate Loan as to which the Borrowers may elect the
Adjusted Libor Rate to be applicable with a maturity of comparable duration to
the LIBOR Interest Period selected by the Borrowers for such LIBOR Based Rate
Loan.
ADJUSTED REVOLVING CREDIT APPLICABLE MARGIN - Section 2.6(b).
ADJUSTED TERM LOAN APPLICABLE MARGIN - Section 2.7(b).
ADMINISTRATION FEE - Section 2.9(b).
ADVANCE(S) - Any monies advanced or credit extended to
Borrowers by any Lender under the Revolving Credit, including without limitation
cash advances and the issuance of Letters of Credit.
AFFILIATE - Section 7.4.
ALPHA FACILITY - Alpha's real estate and improvements located
at Wallingford, New Haven County, Connecticut, as more fully described in the
Mortgage covering the Alpha Facility.
ASSET SALE - The sale, transfer, lease, license or other
disposition, outside of the ordinary course of business, by any Borrower or by
any Subsidiary of a Borrower to any Person other than a Borrower of any Property
now owned or hereafter acquired, of any nature whatsoever in any transaction or
series of related transactions.
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AUTHORIZED OFFICER - Any officer of any Borrower authorized by
specific resolution of such Borrower to request Advances as set forth in the
incumbency certificate referred to in Section 4.1(d) of this Agreement.
BANK AFFILIATE - Any bank that is controlled by a Lender. A
bank shall be deemed controlled by a Lender if (i) the Lender, directly or
indirectly, or acting through one or more other Persons owns, controls or has
power to vote twenty five percent (25%) or more of any class of voting
securities of the bank; or (ii) the Lender controls in any manner the election
of a majority of the directors or trustees of the bank.
BASE RATE - Agent's Prime Rate
BASE RATE LOANS - Loans under the Revolving Credit and the Term
Loans subject to interest calculated under the terms hereof based on the Base
Rate, and not subject to or based upon the Adjusted LIBOR Rate.
BORROWING BASE - The sum of sixty percent (60%) of Eligible
Inventory PLUS eighty-five percent (85%) of Eligible Accounts.
BUSINESS DAY - A day other than Saturday or Sunday when Agent
is open for business in Philadelphia, Pennsylvania.
CAPITALIZED LEASE OBLIGATIONS - Any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, consistently applied.
CAPITAL STOCK - Any and all shares, interests, participation or
other equivalents (however designated) of capital stock of a corporation, any
and all other ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
CASH COLLATERAL ACCOUNT - Section 2.5(b).
CASH PROCEEDS - With respect to any Asset Sale or Offering, the
aggregate cash payments received by a Borrower and/or any of its Subsidiaries
from such Asset Sale or Offering.
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CHANGE OF CONTROL - With respect to any Borrower, the result
caused by any Person and/or its Affiliate acquiring or otherwise obtaining the
right to vote more than forty percent (40%) of any class of the issued and
outstanding Capital Stock of such Borrower entitled to vote.
CLOSING - Section 4.6.
CLOSING DATE - Section 4.6.
COLLATERAL - All of the Property and interests in Property
described in Section 3.1 of this Agreement and all other Property and interests
in Property that now or hereafter secure payment of the Obligations and
satisfaction by Borrowers of all covenants and undertakings contained in this
Agreement and the other Loan Documents.
CONSOLIDATED AMORTIZATION EXPENSE - For any period, the
aggregate consolidated amount of amortization expenses of Borrowers, as
determined in accordance with GAAP.
CONSOLIDATED CAPITAL EXPENDITURES - For any period, the
aggregate of all expenditures (including that portion of Capitalized Lease
Obligations incurred during that period) made by Borrowers and their
Subsidiaries during such period in respect of the purchase, construction or
other acquisition of fixed or capital assets determined in accordance with GAAP.
CONSOLIDATED CAPITALIZATION - For any period, the sum of
Borrowers' (i) Funded Debt plus (ii) Consolidated Tangible Net Worth.
CONSOLIDATED CURRENT ASSETS - At any date, the aggregate
consolidated amount of Borrowers' current assets as would be shown on a
consolidated balance sheet prepared in accordance with GAAP; provided that for
the purposes hereof, Current Consolidated Assets shall not include cash and cash
equivalents.
CONSOLIDATED CURRENT LIABILITIES - At any date, the aggregate
consolidated amount of Borrowers' current liabilities as would be shown on a
consolidated balance sheet prepared in accordance with GAAP; provided that for
the purposes hereof, Consolidated Current Liabilities shall not include the
current maturities of long term Indebtedness, the current portion of Capitalized
Lease Obligations, the outstanding principal balance
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of the Revolving Credit and the mandatory prepayment due pursuant to Section
2.10(c)(iv) relating to Net Free Cash Flow.
CONSOLIDATED DEPRECIATION EXPENSE - For any period, the
aggregate, consolidated amount of depreciation expenses of Borrowers, as
determined in accordance with GAAP.
CONSOLIDATED EBIT - For any period, Borrowers' Consolidated Net
Income (or deficit) PLUS (a) Consolidated Interest Expense PLUS (b) Consolidated
Tax Expense PLUS (c) extraordinary losses and MINUS (d) extraordinary gains, all
as determined in accordance with GAAP..
CONSOLIDATED EBITDA - For any period, Borrowers' Consolidated
Net Income (or deficit) PLUS (a) Consolidated Interest Expense, (b) Consolidated
Tax Expense, (c) Consolidated Depreciation Expense, (d) Consolidated
Amortization Expense MINUS (e) extraordinary gains and PLUS (f) extraordinary
losses, all as determined in accordance with GAAP.
CONSOLIDATED INTEREST EXPENSE - For any period, the aggregate,
consolidated amount of interest expense required to be paid or accrued during
such period on all Indebtedness of Borrowers outstanding during all or any part
of such period, as determined in accordance with GAAP.
CONSOLIDATED NET INCOME - The consolidated net income after
taxes of Borrowers as such would appear on Borrowers' consolidated statement of
income, prepared in accordance with GAAP.
CONSOLIDATED RENTAL PAYMENTS - For any period, the aggregate,
consolidated amount of all rents paid or to be incurred under all operating
leases of Borrowers as lessees.
CONSOLIDATED TANGIBLE NET WORTH - For any period, the amount by
which the consolidated assets of Borrowers (excluding trademarks, goodwill,
covenants not to compete, deferred closing costs and all other assets which
would be determined to be intangible assets under GAAP) exceed all of Borrowers'
Liabilities as would be determined in accordance with GAAP.
CONSOLIDATED TAX EXPENSE - For any period, the aggregate,
consolidated amount of income tax expense of Borrowers, as determined in
accordance with GAAP.
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CURRENT REVOLVING CREDIT MATURITY DATE - The Initial Revolving
Credit Maturity Date or, if the Initial Term is renewed or extended, the last
day of the Current Term.
CURRENT TERM - The period during the Initial Term, and any
renewal or extended term, if in effect, during the term thereof.
DEFAULT - Any event, act, condition or occurrence which with
notice, or lapse of time or both, would constitute an Event of Default
hereunder.
DISTRIBUTION -
(1) Dividends or other distributions on any now or hereafter
outstanding Capital Stock of any Borrower;
(2) The redemption, repurchase, defeasance or acquisition of such
Capital Stock or of warrants, rights or other options to purchase such Capital
Stock; and
(3) Any loans or advances (other than salaries, and to the extent
permitted hereunder, bonuses), to any shareholder(s) of any Borrower.
ELIGIBLE ACCOUNTS - All Accounts of any Borrower meeting all of
the following specifications: (i) the Account is lawfully and exclusively owned
by such Borrower and subject to no Lien (other than Permitted Liens, if
applicable, and Liens granted under this Agreement) and such Borrower has the
right of assignment thereof and the power to grant a security interest therein;
(ii) the Account is valid and enforceable representing the undisputed
indebtedness of an Account Debtor for the purchase of Inventory not more than
ninety (90) days past the invoice date and does not represent a rebilling; (iii)
not more than 50% of the aggregate balance of all Accounts owing from an Account
Debtor obligated on the Account are outstanding more than 90 days past their
invoice date; (iv) the Account is not subject to any defense, set-off, or
counterclaim, deduction, discount, credit, chargeback, freight claim, allowance
or adjustment of any kind; (v) the Account is net of any portion thereof
attributable to the sale of goods that have been returned, rejected, lost or
damaged; (vi) if the Account arises from the sale of goods by a Borrower, such
sale was an absolute sale and not on consignment or on approval or on a
sale-or-return basis nor subject to any other repurchase or return agreement,
and such goods have been shipped to the Account Debtor
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or its designee; (vii) if the Account arises from the performance of services,
such services have actually been performed; (viii) the Account arose in the
ordinary course of such Borrower's business; (ix) no notice of the bankruptcy,
receivership, reorganization, liquidation, dissolution, or insolvency of the
Account Debtor has been received by Agent or any Borrower; (x) the Account
Debtor is not a Subsidiary or Affiliate of any Borrower; (xi) the Account is not
an Account of an Account Debtor having its principal place of business or
executive office outside the United States, unless the payment of such Account
is guaranteed by an irrevocable letter of credit satisfactory to Agent; (xii)
the Account does not represent a sale to the government of the United States or
any subdivision or agency thereof unless Borrowers have complied, for the
benefit of Agent, with the Federal Assignment of Claims Act; (xiii) the Account
is not an Account on which the Account Debtor is obligated to any Borrower under
any instrument; (xiv) the transaction which gave rise to the Account complies in
all respects with all applicable laws, rules and regulations of any Governmental
Authority; and (xv) the Account meets such other reasonable specifications and
requirements which may from time to time be established by Agent. Eligible
Accounts shall not include that portion of an Account representing interest
charges for past due balances or debit memos.
ELIGIBLE INVENTORY - Any and all raw material Inventory
(including raw paper, raw laminating film and unused printing plates) of any
Borrower located at such Borrower's places of business listed on Schedule "5.2"
attached hereto and made a part hereof, which (i) is not subject to any Lien
(other than Liens granted under this Agreement and Permitted Liens, if
applicable); (ii) is not slow moving, obsolete or unmerchantable; (iii) meets
all standards, if any, imposed by any Governmental Authority; and (iv) meets
such other reasonable specifications and requirements which may from time to
time be established by Agent. Eligible Inventory does not include
work-in-process, used printing plates, finished goods, packaging materials,
supplies and other similar items or any unused printing plates in excess of Two
Hundred Fifty Thousand Dollars ($250,000.00).
ENVIRONMENTAL LAWS - Any and all Federal, foreign, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees and any and all common law requirements, rules and bases of liability
regulating, relating to or imposing liability or standards of conduct concerning
pollution, protection of the environment, or the impact of pollutants,
contaminants or toxic or hazardous substances on
-7-
human health or the environment, as now or may at any time hereafter be in
effect.
ERISA - The Employee Retirement Income Security Act of 1974, as
the same may be amended, from time to time.
EVENT OF DEFAULT - Section 8.1.
EXISTING MORTGAGE INDEBTEDNESS - Borrowers' existing term loan
Indebtedness to Agent that is secured by mortgages on the Hagerstown Facility.
EXPENSES - Section 10.6.
FACILITY FEE - The fee which Agent and Co-Agent are entitled to
receive at Closing, less amounts previously paid thereon, for services in
structuring, arranging and underwriting the Revolving Credit and Term Loans, as
more fully set forth in the commitment letters dated December 13, 1995 among Old
Phoenix, Alpha and Agent and Old Phoenix, Alpha and Co-Agent, respectively.
FACILITY LIMIT - The sum of Forty Million Dollars
($40,000,000).
FED FUNDS RATE - The daily rate of interest announced from time
to time by the Board of Governors of the Federal Reserve System in publication
H.15, or any successor publication, as the "Federal Funds Rate".
FIXED CHARGE COVERAGE RATIO - For any period, the ratio of (i)
the sum of (A) Consolidated EBITDA LESS (B) Unfinanced Capital Expenditures LESS
(C) income taxes paid by Borrowers in cash to (ii) the sum of (X) required
principal payments on long-term Indebtedness of Borrowers for the next
consecutive twelve (12) month period PLUS (Y) Consolidated Interest Expense.
FUNDED DEBT - For any Person, on any date, without duplication,
the aggregate principal amount of Indebtedness (except for the item described in
clause (vi) of the definition of Indebtedness) of such Person and its
consolidated Subsidiaries as determined on a consolidated basis.
-8-
FUNDED DEBT TO OPERATING CASH FLOW RATIO - For any period, the
ratio of (i) Borrowers' Funded Debt to (ii) Consolidated EBITDA.
FUNDED DEBT TO CONSOLIDATED CAPITALIZATION RATIO - For any
period, the ratio of (i) Borrowers' Funded Debt to (ii) Consolidated
Capitalization.
GAAP - Generally accepted accounting principles as in effect on
the Closing Date applied in a manner consistent with the most recent audited
financial statements of Borrowers furnished to Agent under Section 6.9 herein.
GOVERNMENT ACTS - Section 2.2(g).
GOVERNMENT AUTHORITY - Any government or political subdivision,
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury, or arbitration
(to the extent having jurisdiction over on the Borrowers or any of their
Subsidiaries, in each case whether foreign or domestic).
HAGERSTOWN FACILITY - Phoenix's real estate and improvement
located at Hagerstown, Washington County, Maryland as more fully described in
the Mortgage covering the Hagerstown Facility.
HAZARDOUS SUBSTANCE - Section 5.15.
INDEBTEDNESS - Of any Person at any date, without duplication,
(i) all indebtedness of such Person for borrowed money (including, with respect
to Borrowers, the Obligations) or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (ii) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (iii) all Capitalized Lease Obligations of such Person, (iv)
the face amount of all letters of credit issued for the account of such Person
and all drafts drawn thereunder, (v) all obligations of other Persons which such
Person has guaranteed, and (vi) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
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INITIAL REVOLVING CREDIT APPLICABLE MARGIN - Section 2.6(a).
INITIAL REVOLVING CREDIT MATURITY DATE - The three (3) year
anniversary date of the date of this Agreement.
INITIAL TERM - Section 2.1(c).
INITIAL TERM LOAN APPLICABLE MARGIN - Section 2.7(a).
INTERCREDITOR AGREEMENT- That certain intercreditor agreement
among Agent (on behalf of Lenders), Phoenixcor, Inc. and Borrowers dated on or
prior to the Closing Date and substantially in the form of Exhibit "B" attached
hereto and made a part hereof.
INTEREST COVERAGE RATIO - The ratio of (i) Consolidated EBIT to
(ii) Consolidated Interest Expense.
INVENTORY - All of the "inventory" (as that term is defined in
Section 9109 of the UCC) whether now existing or hereafter acquired or created.
IRS - Section 6.7.
LENDER - Any of the Lenders listed on Schedule A attached
hereto and made a part hereof, as such Schedule A may be changed from time to
time.
LETTERS OF CREDIT - (a) Standby letters of credit, and (b)
commercial letter or letters of credit, in each case issued to or to be issued
by the Issuer for the account of Borrowers pursuant to Section 2.2 herein.
L/C COMMITMENT - The sum of Five Hundred Thousand Dollars
($500,000.00).
L/C FEES - Section 2.9(c).
LIABILITIES - All liabilities of every kind of each Borrower as
would be shown on a consolidated financial statement of Borrowers prepared in
accordance with GAAP.
LIBOR BASED RATE LOAN - That portion of any Loan on which
interest accrues at the LIBOR Based Rate.
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LIBOR INTEREST PERIOD - A period of one (1), two (2), three (3)
or six (6) months duration during which the Term Loan LIBOR Based Rate or
Revolving Credit LIBOR Based Rate, as the case may be, is applicable.
LIEN - Any interest of any kind or nature in property securing
an obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment. The term "Lien" shall include without
limitation, reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property other than those which would not materially
interfere with any Borrower's use of the Property and would not materially
detract from the value of the Property. For the purposes of this Agreement,
each 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.
LOANS - The unpaid balance of Advances under the Revolving
Credit and the unpaid principal balance of the Term Loans.
LOAN DOCUMENTS - This Agreement, the Revolving Credit Notes,
the Term Loan Notes, the Mortgages, and all agreements, instruments and
documents executed and/or delivered in connection therewith, all as may be
supplemented, restated, superseded, amended or replaced from time to time.
LOCKBOX - Section 2.5(b).
LONDON BUSINESS DAY - Any Business Day on which banks in
London, England are open for business.
MAJORITY LENDERS - At any time, Lenders holding Pro Rata
Percentages aggregating at least seventy-five (75%) percent at such time.
MAXIMUM REVOLVING CREDIT AMOUNT - The sum of Eighteen Million
Dollars ($18,000,000.00) as such amount may be
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permanently reduced from time to time pursuant to Section 2.1(d) herein.
MATERIAL ADVERSE EFFECT - (a) With respect to either Borrower,
any material adverse effect (both before and after giving effect to the
transactions contemplated by this Agreement and the other Loan Documents) with
respect to the business, assets, properties, financial condition, stockholders'
equity, contingent liabilities, prospects, material agreements or results of
operations of such Borrower, or (b) any fact or circumstance that, singly or in
the aggregate with any other fact or circumstance, has a reasonable likelihood
of resulting in or leading to (i) a material adverse effect described in clause
(a), (ii) the inability of such Borrower to perform in any material respect its
obligations hereunder or under any other Loan Document or the inability of
Lenders, or Agent on their behalf, to enforce in any material respect the rights
purported to be granted hereunder or under any other Loan Document, or (iii) a
material adverse effect on the ability of such Borrower to effect (including
hindering or unduly delaying) the transactions contemplated by this Agreement
and the other Loan Documents on the terms contemplated hereby and thereby.
MERGED ENTITIES - Old Phoenix, NEBH and NEBC.
MERGER - Collectively, the merger of Old Phoenix, NEBH and NEBC
into Phoenix pursuant to, and in accordance with the terms of, the Merger
Agreement.
MERGER AGREEMENT - Collectively, the Plan of Merger, dated as
of the Closing Date, between Old Phoenix and Phoenix, the short form merger
dated as of the Closing Date between NEBC and NEBH and the short form merger
dated as of the Closing Date between NEBH and Phoenix.
▇▇▇▇▇'▇ - Section 7.7.
MORTGAGES - Those certain Mortgage and Security Agreements
dated this date and executed by Phoenix or Alpha, as the case may be, in favor
of Agent, on behalf of Lenders.
NEBC - New England Book Components, Inc., a Massachusetts
corporation.
NEBH - New England Book Holding Corporation, a Delaware
corporation.
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NET FREE CASH FLOW - For any period, the sum of (a)
Consolidated Net Income PLUS Consolidated Depreciation Expenses PLUS
Consolidated Amortization Expenses MINUS (b) the sum of (i) current maturities
of long-term Indebtedness for such period PLUS (ii) the current portion of
Capitalized Lease Obligations for such period PLUS (iii) Unfinanced Capital
Expenditures and (c) either (i) MINUS the amount of any increase in Working
Capital during such period from the immediately preceding corresponding period
or (ii) PLUS the amount of any decrease in Working Capital during such period
from the immediately preceding corresponding period.
NET PROCEEDS - In the case of (i) any Asset Sale, Cash
Proceeds, net of direct expenses of sale and also net of the payment of
Indebtedness secured by valid and enforceable Liens on the assets sold, provided
however that any direct expenses constituting taxes imposed on such Asset Sale
(excluding income taxes) shall only be included to the extent that such taxes
are payable in cash within eighteen (18) months of the closing date of the Asset
Sale and (ii) any Offering, the Cash Proceeds net of BONA FIDE reasonable and
customary direct costs of sale (including legal and other professional fees and
underwriting fees).
NOTES - Collectively, the Revolving Credit Notes and the Term
Loan Notes.
OBLIGATIONS - All existing and future debts, liabilities and
obligations of every kind or nature at any time owing by Borrowers, or any of
them, to Lenders or to Agent, whether joint or several, related or unrelated,
primary or secondary, matured or contingent, due or to become due, and whether
principal, interest, fees or Expenses, including, without limitation, debts,
liabilities and obligations in respect of the Revolving Credit, whether related
to cash Advances or Letters of Credit (whether drawn or undrawn), and Term Loans
and any extensions, modifications, substitutions, increases and renewals
thereof; the payment of all amounts advanced by Agent or Lenders to preserve,
protect and enforce rights hereunder and in the Collateral; and all Expenses
incurred by Agent or Lenders.
OFFERING - The sale or issuance by any Borrower of any of its
Capital Stock or any debt instrument in any public or private transaction, or
the receipt of capital contributions in the form of cash to any Borrower.
-13-
OLD PHOENIX - Phoenix Color Corp., a New York corporation.
OVERADVANCE - Section 2.1(a)(i).
PARTICIPANTS - Section 9.16.
PARTICIPATION - Section 9.16.
PBGC - Section 6.7.
PERMITTED BONUS - For any fiscal year, twenty -seven percent
(27%) of the sum of (a) Consolidated Net Income PLUS (b) Consolidated Tax
Expense.
PERMITTED LIENS - Section 7.3.
PERSON - An individual, partnership, corporation, trust,
limited liability company, unincorporated association or organization, joint
venture or any other entity.
PHOENIX - Phoenix Color Corp., formerly known as Phoenix Merger
Corp., a Delaware corporation (survivor of the Merger among Old Phoenix, NEBH
and NEBC).
PRIME RATE - That rate publicly designated by Agent at its
principal office from time to time as its prime rate of interest, which is not
necessarily the lowest or best rate of interest charged by Agent.
