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THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated as of March 15, 1999
between
PREMIER GRAPHICS, INC.,
as Borrower
THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
and
DEUTSCHE FINANCIAL SERVICES CORPORATION,
as Revolving Credit Agent and Lender
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TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT FACILITIES...................................................................... 2
1.1 Revolving Credit Facility..................................................................... 2
1.2 Term Loan A Facility.......................................................................... 5
1.3 Term Loan B Facility.......................................................................... 6
1.4 Letters of Credit............................................................................. 7
1.5 Prepayments................................................................................... 7
1.6 Interest...................................................................................... 9
1.7 Eligible Accounts............................................................................. 12
1.8 Eligible Inventory............................................................................ 14
1.9 Cash Management Systems....................................................................... 15
1.10 Fees.......................................................................................... 15
1.11 Receipt of Payments........................................................................... 16
1.12 Application and Allocation of Payments........................................................ 17
1.13 Loan Account and Accounting................................................................... 17
1.14 Indemnity..................................................................................... 18
1.15 Access........................................................................................ 19
1.16 Taxes......................................................................................... 20
1.17 Additional Provisions......................................................................... 21
1.18 Security Interest in the Collateral........................................................... 23
1.19 Rights of Lender, Limitations on Obligations of Lender........................................ 24
1.20 Single Loan................................................................................... 25
2. CONDITIONS PRECEDENT....................................................................................... 25
2.1 Conditions to the Initial Advance............................................................. 25
2.2 Further Conditions to Each Advance............................................................ 29
3. REPRESENTATIONS AND WARRANTIES............................................................................... 30
3.1 Corporate Existence; Compliance with Law...................................................... 30
3.2 Executive Offices; Corporate or Other Names; FEIN............................................. 30
3.3 Corporate Power; Authorization; Enforceable Obligations....................................... 31
3.4 Financial Statements and Projections.......................................................... 31
3.5 Material Adverse Change....................................................................... 31
3.6 Ownership of Property; Liens.................................................................. 31
3.7 Restrictions; No Default; Material Contracts.................................................. 32
3.8 Labor Matters................................................................................. 32
3.9 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness..................... 33
3.10 Government Regulation......................................................................... 33
3.11 Margin Regulations............................................................................ 33
3.12 Taxes......................................................................................... 33
3.13 ERISA......................................................................................... 34
3.14 No Litigation................................................................................. 35
Third Amended and Restated Loan and Security Agreement
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3.15 Brokers....................................................................................... 35
3.16 Patents, Trademarks, Copyrights and Licenses.................................................. 36
3.17 Full Disclosure............................................................................... 36
3.18 Hazardous Materials........................................................................... 36
3.19 Insurance Policies............................................................................ 37
3.20 Deposit and Disbursement Accounts............................................................. 37
3.21 Subordinated Notes and Senior Notes........................................................... 37
3.22 Representations and Warranties Regarding the Collateral....................................... 37
3.23 Solvency...................................................................................... 39
3.24 Year 2000 Problems............................................................................ 39
4. FINANCIAL STATEMENTS AND INFORMATION....................................................................... 39
4.1 Reports and Notices........................................................................... 39
4.2 Communication with Accountants................................................................ 39
5. AFFIRMATIVE COVENANTS...................................................................................... 40
5.1 Maintenance of Existence and Conduct of Business.............................................. 40
5.2 Payment of Charges and Claims................................................................. 40
5.3 Books and Records............................................................................. 40
5.4 Litigation.................................................................................... 40
5.5 Insurance..................................................................................... 41
5.6 Compliance with Laws.......................................................................... 41
5.7 Agreements.................................................................................... 42
5.8 Supplemental Disclosure....................................................................... 42
5.9 Environmental Matters......................................................................... 43
5.10 Landlord's and Mortgagee's Agreements......................................................... 43
5.11 Certain Obligations Respecting Subsidiaries................................................... 44
5.12 Application of Proceeds....................................................................... 44
5.13 Fiscal Year................................................................................... 44
5.14 Casualty and Condemnation..................................................................... 44
5.15 Covenants Regarding the Collateral............................................................ 45
5.16 Agent's and Revolving Credit Agent's Appointment as Attorneys-in-Fact......................... 48
5.17 Maintenance Covenant.......................................................................... 50
5.18 Year 2000 Problems............................................................................ 51
6. NEGATIVE COVENANTS......................................................................................... 51
6.1 Mergers, Subsidiaries, Etc.................................................................... 51
6.2 Investments................................................................................... 51
6.3 Indebtedness.................................................................................. 51
6.4 Affiliate and Employee Loans and Transactions; Employment Agreements.......................... 52
6.5 Capital Structure and Business................................................................ 52
6.6 Guaranteed Indebtedness....................................................................... 52
6.7 Liens......................................................................................... 52
6.8 Sale of Assets................................................................................ 53
6.9 Material Contracts............................................................................ 53
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6.10 ERISA......................................................................................... 53
6.11 Financial Covenants........................................................................... 54
6.12 Hazardous Materials........................................................................... 55
6.13 Sale-Leasebacks............................................................................... 55
6.14 Cancellation of Indebtedness.................................................................. 55
6.15 Restricted Payments........................................................................... 55
6.16 Real Property Leases.......................................................................... 55
6.17 Bank Accounts................................................................................. 56
6.18 Subordinated Notes............................................................................ 56
6.19 No Speculative Transactions................................................................... 56
6.20 Margin Regulations............................................................................ 56
6.21 Limitation on Negative Pledge Clauses......................................................... 56
6.22 Accounting Changes............................................................................ 56
6.23 Senior Notes.................................................................................. 57
7. TERM....................................................................................................... 57
7.1 Duration...................................................................................... 57
7.2 Survival of Obligations....................................................................... 57
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES..................................................................... 57
8.1 Events of Default............................................................................. 57
8.2 Remedies...................................................................................... 60
8.3 Grant of License to Use Patent and Trademark Collateral....................................... 63
8.4 Waivers by Borrower........................................................................... 63
8.5 Revolving Credit Agent as Sub-Agent in Connection with Current Collateral..................... 64
9. SUCCESSORS AND ASSIGNS..................................................................................... 64
9.1 Successors and Assigns........................................................................ 64
10. ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT....................................................... 65
10.1 Assignment and Participations................................................................. 65
10.2 Appointment of Agent and Revolving Credit Agent............................................... 67
10.3 Agent's and Revolving Credit Agent's Reliance, Etc............................................ 68
10.4 GE Capital, Deutsche and Affiliates........................................................... 68
10.5 Indemnification............................................................................... 69
10.6 Successor Agent............................................................................... 69
10.7 Setoff and Sharing of Payments................................................................ 70
10.8 Fundings; Payments; Non-Funding Lenders; Information; Actions in Concert...................... 71
10.9 Due Diligence and Non-Reliance................................................................ 75
10.10 Out-of-Formula Loans.......................................................................... 76
11. MISCELLANEOUS.............................................................................................. 76
11.1 Complete Agreement; Modification of Agreement................................................. 76
11.2 Amendments and Waivers........................................................................ 76