PRO FORMA BALANCE SHEET - Consolidated pro forma balance sheet
of Borrowers dated as of the Closing Date.
PRO RATA PERCENTAGE - The percentage set forth opposite each
Lender's name on Schedule A.
PROJECTIONS - Borrowers' consolidated financial projection of
earnings statements for the remainder of the current fiscal year and for the
following five (5) years, a copy of which is attached hereto as Exhibit "C" and
made a part hereof.
PROPERTY - Any interest of any Borrower in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible including,
without limitation, Real Property.
-14-
QUARTERLY COMPLIANCE CERTIFICATE - Section 6.10.
REAL PROPERTY - All right, title and interest of any Borrower
or any of its Subsidiaries (including any leasehold estate) in and to any parcel
of real property owned or operated by any Borrower or any of its Subsidiaries,
(including, without limitation, the Hagerstown Facility), together with, in each
case, all improvements, and appurtenant fixtures, equipment, easements and other
property and rights incidental to the ownership, lease or operation thereof.
REGULATION D - Regulation D of the Board of Governors of the
Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
REIMBURSEMENT OBLIGATIONS - Section 2.2(d).
RESERVE - For any day, that reserve (expressed as a decimal)
which is in effect (whether or not actually incurred) with respect to a Lender
(or any Bank Affiliate of such Lender) on such day, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender (or any Bank Affiliate of such Lender) is
subject including any board or governmental or administrative agency of the
United States or any other jurisdiction to which a Lender (or any bank affiliate
of such Lender) is subject), for determining the maximum reserve requirement
(including without limitation any basic, supplemental, marginal or emergency
reserves) for Eurocurrency liabilities as defined in Regulation D.
RESERVE PERCENTAGE - For a Lender (or any Bank Affiliate of
such Lender) on any day, that percentage (expressed as a decimal) which is in
effect on such day, prescribed by the Board of Governors of the Federal Reserve
System (or any successor or any other banking authority to which a Lender (or
any Bank Affiliate of such Lender) is subject, including any board or
governmental or administrative agency of the United States or any other
jurisdiction to which a Lender (or any Bank Affiliate of such Lender is
subject), for determining the maximum reserve requirement (including without
limitation any basic, supplemental, marginal or emergency reserves) for (i)
deposits of United States Dollars or (ii) Eurocurrency liabilities as defined in
Regulation D, in each case used to fund a LIBOR Based Rate Loan subject to an
Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall be adjusted
-15-
automatically on and as of the effective day of any change in the Reserve
Percentage.
REVOLVING CREDIT - Section 2.1(a).
REVOLVING CREDIT BASE RATE - The Base Rate PLUS, as applicable,
the Initial Revolving Credit Applicable Margin or Adjusted Revolving Credit
Applicable Margin.
REVOLVING CREDIT LIBOR APPLICABLE MARGIN - Section 2.6(d)(ii).
REVOLVING CREDIT LIBOR BASED RATE - Section 2.6(d)(ii).
REVOLVING CREDIT NOTES - Section 2.1(b).
REVOLVING CREDIT PRO RATA SHARE - Section 2.1(a)(ii).
STOCK PLEDGE AGREEMENT - Collectively, those certain stock
pledge agreements executed by each of the holders of Capital Stock of each
Borrower, each substantially in the form of Exhibit "D" attached hereto and made
a part hereof.
STOCK PURCHASE AGREEMENT - The Stock Purchase Agreement, dated
as of December 27, 1995, among Old Phoenix and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chemical Venture Capital Associates and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as voting trustees of
the New England Book Corporation Voting Trust.
SUBSIDIARY - With respect to any Person at any time, (i) any
corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty
percent (50%) of whose voting stock is legally and beneficially owned by such
Person; (ii) any trust of which a majority of the beneficial interest is at such
time owned directly or indirectly, beneficially or of record, by such Person or
one or more Subsidiaries of such Person; and (iii) any partnership, joint
venture or other entity of which ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are at such time owned directly or indirectly, beneficially or
of record, by, or which is otherwise controlled directly, indirectly or through
one or more intermediaries by, such Person or one or more Subsidiaries of such
Person.
-16-
SURETIES - Collectively, those persons listed on Schedule B
attached hereto and made a part hereof.
SURETY AGREEMENTS - Collectively, those certain surety
agreements executed by each Surety in favor of Agent, each substantially in the
form of Exhibit "E" attached hereto and made a part hereof.
TERM LOAN A - Section 2.3.
TERM LOAN A MATURITY DATE - The four (4) year anniversary date
of the date of this Agreement.
TERM LOAN A NOTES - Section 2.3(b).
TERM LOAN A PRO RATA SHARE - Section 2.3(a)(ii).
TERM LOAN B - Section 2.4.
TERM LOAN B MATURITY DATE - The five (5) year anniversary date
of the date of this Agreement.
TERM LOAN B NOTES - Section 2.4(b).
TERM LOAN B PRO RATA SHARE - Section 2.4(a)(ii).
TERM LOAN BASE RATE - The Base Rate PLUS, as applicable, the
Initial Term Loan Applicable Margin or Adjusted Term Loan Applicable Margin.
TERM LOAN LIBOR APPLICABLE MARGIN - Section 2.7(d)(ii).
TERM LOAN LIBOR BASED RATE - Section 2.7(d)(ii).
TERM LOAN NOTES - Collectively, the Term Loan A Notes and Term
Loan B Notes.
TERM LOANS - Collectively, Term Loan A and Term Loan B.
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UCC - The Uniform Commercial Code as adopted in the
Commonwealth of Pennsylvania at 13 Pa.C.S.A. Section 1101 ET SEQ.
UNFINANCED CAPITAL EXPENDITURES - Consolidated Capital
Expenditures that are not financed through interest bearing debt from a Person,
within sixty (60) days of the acquisition of the asset.
UNUSED FEE - Section 2.9(a).
WORKING CAPITAL - At any date, Consolidated Current Assets
MINUS Consolidated Current Liabilities.
1.2 ACCOUNTING PRINCIPLES: Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP,
consistently applied, to the extent applicable, except as otherwise expressly
provided in this Agreement.
SECTION 2. THE LOANS
2.1 REVOLVING CREDIT - DESCRIPTION:
(a) (i) Subject to the terms and conditions of this Agreement, each
Lender hereby establishes for the benefit of Borrowers a revolving credit
facility (collectively, the "Revolving Credit") which shall include cash
Advances extended by Lenders to or for the benefit of Borrowers as well as
Letters of Credit issued for the account of Borrowers from time to time
hereunder. The aggregate principal amount of unpaid cash Advances, unreimbursed
draws on Letters of Credit plus outstanding and undrawn Letter(s) of Credit
shall not at any time exceed the lesser of (A) the Maximum Revolving Credit
Amount or (B) the Borrowing Base minus such reserves as Agent may from time to
time reasonably establish, in such amounts and with respect to such matters as
Agent may deem appropriate in its discretion. Subject to such limitation, the
outstanding balance of Advances under the Revolving Credit may fluctuate from
time to time, to be reduced by repayments made by Borrowers, to be increased by
future Advances which may be made by Lenders, to or for the benefit of
Borrowers, and, subject to the provisions of Section 8 below, shall be due and
payable on the Current Revolving Credit Maturity Date. If the aggregate
principal amount of unpaid cash Advances, unreimbursed draws on Letters of
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Credit plus outstanding and undrawn Letter(s) of Credit at any time exceed the
lesser of the Maximum Revolving Credit Amount or the Borrowing Base minus such
reserves established by Agent (such excess referred to as "Overadvance"),
Borrowers shall immediately repay the Overadvance in full.
(ii) Each Lender agrees severally to make cash Advances to
Borrowers, as a part of the Revolving Credit, subject to the terms of this
Agreement, up to the lesser of such Lender's Pro Rata Percentage of the
Revolving Credit or the amount ("Revolving Credit Pro Rata Shares") opposite its
name on Schedule A.
(b) At Closing, Borrowers shall execute and deliver a promissory
note to each Lender for the total principal amount of such Lender's Revolving
Credit Pro Rata Share. As additional Lenders become parties to this Agreement in
accordance with the provisions of Section 9.16 herein, Borrowers shall execute
and deliver to each such additional Lender a promissory note in the original
principal amount of such Lender's Revolving Credit Pro Rata Share, and shall
issue to the applicable selling Lender a replacement promissory note (in the
form of the promissory note replaced, which replaced notes shall be returned to
Borrowers) to reflect the reduced Revolving Credit Pro Rata Share of such Lender
(collectively the "Revolving Credit Notes"). The Revolving Credit Notes shall
evidence each Borrower's unconditional joint and several obligation to repay
such Lender for all Advances made under the Revolving Credit, with interest as
herein and therein provided. Each Advance under the Revolving Credit shall be
deemed evidenced by the Revolving Credit Notes, which are deemed incorporated
herein by reference and made part hereof. The obligations of Borrowers under
the Revolving Credit and this Agreement shall at all times be joint and several.
All Revolving Credit Notes shall be substantially in the form set forth in
Exhibit "G" attached hereto and made a part hereof.
(c) The term ("Initial Term") of the Revolving Credit shall expire
on the Initial Revolving Credit Maturity Date. On such date, unless having been
sooner accelerated by Agent pursuant to the terms hereof, all sums owing under
the Revolving Credit shall be due and payable in full, and as of and after such
date no further Advances shall be available from Lenders. The term of the
Revolving Credit may nonetheless be extended for one (1) year if Agent receives
a written request from Borrowers to extend the Initial Term at any time after
submission of the annual audited
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financial statements required under Section 6.9(a)(ii) for fiscal year end 1996
but not less than 90 days prior to the Initial Revolving Credit Maturity Date
and, within forty-five (45) days after receipt of such request, all Lenders
agree, in writing, to such extension. The term of the Revolving Credit may be
further extended for one (1) additional one (1) year period if Agent receives a
written request from Borrowers at any time after submission of the annual
audited financial statements required under Section 6.9(a)(ii) for fiscal year
end 1997 but not less than 90 days prior to the Current Revolving Credit
Maturity Date, and within forty-five (45) days after receipt of such request,
all Lenders agree, in writing, to such extension. If all Lenders do not timely
agree to extend the Initial Term or then Current Term of the Revolving Credit
(which potential extension each Lender may consider and evaluate in its
respective sole judgment and is under no obligation to approve), the Revolving
Credit shall terminate on the last day of the Initial Term or then Current Term,
as the case may be, and all sums owing under the Revolving Credit shall
thereupon become immediately due and payable and no further Advances shall be
available from Lenders. No extensions provided above shall be operative if a
Default or Event of Default is outstanding as of the date any such request for
an extension or any such extension is granted unless such Default or Event of
Default is expressly waived in writing by all Lenders. Nothing contained in
this paragraph creates any duty or obligation of any kind upon any Lender to
consider or grant any extension of the Initial Term or then Current Term.
(d) Borrowers shall have the right at any time and from time to
time, upon ten (10) Business Days prior written notice to Agent to permanently
reduce, without premium or penalty (but subject to Section 2.12 of this
Agreement), the Maximum Revolving Credit Amount in the minimum amount of Three
Million Dollars ($3,000,000.00) and integral multiples of One Million Dollars
($1,000,000.00) in excess thereof. Upon the effectiveness of such notice, each
Lender's Revolving Credit Pro Rata Share shall be reduced in accordance with
each Lender's Pro Rata Percentage of the amount specified in the notice. Agent
shall promptly notify Lenders of its receipt of such notice. Any notice to
reduce the Maximum Revolving Credit Amount pursuant to this Section 2.1(d) shall
be permanent and may not be revoked. In the event of any such reduction,
outstanding Advances in an amount in excess of the Maximum Revolving Credit
Amount, as so reduced, shall be paid on the effective date accrued on the
amount so paid (subject to Section 2.12 of this Agreement) to the date of
reduction.
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2.2 LETTERS OF CREDIT:
(a) As a part of the Revolving Credit and subject to its terms and
conditions (including, without limitation, the Borrowing Base) Issuer shall, on
behalf of and for the benefit of all Lenders, make available to Borrowers
Letters of Credit which shall not exceed, in the aggregate at any one time
outstanding the L/C Commitment. Notwithstanding the foregoing, all Letters of
Credit shall be in form and substance reasonably satisfactory to Issuer. No
Letter of Credit shall be issued with an expiry date later than (i) three
hundred sixty five (365) days from the date of issuance or (ii) the last day of
the then Current Term. Borrowers shall execute and deliver to Issuer all letter
of credit agreements and other documents required by Issuer for such purposes,
all such documents to be in form and substance reasonably satisfactory to
Issuer.
(b) Immediately upon the issuance of any Letter of Credit, Issuer
is deemed to have granted to each other Lender, and each other Lender is hereby
deemed to have acquired, an undivided participating interest (without recourse
or warranty), in accordance with each such other Lender's respective Pro Rata
Percentage, in all of Issuer's rights and liabilities with respect to such
Letter of Credit. Each Lender shall be directly and unconditionally obligated
to Issuer, according to its Pro Rata Percentage, to reimburse Issuer for any
draws not reimbursed by Borrowers in accordance with the terms hereof, made at
any time without regard to the occurrence of a Default or Event of Default
(including, without limitation, any draw made following the commencement of any
bankruptcy, reorganization, receivership, liquidation or dissolution proceeding
with respect to any Borrower) under any Letter of Credit outstanding under the
Revolving Credit.
(c) Each Letter of Credit issued from time to time under the
Revolving Credit which remains undrawn (and the amounts of draws on Letters of
Credit prior to payment as hereinafter set f borrowed by Borrowers under the
Revolving Credit.
(d) In the event of any request for drawing under any Letter of
Credit by the beneficiary thereof, Issuer shall promptly notify Borrowers and
Borrowers shall immediately reimburse Issuer on the day when such drawing is
honored, by either a cash payment by Borrowers, or, so long as no Event of
Default has occurred and is continuing, in the absence of such payment by
Borrowers, and at Agent's option, by Lenders automatically making, or having
been deemed to have made, (without further request or
-21-
approval of Borrowers) a cash Advance under the Revolving Credit on such date to
reimburse Issuer. All cash Advances which constitute a reimbursement for a draw
under a Letter of Credit shall be shared by Lenders in accordance with their Pro
Rata Percentages and shall be subject to the provisions of this Agreement
including, without limitation, Section 2.5(c). If, for any reason, proceeds of
cash Advances are not received by Issuer from any Lender on the date a drawing
under a Letter of Credit is honored in an amount equal to the amount of such
drawing, Borrowers shall reimburse Issuer, in same day funds, on the Business
Day immediately following the date of such drawing, in an amount equal to the
excess of the amount of such drawing over the amount of such proceeds, if any,
that are so received, plus accrued interest on such amount at the then
applicable interest rate for Base Rate Loans under the Revolving Credit.
Borrowers' reimbursement obligation for draws under Letters of Credit along with
the obligation to pay L/C Fees shall herein be referred to collectively as
Borrowers' "Reimbursement Obligations". All of Borrowers' Reimbursement
Obligations hereunder with respect to Letters of Credit shall apply
unconditionally and absolutely to, and shall be joint and several with respect
to, Letters of Credit issued hereunder on behalf of Borrowers.
(e) (i) In the event that Borrowers shall fail to reimburse Issuer
as provided in Section 2.2(d) in an amount equal to the amount of the drawing
honored by Issuer under a Letter of Credit, Issuer shall promptly notify each
Lender of the unreimbursed amount of such drawing and of such Lender's
participation therein based on such Lender's Pro Rata Percentage. Each Lender
shall make available to Issuer an amount equal to its respective participation
in same day funds, at the office of Issuer specified in such notice, not later
than 1:00 p.m. (Philadelphia time) on the Business Day after the date notified
by Issuer. In the event that any Lender fails to make available to such Issuer
the amount of such Lender's participation based on such Lender's Pro Rata
Percentage in such Letter of Credit, as provided in this Section 2.2(e), Issuer
shall be entitled to recover such amount on demand from such Lender together
with interest at the Fed Funds Rate for three (3) Business Days and thereafter
at the then applicable interest rate for Base Rate Loans under the Revolving
Credit. Issuer shall distribute to each other Lender which has paid all amounts
payable by it under this Section 2.2(e) with respect to any Letter of Credit,
such other Lender's share, based on such Lender's Pro Rata Percentage, of all
payments received by Issuer from Borrowers in reimbursement of drawings honored
by Issuer under such Letter of Credit, when such payments are
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received. Nothing in this Section 2.2(e) shall be deemed to relieve any Lender
from its obligation to pay all amounts payable by it under this Section 2.2(e)
with respect to any Letter of Credit issued by Issuer or to prejudice any rights
that Issuer may have against a Lender as a result of any default by such Lender
hereunder and no Lender shall be responsible for the failure of any other Lender
to pay its respective participation, based on its Pro Rata Percentage, payable
under this Section 2.2(e).
(ii) In connection with the failure of any Lender to make
available to Issuer the amount of such Lender's participation in any Letter of
Credit, such Lender hereby agrees to protect, indemnify, pay and save Issuer
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including, without limitation, reasonable
attorneys' fees, allocated costs of internal counsel and the costs (including
judgments) in connection with any related litigation) which Issuer may incur or
be subject to as a consequence, direct or indirect, of the failure of such
Lender to make available its participation in such Letter of Credit.
Notwithstanding anything to the contrary contained in this Section 2.2(e), no
Lender failing to provide its participation in any Letter of Credit shall have
any obligation to indemnify Issuer in respect of any liability incurred by
Issuer arising solely out of the gross negligence or willful misconduct of
Issuer.
(f) The obligation of Borrowers to reimburse Issuer
for drawings made (or Lenders for cash Advances made to cover drawings made)
under the Letters of Credit and the obligations of Lenders to Issuer under
Section 2.2(e) shall be unconditional and irrevocable and shall be paid strictly
in accordance with the terms of this Agreement under all circumstances
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, setoff, defense or other
right that Borrowers or any other Person may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or transferee may be acting), Issuer,
Agent, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction;
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(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Issuer under any Letter of Credit against presentation
of a demand, draft or certificate or other document that does not comply with
the terms of such Letter of Credit unless Issuer shall have acted with willful
misconduct or gross negligence in issuing such payment;
(v) any other circumstance or happening whatsoever that is
similar to any of the foregoing; or
(vi) the fact that a Default or Event of Default shall have
occurred and be continuing.
(g) If by reason of (i) any change after the Closing
Date in applicable law, regulation, rule, decree or regulatory requirement or
any change in the interpretation or application by any judicial or regulatory
authority of any law, regulation, rule, decree or regulatory requirement or
(ii) compliance by the Issuer or any Lender with any direction, reasonable
request or requirement (whether or not having the force of law) of any
governmental or monetary authority including, without limitation, Regulation D:
(A) Issuer or any Lender shall be subject to any tax or
other levy or charge of any nature or to any variation thereof (except for
changes in the rate of any tax on the net income of Issuer or any Lender or its
applicable lending office) or to any penalty with respect to the maintenance or
fulfillment of its obligations under this Section 2.2, whether directly or by
such being imposed on or suffered by Issuer or any Lender;
(B) any reserve, deposit or similar requirement is or shall
be applicable, imposed or modified in respect of any Letter of Credit issued by
the Issuer or participation therein purchased by any Lender; or
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(C) there shall be imposed on Issuer or any Lender any other
condition regarding this Section 2.2, any Letter of Credit or any participation
therein;
and the result of the foregoing is to directly or indirectly increase the cost
to Issuer or any Lender of issuing, creating, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by Issuer or any Lender, then
and in any such case Issuer or such Lender shall, after the additional cost is
incurred or the amount received is reduced, notify Borrowers and Borrowers shall
pay on demand such amounts as may be necessary to compensate Issuer or such
Lender for such additional cost or reduced receipt, together with interest on
such amount from the date demanded until payment in full thereof at a rate per
annum equal at all times to the applicable interest rate for Base Rate Loans
under the Revolving Credit. A certificate signed by an officer of Issuer or
such Lender as to the amount of such increased cost or reduced receipt showing
in reasonable detail the basis for the calculation thereof, submitted to
Borrowers and the Agent by Issuer or any Lender, as the case may be, shall,
except for manifest error, and absent written notice from Borrowers to Agent
within ten (10) days from submission, be final, conclusive and binding for all
purposes.
(h) (i) In addition to amounts payable as elsewhere provided
in this Section 2.2, without duplication, Borrowers hereby agree to protect,
indemnify, pay and save Issuer, Agent and Lenders harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which Issuer may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance of the
Letters of Credit or (B) the failure of Issuer to honor a drawing under any
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO government or
Governmental Authority (all such acts or omissions herein called "Government
Acts").
(ii) As between Borrowers and Issuer, Agent and Lenders,
Borrowers assume all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by Issuer by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
Issuer shall not be responsible: (A) for the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection
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with the application for and issuance of such Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(C) for failure of the beneficiary of any such Letter of Credit to comply fully
with conditions required in order to draw upon such Letter of Credit; (D) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they are
in cipher, unless any of the foregoing are caused by Issuer's gross negligence
or willful misconduct; (E) for errors in interpretation of technical terms;
(F) for any loss or delay in the transmission of any document required in order
to make a drawing under any such Letter of Credit or of the proceeds thereof,
unless caused by Issuer's gross negligence or willful misconduct; (G) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (H) for any consequences arising
from causes beyond the control of Issuer, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the vesting
of any of Issuer's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or omitted by
Issuer in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith, shall not create any liability
on the part of Issuer to Borrowers.