11.3 Fees and Expenses............................................................................. 79
Third Amended and Restated Loan and Security Agreement
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11.4 No Waiver..................................................................................... 80
11.5 Remedies...................................................................................... 80
11.6 Severability.................................................................................. 80
11.7 Conflict of Terms............................................................................. 80
11.8 Right of Set-off.............................................................................. 80
11.9 Authorized Signature.......................................................................... 81
11.10 GOVERNING LAW................................................................................. 81
11.11 Notices....................................................................................... 82
11.12 Section Titles................................................................................ 82
11.13 Counterparts.................................................................................. 82
11.14 Time of the Essence........................................................................... 82
11.15 WAIVER OF JURY TRIAL.......................................................................... 82
11.16 NO ORAL AGREEMENTS............................................................................ 83
11.17 RELEASE....................................................................................... 83
11.18 Amendment and Restatement..................................................................... 83
11.19 References.................................................................................... 84
Third Amended and Restated Loan and Security Agreement
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INDEX OF ANNEXES, SCHEDULES AND EXHIBITS
Annex A - Definitions
Annex B - Schedule of Closing Documents
Annex C - Financial Statements, Projections and Notices
Annex D - Insurance Requirements
Annex E - Cash Management Systems
Annex F - Revolving Credit and Term Loan Commitments
Annex G - Letters of Credit
Annex H - Collateral Reports
Annex I - Lenders' Wire Transfer Information
Annex J - Notice, Addresses
Schedule A-1 - Employment Agreements
Schedule A-2 - Subordinated Notes
Schedule B-(h) - Leases not subject to Collateral Assignment
Schedule 3.2 - Executive Offices; Trade Names
Schedule 3.4 - Financial Statements and Projections
Schedule 3.5 - Dividends
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Material Contracts
Schedule 3.8 - Labor Matters
Schedule 3.9 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.12 - Tax Matters
Schedule 3.13 - ERISA Plans
Schedule 3.14 - Litigation
Schedule 3.15 - Brokers
Schedule 3.16 - Patents, Trademarks, Copyrights and Licenses
Schedule 3.18 - Hazardous Materials
Schedule 3.19 - Insurance Policies
Schedule 3.20 - Disbursement and Deposit Accounts
Schedule 3.22(c) - Schedule of Offices, Locations of Collateral and Records Concerning Collateral
Schedule 5.10 - Locations without Landlord's Consents or Mortgagee's Consents
Schedule 3.22(d) - Schedule of Instruments
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4 - Loans to and Transactions with Employees
Schedule 6.7 - Liens
Schedule 8.1(m) - Key Employees
Schedule 11.9 - Authorized Signatures
Exhibit A-1 - Form of Note A
Exhibit A-2 - Form of Note B
Exhibit A-3 - Form of Revolving Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Term Loan Borrowing
Exhibit C - Form of Borrowing Base Certificate
Third Amended and Restated Loan and Security Agreement
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Exhibit D - Form of Assignment Agreement
Exhibit E - Form of Affiliate Guaranty
Exhibit F - Form of Affiliate Security Agreement
Exhibit G - Form of Certificate Regarding Senior Notes
Exhibit H-1 - Form of Notice of Conversion/Continuation for Revolving Credit Advances
Exhibit H-2 - Form of Notice of Conversion/Continuation for Term Loan Advances
Third Amended and Restated Loan and Security Agreement
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THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of
March 15, 1999, between PREMIER GRAPHICS, INC., a Delaware corporation (the
"Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
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(in its individual capacity, "GE Capital"), as a Lender, and as Agent for
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Lenders (in such capacity, the "Agent"), DEUTSCHE FINANCIAL SERVICES
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CORPORATION, a Nevada corporation, as a Lender, and as Revolving Credit Agent
for Lenders (in such capacity the "Revolving Credit Agent"), and TRANSAMERICA
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EQUIPMENT FINANCIAL SERVICES CORPORATION, a Delaware corporation (formerly known
as Transamerica Business Credit Corporation), as a Lender, and the other Lenders
signatory hereto from time to time.
RECITALS
A. Borrower and GE Capital, for itself and as agent for certain
participants (in such capacities, "Original Lender") entered into that certain
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Term and CAPEX Loan and Security Agreement dated as of June 19, 1997, as
thereafter amended from time to time, including, without limitation, as amended
by that certain First Amendment to Term and CAPEX Loan and Security Agreement
dated as of September 26, 1997 (as amended, the "Original Agreement").
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B. Borrower and Original Lender amended, restated and modified (but did
not extinguish) the Original Loan Agreement by entering into that certain
Amended and Restated Loan and Security Agreement, dated as of December 16, 1997,
as thereafter amended from time to time, including without limitation, as
amended by (i) that certain First Amendment to Loan and Security Agreement dated
as of ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) that certain Second Amendment to Loan and Security
Agreement dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) that certain Third Amendment to Loan
and Security Agreement dated as of May 8, 1998, and (iv) that certain Fourth
Amendment to Loan and Security Agreement dated as of June 15, 1998 (as amended,
the "First Restated Agreement").
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C. Borrower, GE Capital as a lender and as agent for the lenders and the
other lenders party thereto (the "August 1998 Lenders") amended, restated and
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modified the First Restated Agreement by entering into that certain Second
Amended and Restated Loan and Security Agreement, dated as of August 21, 1998,
as thereafter amended from time to time, including without limitation as amended
by (i) that certain First Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of August 31, 1998, (ii) that certain Second
Amendment to Second Amended and Restated Loan and Security Agreement, dated as
of September 16, 1998, (iii) that certain Third Amendment to Second Amended and
Restated Loan and Security Agreement, dated as of September 25, 1998, (iv) that
certain Fourth Amendment to Second Amended and Restated Loan and Security
Agreement, dated as of December 11, 1998 (v) that certain Fifth Amendment to
Second Amended and Restated Loan and Security Agreement, dated as of March ___,
1999, and (vi) that certain Sixth Amendment to Second
Amended and Restated Loan and Security Agreement, dated as of March ___, 1999
(as amended, the "Second Restated Agreement").
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D. Borrower and Deutsche Financial Services Corporation, a Nevada
corporation ("Deutsche"), entered into that certain Loan and Security Agreement,
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dated August 21, 1998 (the "Deutsche Loan Agreement").
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E. Borrower has requested that (i) the August 1998 Lenders modify the
credit facilities under the Second Restated Loan Agreement and extend their
relationship with Borrower, and the August 1998 Lenders are willing to do so
upon the terms and conditions set forth herein; (ii) Deutsche modify the credit
facilities under the Deutsche Loan Agreement and extend its relationship with
Borrower, and Deutsche is willing to do so upon the terms and conditions set
forth herein; and (iii).the August ▇▇▇▇ ▇▇▇▇▇▇▇ and Deutsche combine together
the credit facilities under the Second Restated Loan Agreement and the credit
facilities under the Deutsche Loan Agreement, and the August 1998 Lenders and
Deutsche are willing to do so upon the terms and conditions set forth herein.
F. In connection with the respective increase and extension of the
relationship between Borrower and the August 1998 Lenders and between Borrower
and Deutsche and the formation of the relationship between Borrower and the
other Lenders, the parties hereto wish to respectively and completely amend,
consolidate, restate and modify (but not extinguish) each of the Second Restated
Loan Agreement and the Deutsche Loan Agreement through the execution of this
Agreement, which will supersede all prior agreements among the parties hereto.
G. Capitalized terms used herein shall have the meanings ascribed to
them on Annex A. All Schedules, Annexes, Attachments and Exhibits hereto, or
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expressly identified to this Agreement, are incorporated herein by reference,
and taken together, shall constitute but a single agreement. Unless otherwise
expressly set forth herein, or in a written amendment referring to such
Schedules and Annexes, all Schedules and Annexes referred to herein shall mean
the Schedules as in effect at the Closing Date. As used herein, the plural
shall include the singular, the singular includes the plural, and pronouns in
any gender (masculine, feminine or neuter) shall all apply to all genders.
These Recitals shall be construed as part of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto intending to
be legally bound agree as follows:
1. AMOUNT AND TERMS OF CREDIT FACILITIES
1.1 Revolving Credit Facility.
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(a) Subject to the terms and conditions hereof, each Revolving Lender
agrees to make available from time to time until the Revolving Loan Commitment
Termination Date its Pro Rata Share of advances (each, a "Revolving Credit
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Advance"). The Pro Rata Share of the
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Revolving Loan of any Revolving Lender shall not at any time exceed its separate
Revolving Loan Commitment. The obligations of each Revolving Lender hereunder
shall be several and not joint. Each Revolving Credit Advance shall be
Obligations secured by all the Collateral. The aggregate amount of Revolving
Credit Advances outstanding shall not exceed at any time the lesser of (i) the
Maximum Amount and (ii) the Borrowing Base ("Borrowing Availability").