(iv) The term "Lender" shall, unless the context otherwise
indicates, include the Issuer in its individual capacity as a Lender.
2.3 TERM LOAN A - DESCRIPTION:
(a) (i) Lenders hereby advance to Borrowers, subject to
the terms and conditions of this Agreement, the sum of Sixteen Million Dollars
($16,000,000.00) ("Term Loan A").
(ii) Each Lender severally agrees to make an advance to
Borrowers as part of Term Loan A, subject to the terms of this Agreement, in the
amount ("Term Loan A Pro Rata Share") set forth opposite its name on Schedule A.
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(b) At Closing, Borrowers shall execute and deliver a
promissory note to each Lender in the principal amount of such Lender's Term
Loan A Pro Rata Share. As additional Lenders become parties to this Agreement
in accordance with the provisions of Section 9.16 herein, Borrowers shall
execute and deliver to each such additional Lender a promissory note in the
principal amount of such Lender's Term Loan A Pro Rata Share and shall issue to
the applicable selling Lender a replacement promissory note (in the form of the
promissory note replaced, which replaced notes shall be returned to Borrowers)
to reflect the reduced Term Loan A Pro Rata Share of such Lender (collectively
the "Term Loan A Notes"). The Term Loan A Notes shall evidence each Borrower's
unconditional joint and several obligation to repay such Lender such Lender's
Term Loan A Pro Rata Share of Term Loan A with interest as herein and therein
provided. The obligations of Borrowers under Term Loan A and this Agreement
shall at all times be joint and several. All Term Loan A Notes shall be
substantially in the form set forth in Exhibit "H" attached hereto.
(c) The principal balance of Term Loan A shall be paid in
fifteen (15) consecutive quarterly installments commencing April 30, 1996 and
continuing on the last day of each calendar quarter thereafter. The first such
installment shall be in the amount of Four Hundred Thousand Dollars
($400,000.00). Equal installments of One Million Two Hundred Thousand Dollars
($1,200,000.00) each shall be payable on July 31, 1996, October 31, 1996 and
January 31, 1997. Commencing on April 30, 1997, the balance of Term Loan A
shall be payable in eleven (11) consecutive quarterly installments of One
Million Dollars ($1,000,000.00) each along with a final installment (which final
installment shall be the sixteenth ((16th)) installment paid) of all unpaid
principal and any accrued and unpaid interest under Term Loan A shall be payable
on the Term Loan A Maturity Date.
2.4 TERM LOAN B - DESCRIPTION:
(a) (i) Lenders hereby advance to Borrowers, subject to
the terms and conditions of this Agreement, the sum of Six Million Dollars
($6,000,000.00) ("Term Loan B").
(ii) Each Lender severally agrees to make an advance to
Borrowers as part of Term Loan B, subject to the terms of this Agreement, in the
amount ("Term Loan B Pro Rata Share") set forth opposite its name on Schedule A.
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(b) At Closing, Borrowers shall execute and deliver a
promissory note to each Lender in the principal amount of such Lender's Term
Loan B Pro Rata Share. As additional Lenders become parties to this Agreement,
in accordance with the provisions of Section 9.16 herein, Borrowers shall
execute and deliver to each such additional Lender a promissory note in the
principal amount of such Lender's Term Loan B Pro Rata Share and shall issue to
the applicable selling Lender a replacement promissory note (in the form of the
promissory note replaced, which replaced notes shall be returned to Borrowers)
to reflect the reduced Term Loan B Pro Rata Share of such Lender (collectively
the "Term Loan B Notes"). The Term Loan B Notes shall evidence each Borrower's
unconditional joint and several obligation to repay such Lender such Lender's
Term Loan B Pro Rata Share of Term Loan B with interest as herein and therein
provided. The obligations of Borrowers under Term Loan B and this Agreement
shall at all times be joint and several. All Term Loan B Notes shall be
substantially in the form set forth in Exhibit "I" attached hereto.
(c) The principal balance of Term Loan B shall be paid in
fifty nine (59) consecutive monthly installments of Fifty Thousand Dollars
($50,000.00) each commencing on February 29, 1996 and continuing on the last day
of each calendar month thereafter along with a final installment (which final
installment shall be the sixtieth ((60th)) installment paid) of all unpaid
principal and any accrued and unpaid interest under Term Loan B shall be payable
on the Term Loan B Maturity Date.
2.5 ADVANCES, CONVERSIONS, RENEWALS AND PAYMENTS:
(a) Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Revolving Credit,
Term Loan A, Term Loan B, the Expenses, the Administration Fee, the Unused Fee,
the L/C Fees, and all other charges and any other Obligations of Borrowers
hereunder, shall be made to Agent at its main Philadelphia banking office, Broad
and Chestnut Streets, Philadelphia, Pennsylvania, in United States dollars, in
immediately available funds. Agent and each Lender, on behalf of all Lenders,
shall have the unconditional right and discretion to charge any Borrower's
operating account with any such respective institution for all of Borrowers'
Obligations as they become due from time to time under this Agreement including
without limitation, interest, principal, fees and reimbursement of Expenses.
Alternatively, Agent may in its discretion (and Borrowers hereby authorize Agent
to) direct the Lenders to make a cash Advance under the Revolving Credit
(subject to the terms and
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provisions of this Agreement) in a sum sufficient to pay all interest accrued
and payable on the Obligations during the immediately preceding month and to pay
all costs, fees and Expenses owing hereunder.
(b) Borrowers shall maintain a lockbox account(s)
("Lockbox") with Agent (on terms and conditions satisfactory to Agent) and a
depository account(s) ("Cash Collateral Account") with Agent subject to the
provisions of this subparagraph. Borrowers have agreed with Agent that all
collections of Accounts will be paid directly from Account Debtors into the
Lockbox. Borrowers shall then cause (and Agent is also hereby irrevocably
authorized to cause) the transfer of such collections from the Lockbox to the
Cash Collateral Account. Deposits into the Cash Collateral Account shall be
applied by Agent daily, subject to Agent's standard clearing procedures and
clearing periods for deposited funds, to reduce the outstanding indebtedness
under the Revolving Crems of this Agreement. All collections of Accounts and
proceeds of other Collateral to the extent received by any Borrower shall be
held in trust for the benefit of Lenders and remitted, IN SPECIE, to Agent for
deposit in the Cash Collateral Account immediately upon receipt by any Borrower.
Funds constituting mandatory prepayments as set forth in Section 2.10(c) shall
be applied in the manner set forth in Section 2.10(d). Borrowers shall have no
right of access to or withdrawal from the Lockbox or the Cash Collateral
Account; provided that if there are no outstanding Advances and no Event of
Default has occurred and is continuing, then all collections of Accounts shall
be, subject to Agent's standard clearing procedures and clearing periods for
deposited funds, transferred to Phoenix's operating accounts with Agent.
(c) (i) Advances which may be made by Lenders from time to
time under the Revolving Credit shall be made available by crediting such
proceeds to Phoenix's operating account with Agent.
(ii) All Advances, other than Letters of Credit,
requested by Borrowers under the Revolving Credit must be in the minimum amount
of (A) One Hundred Thousand Dollars ($100,000.00) and integral multiples of
Fifty Thousand Dollars ($50,000.00) in excess thereof for Base Rate Loans and
(B) Five Hundred Thousand Dollars ($500,000.00) and integral multiples of One
Hundred Thousand Dollars ($100,000.00) in excess thereof for LIBOR Based Rate
Loans and must be requested:
(1) by 11:00 A.M., Philadelphia time, on the date
such Advance is to be made if a Base Rate Loan, and
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(2) by 11:00 A.M. Philadelphia time at least two
(2) Business Days in advance if a LIBOR Based Rate Loan.
(iii) All requests for an Advance are to be in writing
via a borrowing base certificate in the form of Exhibit "J" attached hereto and
made a part hereof which form is to be executed by an Authorized Officer of
Phoenix. Such request may be sent by telecopy or facsimile transmission
provided that Agent shall have the right to require that receipt of such request
not be effective unless confirmed via telephone with Agent.
(iv) A. Upon receiving a request for an Advance in
accordance with subparagraph (ii) above, by twelve o'clock (12:00) noon,
Philadelphia time or as soon as is reasonably practicable thereafter, Agent
shall notify all Lenders of the request. Each Lender shall advance its
applicable Pro Rata Percentage of the requested Advance to Agent by remitting
federal funds, immediately available, to Agent pursuant to Agent's instructions
prior to two o'clock (2:00) p.m. Philadelphia time or as soon as is reasonably
practicable thereafter on the date of the Advance. Subject to the satisfaction
of the terms and conditions hereof, and receipt by the Agent of all required
funds from the other Lenders, Agent shall make the requested Advance available
to the Borrowers by crediting such amount to Phoenix's operating account with
Agent as soon as is reasonably practicable thereafter on the day the requested
Advance is to be made. In lieu of the foregoing, Agent may, in its discretion
(and without any obligation to do so or continue to do so), fund the Revolving
Credit Pro Rata Share of an Advance (including any cash Advance to reimburse
Issuer for unreimbursed draws under a Letter of Credit) on behalf of any one or
more Lenders (unconditionally and absolutelsettlement of the Revolving Credit
Pro Rata Shares of Lenders on the following Business Day or under such other
settlement procedures as Agent and Co-Agent may mutually agree upon from time to
time.
B. Neither Agent nor any other Lender shall be
obligated, for any reason whatsoever, to advance the share of any other Lender.
If such corresponding amount is not made available to Agent by such Lender on
the date the Advance is made and Agent elects (at its discretion, without any
obligation to do so) to make such Lender's share of the Advance (including any
cash Advance to reimburse Issuer for unreimbursed draws under a Letter of
Credit), Agent shall be entitled to recover such amount on demand from such
Lender, or from the Borrowers, together with interest at a per annum rate equal
to the Fed Funds Rate in respect of each day during the period commencing on the
date such amount was made
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available to the Borrowers (or on that date Agent required such funds to be
advanced pursuant to the settlement procedures established by Agent and
Co-Agent) and ending on (but excluding) the date Agent recovers such amount. To
the extent not reimbursed by such Lender, Borrowers shall immediately repay on
demand such amount. Agent shall also be entitled to recover any and all losses
and damages (including without limitation, attorneys' fees) from any Lender
failing to so advance upon demand of Agent. Agent may set off the obligations
of a Lender under this paragraph against any distributions or payments of the
Obligations which Agent would otherwise make available to such Lender. To the
extent any Lender fails to provide or delays providing its respective Pro Rata
Percentage of any requested Advance, such Lender's Pro Rata Percentage of all
payments of the Obligations (but not its Revolving Credit Pro Rata Share of
Advances required to be funded by such Lender) shall decrease to reflect the
actual percentage which its actual outstanding Advances bears to the total
outstanding Advances of all Lenders.
2.6 REVOLVING CREDIT INTEREST:
(a) Subject to Sections 2.6(b) and (d) below, the unpaid
principal balance of cash Advances under the Revolving Credit shall bear
interest, subject to the terms hereof, at the per annum rate equal to the Base
Rate plus one-half of one percent (0.5%) ("Initial Revolving Credit Applicable
Margin").
(b) So long as Borrowers on a consolidated basis satisfy
the financial test set forth below, tested quarterly on a rolling four (4)
quarter basis beginning with the fiscal quarter ending March 31, 1997, the
interest rate applicable to the unpaid principal balance of cash Advances under
the Revolving Credit may be adjusted quarterly and interest shall accrue
(subject to Borrowers' right to elect a LIBOR Based Rate Loan pursuant to
Section 2.6(d)) at the per annum rate equal to the Base Rate plus the Adjusted
Revolving Credit Applicable Margin. In no event, however, may a downward
adjustment occur if a Default or Event of Default has occurred and is
continuing. Any such adjustment shall be effective on the later of (i) five (5)
days after, or (ii) the first day of the calendar month after, Agent's receipt
of the Quarterly Compliance Certificate demonstrating the financial test is
satisfied. The Adjusted Revolving Credit Applicable Margin shall be determined
in accordance with the chart set forth below:
Funded Debt to Operating Adjusted Revolving Credit
Cash Flow Ratio Applicable Margin
------------------------ -------------------------
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1. Greater than 3.00 to 1.0 0.5%
2. Greater than 2.50 to 1.0 but less 0.25%
than or equal to 3.00 to 1.0
3. Less than or equal to 0%
2.50 to 1.0
(c) Changes in the interest rate applicable to Base Rate Loans
under the Revolving Credit shall become effective on the same day as Agent
announces a change in its Prime Rate. Interest on the Revolving Credit shall be
payable monthly, in arrears, on the first day of each calendar month, beginning
on the first day of the first full calendar month after the Closing Date.
(d) LIBOR RATE OPTION:
(i) So long as Borrowers on a consolidated basis
satisfy the financial test set forth below (provided however, no downward
adjustment may occur if a Default or Event of Default has occurred and is
continuing), tested quarterly on a rolling four (4) quarter basis beginning with
the fiscal quarter ending March 31, 1997 and subject to the provisions of
Section 2.5(c) and this Section 2.6(d), Borrowers may choose to have all or a
portion of the Revolving Credit accrue interest (commencing, or in the case of
subsequent quarters, changing, on the later of (i) five (5) days, or (ii) the
first day of the calendar month after, Agent's receipt of the Quarterly
Compliance Certificate demonstrating the financial test is satisfied) at the
Revolving Credit LIBOR Based Rate.
(ii) Interest on the outstanding LIBOR Based Rate
Loans applicable to the Revolving Credit shall accrue at the per annum rate
("Revolving Credit LIBOR Based Rate") equal to the Adjusted LIBOR Rate as
determined by Agent at the time of such request plus the Revolving Credit LIBOR
Applicable Margin. The Revolving Credit LIBOR Applicable Margin shall be
determined in accordance with the chart set forth below:
Funded Debt to Operating Revolving Credit LIBOR
Cash Flow Ratio Applicable Margin
------------------------ ----------------------
1. Greater than 3.0 to 1.0 3.00%
2. Greater than 2.5 to 1.0 but less 2.75%
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than or equal to 3.0 to 1.0
3. Greater than 2.0 to 1.0 but less 2.25%
than or equal to 2.5 to 1.0
4. Less than or equal to 2.0 to 1.0 1.75%
(iii) Borrowers shall select a LIBOR Interest Period
during which the Revolving Credit LIBOR Based Rate is applicable; provided,
however, that if the LIBOR Interest Period would otherwise end on a day which
shall not be a London Business Day, such LIBOR Interest Period shall be extended
to the next preceding or succeeding London Business Day as is the Agent's custom
in the market in which such LIBOR Based Rate Loan relates. Interest shall
accrue from and including the first day of each LIBOR Interest Period to, but
excluding the day on which any LIBOR Interest Period expires. For any LIBOR
Interest Period which begins on the last London Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such LIBOR Interest Period), the LIBOR Interest Period shall
end on the last London Business Day of a calendar month. All accrued and unpaid
interest on a LIBOR Based Rate Loan must be repaid in full on the last day of
the applicable LIBOR Interest Period. Interest shall also be due and payable
for a LIBOR Interest Period in excess of three (3) months, on the day of such
LIBOR Interest Period that would have been the last day of such LIBOR Interest
Period if such LIBOR Interest Period were a three (3) month period. No LIBOR
Interest Period with respect to the Revolving Credit may end after the Current
Revolving Credit Maturity Date. Subject to all of the terms and conditions
applicable to a request to convert all or a portion of the Revolving Credit to a
LIBOR Based Rate Loan, Borrowers may convert such LIBOR Based Rate Loan as of
the last day of the LIBOR Interest Period to a new LIBOR Based Rate Loan
provided all interest accrued under the expiring LIBOR Interest Period has been
paid. If the Borrowers fail to notify the Agent of the LIBOR Interest Period
for such a subsequent LIBOR Based Rate Loan at least two (2) Business Days prior
to the last day of the then current LIBOR Interest Period of such an outstanding
LIBOR Based Rate Loan, then such outstanding LIBOR Based Rate Loan shall become
a Base Rate Loan at the end of the current LIBOR Interest Period and shall
accrue interest at the applicable Revolving Credit Base Rate in accordance with
Sections 2.6(a) and (b) above.
(iv) The Adjusted LIBOR Rate may be automatically
adjusted by Agent on a prospective basis to take into account the
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additional or increased cost of maintaining any necessary reserves for
Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable LIBOR Interest Period, including but not
limited to changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage and any Reserve which has resulted in a payment
pursuant to Section 2.13 below, that increase the cost to Lenders of funding the
LIBOR Based Rate Loan. Agent shall promptly give the Borrowers and each Lender
notice of such a determination and adjustment, which determination shall be
prima facie evidence of the correctness of the fact and the amount of such
adjustment.
(v) If Borrowers shall have requested the rate based
on the Adjusted LIBOR Rate in accordance with Section 2.6(d) and Agent shall
have reasonably determined that Eurodollar deposits equal to the amount of the
principal of the requested LIBOR Based Rate Loan and for the LIBOR Interest
Period specified are unavailable, or that the rate based on the Adjusted LIBOR
Rate will not adequately and fairly reflect the cost of the Adjusted LIBOR Rate
applicable to the specified LIBOR Interest Period, of making or maintaining the
principal amount of the requested LIBOR Based Rate Loan specified by the
Borrowers during the LIBOR Interest Period specified, or that by reason of
circumstances affecting Eurodollar markets, adequate and reasonable means do not
exist for ascertaining the rate based on the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, Agent shall promptly give notice of such
determinatAdjusted LIBOR Rate is not available. A determination by Agent
hereunder shall be prima facie evidence of the correctness of the fact and
amount of such additional costs or unavailability. Upon such a determination,
(i) the obligation to convert to, or maintain a LIBOR Based Rate Loan at the
rate based on the Adjusted LIBOR Rate shall be suspended until Agent shall have
notified the Borrowers that such conditions shall have ceased to exist, and (ii)
the applicable Revolving Credit portion subject to the requested conversion
shall continue to accrue interest at the applicable Revolving Credit Base Rate
in accordance with Sections 2.6(a) and 2.6(b) above.
(vi) If, as a result of any changes in applicable law
or regulation or the interpretation thereof, it becomes unlawful for a Lender
(or such Lender's Bank Affiliate) to maintain Eurodollar liabilities sufficient
to fund any LIBOR Based Rate Loan
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subject to the rate based on the Adjusted LIBOR Rate, then such Lender shall
immediately notify the Agent who shall immediately notify the Borrowers thereof
and such Lender's obligations hereunder to convert to, or maintain a LIBOR Based
Rate Loan at the rate based on the Adjusted LIBOR Rate shall be suspended until
such time as such Lender (or such Lender's Bank Affiliate) may again cause the
rate based on the Adjusted LIBOR Rate to be applicable to its share of any LIBOR
Based Rate Loan and such Lender's share of the Revolving Credit subject to the
LIBOR Based Rate Loan shall continue to accrue interest at the applicable
Revolving Credit Base Rate in accordance with Sections 2.6(a) and 2.6(b) above.
Promptly after becoming aware that it is no longer unlawful for such Lender (or
such Lender's Bank Affiliate) to maintain such Eurodollar liabilities, such
Lender shall notify the Agent who will notify the Borrowers thereof and such
suspension shall cease to exist.
2.7 TERM LOAN INTEREST:
(a) Subject to Sections 2.7(b) and (d) below, the unpaid
principal balance of each of the Term Loans shall bear interest, subject to the
terms hereof, at the per annum rate equal to the Base Rate plus one and one half
percent (1.5%) ("Initial Term Loan Applicable Margin").
(b) So long as Borrowers on a consolidated basis satisfy
the financial test set forth below, tested quarterly on a rolling four (4)
quarter basis beginning with the fiscal quarter ending March 31, 1997, the
interest rate applicable to the unpaid principal balance of each of the Term
Loans may be adjusted quarterly and interest shall accrue (subject to Borrowers'
right to elect a LIBOR Based Rate Loan pursuant to Section 2.7(d)) at the per
annum rate equal to the Base Rate plus the Adjusted Term Loan Applicable Margin.
In no event, however may a downward adjustment occur if a Default or Event of
Default has occurred and is continuing. Any such adjustment shall be effective
on the later of (i) five (5) days after, or (ii) the first day of the calendar
month after, Agent's receipt of the Quarterly Compliance Certificate
demonstrating the financial test is satisfied. The Adjusted Term Loan
Applicable Margin shall be determined in accordance with the chart set forth
below:
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Funded Debt to Operating Adjusted Term Loan
Cash Flow Ratio Applicable Margin
------------------------ ------------------
1. Greater than 3.0 to 1.0 1.50%
2. Greater than 2.5 to 1.0 but less 1.00%
than or equal to 3.0 to 1.0
3. Greater than 2.0 to 1.0 but less .5%
than or equal to 2.5 to 1.0
4. Less than or equal to 2.0 to 1.0 0%
(c) Changes in the interest rate applicable to Base Rate
Loans on either of the Term Loans shall become effective on the same day as
Agent announces a change in its Prime Rate. Interest on each of the Term Loans
shall be payable monthly, in arrears, on the first day of each calendar month,
beginning on the first day of the first full calendar month after the Closing
Date hereof.
(d) LIBOR RATE OPTION:
(i) So long as Borrowers on a consolidated basis
satisfy the financial test set forth below (provided however, no downward
adjustment may occur if a Default or Event of Default has occurred and is
continuing), tested quarterly on a rolling four (4) quarter basis beginning with
the fiscal quarter ending March 31, 1997 and subject to the provisions of
Section 2.5(c) and this Section 2.7(d), Borrowers, may choose to have all or a
portion of either the Term Loans accrue interest (commencing, or in the case of
subsequent quarters, changing, on the later of (i) five (5) days after, or (ii)
the first day of the calendar month after, Agent's receipt of the Quarterly
Compliance Certificate demonstrating the financial test is satisfied) at the
Term Loan LIBOR Based Rate provided that in no event may the portion of the Term
Loan subject to the Term Loan LIBOR Based Rate include any principal
installments on the applicable Term Loan required to be made during the chosen
LIBOR Interest Period.
(ii) Interest on the outstanding LIBOR Based Rate
Loans applicable to either of the Term Loans shall accrue at the per annum rate
("Term Loan LIBOR Based Rate") equal to the Adjusted LIBOR Rate as determined by
Agent at the time of such request plus the Term Loan LIBOR Applicable Margin.
The LIBOR Applicable Margin shall be determined in accordance with the chart set
forth below:
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Funded Debt to Operating Term Loan LIBOR
Cash Flow Ratio Applicable Margin
------------------------ -----------------
1. Greater than 3.0 to 1.0 4.00%
2. Greater than 2.5 to 1.0 but less 3.00%
than or equal to 3.0 to 1.0
3. Greater than 2.0 to 1.0 but less 2.75%
than or equal to 2.5 to 1.0
4. Less than or equal to 2.0 to 1.0 2.25%
(iii) Borrowers shall select a LIBOR Interest Period
during which the Term Loan LIBOR Based Rate is applicable; provided, however,
that if the LIBOR Interest Period would otherwise end on a day which shall not
be a London Business Day, such LIBOR Interest Period shall be extended to the
next preceding or succeeding London Business Day as is the Agent's custom in the
market in which such LIBOR Based Rate Loan relates. Interest shall accrue from
and including the first day of each LIBOR Interest Period to, but excluding the
day on which any LIBOR Interest Period expires. For any LIBOR Interest Period
which begins on the last London Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the
end of such LIBOR Interest Period), the LIBOR Interest Period shall end on the
last London Business Day of a calendar month. All accrued and unpaid interest
on a LIBOR Based Rate Loan must be repaid in full on the last day of the
applicable LIBOR Interest Period. Interest shall also be due and payable for a
LIBOR Interest Period in excess of three (3) months, on the day of such LIBOR
Interest Period that would have been the last day of such period if such LIBOR
Interest Period were a three (3) month period. No LIBOR Interest Period with
respect to either of the Term Loans may end after the Term Loan A Maturity Date
or Term Loan B Maturity Date, as applicable. Subject to all of the terms and
conditions applicable to a request to convert all or a portion of either Term
Loan to a LIBOR Based Rate Loan, Borrowers may convert such LIBOR Based Rate
Loan as of the last day of the LIBOR Interest Period to a new LIBOR Based Rate
Loan provided all interest accrued under the expiring LIBOR Interest Period has
been paid. If the Borrowers fail to notify the Agent of the LIBOR Interest
Period for such a subsequent LIBOR Based Rate Loan at least two (2) Business
Days prior to the last day of the then current LIBOR Interest Period of such an
outstanding LIBOR Based Rate Loan, then such outstanding LIBOR Based Rate Loan
shall become a Base Rate Loan at the end of the current LIBOR Interest Period
and shall accrue interest at the
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applicable Term Loan Base Rate in accordance with Sections 2.7(a) and (b) above.
(iv) The Adjusted LIBOR Rate may be automatically
adjusted by Agent on a prospective basis to take into account the additional or
increased cost of maintaining any necessary reserves for Eurodollar deposits or
increased costs due to changes in applicable law or regulation or the
interpretation thereof occurring subsequent to the commencement of the then
applicable LIBOR Interest Period, including but not limited to changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage and
any Reserve which has resulted in a payment pursuant to Section 2.13 below, that
increase the cost to Lenders of funding the LIBOR Based Rate Loan. Agent shall
promptly give the Borrowers and each Lender notice of such a determination and
adjustment, which determination shall be prima facie evidence of the correctness
of the fact and the amount of such adjustment.
(v) If Borrowers shall have requested the rate based
on the Adjusted LIBOR Rate in accordance with Section 2.7(d) and Agent shall
have reasonably determined that Eurodollar deposits equal to the amount of the
principal of the requested LIBOR Based Rate Loan and for the LIBOR Interest
Period specified are unavailable, or that the rate based on the Adjusted LIBOR
Rate will not adequately and fairly reflect the cost of the Adjusted LIBOR Rate
applicable to the specified LIBOR Interest Period, of making or maintaining the
principal amount of the requested LIBOR Based Rate Loan specified by the
Borrowers during the LIBOR Interest Period specified, or that by reason of
circumstances affecting Eurodollar markets, adequate and reasonable means do not
exist for ascertaining the rate based on the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, Agent shall promptly give notice of such
determinatAdjusted LIBOR Rate is not available. A determination by Agent
hereunder shall be prima facie evidence of the correctness of the fact and
amount of such additional costs or unavailability. Upon such a determination,
(i) the obligation to convert to, or maintain a LIBOR Based Rate Loan at the
rate based on the Adjusted LIBOR Rate shall be suspended until Agent shall have
notified the Borrowers that such conditions shall have ceased to exist, and (ii)
the applicable Term Loan portion subject to the requested conversion shall
continue to accrue interest at the applicable Term Loan Base Rate in accordance
with Sections 2.7(a) and 2.7(b) above.
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(vi) If, as a result of any changes in applicable law
or regulation or the interpretation thereof, it becomes unlawful for a Lender
(or such Lender's Bank Affiliate) to maintain Eurodollar liabilities sufficient
to fund any LIBOR Based Rate Loan subject to the rate based on the Adjusted
LIBOR Rate, then such Lender shall immediately notify the Agent who shall
immediately notify the Borrowers thereof and such Lender's obligations hereunder
to convert to, or maintain a LIBOR Based Rate Loan at the rate based on the
Adjusted LIBOR Rate shall be suspended until such time as such Lender (or such
Lender's Bank Affiliate) may again cause the rate based on the Adjusted LIBOR
Rate to be applicable to its share of any LIBOR Based Rate Loan and such
Lender's share of the Revolving Credit subject to the LIBOR Based Rate Loan
shall continue to accrue interest at the applicable Term Loan Base Rate in
accordance with Sections 2.6(a) and 2.6(b) above. Promptly after becoming aware
that it is no longer unlawful for such Lender (or such Lender's Bank Affiliate)
to maintain such Eurodollar liabilities, such Lender shall notify the Agent who
will notify the Borrowers thereof and such suspension shall cease to exist.
2.8 ADDITIONAL INTEREST PROVISIONS.
(a) Interest on the Loans, regardless of the rate option,
shall be calculated on the basis of a year of three hundred sixty (360) days but
charged for the actual number of days elapsed.
(b) All Loans not specifically designated by Borrowers,
pursuant to the terms hereof or not requested in conformity with the terms
hereof, shall be Base Rate Loans. No LIBOR Based Rate Loans shall be requested
by Borrowers or made available by Agent if a Default or an Event of Default has
occurred and is continuing hereunder.
(c) After the occurrence and during the continuance of an
Event of Default hereunder, the per annum effective rate of interest on all
outstanding principal under the Loans, regardless of the rate option, and all
fees for Letters of Credit shall, upon written direction to Agent from Majority
Lenders, be increased to, as applicable, the Revolving Credit Base Rate or Term
Loan Base Rate PLUS three (3) percentage points and may be applied retroactively
to the date of the occurrence of the Event of Default. The Agent will give
Borrowers subsequent written notice of such increase.
(d) All LIBOR Based Rate Loans shall automatically convert
to Base Rate Loans, upon the occurrence of an Event of
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Default and written notice from Agent of such conversion, subject to Lenders'
rights under Section 2.8(c).
(e) All contractual rates of interest chargeable on
outstanding principal under the Loans, regardless of the rate option, shall
continue to accrue and be paid even after Default, an Event of Default,
maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind
or the happening of any event or occurrence similar or dissimilar.
(f) In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder and charged or collected
pursuant to the terms of this Agreement exceed the highest rate permers have
charged or received interest hereunder in excess of the highest applicable rate,
Lenders shall apply, in their sole discretion, and set off such excess interest
received by Lenders against other Obligations due or to become due and such rate
shall automatically be reduced to the maximum rate permitted by such law.
2.9 FEES:
(a) So long as the Revolving Credit is outstanding and has
not been terminated, Borrowers shall unconditionally pay to Agent, for the
ratable benefit of Lenders, a non-refundable fee ("Unused Fee") equal to
one-half of one percent (.50%) per annum of the daily unused portion of the
Revolving Credit (which shall be calculated as the Maximum Revolving Credit
Amount minus the average daily outstanding principal balance of Advances). The
Unused Fee shall be computed and paid on a quarterly basis, in arrears, on the
first day of each calendar quarter beginning on the first day of the first
calendar quarter after the Closing Date and on the last day of the Current Term.
The Unused Fee shall be calculated on the basis of a year of three hundred sixty
(360) days but charged for the actual number of days elapsed.
(b) Borrowers shall unconditionally pay to Agent, for its
own account, until the Obligations are satisfied in full, a non-refundable fee
("Administration Fee") of Forty Thousand Dollars ($40,000.00), payable annually
in advance, beginning on the Closing Date and on the same day of each year
thereafter.
(c) Borrowers shall pay to Agent, upon issuance, for the
ratable benefit of Lenders, a fee in the amount of two and one quarter percent
(2.25%) per annum (less one quarter of one percent (.25%) which shall be paid to
Issuer for its own account) (as a
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condition of the issuance of each such Letter of Credit) plus all of Issuers'
standard charges for the account of Issuer for the issuance, amendment,
extension and cancellation of each such Letter of Credit (collectively, the "L/C
Fees").
2.10 PREPAYMENTS:
(a) No portion of the LIBOR Based Rate Loans may be prepaid at
any time unless Borrowers first satisfy in full all obligations under Section
2.12 below arising from such prepayment.
(b) Term Loan Based Rate Loans may be prepaid at any time and
from time to time, upon one (1) Business Days' notice to Agent, in whole or in
part without premium or penalty.
(c) (i) Borrowers shall, on the date of the receipt of Cash
Proceeds from any Offering, prepay Term Loan A in an amount equal to the Net
Proceeds thereof.
(ii) Borrowers shall, on the date of the receipt of
any Net Proceeds in excess of One Million Dollars ($1,000,000.00) in the
aggregate in any fiscal year from any Asset Sale, or series of Asset Sales
(except for an Asset Sale with respect to the Hagerstown Facility), prepay Term
Loan A in an amount equal to such excess. Any such Net Proceeds received after
Term Loan A has been paid in full shall then be used to prepay Term Loan B.
(iii) Borrowers shall, on the date of the receipt of
Cash Proceeds from an Asset Sale of the Hagerstown Facility (or any portion
thereof), prepay Term Loan B in an amount equal to the Net Proceeds thereof.
(iv) (A) Borrowers shall prepay Term Loan A, on an
annual basis, in an amount equal to seventy five (75%) percent of Borrowers' Net
Free Cash Flow for the immediately preceding fiscal year calculated as of the
last day of such preceding fiscal year; provided that, effective with the fiscal
year beginning on the earlier of (1) January 1, 1999 or (2) the year in which
the principal balance of Term Loan A has been reduced to Four Million Dollars
($4,000,000.00), such annual prepayment shall be reduced to fifty percent (50%)
of Borrower's Net Free Cash Flow.
(B) Prepayments under this Section 2.10(c)(iv) shall
be due in the fiscal year immediately succeeding the year for which the
calculation of Net Free Cash Flow is based as follows:
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(1) If the amount of the prepayment is less than
or equal to One Million Five Hundred Thousand Dollars ($1,500,000.00) then the
prepayment shall be paid on April 1.
(2) If the amount of the prepayment is greater
than One Million Five Hundred Thousand Dollars ($1,500,000.00) but less than or
equal to Three Million Dollars ($3,000,000.00), then One Million Five Hundred
Thousand Dollars ($1,500,000.00) of the prepayment shall be paid on April 1 and
the balance on August 1.
(3) If the amount of the prepayment is greater
than Three Million dollars ($3,000,000.00), then fifty percent (50%) of the
prepayment shall be paid on April 1 and the balance on August 1.
(d) All prepayments of every kind on account of either of
the Term Loans shall be applied to the principal balance thereof in the inverse
order of maturity.
(e) Subject to Sections 2.10(c) and (d), all prepayments on
account of either of the Term Loans shall be applied as directed by Borrowers
but, if no direction is given, first to the principal balance of Base Rate Loans
and then to the principal balance of LIBOR Based Rate Loans in inverse order of
maturity.
2.11 USE OF PROCEEDS:
(a) The extensions of credit under and proceeds of the
Revolving Credit and Term Loan A shall be used (i) to finance the purchase by
Phoenix of all of the outstanding Capital Stock of NEBH and NEBC in conjunction
with the consummation of the Merger, (ii) for working capital, (iii) to
refinance Borrowers' and NEBC's existing Indebtedness and (iv) for the issuance
of Letters of Credit.
(b) The proceeds of Term Loan B shall be used to refinance
Borrowers' Existing Mortgage Indebtedness.
2.12 INDEMNITY: Borrowers shall indemnify, defend and hold harmless
Agent and Lenders against any and all loss, liability, cost or expense which
Agent and Lenders may sustain or incur (including, without limitation, loss of
the LIBOR Applicable Margin) as a consequence of (a) any failure of Borrowers to
convert or extend any LIBOR Based Rate Loan after notice thereof has been given
to Agent or (b) any payment, prepayment or conversion of a
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LIBOR Based Rate Loan by Borrowers made for any reason on a date other than the
last day of the applicable LIBOR Interest Period. Borrowers shall pay the full
amount thereof to Agent on demand by Agent at the request of any Lender.
2.13 CAPITAL ADEQUACY: If any present or future law, governmental
rule, regulation, policy, guideline, directive or similar requirement (whether
or not having the force of law) imposes, modifies, or deems applicable any
capital adequacy, capital maintenance or similar requirement which affects the
manner in which any Lender allocates capital resources to its commitments
(including any commitments hereunder), and as a result thereof, in the opinion
of such Lender, the rate of return on such Lender's capital with regard to the
Loans is reduced to a level below that which such Lender could have achieved but
for such circumstances, then in such case and upon notice from such Lender to
Borrowers, from time to time, Borrowers shall pay such Lender such additional
amount or amounts as shall compensate such Lender for such reduction in Lender's
rate of return. Such notice shall contain the statement of such Lender with
regard to any such amount or amounts which shall, in the absence of manifest
error, be binding upon Borrowers. In determining such amount, such Lender may
use any reasonable method of averaging and attribution that it deems applicable.
2.14 INTEREST RATE PROTECTION: Borrowers shall purchase and obtain
(at their sole expense) within ninety (90) days following the Closing Date,
interest rate protection covering no less than fifty (50%) percent of Term Loan
A, for a period of at least two (2) years, under terms and conditions and with
strike rates and counterparties acceptable to Agent and Co-Agent.
SECTION 3. COLLATERAL
3.1 DESCRIPTION: As security for the payment of the Obligations,
and satisfaction by Borrowers of all covenants and undertakings contained in
this Agreement and the other Loan Documents:
(a) each Borrower hereby assigns and grants to Agent, for
the ratable benefit of Lenders, a continuing lien on and security interest in,
upon and to the following Property:
(i) ACCOUNTS, ETC. - All of such Borrower's now owned
and hereafter acquired, created, or arising Accounts,
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accounts receivable, notes receivable, contract rights, chattel paper, documents
(including documents of title), instruments and letters of credit;
(ii) INVENTORY - All of such Borrower's now owned
or hereafter acquired or created Inventory of every nature and kind, wherever
located;
(iii) GENERAL INTANGIBLES - All of such Borrower's
now owned and hereafter acquired, created or arising general intangibles of
every kind and description, including, but not limited, to all existing and
future customer lists, choses in action, claims, books, records, patents and
patent applications, copyrights, trademarks, tradenames, tradestyles, trademark
applications, blueprints, drawings, designs and plans, trade secrets, contracts,
contract rights (including, without limitation, all rights and claims under the
Stock Purchase Agreement), licenses, license agreements, formulae, tax and any
other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies including without limitation, credit insurance
and key man life insurance policies, and computer information, software, records
and data;
(iv) EQUIPMENT - All of such Borrower's now owned
and hereafter acquired equipment, including, without limitation, machinery,
vehicles, furniture and fixtures, wherever located, and all replacements, parts,
accessories, substitutions and additions thereto;
(v) DEPOSIT ACCOUNTS - All of such Borrower's now
existing and hereafter acquired or arising deposit accounts of every nature,
wherever located, and all documents and records associated therewith;
(vi) PROPERTY IN LENDER'S POSSESSION - All
Property of such Borrower, now or hereafter in Agent's or any Lender's
possession;
(vii) SECURITIES - All of such Borrower's now
owned or hereafter acquired securities whether registered or unregistered; and
(viii) PROCEEDS - The proceeds (including, without
limitation, insurance proceeds), whether cash or non-cash, of all of the
foregoing property described in clauses (i) through (vii) other than proceeds of
any tax refund or insurance claim
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attributable ed to NEBH or NEBC that are required to be paid to the Escrow Fund
(as that term is defined in the Stock Purchase Agreement) in accordance with and
pursuant to the terms of Section 8.2 of the Stock Purchase Agreement.
(b) Agent (for the ratable benefit of Lenders) shall
receive a mortgage (or, if applicable, deed of trust), on all Real Property
owned by each Borrower including, without limitation, the Hagerstown Facility
and Alpha Facility.
(c) Agent (for the ratable benefit of Lenders) shall
receive pledges, in the form of, and subject to the terms of, the Stock Pledge
Agreements, of all of the Capital Stock owned legally or beneficially in each
Borrower.
3.2 LIEN DOCUMENTS: At Closing and thereafter as Agent deems
necessary, each Borrower shall execute and deliver to Agent, or have executed
and delivered (all in form and substance reasonably satisfactory to Agent and
its counsel):
(a) Financing statements pursuant to the UCC, which Agent,
may file in any jurisdiction where any Collateral is or may be located and in
any other jurisdiction that Agent deems appropriate;
(b) Mortgages (or, if applicable, deeds of trust), pursuant
to applicable state law in the proper form for recording in any jurisdiction
where any Real Property of any Borrower is or may be located together with title
insurance policies insuring the first priority Lien of Agent against such Real
Property from a title insurance company acceptable to Agent, in an amount
satisfactory to Agent and subject only to such exceptions as Agent may approve;
and
(c) Any other agreements, documents, instruments and
writings, including, without limitation, trademark security agreements,
reasonably required by Agent to evidence, perfect or protect the liens and
security interests in the Collateral or as Agent may reasonably request from
time to time.
3.3 OTHER ACTIONS: In addition to the foregoing, Borrowers shall
do anything further that may be reasonably required by Agent to secure Lenders
and effectuate the intentions and objects of this Agreement, including, but not
limited to, the execution and delivery of lockbox agreements, continuation
statements, amendments to financing statements, security agreements, contracts
and any
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other documents required hereunder. At Agent's request, Borrowers shall also
immediately deliver (with execution by Borrowers of all necessary documents or
forms to reflect, implement or enforce the Liens described herein) to Agent all
items for which Lender must receive possession to obtain a perfected security
interest, including without limitation, all notes, stock powers, letters of
credit, certificates and documents of title, chattel paper, warehouse receipts,
instruments, and any other similar instruments constituting Collateral.
3.4 SEARCHES, CERTIFICATES: (a) Agent shall, prior to or at
Closing, and thereafter as Agent may determine from time to time, at Borrowers'
expense, obtain the following searches (the results of which are to be
consistent with the warranties made by Borrowers in this Agreement):
(i) UCC searches with the Secretary of State and local
filing office of each state where each Borrower maintains its executive office,
a place of business, or assets;
(ii) Judgment, federal tax lien and corporate tax lien
searches, in all applicable filing offices of each state searched under
subparagraph (i) above; and
(iii) Searches of the type described in clauses (i) and
(ii) against Old Phoenix, NEBC and NEBH in such jurisdictions as may be
reasonably acceptable to Agent.
(b) Borrowers shall, prior to or at Closing and at their
expense, obtain and deliver to Agent good standing certificates showing each
Borrower (and Old Phoenix, NEBH and NEBC) to be in good standing in its
respective state of incorporation and in each other state or foreign country in
which it is doing and presently intends to do business for which qualification
is required.
3.5 LANDLORD'S WAIVERS: Borrowers will cause each owner of any
premises occupied by each Borrower or to be occupied by any Borrower where
Collateral is held, to execute and deliver to Agent an instrument, in form and
substance satisfactory to Agent, under which such owner(s) subordinates
its/his/their interests in and waives its/his/their right to distrain on or
foreclose against the Collateral and agrees to allow Agent to remain on such
premises to dispose of or deal with any Collateral located thereon.
3.6 FILING SECURITY AGREEMENT: A carbon, photographic or other
reproduction or other copy of this Agreement or of a
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financing statement is sufficient as and may be filed in lieu of a financing
statement.