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Notwithstanding the foregoing, if the aggregate unpaid balance of Revolving
Credit Advances outstanding at any time should exceed the Borrowing Availability
at such time (an "Out-of-Formula Condition"), such Revolving Credit Advances
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shall nonetheless constitute Obligations that are secured by the Collateral and
be entitled to all of the benefits of the Loan Documents. In the event that
Revolving Credit Agent or any Revolving Lender is willing in its sole and
absolute discretion to make Out-of-Formula Loans, such Out-of-Formula Loans
shall be payable ON DEMAND and shall bear interest provided in this Agreement
for Revolving Credit Advances generally or at such higher rate of interest as
Revolving Credit Agent or such Revolving Lender may require as a condition to
making any such Out-of-Formula Loans. Until the Revolving Loan Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow
under this Section 1.1.
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(b) Advances under the Revolving Loan Commitment established pursuant
to Section 1.1 hereof shall be made and funded as follows:
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(i) Whenever Borrower desires to receive a Revolving Credit
Advance under Section 1.1 of this Agreement (other than a Revolving Credit
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Advance resulting from a conversion or continuation pursuant to Section 1.6(g)),
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Borrower shall give Revolving Credit Agent prior written notice (or telephonic
notice promptly confirmed in writing) of such request for a Revolving Credit
Advance (a "Notice of Borrowing"), which shall be in the form of Exhibit B-1
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annexed hereto and signed by an authorized officer of Borrower. Such Notice of
Borrowing shall be given by Borrower no later than 11:00 a.m. (New York time) at
the office of Revolving Credit Agent designated by Revolving Credit Agent from
time to time (A) on the Business Day of the requested funding date of such
Revolving Credit Advance, in the case of Base Rate Loans, and (B) at least 4
Business Days prior to the requested funding date of such Revolving Credit
Advance, in the case of LIBOR Loans. Notices received after 11:00 a.m. (New
York time) shall be deemed received on the next Business Day. Each Notice of
Borrowing (or telephonic notice thereof) shall be irrevocable and shall specify
(A) the principal amount of the Revolving Credit Advance, (B) the date of the
Revolving Credit Advance (which shall be a Business Day), (C) whether the
Revolving Credit Advance is to consist of Base Rate Loans or LIBOR Loans, (D) in
the case of LIBOR Loans, the duration of the Interest Period to be applicable
thereto, and (E) the account of Borrower to which the proceeds of such Revolving
Credit Advance are to be disbursed. Borrower may not request any LIBOR Loans if
a Default or Event of Default exists. In addition to the foregoing, if Borrower
desires to have a Revolving Credit Advance constitute a LIBOR Loan, Borrower
must comply with the provisions of Section 1.6(g) hereof.
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(ii) Unless payment is otherwise timely made by Borrower, the
becoming due of any amount required to be paid under this Agreement or any of
the other Loan Documents with respect to the Obligations (whether as principal,
accrued interest, fees or other
3
charges, including the repayment of any Revolving Loan Letter of Credit
Obligations and including the repayment of any interest payment made on the
White Arts Bonds pursuant to the White Arts Letter of Credit, but specifically
not including the repayment of any principal payment made on the White Arts
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Bonds pursuant to the White Arts Letter of Credit) shall be deemed irrevocably
to be a request (without any requirement for the submission of a Notice of
Borrowing) for Revolving Credit Advances on the due date of, and in an aggregate
amount required to pay, such Obligations, and the proceeds of such Revolving
Credit Advances may be disbursed by way of direct payment of the relevant
Obligation and shall bear interest as Base Rate Loans. Neither Revolving Credit
Agent nor any Revolving Lender shall have any obligation to Borrower to honor
any deemed request for a Revolving Credit Advance, but may do so in their
discretion and without regard to the existence of, and without being deemed to
have waived, any Default or Event of Default and regardless of whether such
Revolving Credit Advance is funded after the Revolving Loan Commitment
Termination Date.