3.7 POWER OF ATTORNEY: Each of the officers of Agent is hereby
irrevocably made, constituted and appointed the true and lawful attorney for
each Borrower (without requiring any of them to act as such) with full power of
substitution to do the following: (a) endorse the name of such Borrower upon
any and all checks, drafts, money orders and other instruments for the payment
of monies that are payable to such Borrower and constitute collections on that
Borrower's Accounts or proceeds of other Collateral; (b) execute in the name of
any Borrower any financing statements, schedules, assignments, instruments,
documents and statements that such Borrower is obligated to give Agent hereunder
or is necessary to perfect (or continue or evidence the perfection of such
security interest or lien) Agent's security interest or lien in the Collateral;
and (c) do such other and further acts and deeds in the name of any Borrower
that Agent may reasonably deem necessary or desirable to enforce any Account or
other Collateral.
3.8 PARTICULAR RELEASES OF SECURITY INTERESTS: If in connection with
any public Offering of any Borrower's Capital Stock, or pursuant to a written
notice from a Person with an interest therein, it is determined that the
security interest granted in Borrowers' equipment under Section 3.1(a)(iv)
constitutes a violation of any lease, conditional sale contract or purchase
money security agreement with respect to any particular item of such equipment,
then upon Borrowers' written request to Agent, which request shall be
accompanied by such documentation as Agent may reasonably require to verify such
violation and to specifically identify such equipment, Agent shall execute a
UCC-3 partial release statement for such specified equipment.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement is subject to the following conditions
precedent (all instruments, documents and agreements to be in form and substance
reasonably satisfactory to Agent and Agent's counsel):
4.1 RESOLUTIONS, OPINIONS, AND OTHER DOCUMENTS: Borrowers shall
have delivered, or caused to be delivered to Agent the following:
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(a) this Agreement, the Revolving Credit Notes and the Term
Loan Notes all properly executed;
(b) mortgages, financing statements and each of the other Loan
Documents to be executed by any Borrower or any other Person pursuant to the
terms hereof;
(c) certified copies of (i) resolutions of each Borrower's
board of directors authorizing the execution of this Agreement, the Revolving
Credit Notes and the Term Loan Notes to be issued hereunder and each document
required to be delivered by any Section hereof and (ii) each Borrower's Articles
or Certificate of Incorporation and By-laws;
(d) an incumbency certificate for each Borrower identifying
all Authorized Officers, with specimen signatures;
(e) a written opinion of Borrowers' independent counsel
addressed to Agent for the benefit of all Lenders and Issuer and opinions of
such other counsel as Agent deems reasonably necessary;
(f) such financial statements, reports, certifications and
other operational information as Agent may reasonably require including without
limitation consolidated audited financial statements for Old Phoenix for the
fiscal year ending September 30, 1995, the Projections and the Pro Forma Balance
Sheet;
(g) certification by the chief financial officer of each
Borrower that there has not occurred any material adverse change in the
operations and condition (financial or otherwise) of Old Phoenix, NEBH or NEBC
or any of the Borrowers since September 30, 1995;
(h) payment by Borrowers of all fees including, without
limitation, the Facility Fee, due Agent and Co-Agent on the Closing Date and
Expenses associated with the Loans;
(i) an environmental survey on each Borrower's Real Property
(other than the Alpha Facility), performed by a qualified engineering firm
acceptable to Agent;
(j) the Intercreditor Agreement properly executed by each of
the parties thereto;
(k) the Surety Agreements properly executed by each of the
Sureties;
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(l) the Stock Pledge Agreements properly executed by each of
the parties thereto, together with stock powers endorsed in blank and
accompanied by delivery to Agent of original share certificates;
(m) Uniform Commercial Code, judgment, federal and state tax
lien searches against each Borrower, Old Phoenix, NEBH and NEBC, at Borrowers'
expense, showing that the Property of each such Person is not subject to any
Liens except for Permitted Liens, together with Good Standing and Corporate Tax
Lien Search Certificates showing no Liens on each such Person's Property and
showing each Borrower to be in good standing in each jurisdiction in which it is
qualified to do business;
(n) appraisals on Borrowers' Real Property acceptable to Agent
and Co-Agent;
(o) an initial borrowing base certificate dated the Closing
Date as required under Section 2.5(c)(iii), indicating borrowing availability
sufficient to consummate the transactions contemplated under the Stock Purchase
Agreement;
(p) consummation of the (i) acquisition of the Capital Stock
of NEBH and NEBC in accordance with the terms of the Stock Purchase Agreement
and (ii) the Merger in accordance with the terms of the Merger Agreement;
(q) a peer review letter of Borrowers' current independent
certified public accountants; and
(r) title insurance policies required under Section 3.2(b)
hereunder.
4.2 ABSENCE OF CERTAIN EVENTS: At the Closing Date, no Default or
Event of Default hereunder shall have occurred and be continuing, and no event
shall have occurred and be continuing.
4.3 WARRANTIES AND REPRESENTATIONS AT CLOSING: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though made on and as of that date. Borrowers shall not
have taken any action or permitted any condition to exist which would have been
prohibited by any Section hereof.
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4.4 COMPLIANCE WITH THIS AGREEMENT: Borrowers shall have performed
and complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by Borrowers before or at the
Closing Date.
4.5 OFFICERS' CERTIFICATE: Agent shall have received a certificate
dated the Closing Date and signed by the chief financial officer of each
Borrower certifying that all of the conditions specified in this Section have
been fulfilled.
4.6 CLOSING: Subject to the conditions of this Section, the
Revolving Credit and each Term Loan shall be made available on such date (the
"Closing Date") and at such time as may be mutually agreeable to the parties
contemporaneously with the execution hereof ("Closing") at New York, New York.
4.7 WAIVER OF RIGHTS: By completing the Closing hereunder, or by
making advances hereunder, Agent and Lenders do not thereby waive a breach of
any warranty or representation made by Borrowers hereunder or any agreement,
document, or instrument delivered to Agent or otherwise referred to herein, and
any claims and rights of Agent and Lenders resulting from any breach or
misrepresentation by Borrowers are specifically reserved by Agent and Lenders.
4.8 CONDITIONS FOR FUTURE ADVANCES: The making of Advances under
the Revolving Credit in any form following the Closing Date is subject to the
following conditions precedent (all instruments, documents and agreements to be
in form and substance reasonably satisfactory to Agent and its counsel)
following the Closing Date:
(a) This Agreement and each of the other Loan Documents
shall be effective;
(b) No event or condition shall have occurred or become
known to any Borrower, or would result from the making of any requested Advance,
which could have a Material Adverse Effect;
(c) No Default or Event of Default then exists;
(d) Each Advance is within and complies with the terms and
conditions of this Agreement including, without limitation, the notice
provisions, including a Borrowing Base Certificate, contained in Section 2.5
hereof;
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(e) No Lien (other than a Permitted Lien), including,
without limitation, any federal tax Lien, has been imposed on any Borrower
unless such Lien (i) arises from the business or operations of NEBC or NEBH
conducted prior to the Closing Date; (ii) is and remains fully covered by the
escrow fund established under the Stock Purchase Agreement, and (iii) is
satisfied within sixty (60) days of the imposition thereof; and
(f) Each representation and warranty set forth in Section 5
and any other Loan Document in effect at such time (as amended or modified from
time to time) is then true and correct in all material respects.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lenders to complete the Closing and make the initial
Advances under the Revolving Credit and the Term Loans to Borrowers, each
Borrower warrants and represents to Agent, Issuer and Lenders that:
5.1 CORPORATE ORGANIZATION AND VALIDITY:
(a) Each Borrower is a corporation duly organized and
validly existing under the laws of its state of incorporation, is duly
qualified, is validly existing and in good standing and has lawful power and
authority to engage in the business it conducts in each state where the nature
and extent of its business requires qualification, except where the failure to
so qualify does not and could not have a Material Adverse Effect. A list of all
states and other jurisdictions where each Borrower is qualified to do business
is attached hereto as Schedule "5.1" and made a part hereof.
(b) The making and performance of this Agreement and the
other Loan Documents will not violate any law, government rule or regulation,
court or administrative order or other such order, or the charter, minutes or
bylaw provisions of any Borrower or violate or result in a default (immediately
or with the passage of time) under any contract, agreement or instrument to
which each Borrower is a party, or by which each is bound. No Borrower is in
violation of any term of any agreement or instrument to which it is a party or
by which it may be bound or of its charter, minutes or its bylaws which
violation has or could have a Material Adverse Effect.
(c) Each Borrower has all requisite corporate power and
authority to enter into and perform this Agreement and to incur the obligations
herein provided for, and has taken all proper and
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necessary corporate action to authorize the execution, delivery and performance
of this Agreement, and the other Loan Documents as applicable.
(d) This Agreement, the Revolving Credit Notes and Term
Loan Notes to be issued hereunder, and all of the other Loan Documents, when
delivered, will be valid and binding upon each Borrower and enforceable in
accordance with their respective terms.
5.2 PLACES OF BUSINESS: The only places of business of each
Borrower, and the places where each keeps and intends to keep its Property, are
at the addresses listed in Schedule "5.2" attached hereto and made part hereof.
5.3 PENDING LITIGATION: There are no judgments or judicial or
administrative orders or proceedings pending, or to the knowledge of Borrowers,
threatened, against any Borrower or any of the Merged Entities in any court or
before any Governmental Authority except as shown in Schedule "5.3" attached
hereto and made part hereof. To the knowledge of Borrowers, there are no
investigations (civil or criminal) pending or threatened against any Borrower or
any of the Merged Entities in any court or before any Governmental Authority.
No Borrower is (and the Merged Entities were, immediately prior to the Merger,
not) in default with respect to any order of any Governmental Authority, which
causes or could cause a Material Adverse Effect. To the best of the knowledge
of each Borrower, no shareholder or executive officer of any Borrower or the
Merged Entities has been indicted in connection with or convicted of engaging in
any criminal conduct, or is currently subject to any lawsuit or proceeding or
under investigation in connection with any anti-racketeering or other conduct or
activity which may result in the forfeiture of any property to any Governmental
Authority.
5.4 TITLE TO PROPERTIES: Each Borrower has good and marketable
title in fee simple (or its equivalent under applicable law) to all the Property
it respectively purports to own, free from Liens and free from the claims of any
other Person, except for those Liens set forth on Schedule "5.4" attached hereto
and made part hereof.
5.5 GOVERNMENTAL CONSENT: Neither the nature of any Borrower or of
its business or Property, nor any relationship between any Borrower and any
other Person, nor any circumstance affecting any Borrower in connection with the
issuance or delivery of this Agreement, the Revolving Credit Notes or Term Loan
Notes, or any
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other Loan Documents is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority on
the part of any Borrower in connection with the execution, issuance or delivery
of this Agreement or the issuance or delivery of the Revolving Credit Notes or
Term Loan Notes, or the other Loan Documents.
5.6 TAXES: All tax returns required to be filed by each Borrower
and Old Phoenix and, to the best of Borrowers' knowledge, each of the Merged
Entities (with respect to any state, other than Massachusetts, or local taxing
authority), in any jurisdiction have been filed, and all taxes, assessments,
fees and other governmental charges upon each Borrower and Old Phoenix, or, to
the best of Borrowers' knowledge, each of the Merged Entities (with respect to
any state, other than Massachusetts, or local taxing authority), or upon any of
their respective Property, income or franchises, which are shown to be due and
payable on such returns have been paid, except for those taxes being contested
in good faith with due diligence by appropriate proceedings for which
appropriate reserves have been maintained under GAAP and as to which no Lien has
been entered. No Borrower is aware of any proposed additional tax assessment or
tax to be assessed against or applicable to such Borrower.
5.7 FINANCIAL STATEMENTS: The annual consolidated audited balance
sheet of Old Phoenix as of September 30, 1995 and of NEBH as of December 31,
1994, and the related statements of profit and loss, stockholder's equity and
cash flow as of each such date, all accompanied by reports thereon from Old
Phoenix's or NEBH'S independent certified public accountants, (complete copies
of which have been delivered to Agent), have been prepared in accordance with
GAAP and present fairly the financial position of Old Phoenix and NEBH,
respectively as of such dates and the results of its operations for such
periods. The fiscal year for all Borrowers currently ends on December 31. Each
Borrower's federal tax identification number is as listed on Schedule "5.7"
attached hereto and made part hereof.
5.8 FULL DISCLOSURE: Neither the financial statements referred to
in Section 5.7, nor this Agreement or related agreements and documents or any
written statement furnished by Borrowers or any of the Merged Entities or any of
them to Agent and/or any Lender in connection with the negotiation of the
Revolving Credit or Term Loans and contained in any financial statements or
documents relating to any Borrower or any one of the Merged Entities contain any
untrue statement of a material fact or
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omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact known to any Borrower which has not
been disclosed in writing to Agent which has or could have a Material Adverse
Effect.
5.9 SUBSIDIARIES: No Borrower has any Subsidiaries or Affiliates,
except as listed on Schedule "5.9" attached hereto and made a part hereof.
5.10 GUARANTEES, CONTRACTS, ETC.:
(a) No Borrower owns or holds equity or long term debt
investments in, has any outstanding advances to, or serves as guarantor, surety
or accommodation maker for the obligations of, or has any outstanding borrowings
from, any Person, or has entered into any leases for real or personal Property
(whether as landlord or tenant), except as described in Schedule "5.10",
attached hereto and made part hereof.
(b) No Borrower is a party to any contract or agreement, or
subject to any charter or other corporate restriction, which has or could have a
Material Adverse Effect.
(c) Except as otherwise specifically provided in this
Agreement, no Borrower has agreed or consented to cause or permit any of its
Property whether now owned or hereafter acquired to be subject in the future
(upon the happening of a contingency or otherwise), to a Lien not permitted by
this Agreement.
5.11 GOVERNMENT REGULATIONS, ETC.:
(a) The use of the proceeds of and Borrowers' issuance of the
Revolving Credit Notes and Term Loan Notes, will not directly or indirectly
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto, including, without
limitation, Regulations U, T, G and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. No Borrower owns or intends to carry or
purchase any "margin stock" within the meaning of said Regulation U.
(b) Each Borrower has obtained all licenses, permits,
franchises or other governmental authorizations necessary for the ownership of
its Property (including, in the case of Old Phoenix, the acquisition and
ownership of the Capital Stock of NEBH and
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NEBC) and for the conduct of its business, except for those which, if not
obtained, cause or could cause a Material Adverse Effect.
(c) As of the date hereof, no employee benefit plan ("Pension
Plan"), as defined in Section 3(2) of ERISA, (other than a multi employer plan
described in Section 3(37) of ERISA) maintained by any Borrower or under which
any Borrower could have any liability under ERISA (i) has failed to meet the
minimum funding standards established in Section 302 of ERISA, (ii) has failed
to comply in a material respect with all applicable requirements of ERISA and of
the Internal Revenue Code, including all applicable rulings and regulations
thereunder, (iii) has engaged in or been involved in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code which
would subject Borrowers to any material liability, or (iv) has been terminated
if such termination would subject such Borrowers to any material liability. No
Borrower has assumed, or received notice of a claim asserted against such
Borrower for, withdrawal liability (as defined in Section 4207 of ERISA) with
respect to any multi employer pension plan and is not a member of any Controlled
Group (as defined in ERISA). Each Borrower has timely made all contributions
when due with respect to any multi employer pension plan in which it
participates and no event has occurred triggering a claim against such Borrower
for withdrawal liability with respect to any multi employer pension plan in
which such Borrower participates. All Employee Benefit Plans and multi employer
pension plans to which any Borrower participates is listed on Schedule "5.11(c)"
attached hereto and made part hereof.
(d) No Borrower is (and immediately prior to the Merger,
none of the Merged Entities was) in violation of or has received written notice
that it is in violation of any applicable statute, regulation or ordinance of
the United States of America, or of any state, city, town, municipality, county
or of any other jurisdiction, or of any agency, or department thereof,
(including without limitation, Environmental Laws), a violation of which causes
or could cause a Material Adverse Effect.
(e) Each Borrower is, (and each of the Merged Entities,
immediately prior to the Merger was) current with all reports and documents
required to be filed with any state or federal securities commission or similar
agency and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
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5.12 BUSINESS INTERRUPTIONS: Within five (5) years prior to the
date hereof, none of the business, Property or operations of any Borrower or any
Merged Entity has been materially and adversely affected in any way by any
casualty, strike, lockout, combination of workers, order of the United States of
America, or any state or local government, or any political subdivision or
agency thereof, directed against such Borrower or Merged Entity. There are no
pending or, to Borrowers' knowledge, threatened labor disputes, strikes,
lockouts or similar occurrences or grievances affecting the business being
operated by any Borrower.
5.13 NAMES:
(a) Within five (5) years prior to the Closing Date,
neither any Borrower nor any Merged Entity has conducted business under or used
any other name (whether corporate or assumed) except for the names shown on
Schedule "5.13(a)" attached hereto and made part hereof. Each Borrower is the
sole owner of all names listed on such Schedule "5.13(a)" and, to the best of
Borrowers' knowledge, any and all business done and all invoices issued in such
trade names are such Borrower's (or, as applicable, one of the Merged Entities')
sales, business and invoices. Each trade name of each Borrower (or Merged
Entity) represents a division or trading style of such Borrower (or Merged
Entity) and not a separate corporate subsidiary or affiliate or independent
entity.
(b) All trademarks, patents or copyrights which any
Borrower uses, plans to use or has a right to use are listed on Schedule
"5.13(b)" attached hereto and made part hereof. The Borrower identified on such
Schedule "5.13(b)" is the sole owner of such Property except to the extent any
other Person has claims or rights in such Property, as such claims and rights
are described on such Schedule "5.13(b)." To the best of each Borrower's
knowledge, no Borrower is in violation of any rights of any other Person with
respect to such Property.
5.14 OTHER ASSOCIATIONS: No Borrower is engaged or has an interest
in any joint venture or partnership with any other Person except as described on
Schedule "5.14" hereto and made part hereof.
5.15 ENVIRONMENTAL MATTERS: Except as disclosed on Schedule "5.15"
attached hereto and made part hereof:
(a) No Property presently owned, leased or operated by any
Borrower contains, or has previously contained, and, no
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property formerly owned, leased or operated by any Borrower or by any Merged
Entity during the period of such ownership, lease of operation, contained, any
Hazardous Substances in amounts or concentrations which (i) constitute or
constituted a violation of, or (ii) could give rise to liability under, any
Environmental Law.
(b) Each Borrower is in compliance, and, together with each of
the Merged Entities, for the duration of all applicable statutes of limitations
periods, have been in compliance with all applicable Environmental Laws, and
there is no contamination at, under or about any properties presently owned,
leased, or operated by any Borrower or violation of any Environmental Law with
respect to such properties which could reasonably be expected to interfere with
any of their continued operations or reasonably be expected to impair the fair
saleable value thereof.
(c) No Borrower has received any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws and no Borrower has
knowledge that any such notice will be received or is being threatened.
(d) Hazardous Substances have not been transported or
disposed of in a manner or to a location which are reasonably likely to give
rise to liability of any Borrower under any Environmental Law.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of any Borrower,
threatened, under any Environmental Law to which any Borrower is or, to any
Borrower's knowledge, will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding, the implementation
of which is reasonably likely to have a material adverse effect on any
Borrower's business, financial condition, Property or prospect under any
Environmental Law.
As used herein, the term "Hazardous Substances" means any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance or similar term, under any Environmental Law.
5.16 REGULATION O: No director, executive officer or principal
shareholder of any Borrower is a director, executive officer or principal
shareholder of any Lender. For the purposes
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hereof the terms "director" "executive officer" and "principal shareholder"
(when used with reference to a Lender), have the respective meanings assigned
thereto in Regulation O issued by the Board of Governors of the Federal Reserve
System.
5.17 CAPITAL STOCK: The authorized and outstanding Capital Stock of
each Borrower is as set forth on Schedule "5.17" attached hereto and made part
hereof. All of the Capital Stock of each Borrower has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all
Governmental Authorities governing the sale and delivery of securities. Except
for the rights and obligations set forth in Schedule "5.17", there are no
subscriptions, warrants, options, calls, commitments, rights or agreements by
which any Borrower or any of the shareholders of such Borrower is bound relating
to the issuance, transfer, voting or redemption of shares of its capital stock
or any pre-emptive rights held by any Person with respect to the shares of
Capital Stock of any Borrower. Except as set forth in Schedule "5.17", no
Borrower has issued any securities convertible into or exchangeable for shares
of its Capital Stock or any options, warrants or other rights to acquire such
shares or securities convertible into or exchangeable for such shares.
5.18 SOLVENCY: After giving effect to the transactions contemplated
under the Stock Purchase Agreement, the Merger Agreement and this Agreement,
each Borrower is solvent, is able to pay its respective debts as they become
due, and has capital sufficient to carry on its respective business and all
businesses in which each is about to engage, and now owns Property having a
value both at fair valuation and at present fair salable value greater than the
amount required to pay such entity's debts. No Borrower will be rendered
insolvent by the execution and delivery of this Agreement or any of the other
Loan Documents executed in connection with this Agreement or by the transactions
contemplated hereunder or thereunder.
5.19 INTERRELATEDNESS OF BORROWERS: The business operations of each
Borrower are interrelated and complement one another, and such companies have a
common business purpose, with inter-company bookkeeping and accounting
adjustments used to separate their respective Properties, Liabilities, and
transactions. To permit their uninterrupted and continuous operations, such
companies now require and will from time to time hereafter require funds for
general business purposes. The proceeds of Advances under the
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Revolving Credit and the making of the Term Loans will directly or indirectly
benefit each Borrower hereunder severally and jointly, regardless of which
Borrower requests or receives part or all of the proceeds of such advances.
5.20 STOCK PURCHASE AGREEMENT: The purchase of the stock of NEBH
and NEBC by Old Phoenix has been completed strictly in accordance with all
applicable law, and the Stock Purchase Agreement constitutes a valid and binding
agreement, enforceable against Old Phoenix in accordance with its terms. The
Stock Purchase Agreement, a true and correct copy of which is attached as
Exhibit "K" and made a part hereof, has not been amended or modified in any way.
5.21 MERGER AGREEMENT: The merger of Old Phoenix, NEBH and NEBC
into Phoenix has been completed strictly in accordance with all applicable law,
and the Merger Agreement constitutes a valid and binding agreement, enforceable
in accordance with its terms. The Merger Agreement, a true and correct copy of
which is attached collectively as Exhibit "L", made a part hereof has not been
amended or modified in any way.
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS
Each Borrower covenants that until all of Borrowers' Obligations to
Lenders, Issuer or Agent are paid and satisfied in full and the Revolving Credit
has been terminated:
6.1 PAYMENT OF TAXES AND CLAIMS: Each Borrower shall pay, before
they become delinquent,
(a) all taxes, assessments and governmental charges or
levies imposed upon it or upon such Borrower's Property, and
(b) all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other Persons entitled to the benefit of
statutory or common law Liens, which, if unpaid, would result in the imposition
of a Lien upon its Property;
provided, however, that such Borrower shall not be required to pay any such tax,
assessment, charge, levy, claim or demand if the amount, applicability or
validity thereof shall at the time be contested in good faith and by appropriate
proceedings by such Borrower, and if such Borrower shall have set aside on its
books adequate reserves in respect thereof, if so required in accordance with
GAAP; which deferment of payment is permissible so long as no
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Lien other than a Permitted Lien has been entered and such Borrower's title to,
and its right to use, its Property are not materially adversely affected
thereby.
6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE:
(a) PROPERTY - Each Borrower shall maintain its Property in
good condition (normal wear and tear excepted) and make all necessary renewals,
replacements, additions, betterments and improvements thereto and will pay and
discharge when due the cost of repairs and maintenance to its Property, and will
pay all rentals when due for all real estate leased by any Borrower.
(b) PROPERTY INSURANCE, PUBLIC AND PRODUCTS LIABILITY
INSURANCE - Each Borrower shall maintain insurance (i) on all insurable tangible
Property against fire, flood, casualty and such other hazards (including,
without limitation, extended coverage, workmen's compensation, boiler and
machinery, with inflation coverage by endorsement) and (ii) against public
liability, product liability and business interruption, in each case in such
amounts, with such deductibles and with such insurers as are customarily used by
companies operating in the same industry as Borrowers. At or prior to Closing,
Borrowers shall furnish Agent with duplicate original policies of insurance or
such other evidence of insurance as Agent may require. In the event any
Borrower fails to procure or cause to be procured any such insurance or to
timely pay or cause to be paid the premium(s) on any such insurance, Agent (on
behalf of Lenders) may do so for such Borrower, but such Borrower shall continue
to be liable for the same. The policies of all such casualty insurance shall
contain standard Mortgagee and Lender's Loss Payable Clauses (and, with respect
to liability and interruption insurance, additional insured clauses) issued in
favor of Agent under which all losses thereunder shall be paid to Agent (for the
ratable benefit of Lenders) as Agent's interest may appear. Such policies shall
expressly provide that the requisite insurance cannot be altered or canceled
without thirty (30) days prior written notice to Agent and shall insure Agent
notwithstanding the act or neglect of any Borrower. Each Borrower hereby
appoints Agent as such Borrower's attorney-in-fact, exercisable at Agent's
option to endorse any check (but only a check in excess of $100,000 if no Event
of Default has occurred) which may be payable to any Borrower in order to
collect the proceeds of such insurance and any amount or amounts collected by
Agent pursuant to the provisions of this paragraph may be applied by Agent, in
its sole discretion, to any Obligations or to repair, reconstruct or replace the
loss of or damage to Collateral as Agent
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in its reasonable judgment may from time to time determine. Borrowers further
covenant that all insurance premiums owing under its current policies have been
paid. Borrowers shall notify Agent, immediately, upon any Borrower's receipt of
a notice of termination, cancellation, or non-renewal from its insurance company
of any such policy.
(c) FINANCIAL RECORDS - Each Borrower shall keep current
and accurate books of records and accounts in which full and correct entries
will be made of all of its business transactions, and will reflect in its
financial statements adequate accruals and appropriations to reserves, all in
accordance with GAAP. No Borrower shall change its respective fiscal year end
date without the prior written consent of Agent.
(d) CORPORATE EXISTENCE AND RIGHTS - Each Borrower shall do
(or cause to be done) all things necessary to preserve and keep in full force
and effect its existence, good standing, rights and franchises.
(e) COMPLIANCE WITH LAWS - Each Borrower shall be in
compliance with any and all laws, ordinances, governmental rules and
regulations, and court or administrative orders or decrees to which it is
subject, whether federal, state or local, (including without limitation
Environmental Laws) and shall obtain any and all licenses, permits, franchises
or other governmental authorizations necessary to the ownership of its Property
or to the conduct of its businesses, which violation or failure to obtain causes
or could cause a Material Adverse Effect. Borrowers shall timely satisfy all
assessments, fines, costs and penalties imposed (after exhaustion of all
appeals, provided a stay has been put in effect during such appeal) by any
Governmental Authority against any Borrower or any Property of any Borrower.
6.3 BUSINESS CONDUCTED: Each Borrower shall continue in the
business presently operated by it using its best efforts to maintain its
customers and goodwill. No Borrower shall engage, directly or indirectly, in
any material respect in any line of business substantially different from the
businesses conducted by the Borrowers (or any of the Merged Entities)
immediately prior to the Closing Date.
6.4 LITIGATION: Borrowers shall give prompt notice to Agent of any
litigation claiming in excess of $250,000 from any Borrower, or which may
otherwise have a Material Adverse Effect.
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6.5 ISSUE TAXES: Each Borrower shall pay all taxes (other than
taxes based upon or measured by any Lender's income or revenues or any personal
property tax), if any, in connection with the issuance of the Revolving Credit
Notes or Term Loan Notes, and the recording of any lien documents. The
obligations of each Borrower hereunder shall survive the payment of Borrowers'
Obligations hereunder and the termination of this Agreement.
6.6 BANK ACCOUNTS: Each Borrower shall maintain its major
depository and disbursement account(s) with Agent.
6.7 EMPLOYEE BENEFIT PLANS: Each Borrower will (a) fund all its
Pension Plan(s) in a manner that will satisfy the minimum funding standards of
Section 302 of ERISA, or will promptly satisfy any accumulated funding
deficiency that arises under Section 302 of ERISA, (b) furnish Agent, promptly
after filing of the same, with copies of all reports or other statements filed
with the United States Department of Labor, the Pension Benefit Guaranty
Corporation ("PBGC") or the Internal Revenue Service ("IRS") with respect to all
Pension Plan(s), or which any Borrower, or any member of a Controlled Group, may
receive from the United States Department of Labor, the IRS or the PBGC, with
respect to all such Pension Plan(s), and (c) promptly advise Agent of the
occurrence of any reportable event (as defined in Section 4043 of ERISA, other
than a reportable event for which the thirty (30) day notice requirement has
been waived by the PBGC) or prohibited transaction (under Section 406 of ERISA
or Section 4975 of the Internal Revenue Code) with respect to any such Pension
Plan(s) and the action which such Borrower proposes to take with respect
thereto. Each Borrower will make all contributions when due with respect to any
multi employer pension plan in which it participates and will promptly advise
Agent upon (i) its receipt of notice of the assertion against such Borrower of a
claim for withdrawal liability, (ii) the occurrence of any event which, to the
best of each Borrower's knowledge, would trigger the assertion of a claim for
withdrawal liability against any Borrower, and (iii) upon the occurrence of any
event which, to the best of each Borrower's knowledge, would place any Borrower
in a Controlled Group as a result of which any member (including such Borrower)
thereof may be subject to a claim for withdrawal liability, whether liquidated
or contingent.
6.8 FINANCIAL COVENANTS: Borrowers shall maintain and comply with
the following financial covenants:
(a) FIXED CHARGE COVERAGE RATIO: Borrowers shall have and
maintain at all times a Fixed Charge Coverage Ratio of not less
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than the following during the following periods (measured quarterly on a rolling
four quarter basis):
PERIOD MINIMUM RATIO
------ -------------
December 31, 1996 through September 29, 1997 1.05 to 1.00
September 30, 1997 through September 29, 1998 1.25 to 1.00
September 30, 1998 and thereafter 1.50 to 1.00
(b) INTEREST COVERAGE RATIO: Borrowers shall have and
maintain at all times an Interest Coverage Ratio of not less than the following
during the following periods (measured quarterly on a cumulative basis so that
the calculation at (i) March 31, 1996 is based on three (3) months; (ii) June
30, 1006 is based on six (6) months, and (iii) September 30, 1996 is based on
nine (9) months):
PERIOD MINIMUM RATIO
------ -------------
March 31, 1996 through September 29, 1996 2.50 to 1.00
September 30, 1996 through December 30, 1996 3.00 to 1.00
(c) FUNDED DEBT TO OPERATING CASH FLOW RATIO: Borrowers
shall have and maintain at all times a Funded Debt to Operating Cash Flow Ratio
of not more than the following during the following periods (measured quarterly
on a rolling four-quarter basis or, with respect to the measuring periods ending
on March 31, 1996, June 30, 1996 and September 30, 1996, calculating the
Operating Cash Flow on an annualized basis):
PERIOD MINIMUM RATIO
------ -------------
Three months ending March 31, 1996 2.75 to 1.00
Six months ending June 30, 1996 2.65 to 1.00
Nine months ending September 30, 1996 2.30 to 1.00
Twelve months ending December 31, 1996
and through March 30, 1997 2.30 to 1.00
March 31, 1997 through September 29, 1997 2.00 to 1.00
September 30, 1997 through March 30, 1998 1.75 to 1.00
March 31, 1998 and thereafter 1.50 to 1.00
(d) FUNDED DEBT TO CONSOLIDATED CAPITALIZATION: Borrowers
shall have and maintain at all times a Funded Debt to
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Consolidated Capitalization Ratio of not more than the following during the
following periods:
PERIOD MAXIMUM RATIO
------ -------------
Closing Date through December 30, 1996 1.20 to 1.00
December 31, 1996 through December 30, 1997 1.05 to 1.00
December 31, 1997 through December 30, 1998 0.85 to 1.00
December 31, 1998 through December 30, 1999 0.65 to 1.00
December 31, 1999 and thereafter 0.50 to 1.00
(e) CONSOLIDATED TANGIBLE NET WORTH: Borrowers shall have
and maintain at all times a Consolidated Tangible Net Worth of not less than the
following during the following periods:
PERIOD MINIMUM AMOUNT
------ --------------
Closing Date through December 30, 1996 ($7,500,000)
December 31, 1996 through December 30, 1997 ($ 600,000)
December 31, 1997 through December 30, 1998 $8,500,000.00
December 31, 1998 through December 30, 1999 $19,000,000.00
December 31, 1999 through December 30, 2000 $30,000,000.00
December 31, 2000 and thereafter $40,000,000.00
(f) CAPITAL EXPENDITURES: Borrowers shall not expend for
Capital Expenditures more than the following amounts during the following
periods:
PERIOD MAXIMUM AMOUNT
------ --------------
Fiscal Year Ending December 31, 1996 $5,300,000.00
Fiscal Year Ending December 31, 1997 $3,000,000.00
Fiscal Year Ending December 31, 1998 $3,000,000.00
Fiscal Year Ending December 31, 1999 $3,000,000.00
Fiscal Year Ending December 31, 2000 $4,000,000.00
6.9 FINANCIAL AND BUSINESS INFORMATION: Borrowers shall deliver to
Agent the following:
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(a) FINANCIAL STATEMENTS AND COLLATERAL REPORTS: such
data, reports, statements and information, financial or otherwise, as Agent may
reasonably request, including, without limitation:
(i) within thirty (30) days after the end of each
calendar month in each fiscal year of Borrowers, the earnings and retained
earnings statement of Borrowers for such month and for the expired portion of
the fiscal year ending with the end of such month, setting forth in comparative
form the corresponding figures for the corresponding periods of the previous
fiscal year, and, for each fiscal year other than fiscal year 1996, a comparison
of Borrowers' actual earnings statement for such month compared to the monthly
earnings forecast required under Section 6.9(a)(v), and the consolidated and
consolidating balance sheet of Borrowers as at the end of such month, setting
forth in comparative form the corresponding figures as at the end of the
corresponding period of the previous fiscal year, all in reasonable detail and
certified by the chief financial officer of each Borrower to have been prepared
from the books and records of such Borrower, it being understood that for the
first thirteen (13) calendar months from the Closing Date comparative
information will not be available and cannot be furnished;
(ii) within ninety (90) days after the end of each
fiscal year of Borrowers, the earnings and retained earnings statement of
Borrowers for such year, the balance sheet of Borrowers as at the end of such
fiscal year and a statement of cash flows for such fiscal year, all on a
consolidated and consolidating basis, setting forth in each case in comparative
form the corresponding figures as at the end of and for the previous fiscal
year, all in reasonable detail, including all supporting schedules, and audited
and unqualifiedly certified by, beginning in fiscal year 1996, a Big "6"
independent public accounting firm, to have been prepared in accordance with
GAAP, and such independent public accountants shall also unqualifiedly certify
that in making the examinations necessary to their certification mentioned above
they have reviewed the terms of this Agreement and the accounts and conditions
of the Borrowers during the accounting period covered by the certificate and
that such review did not disclose the existence of any condition or event which
constitutes a Default or an Event of Default (or if such conditions or events
existed, describing them) together with copies of any management letters
provided by such accountants to management of any Borrower;
(iii) within fifteen (15) days of the end of each
calendar month, Borrowers' accounts receivable aging report,
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accounts payable aging report, inventory certificates, account status reports,
and such other reports as Agent reasonably deems necessary, certified by
Phoenix's chief financial officer as ory to Agent;
(iv) within sixty (60) days after each fiscal year
end, consolidated projections of Borrowers' earnings statements for the then
current and succeeding four (4) fiscal years; and a comparison of actual results
to the Projections for the just completed fiscal year; and
(v) within thirty (30) days prior to each fiscal year
end, a monthly forecast of Borrowers' consolidated earnings statement for each
month of the next succeeding fiscal year.
(b) NOTICE OF EVENT OF DEFAULT - promptly upon becoming
aware of the existence of any condition or event which constitutes a Default or
an Event of Default under this Agreement, a written notice specifying the nature
and period of existence thereof and what action Borrowers are taking (and
propose to take) with respect thereto;
(c) NOTICE OF CLAIMED DEFAULT - promptly upon receipt by
any Borrower, notice of default, oral or written, given to such Borrower by any
creditor for borrowed money, or holding long term Indebtedness of such Borrower
in excess of Two Hundred Fifty Thousand Dollars ($250,000.00);
(d) SECURITIES AND OTHER REPORTS - if any Borrower shall be
required to file reports with the Securities and Exchange Commission pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
promptly upon its becoming available, one copy of each financial statement,
report, notice or proxy statement sent by such Borrower to stockholders
generally, and, a copy of each regular or periodic report, and any registration
statement, or prospectus in respect thereof, filed by such Borrower with any
securities exchange or with federal or state securities and exchange commissions
or any successor agency.
6.10 OFFICERS' CERTIFICATES: Along with the set of financial
statements delivered to Agent at the end of each calendar month that is also the
end of a fiscal quarter pursuant to Section 6.9(a) hereof, Phoenix shall deliver
to Agent a certificate ("Quarterly Compliance Certificate") (in the form of
Exhibit "M" attached hereto and made a part hereof) from the chief financial
officer of Phoenix (and as to certificates accompanying the annual financial
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statements of Borrowers, also certified by Phoenix's independent certified
public accountant) setting forth:
(a) COVENANT COMPLIANCE - the information (including
detailed calculations) required in order to establish whether Borrowers are in
compliance with the requirements of Sections 6.8 as of the end of the period
covered by the financial statements then being furnished (and any exhibits
appended thereto) under Section 6.9; and
(b) EVENT OF DEFAULT - that the signer has reviewed the
relevant terms of this Agreement, and has made (or caused to be made under his
supervision) a review of the transactions and conditions of Borrowers from the
beginning of the accounting period covered by the income statements being
delivered therewith to the date of the certificate, and that such review has not
disclosed the existence during such period of any condition or event which
constitutes a Default or an Event of Default, specifying the nature and period
of existence thereof and what action Borrowers have taken or propose to take
with respect thereto.
6.11 AUDITS AND INSPECTION: Each Borrower shall permit any of
Agent's and Co-Agent's officers or other representatives to visit and inspect
upon reasonable notice during business hours any of the locations of any
Borrower, to examine and audit all of such Borrower's books of account, records,
reports and other papers, to make copies and extracts therefrom and to discuss
its affairs, finances and accounts with its officers, employees and independent
certified public accountants all at Borrowers' expense at the standard rates
charged by the Agent and Co-Agent for such activities (plus the Agent's and
Co-Agent's out-of-pocket expenses). Representatives of each Lender may
accompany Agent or Co-Agent during each such inspection and visit. Agent and
Co-Agent shall conduct at least two (2) audits per year.
6.12 TAX RETURNS AND REPORTS: At Agent's request from time to time,
Borrowers shall promptly furnish Agent with copies of the annual federal and
state income tax returns of each Borrower. Each Borrower further agrees that, if
requested by Agent, it shall promptly furnish Agent with copies of all reports
filed with any federal, state or local governmental authority or agency, board
or commission.
6.13 INFORMATION TO PARTICIPANT: Agent and each Lender may divulge
to any participant, assignee or co-lender or prospective participant, assignee
or co-lender it may obtain in the Revolving
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Credit or Term Loans, or any portion thereof, all information, and furnish to
such Person copies of any reports, financial statements, certificates, and
documents obtained under any provision of this Agreement, or related agreements
and documents; provided, however, such Participant, assignee, co-lender or
prospective participant, assignee or co-lender is aware of Agent's and such
Lender's covenant pursuant to Section 10.20 hereof and has agreed to comply with
such covenant.
6.14 MATERIAL ADVERSE DEVELOPMENTS: Each Borrower agrees that
immediately upon becoming aware of any development or other information outside
the ordinary course of business and excluding matters of a general economic,
financial or political nature which would reasonably be expected to materially
and adversely affect its businesses, financial condition, Property, prospects or
its ability to perform under this Agreement, it shall give to Agent telephonic
or telegraphic notice specifying the nature of such development or information
and such anticipated effect. In addition, such verbal communication shall be
confirmed by written notice thereof to Agent on the same day such verbal
communication is made on the next business day thereafter.
6.15 ENGAGEMENT OF BIG "6" ACCOUNTING FIRM: Borrowers shall engage,
no later than March 31, 1996, a Big "6" independent certified pubic accounting
firm, which firm shall prepare (beginning with the audited financial statements
for fiscal year ending December 31, 1996) the annual audited financial
statements of Borrowers required under Section 6.9(a) hereof and provide, in
conjunction therewith, management letters.
6.16 PLACES OF BUSINESS: Borrowers shall give thirty (30) days
prior written notice to Agent of any changes in the location of any of its
respective places of business, of the places where records concerning its
Accounts are kept, or the establishment of any new, or the discontinuance of any
existing place of business; provided that no Borrower may establish any place of
business outside of the United States.
6.17 FISCAL YEAR: Borrowers shall take all steps necessary to
change their consolidated fiscal year from its current September 30 end date to
a December 31 end date.
6.18 QUARTERLY IMPLEMENTATION: Borrowers shall provide Agent with a
written review prepared by Borrowers' chief financial officer, on a quarterly
basis for each fiscal quarter for the fiscal year that ends December 31, 1996,
within forty five (45)
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days of the end of each fiscal quarter, of Borrowers' actual financial results
as compared to the Projections.
6.19 ACCOUNT VERIFICATION: Whether or not a Default or Event of
Default has occurred, any of Agent's officers, employees or agents shall have
the right at any time, upon reasonable notice during business hours, in the name
of Agent or a Borrower, to verify the validity, amount or any other matter
relating to Accounts by mail, telephone or otherwise. Borrowers shall cooperate
fully with Agent, its officers, employees or agents in such process.
6.20 KEY MAN LIFE INSURANCE POLICIES: Within sixty (60) days after
the Closing Date, Borrowers shall obtain Key Man life insurance on ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (unless Borrowers furnish Agent
with proof of uninsurability of any of them for general health reasons from
three (3) insurers acceptable to Agent), in the amount of $2,500,000 each (the
proceeds of which shall be assigned to Agent for the ratable benefit of Lenders
by assignment documents in form and substance reasonably satisfactory to Agent),
to be in effect so long as the Obligations are outstanding. Any proceeds paid
to Agent pursuant to such assignments shall be held by Agent as collateral
security for the Obligations and may be applied against the Obligations upon the
occurrence of an Event of Default in such order as Agent may determine.
6.21 DISSOLUTION OF CLASSIC FOIL, INC.: Borrowers shall take all
steps necessary to dissolve, in accordance with applicable state law, Classic
Foil, Inc., a New York corporation and wholly owned subsidiary of Phoenix.
Borrowers shall furnish Agent with proof of such dissolution within ninety (90)
days from the date hereof.