(iii) As an accommodation to Borrower, Revolving Credit Agent and
Revolving Lenders may permit telephonic requests for Revolving Credit Advances
and electronic transmittal of instructions, authorizations, agreements or
reports to Revolving Credit Agent by Borrower; provided, however, that Borrower
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shall confirm each such telephonic request for a Revolving Credit Advance by
delivery of the required Notice of Borrowing to Revolving Credit Agent by
facsimile transmission promptly, but in no event later than 5:00 p.m. (New York
time) on the same day. Unless Borrower specifically directs Revolving Credit
Agent and Revolving Lenders in writing not to accept or act upon telephonic or
electronic communications from Borrower, neither Revolving Credit Agent nor any
Revolving Lender shall have any liability to Borrower for any loss or damage
suffered by Borrower as a result of Revolving Credit Agent's or any Revolving
Lender's honoring or any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Revolving Credit Agent or
Revolving Lenders by Borrower and neither Revolving Credit Agent nor any
Revolving Lender shall have any duty to verify the origin of any such
communication or the identity or authority of the Person sending it.
(iv) Borrower hereby irrevocably authorizes Revolving Credit
Agent to disburse the proceeds of each Revolving Credit Advance requested, or
deemed to be requested under this Agreement as follows: (A) the proceeds of each
Revolving Credit Advance requested under Section 1.1(b)(i) shall be disbursed by
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Revolving Credit Agent by wire transfer to such bank account as may be agreed
upon by Borrower and Revolving Credit Agent from time to time or elsewhere if
pursuant to a written direction from Borrower, and (B) the proceeds of each
Revolving Credit Advance requested under Section 1.1(b)(ii) shall be disbursed
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by Revolving Credit Agent by way of direct payment of the relevant interest or
other Obligation.
(c) Borrower shall utilize the proceeds of the Revolving Loan solely
for Borrower's ordinary working capital and general corporate needs (but
excluding in any event the making of any Restricted Payment not specifically
permitted by Section 6.15) and, if the full amount of each of the Term Loan A
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Commitment and Term Loan B Commitment has been advanced hereunder, the proceeds
of a Revolving Credit Advance may also be used in connection
4
with the financing of an Eligible Acquisition, provided that after the making of
such Revolving Credit Advance and for a period of 60 days thereafter (and the
incurrence of any Revolving Loan Letter of Credit Obligations relating thereto)
Borrower shall have a Net Borrowing Availability of at least $5,000,000.
(d) Borrower shall execute and deliver to each Revolving Lender a
note to evidence the Revolving Loan Commitment of that Revolving Lender. Each
note shall be in the principal amount of the Revolving Loan Commitment of the
applicable Revolving Lender, dated the Closing Date and substantially in the
form of Exhibit A-3 (each a "Revolving Note" and, collectively, the "Revolving
----------- -------------- ---------
Notes"). Each Revolving Note shall represent the obligation of Borrower to pay
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the amount of each Revolving Lender's Revolving Loan Commitment or, if less, the
applicable Revolving Lender's Pro Rata Share of the aggregate unpaid principal
amount of all Revolving Credit Advances to Borrower together with interest
thereon as prescribed in Section 1.6. The entire unpaid balance of the
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Revolving Loan and all other non-contingent Obligations shall be immediately due
and payable in full in immediately available funds on the Revolving Loan
Commitment Termination Date.