6.22 REMOVAL OF PROPERTY FROM HINGHAM FACILITY. Borrowers shall,
within ninety (90) days from the Closing Date, either obtain a written
landlord's waiver satisfactory to Agent, or remove all of Borrowers' Property
from the facility located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and, after such removal, Borrowers shall not store or place any Proper
SECTION 7. BORROWERS' NEGATIVE COVENANTS:
Borrowers covenant that until all of the Obligations are paid and
satisfied in full and the Revolving Credit has been terminated, that:
7.1 MERGER, CONSOLIDATION, DISSOLUTION OR LIQUIDATION:
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(a) No Borrower shall engage in any Asset Sale other than
(i) Inventory sold in the ordinary course of such Borrower's business, and (ii)
equipment that is replaced by other equipment of comparable or superior quality
and value within ninety (90) days of such sale, lease, license, transfer or
other disposition.
(b) No Borrower shall merge or consolidate with any other
Person except with another Borrower or commence a dissolution or liquidation.
7.2 ACQUISITIONS: Except as permitted by Section 7.4(a), no
Borrower shall acquire all or a material portion of the Capital Stock or assets
of any Person in any transaction or in any series of related transactions or
enter into any sale and leaseback transaction.
7.3 LIENS AND ENCUMBRANCES: No Borrower shall: (i) execute a
negative pledge agreement with any Person covering any of its Property, or (ii)
cause or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), its Property (including, without
limitation, the Collateral), whether now owned or hereafter acquired, to be
subject to a Lien or be subject to any claim except for Permitted Liens. As
used herein, "Permitted Liens" means:
(a) Liens securing taxes, assessments or governmental
charges or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords, and other like persons, provided the payment thereof is
not at the time required by Section 6.1;
(b) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance,
social security and other like laws;
(c) Existing Liens described on Schedule "5.4"; and
(d) Liens constituting purchase money security interests
hereafter created by a Borrower to Persons providing financing for Capital
Expenditures permitted under this Agreement so long as each obligation secured
by a Lien permitted by this subparagraph (d) does not exceed 100% of the lower
of the cost or fair market value of the Property acquired with such financing.
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7.4 TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES:
(a) No Borrower shall enter into any transaction with any
Subsidiary or other Affiliate including, without limitation, the purchase, sale,
or exchange of Property, or the loaning or giving of funds to any Affiliate or
any Subsidiary unless (i) such Subsidiary or Affiliate is engaged in a business
substantially related to the business conducted by Borrowers, is a Borrower
hereunder and the transaction is in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's business and upon terms substantially
the same and no less favorable to such Borrower as it would obtain in a
comparable arm's-length transactions with any Person not an Affiliate or a
Subsidiary, and so long as such transaction is not prohibited hereunder; or (ii)
such transaction is intended for incidental administrative purposes. (An
"Affiliate" means any entity which directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with any
such Borrower. Control may be by ownership, contract, or otherwise.)
(b) No Borrower shall create or acquire any Subsidiary
unless such Subsidiary engages in a business substantially related to the
business of Borrowers as conducted immediately prior to the Closing Date and
joins into this Agreement (under agreements acceptable to Agent) as a Borrower
hereunder and into each of the other Loan Documents, in each case, as if an
original signatory thereto.
7.5 GUARANTEES: Excepting the endorsement in the ordinary course
of business of negotiable instruments for deposit or collection, no Borrower
shall become or be liable, directly or indirectly, primary or secondary, matured
or contingent, in any manner, whether as guarantor, surety, accommodation maker,
or otherwise, for the existing or future indebtedness of any kind of any Person.
7.6 DISTRIBUTIONS, BONUSES AND OTHER INDEBTEDNESS: No Borrower
shall: (a) declare or pay or make any forms of Distribution to its
shareholders, their successors or assigns other than dividends to Phoenix by a
Subsidiary of Phoenix and loans or advances to any shareholder that is also an
employee which loans or advances do not exceed in the aggregate as to all
shareholders at any one time Two Hundred Thousand Dollars ($200,000); (b)
declare or pay any bonus compensation to its shareholders, officers or directors
other than, so long as no Default or Event of Default has occurred and is
continuing (or would occur after giving effect to the payment of the Permitted
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Bonus) the Permitted Bonus; provided however that the Permitted Bonus in any
fiscal year cannot exceed the lesser of (i) One Million Five Hundred Thousand
Dollars ($1,500,000) or (ii) the amount of mandatory prepayments made pursuant
to Section 2.10(c)(iv) (relating to Net Free Cash Flow); and provided further
that (A) if the entire mandatory prepayment under Section 2.10(c)(iv) is due
April 1 of such year, the Permitted Bonus can only be paid after such payment is
made and (B) if the mandatory prepayment under Section 2.10(c)(iv) is payable on
April 1 and August 1 of such year, then up to fifty percent (50%) of the
Permitted Bonus can only be paid after the April 1 payment is made and the
balance of the Permitted Bonus can only be paid after the August 1 payment is
made; (c) hereafter incur or become liable for any Indebtedness other than from
Lenders hereunder except (i) Indebtedness giving rise to a Permitted Lien under
Section 7.3(d) and (ii) Indebtedness existing as of the date of this Agreement
and listed on Schedule "7.6" attached hereto and made a part hereof; (d) make
any prepayments of any nature whatsoever on any Indebtedness (other than
pursuant to Asset Sales or to Lenders, in each case as permitted hereunder); or
(e) make any payments (whether principal or interest) in connection with any of
the loans to shareholders, officers or directors listed on Schedule "7.6" until
Term Loan A has been paid in full.
7.7 LOANS AND INVESTMENTS: Except as expressly permitted in
Section 7.6, no Borrower shall make or have outstanding loans, advances,
extensions of credit or capital contributions to, investments in, any Person.
7.8 USE OF LENDERS' NAME: No Borrower shall use any Lender's name
(or the name of any of either Lender's Affiliates) or Agent's name in connection
with any of its business operations. Nothing herein contained is intended to
permit or authorize any Borrower to make any contract on behalf of any Lender or
Agent.
7.9 MISCELLANEOUS COVENANTS:
(a) No Borrower shall become or be a party to any contract
or agreement which at the time of becoming a party to such contract or agreement
materially impairs such Borrower's ability to perform under this Agreement, or
under any other instrument, agreement or document to which such Borrower is a
party or by which it is or may be bound.
(b) No Borrower shall carry or purchase any "margin stock"
within the meaning of Regulations U, G, T or X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II.
SECTION 8. DEFAULT
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8.1 EVENTS OF DEFAULT: Each of the following events shall
constitute an event of default ("Event of Default"):
(a) PAYMENTS - if any Borrower fails to make any payment of
principal or interest, including any Overadvance, under the Revolving Credit or
any Term Loan on the due date of such payment; or
(b) OTHER CHARGES - if any Borrower fails to pay any other
charges, fees, Expenses or other monetary obligations owing to any Lender or
Agent arising out of or incurred in connection with this Agreement within five
(5) Business Days after the date such payment is due and payable; or
(c) PARTICULAR COVENANT DEFAULTS - if any Borrower fails to
perform, comply with or observe any covenant or undertaking contained in this
Agreement and (other than with respect to the covenants contained in Section 6.8
and Section 7 for which no cure period shall exist) such failure continues for
thirty (30) days after Agent has given Borrowers notice thereof; or
(d) FINANCIAL INFORMATION - if any statement, report,
financial statement, or certificate made or delivered by any Borrower or any of
its officers, employees or agents, to Agent or any Lender is not true and
correct, in all material respects, when made; or
(e) UNINSURED LOSS - if there shall occur any uninsured
damage to or loss, theft, or destruction in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate with respect to any portion of any
Property of any Borrower; or
(f) WARRANTIES OR REPRESENTATIONS - if any warranty,
representation or other statement by or on behalf of any Borrower contained in
or pursuant to this Agreement, the other Loan Documents or in any document,
agreement or instrument furnished in compliance with, relating to, or in
reference to this Agreement, is false, erroneous, or misleading in any material
respect when made; or
(g) AGREEMENTS WITH OTHERS - if any Borrower shall default
beyond any grace period under any agreement with any third party creditor for
the payment of principal or interest of any Indebtedness from such Borrower, if
the effect of such default is to cause such Borrower's obligations which are the
subject thereof to become due prior to its maturity date or prior to its
regularly scheduled date of payment;
(h) OTHER AGREEMENTS WITH LENDERS - if any Borrower breaches
or violates the terms of, or if a default or an Event of Default, occurs under,
any other existing or future agreement (related or unrelated)
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(including, without limitation, the other Loan Documents) between any Borrower
or among Borrowers and Agent or any Lender or all Lenders; or
(i) JUDGMENTS - if any final judgment for the payment of
money in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in the
aggregate (i) which is not fully and unconditionally covered by insurance or
(ii) for which such Borrowers have not established a cash or cash equivalent
reserve in the full amount of such judgment shall be rendered by a court of
record against any Borrower and such judgment shall continue unsatisfied and in
effect for a period of thirty (30) consecutive days without being vacated,
discharged, satisfied or bonded pending appeal;
(j) ASSIGNMENT FOR BENEFIT OF CREDITORS, ETC. - if any
Borrower makes or proposes, in writing an assignment for the benefit of
creditors generally, offers a composition or extension to creditors, or makes or
sends notice of an intended bulk sale of any business or assets now or hereafter
owned or conducted by any Borrower; or
(k) BANKRUPTCY, DISSOLUTION, ETC. - upon the commencement
of any action for the dissolution or liquidation of any Borrower, or the
commencement of any proceeding to avoid any transaction entered into by any
Borrower, or the commencement of any case or proceeding for reorganization or
liquidation of any Borrower's debts under the Bankruptcy Code or any other state
or federal law, now or hereafter enacted for the relief of debtors, whether
instituted by or against such Borrower; PROVIDED, HOWEVER, that such Borrower
shall have ninety (90) days to obtain the dismissal or discharge of involuntary
proceedings filed against it, it being understood that during such ninety (90)
day period, no Lender shall be obligated to make Advances hereunder and Agent
may seek adequate protection in any bankruptcy proceeding; or
(l) RECEIVER - upon the appointment of a receiver,
liquidator, custodian, trustee or similar official or fiduciary for any Borrower
or for any Borrower's Property; or
(m) EXECUTION PROCESS, ETC. - the issuance of any execution
or distraint process against any Collateral or, with respect to any judgments
seeking in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in the
aggregate, any other Property of any Borrower; or
(n) TERMINATION OF BUSINESS - if any Borrower ceases any
material portion of its business operations as presently conducted; or
(o) PENSION BENEFITS, ETC. - if any Borrower fails to comply
with ERISA so that proceedings are commenced to appoint a trustee under ERISA to
administer such Borrower's employee plans or the Pension Benefit Guaranty
Corporation institutes proceedings to appoint a trustee to administer such
plan(s), or a Lien is entered to secure any defi-
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ciency or claim or a "reportable event" as defined under ERISA occurs; or
(p) INVESTIGATIONS - any indication or evidence received by
Agent or any Lender that reasonably leads it to believe any Borrower may have
directly or indirectly been engaged in any type of activity which, would be
reasonably likely to result in the forfeiture of any material property of any
Borrower to any governmental entity, federal, state or local; or
(q) CHANGE OF CONTROL - if there shall occur a Change of
Control.
8.2 CURE - Intentionally Omitted.
8.3 RIGHTS AND REMEDIES ON DEFAULT:
(a) In addition to all other rights, options and remedies
granted or available to Agent or Lenders under this Agreement or the Loan
Documents (each of which is also then exercisable by Agent), or otherwise
available at law or in equity, upon or at any time after the occurrence and
during the continuance of a Default or an Event of Default, Agent may, in its
discretion, and the Majority Lenders shall have the right to cause Agent to, (by
written notice to Agent) to withhold or cease making Advances under the
Revolving Credit.
(b) In addition to all other rights, options and remedies
granted or available to Agent under this Agreement or the Loan Documents (each
of which is also then exercisable by Agent), Agent may, in its discretion, and
the Majority Lenders shall have the right to cause Agent (by written notice to
Agent), upon or at any time after the occurrence and during the continuance of
an Event of Default to terminate the Revolving Credit and to declare the
Obligations immediately due and payable, all without demand, notice, presentment
or protest or further action of any kind (it also being understood that the
occurrence of any of the events or conditions set forth in Sections 8.1(j),(k)
or (l) shall automatically cause an acceleration of the Obligations).
(c) In addition to all other rights, options and remedies
granted or available to Agent, under this Agreement or the Loan Documents (each
of which is also then exercisable by Agent), upon or at any time after the
occurrence and during the continuance of an Event of Default, Borrowers shall be
obligated to deliver and pledge to Agent, on behalf of all Lenders, cash
collateral in the amount of all outstanding Letters of Credit.
(d) In addition to all other rights, options and remedies
granted or available to Agent under this Agreement or the Loan Documents (each
of which is also then exercisable by Agent), Agent may, or at the
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direction of Majority Lenders, shall, upon or at any time after the acceleration
of the Obligations following occurrence of an Event of Default (other than the
rights with respect to clause (iv) below which Agent may exercise at any time
after an Event of Default and regardless of whether there is an acceleration),
exercise all rights under the UCC and any other applicable law or in equity, and
under all Loan Documents permitted to be exercised after the occurrence of an
Event of Default, including the following rights and remedies (which list is
given by way of example and is not intended to be an exhaustive list of all such
rights and remedies):
(i) The right to take possession of, send notices
regarding and collect directly the Collateral, with or without judicial process
(including without limitation the right to notify the United States postal
authorities to redirect th judicial assistance, enter any Borrower's premises
and take possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises in compliance with subsection (e) below, without any
liability for rent, storage, utilities or other sums, and such Borrower shall
not resist or interfere with such action; or
(iii) Require any Borrower at such Borrower's expense to
assemble all or any part of the Collateral (other than real estate or fixtures)
and make it available to Agent at any place designated by Agent; or
(iv) The right to reduce or modify the Maximum
Revolving Credit Amount, Borrowing Base or any portion thereof or the advance
rates or to modify the terms and conditions upon which Lenders may be willing to
consider making Advances under the Revolving Credit or to take additional
reserves in the Borrowing Base for any reason; or
(e) Borrowers each hereby agree that a notice received by
it at least seven (7) days before the time of any intended public sale or of the
time after which any private sale or other disposition of the Collateral is to
be made, shall be deemed to be reasonable notice of such sale or other
disposition. If permitted by applicable law, any perishable inventory or
Collateral which threatens to speedily decline in value or which is sold on a
recognized market may be sold immediately by Agent without prior notice to any
Borrower. Each Borrower covenants and agrees not to interfere with or impose
any obstacle to Agent's exercise of its rights and remedies with respect to the
Collateral, after the occurrence of an Event of Default hereunder.
8.4 NATURE OF REMEDIES: All rights and remedies granted Agent
hereunder and under the Loan Documents, or otherwise available at law or in
equity, shall be deemed concurrent and cumulative, and not alternative remedies,
and Agent may proceed with any number of remedies at the same time until all
Obligations are satisfied in full. The
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exercise of any one right or remedy shall not be deemed a waiver or release of
any other right or remedy, and Agent, upon or at any time after the occurrence
of an Event of Default, may proceed against any Borrower, at any time, under any
agreement, with any available remedy and in any order.
8.5 SET-OFF: If any bank account of any Borrower with Agent, any
Lender or any participant is attached or otherwise liened or levied upon by any
third party, such Lender (and such participant) as agent for the ratable benefit
of all Lenders shall have and be deemed to have, without notice to Borrowers or
any of them, the immediate right of set-off and may apply the funds or amount
thus set-off against any of Borrowers' Obligations hereunder.
SECTION 9. AGENT
As between Agent, on one hand, and Lenders, on the other hand, Agent
and each Lender, who are now or shall become parties to this Agreement, agree as
follows (with the consent and approval of Borrowers):
9.1 APPOINTMENT AND AUTHORIZATION. Each Lender, and each
subsequent holder of any of the Revolving Credit Notes or Term Loan Notes by its
acceptance thereof, hereby irrevocably appoints and authorizes Agent to take
such action on its behalf and to exercise such powers under this Agreement as
are delegated to Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. Subject to the provisions of this Agreement,
Agent will handle all transactions relating to the Loans and all other
Obligations, including, without limitation, all transactions with respect to
Letters of Credit, this Agreement, the Loan Documents and all related documents
in accordance with its usual banking practices. Except as otherwise expressly
provided herein, Borrowers are hereby authorized by Lenders to deal solely with
Agent in all transactions which affect Lenders under this Agreement and the Loan
Documents. The rights, privileges and remedies accorded to Agent hereunder
shall be exercised by Agent on behalf of all of Lenders.
9.2 GENERAL IMMUNITY. In performing its duties as Agent hereunder,
Agent will take the same care as it takes in connection with loans in which it
alone is interested. Subject to Section 9.6 of this Agreement, 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 hereunder or in connection
herewith except as such action or omission are caused solely from its or their
own gross negligence or willful misconduct unless such action was taken or
omitted to be taken by Agent at the direction of Majority Lenders.
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9.3 CONSULTATION WITH COUNSEL. Agent may consult with legal
counsel and any other professional advisors or consultants deemed necessary or
appropriate and selected by Agent and shall not be liable for any action taken
or suffered in good faith by it in accordance with the advice of such counsel.
9.4 DOCUMENTS. Agent shall not be under a duty to examine into or
pass upon the effectiveness, genuineness or validity of this Agreement or any of
the Revolving Credit Notes or Term Loan Notes or any other instrument or
document furnished pursuant hereto or in connection herewith, and Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be. In addition Agent shall not be liable for failing to make any
inquiry concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument or document. Subject to Section
10.20, Agent shall furnish to Lenders copies of all notices and financial
statements received from Borrowers hereunder.
9.5 RIGHTS AS A LENDER. With respect to its applicable Revolving
Credit Pro Rata Share and Term Loan Pro Rata Share, Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include Agent in its individual capacity. Subject
to the provisions of this Agreement, Agent may accept deposits from, lend money
to and generally engage in any kind of banking or trust business with Borrowers
and their Affiliates and Subsidiaries as if it were not Agent.
9.6 RESPONSIBILITY OF AGENT. It is expressly understood and agreed
that the obligations of Agent hereunder are only those expressly set forth in
this Agreement and that Agent shall be entitled to assume that no Default or
Event of Default, has occurred and is continuing, unless Agent has actual
knowledge of such fact. Except to the extent Agent is required by Lenders
pursuant to the express terms hereof to take a specific action, Agent shall be
entitled to use its discretion with respect to exercising or refraining from
exercising any rights which may be vested in it by, or with respect to taking or
refraining from taking any action or actions that it may be able to take under
or in respect of, this Agreement and the Loan Documents. Agent shall incur no
liability under or in respect of this Agreement and the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party or
parties, or with respect to anything that it may do or refrain from doing in the
reasonable exercise of its judgment, or that may seem to it to be necessary or
desirable under the circumstances. It is agreed among Agent and Lenders that
Agent shall have no responsibility to carry out audits or otherwise examine the
books and records or properties of Borrowers, except as Agent in its sole
discretion deems appropriate or as otherwise expressly required
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hereunder. The relationship between Agent and each Lender is and shall be that
of agent and principal only and nothing herein shall be construed to constitute
Agent a joint venturer with any Lender, a trustee or fiduciary for any of
Lenders or for the holder of a participation therein nor impose on Agent duties
and obligations other than those set forth herein.
9.7 COLLECTIONS AND DISBURSEMENTS.
(a) Agent will have the right to collect and receive all
payments of the Obligations, and to collect and receive all reimbursements for
draws made under the Letters of Credit, together with all fees, charges or other
amounts due under this Agreement and the Loan Documents, and Agent will remit to
each Lender, according to its applicable Pro Rata Percentage, all such payments
actually received by Agent (subject to any required clearance procedures) in
accordance with the settlement procedures established by Agent and Co-Agent from
time to time.
(b) If any such payment received by Agent is rescinded or
otherwise required to be returned for any reason at any time, whether before or
after termination of this Agreement and the Loan Documents, each Lender will,
upon written notice from Agent, promptly pay over to Agent its Pro Rata
Percentage of the amount so rescinded or returned, together with interest and
other fees thereon if also required to be rescinded or returned.
(c) All payments by Agent and Lenders to each other
hereunder shall be in immediately available funds. Agent will at all times
maintain proper books of account and records reflecting the interest of each
Lender in the Revolving Credit and the Letters of Credit and the Term Loans, in
a manner customary to Agent's keeping of such records, which books and records
shall be available for inspection by each Lender at reasonable times during
normal business hours, at such Lender's sole expense. Agent may treat the
payees of any Revolving Credit Note or Term Loan Note as the holder thereof
until written notice of the transfer thereof shall have been received by Agent.
In the event that any Lender shall receive any payments in reduction of the
Revolving Credit or Term Loans in an amount greater than its applicable Pro Rata
Percentage in respect of indebtedness to Lenders evidenced hereby (including,
without limitation amounts obtained by reason of setoffs), such Lender shall
hold such excess IN TRUST for Agent (on behalf of all other Lenders) and shall
promptly remit to Agent such excess amount so that the amounts received by each
Lender hereunder shall at all times be in accordance with its applicable Pro
Rata Percentage. To the extent necessary for each Lender's actual percentage of
all outstanding Loans to equal its applicable Pro Rata Percentage, Lender having
a greater share of any payment(s) than its applicable Pro Rata Percentage shall
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acquire a participation in the applicable Revolving Credit Pro Rata Share or
applicable Term Loan Pro Rata Shares of the Other Lender as determined by
Agent.
9.8 INDEMNIFICATION. Lenders hereby each indemnify Agent (and
Issuer with respect to Letters of Credit) ratably according to each Lender's Pro
Rata Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by or asserted
against Agent (or Issuer, as the case may be) in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
by Agent (or Issuer, as the case may be) under or related to this Agreement or
the Loans, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from Agent's (or Issuer's, as
the case may be) gross negligence or willful misconduct unless such action was
taken or omitted by Agent (or Issuer, as the case may be) at the direction of
the Majority Lenders. Agent shall have the right to deduct, from any amounts to
be paid by Agent to any Lender hereunder, any amounts owing to Agent by such
Lender by virtue of this paragraph.
9.9 EXPENSES.
(a) All out-of-pocket costs and out-of-pocket expenses
incurred by Agent and not reimbursed on demand by Borrowers, in connection with
the analysis, negotiation, preparation, consummation, creation, amendment,
administration, termination, work-out, forbearance and enforcement of the Loans
(including, without limitation, audit expenses, counsel fees and expenditures to
protect, preserve and defend Agent's and each Lender's rights and interest under
the Loan Documents) shall be shared and paid on demand by Lenders pro rata based
on their applicable Pro Rata Percentage.
(b) Agent may deduct from payments or distributions to be
made to Lenders such funds as may be necessary to pay or reimburse Agent for
such costs or expenses.
9.10 NO RELIANCE. By execution of or joining in this Agreement,
each Lender acknowledges that it has entered into this Agreement and the Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by Agent. Each Lender
shall continue to make its own analysis and evaluation of Borrowers. Agent
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Borrower, any obligor or any account debtor of
any Borrower; the accuracy, sufficiency or currency of any information
concerning the financial condition, prospects or results of operations of any
Borrower; or for sufficiency, authenticity, legal effect, validity or
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enforceability of the Loan Documents. Agent assumes no responsibility or
liability with respect to the collectibility of the Obligations or the
performance by Borrowers of any obligation under the Loan Documents.
9.11 REPORTING. During the term of this Agreement, and subject to
Section 10.20, Agent will promptly furnish each Lender with copies of all
financial statements of Borrowers to be delivered or obtained hereunder and such
other financial statements and reports as any Lender may reasonably request.
Agent will immediately notify Lenders when it receives actual knowledge of any
Event of Default under the Loan Documents.
9.12 REMOVAL OF AGENT. Agent may resign at any time upon giving
thirty (30) days prior written notice thereof to Lenders and Borrowers. Agent
may be removed as Agent hereunder upon the written consent of all Lenders
exclusive of Agent upon the following: (i) wilful misconduct in the performance
of Agent's duties or responsibilities under this Agreement; or (ii) if a
receiver, trustee or conservator is appointed for Agent or any state or federal
regulatory authority assumes management or control of Agent or if, under
applicable law, the administrative or discretionary duties and responsibilities
of Agent hereunder become controlled by or subject to the approval of any state
or federal regulatory authority. Upon any resignation or permitted removal of
Agent, Co-Agent shall become the Agent. If Co-Agent declines to become the
Agent, the Lenders (exclusive of Agent) shall have the right to appoint a
successor Agent by majority vote of the other Lenders (based upon the Pro Rata
Percentages of the other Lenders). Upon the acceptance of the appointment as a
successor Agent hereunder by such successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, obligations and
duties of the retiring Agent and the retiring Agent shall be discharged from its
duties and obligations hereunder.
9.13 ACTION ON INSTRUCTIONS OF LENDERS. With respect to any
provision of this Agreement, or any issue arising thereunder, concerning which
Agent is authorized to act or withhold action by direction of Lenders, Agent
shall in all cases be fully protected in so acting, or in so refraining from
acting, hereunder in accordance with written instructions signed by Lenders.
Such instructions and any action taken or failure to act pursuant thereto shall
be binding on all Lenders and on all holders of the Revolving Credit Notes and
Term Notes.
9.14 SEVERAL OBLIGATIONS. The obligation of each Lender is several,
and neither Agent nor any other Lender shall be responsible for the obligation
and commitment of any other Lender.
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9.15 CONSENT OF LENDERS.
(a) Except as expressly provided herein, Agent shall have
the sole and exclusive right to service, administer and monitor the Loans and
the Loan Documents, including without limitation, the right to exercise all
rights, remedies, privileges and options under the Loan Documents, including
without limitation the credit judgment with respect to the making of Advances
and the determination as to the basis on which and extent to which Advances may
be made and the determination as to whether draws should be honored for Letters
of Credit.
(b) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent shall not, without the prior written consent of
all Lenders: (i) extend any payment date under the Revolving Credit Notes or
Term Loan Notes, the Current Revolving Credit Maturity Date, the Term Loan A
Maturity Date or Term Loan B Maturity Date, (ii) except as contemplated under
this Agreement, reduce any interest rate applicable to the Revolving Credit or
either Term Loan, any fee payable hereunder or any fee for any Letter of Credit,
(iii) increase the Facility Limit, (iv) compromise or settle all or a portion of
the Obligations, (v) release any obligor from the Obligations except in
connection with termination of the Revolving Credit and full payment and
satisfaction of all Obligations, (vi) amend the definition of Majority Lenders,
(vii) amend this Section 9.15(b), or (viii) except for releases of Collateral
under Section 3.8 hereunder, release Collateral in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00) in the aggregate in any fiscal year.
(c) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent shall not, without the prior written consent of
Majority Lenders: (i) enter into any written amendment to any of the Loan
Documents; (ii) waive any Borrower's compliance with the terms and conditions of
the Loan Documents or any Event of Default hereunder or thereunder; or (iii)
consent to any Borrower's taking any action which, if taken, would constitute an
Event of Default under this Agreement or under any of the Loan Documents.
(d) After an acceleration of the Obligations, Agent shall
have the sole and exclusive right, after consultation (to the extent reasonably
practicable under the circumstances) with all Lenders, and, unless otherwise
directed by the Majority Lenders, to exercise or refrain from exercising any and
all right, remedies, privileges and options under the Loan Documents and ations,
including, without limitation, instituting and pursuing all legal actions
brought against any Borrower or to collect the Obligations, or defending any and
all actions brought by any Borrower or other Person; or incurring Expenses or
otherwise making expenditures to protect the Loans, the Collateral or Lenders'
rights or remedies.
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(e) To the extent Agent is required to obtain or otherwise
elects to seek the consent of Lenders to an action Agent desires to take, if any
Lender fails to notify Agent, in writing, of its consent or dissent to any
request of Agent hereunder within five (5) days of such Lender's receipt of such
request, such Lender shall be deemed to have given its consent thereto.
9.16 PARTICIPATION AND ASSIGNMENTS: Borrowers hereby acknowledge
and agree that a Lender may at any time: (a) grant any participation(s) in up
to forty-nine percent (49%) of its Revolving Credit Pro Rata Share and Term Loan
Pro Rata Share and of its right, title and interest therein and in or to this
Agreement (collectively, "Participation") to any other lending office of such
Lender or to any other bank, lending institution or other entity which the
granting Lender reasonably determines has the requisite sophistication to
evaluate the merits and risks of investments in Participation ("Participants");
provided, however, that: (i) all amounts payable by Borrowers to each Lender
hereunder shall be determined as if such Lender had not granted such
Participation; and (ii) any agreement pursuant to which any Lender may grant a
Participation: (A) shall provide that such Lender shall retain the sole right
and responsibility to enforce the obligations of Borrowers hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement; (B) such participation agreement may
provide that such Lender will not agree to any modification, amendment or waiver
of this Agreement without the consent of the Participant if such amendment,
modification or waiver would reduce the principal of or, except as contemplated
in this Agreement, the rate of interest on the Loans, increase the amount of the
Facility Limit, postpone the date fixed for any scheduled payment of principal
of or interest on the Loans, subject to Section 9.15 hereof; and (C) shall not
relieve such Lender from any of its obligations under this Agreement, which
shall remain absolute (including without limitation its obligation to make
Advances hereunder); and (b) assign, pursuant to an Assignment and Acceptance
substantially in the form of Exhibit "N", attached hereto and made a part hereof
(the "Assignment") (i) all or any percent of its Revolving Credit Pro Rata Share
and Term Loan Pro Rata Share or any right, title and interest therein or in and
to this Agreement to Agent or Co-Agent (in their capacity as a "Lender") or any
Affiliate of Agent or Co-Agent; or (ii) up to forty nine percent (49%) of its
Revolving Credit Pro Rata Share or Term Loan Pro Rata Share (but in no event
less than Five Million Dollars ($5,000,000.00) in the aggregate of such
Revolving Credit Pro Rata Share and Term Loan Pro Rata Share) and any right,
title and interest therein and in and to this Agreement to another financial
institution, with the prior written consent of the Agent and Borrowers which
consent shall not be unreasonably withheld, which assignment shall in the case
of (i) or (ii) above shall be accompanied by payment to the Agent of a $2,500
transfer fee. Notwithstanding the immediately preceding sentence, Borrowers'
consent shall not be required for Agent's
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and Co-Agent's assignment of up to twenty five percent (25%) of each such
Lender's Revolving Credit Pro Rata Share, Term Loan A Pro Rata Share and Term
Loan B Pro Rata Share to any domestic financial institution having capital and
surplus of at least One Hundred Million Dollars ($100,000,000.00). Upon the
execution by the assignor or assignee of the Assignment, and delivery to Agent
of such Assignment for acceptance, the assigning Lender shall, to the extent
provided in such Assignment, be released from its obligations under this
Agreement and the assignee thereunder shall be a party hereto and, to the extent
provided in such Agreement, have the rights and obligations of a Lender
hereunder. All participations and assignments hereunder shall be of the
Revolving Credit and Term Loans in the same proportion as is the Revolving
Credit Pro Rata Shares and Term Loan Pro Rata Shares of the Lender making the
assignment or granting the Participation.
SECTION 10. MISCELLANEOUS
10.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND
DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT AND
ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE DEEMED
SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL NOT
AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND
EFFECT.
10.2 INTEGRATED AGREEMENT: The Revolving Credit Notes, the Term
Loan Notes the other Loan Documents, all related agreements, and this Agreement
shall be construed as integrated and complementary of each other, and as
augmenting and not restricting Lender's rights and remedies. If, after applying
the foregoing, an inconsistency still exists, the provisions of this Agreement
shall constitute an amendment thereto and shall control.
10.3 WAIVER: No omission or delay by Agent in exercising any right
or power under this Agreement or any related agreements and documents will
impair such right or power or be construed to be a waiver of any default, or
Event of Default or an acquiescence therein, and any single or partial exercise
of any such right or power will not preclude other or further exercise thereof
or the exercise of any other right, and as to Borrowers no waiver will be valid
unless in writing and signed by Agent and then only to the extent specified.
10.4 INDEMNITY:
(a) Each Borrower releases and shall indemnify, defend and
hold harmless Agent and Lenders, and their respective officers, employees and
agents, of and from any claims, demands, liabilities, obligations, judgments,
injuries, losses, damages and costs and expenses
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(including, without limitation, reasonable legal fees) resulting from (i) acts
or conduct of any Borrower or all Borrowers under, pursuant or related to this
Agreement and the other Loan Documents, (ii) Borrowers' breach or violation of
any representation, warranty, covenant or undertaking contained in this
Agreement or the other Loan Documents, and (iii) Borrowers' failure to comply
with any or all laws, statutes, ordinances, governmental rules, regulations or
standards, whether federal, state or local, or court or administrative orders or
decrees, (including without limitation Environmental Laws, etc.) and all costs,
expenses, fines, penalties or other damages resulting therefrom, unless
resulting solely from acts or conduct of Agent or Lenders constituting wilful
misconduct or gross negligence.
(b) Promptly after receipt by an indemnified party under
subsection (a) above of notice of the commencement of any action by a third
party, such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof. The omission so to notify the
indemnifying party shall relieve the indemnifying party from any liability which
it may have to any indemnified party under such subsection only if the
indemnifying party is unable to defend such actions as a result of such failure
to so notify. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnified party), and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.
10.5 TIME: Whenever any Borrower shall be required to make any
payment, or perform any act, on a day which is not a Business Day, such payment
may be made, or such act may be performed, on the next succeeding Business Day.
Time is of the essence in Borrowers' performance under all provisions of this
Agreement and all related agreements and documents.
10.6 EXPENSES OF AGENT, CO-AGENT AND LENDERS: At Closing and from
time to time thereafter, Borrowers will pay promptly upon demand of Agent all
reasonable costs, fees and expenses (a) of Agent and Co-Agent in connection with
(i) the analysis, negotiation, preparation, execution, administration and
delivery of this Agreement and other Loan Documents and the documents and
instruments referred to herein and
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therein and any amendment, amendment and restatement, supplement, waiver or
consent relating hereto or thereto, whether or not any such amendment, amendment
and restatement, supplement, waiver or consent is executed or becomes effective
(including, without limitation, audit fees for two(2) audits per year provided
no Default or Event of Default has occurred in which case there shall be no
limitation on the number of audits for which Agent and Co-Agent shall be
reimbursed, search costs, the reasonable fees, expenses and disbursements of
counsel for Agent and Co-Agent and reasonable charges of any expert consultant
to Agent and Co-Agent) and (ii) the syndication of the commitments (not to
exceed in any event the aggregate of Ten Thousand Dollars ($10,000.00) and (b)
of Agent and Co-Agent and the Lenders in connection with the enforcement of any
Obligations of, or the collection of any payments owing from, Borrowers under
this Agreement and/or the other Loan Documents or protection or defense of the
rights of Lenders and/or Agent and Co-Agent under the Loan Documents, following
the occurrence of any Event of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement and other
Loan Documents in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings, or otherwise (including the reasonable fees and disbursements of
counsel for Agent and Co-Agent and Lenders and reasonable allocated costs of
internal counsel) (collectively, the "Expenses");
10.7 BROKERAGE: This transaction was brought about and entered into
by Agent, Lenders and Borrowers acting as principals and without any brokers,
agents or finders being the effective procuring cause hereof. Each Borrower
represents that it has not committed Agent or any Lender to the payment of any
brokerage fee, commission or charge in connection with this transaction. If any
such claim is made on Agent or any Lender by any broker, finder or agent or
other person, Borrowers hereby indemnify, defend and save such party harmless
against such claim and further will defend, with counsel satisfactory to Agent,
any action or actions to recover on such claim, at Borrowers' own cost and
expense, including such party's reasonable counsel fees. Borrowers further
agree that until any such claim or demand is adjudicated in such party's favor,
the amount demanded shall be deemed a liability of Borrowers under this
Agreement.
10.8 NOTICES:
(a) Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed given if delivered in person
or if sent by telecopy or by nationally recognized overnight courier, as
follows, unless such address is changed by written notice hereunder:
If to Agent to: CoreStates Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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F.C. 1-8-4-20
Philadelphia, PA 19102
Attn: ▇▇. ▇▇▇▇▇,
Vice President
With copies to: Blank, Rome, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Four ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
If to Borrowers to: Phoenix Color Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,Esquire
If to Lenders: To the addresses set forth on Schedule A
(b) Any notice sent by Agent, any Lender or Borrowers by
any of the above methods shall be deemed to be given when so received.
(c) Agent shall be fully entitled to rely upon any telecopy
transmission or other writing purported to be sent by any Authorized Officer
(whether requesting an Advance or otherwise) as being genuine and authorized.
10.9 HEADINGS: The headings of any paragraph or Section of this
Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
10.10 SURVIVAL: All warranties, representations, and covenants made
by Borrowers herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement, shall be considered to have been relied upon by Agent and
Lenders, and shall survive the delivery to Lenders of the Revolving Credit Notes
and Term Loan Notes, regardless of any investigation made by Lenders or on their
behalf. All statements in any such certificate or other instrument prepared
and/or delivered for the benefit of Agent and any and all Lenders shall
constitute warranties and representations by Borrowers hereunder. Except as
otherwise expressly
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provided herein, all covenants made by Borrowers hereunder or under any other
agreement or instrument shall be deemed continuing until all Obligations are
satisfied in full.
10.11 SUCCESSORS AND ASSIGNS: This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties. No Borrower may transfer, assign or delegate any of its duties or
obligations hereunder.
10.12 DUPLICATE ORIGINALS: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterpart, all of which counterparts taken
together shall constitute one completed fully executed document.
10.13 MODIFICATION: No modification hereof or any agreement referred
to herein shall be binding or enforceable unless in writing and signed by
Borrowers, Agent and the Lenders or, if applicable, Majority Lenders.
10.14 SIGNATORIES: Each individual signatory hereto represents and
warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a
party.
10.15 THIRD PARTIES: No rights are intended to be created hereunder,
or under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of any Borrower. Nothing contained in
this Agreement shall be construed as a delegation to Agent or any Lender of
Borrowers' duty of performance, including, without limitation, Borrowers' duties
under any account or contract with any other Person.
10.16 DISCHARGE OF TAXES, BORROWERS' OBLIGATIONS, ETC.: Agent, in
its sole discretion, shall have the right at any time, and from time to time,
with prior notice to Borrowers if Borrowers fail to do so five (5) Business Days
after requested in writing to do so by Agent, to: (a) pay for the performance of
any of Borrowers' obligations hereunder, and (b) discharge taxes or Liens, at
any time levied or placed on any of any Borrower's Property in violation of this
Agreement unless such Borrower is in good faith with due diligence by
appropriate proceedings contesting such taxes or Liens and maintaining proper
reserves therefor in accordance with GAAP. Expenses and advances shall be added
to the Revolving Credit, bear interest at the same rate applied to the Revolving
Credit, until reimbursed to Agent. Such payments and advances made by Agent
shall not be construed as a waiver by Agent or Lenders of an Event of Default
under this Agreement.
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10.17 WITHHOLDING AND OTHER TAX LIABILITIES: Each Lender shall have
the right to refuse to make any Advances from time to time unless Borrowers
shall, at Agent's request, have given to Agent evidence, reasonably satisfactory
to Agent, that Borrowers have properly deposited or paid, as required by law,
all withholding taxes and all federal, state, city, county or other taxes due up
to and including the date of the requested Advance. Copies of deposit slips
showing payment shall likewise constitute satisfactory evidence for such
purpose. In the event that any lien, assessment or tax liability against any
Borrower shall arise in favor of any taxing authority, whether or not notice
thereof shall be filed or recorded as may be required by law, Agent shall have
the right (but shall not be obligated, nor shall Agent or any Lender hereby
assume the duty) to pay any such lien, assessment or tax liability by virtue of
which such charge shall have arisen; provided, however, that Agent shall not pay
any such tax, assessment or lien if the amount, applicability or validity
thereof is being contested in good faith and by appropriate proceedings by
Borrowers. In order to pay any such lien, assessment or tax liability, Agent
shall not be obliged to wait until said lien, assessment or tax liability is
filed before taking such action as hereinabove set forth. Any sum or sums which
Agent (shared ratably by Lenders) shall have paid for the discharge of any such
lien shall be added to the Revolving Credit and shall be paid by Borrowers to
Agent with interest thereon, upon demand, and Agent shall be subrogated to all
rights of such taxing authority against Borrowers.
10.18 CONSENT TO JURISDICTION: Each Borrower and each Lender hereby
irrevocably consents to the jurisdiction of the Courts of Common Pleas, the
Commonwealth of Pennsylvania or the United States District Court for the Eastern
District of Pennsylvania in any and all actions and proceedings whether arising
hereunder or under any other agreement or undertaking and irrevocably agree to
service of process by certified mail, return receipt requested to the address of
the appropriate party set forth herein.
10.19 WAIVER OF JURY TRIAL: EACH BORROWER, AGENT, ISSUER AND EACH
LENDER HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN
CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH RESPECT
TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS.
10.20 CONFIDENTIAL INFORMATION: The Agent and each Lender (and any
prospective Lender or Participant) agree to hold in confidence all confidential
material or proprietary information obtained by them with respect to Borrowers'
business operations that is plainly marked by the provider of such material or
information as confidential or proprietary except (a) to the extent that the
production of such information is required pursuant to any statute, ordinance,
regulation, rule or order or any subpoena or any Governmental Authority or by
reason of any bank regulation in connection with any bank examination, (b) to
the extent
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already publicly disclosed and (c) that any Lender shall not be prohibited from
disclosing any such information to any of their agents, attorneys, accountants,
consultants, participants, assignees, prospective participants, who are aware of
such Lender's covenant in this Section 10.19 and who have agreed with such
Lender, for the benefit of the Borrowers, to comply with such covenant. Nothing
contained in this Section shall in any way restrict, limit or impair the rights
of Agent or Lenders to sell any Collateral or otherwise enforce their Liens in
any Collateral following the occurrence of any Event of Default.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.
PHOENIX COLOR CORP. ALPHA SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------- ---------------------------
Title: Chief Financial Officer Title: Chief Financial Officer
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- -----------------------
(Corporate Seal) (Corporate Seal)
CORESTATES BANK, N.A., as Agent,
as Issuer and as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: Vice President
FLEET BANK OF MASSACHUSETTS, N.A.
as Co-Agent and as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
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SCHEDULE A
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Revolving Credit Term Loan A Term Loan B
Lenders Pro Rata Percentage Pro Rata Share Pro Rata Share Pro Rata Share
------- ------------------- ---------------- -------------- --------------
1. CoreStates Bank, N.A. 50% $9,000,000 $8,000,000 $3,000,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇-▇-▇-▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
2. Fleet Bank of Massachusetts 50% $9,000,000 $8,000,000 $3,000,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