1.2 Term Loan A Facility.
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(a) Upon and subject to the terms and conditions hereof, each Term
Lender agrees to make available, from time to time, until the applicable Term
Loan Commitment Termination Date, for Borrower's use and upon the request of
Borrower therefor to Agent, its Pro Rata Share of advances (each, a "Term Loan A
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Advance") to finance Eligible Acquisitions. The amount of Term Loan A Advances
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made to finance any Eligible Acquisition shall equal fifty percent (50%) of the
amount of the purchase price being financed hereunder, provided, however, that
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if the full amount of Term Loan B has been advanced hereunder, the amount of
Term Loan A Advances made to finance any Eligible Acquisition may equal up to
one hundred percent (100%) of the purchase price being financed hereunder. The
aggregate amount of each Lender's Term Loan A Advances shall not at any time
exceed its separate Term Loan A Commitment. The obligations of each Lender
hereunder shall be several and not joint. Each Term Loan A Advance shall be
secured by all of the Collateral. Each Lender's Term Loan A Commitment shall be
permanently reduced by the amount of each Term Loan A Advance made by it
hereunder, and Borrower may not reborrow any amount repaid with respect to any
Term Loan A Advance; provided, however, that for the purposes of this sentence,
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the incurrence by a Term Lender of a Term Loan Letter of Credit Obligation shall
constitute a Term Loan A Advance only to the extent such Lender actually funds
any amounts pursuant to such Term Loan Letter of Credit Obligation that are not
in due course repaid in accordance with the terms and conditions generally
applicable to Revolving Credit Advances. Reference is hereby made to Annex G
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for a description of the limits on the Term Loan Letter of Credit Obligations.
(b) Borrower shall give Agent notice of each borrowing, which notice
shall be in the form of Exhibit B-2 ("Notice of Term Loan Borrowing"). On the
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dates specified for such borrowing, pursuant to Section 10.8, each Lender shall
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make available to Agent such Lender's Pro Rata Share of the Term Loan A Advance
or Advances to be made on such date to the
5
Borrower, in immediately available funds. Agent shall notify each other Lender
of the consummation of each Eligible Acquisition financed hereby.
(c) Borrower shall execute and deliver to each Lender a note in the
principal amount of the Term Loan A Commitment of such Lender, dated the Closing
Date and substantially in the form of Exhibit A-1 (each, a "Note A" and,
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collectively, the "Note A"). Each Note A shall represent the obligation of
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Borrower to pay the amount of the applicable Lender's Term Loan A Commitment or,
if less, the aggregate amount of the Term Loan A Advances made by such Lender,
together with interest thereon as prescribed in Section 1.6. The date, amount
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and interest rate of each Term Loan A Advance made by each Lender and each
payment of principal and interest with respect thereto shall be recorded on the
books and records of Agent which books and records shall constitute prima facie
----- -----
evidence of the accuracy of the information therein recorded.
(d) The principal of each Term Loan A Advance actually funded by a
Term Lender shall be payable in equal consecutive quarterly installments in an
amount equal to one-twentieth (1/20) of the principal amount of such Term Loan A
Advance each which shall be due commencing on the first day of the calendar
quarter immediately following the date of such Term Loan A Advance (provided
that the initial quarterly principal installment payment date for the initial
Term Loan A Advance hereunder shall be July 1, 1999), and shall continue to be
due on the first day of each calendar quarter thereafter, together with a final
installment which shall be due on the Term Loan Commitment Termination Date in
an amount equal to the entire remaining unpaid principal balance of such Term
Loan A Advance.
(e) Each payment of principal with respect to the Term Loan A
Advances shall be paid to Agent for the ratable benefit of each Lender making a
Term Loan A Advance(s), ratably in proportion to each such Lender's respective
Term Loan A Advances.
1.3 Term Loan B Facility.
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(a) Upon and subject to the terms and conditions hereof, each Lender
agrees to make available, from time to time, until the applicable Term Loan
Commitment Termination Date, for Borrower's use and upon the request of Borrower
therefor to Agent, its Pro Rata Share of advances (each, a "Term Loan B
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Advance") to finance Eligible Acquisitions. The amount of Term Loan B Advances
made to finance any Eligible Acquisition shall equal fifty percent (50%) of the
amount of the purchase price financed hereunder; provided, however, that if the
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full amount of Term Loan A has been advanced hereunder or there is at such time
no further availability for funding under the Term Loan A Commitment, the amount
of Term Loan B Advances made to finance any Eligible Acquisition may equal up to
one hundred percent (100%) of the purchase price being financed hereunder. The
aggregate amount of each Lender's Term Loan B Advances shall not at any time
exceed its separate Term Loan B Commitment. The obligations of each Lender
hereunder shall be several and not joint. Each Term Loan B Advance shall be
secured by all of the Collateral. Each Lender's Term Loan B Commitment shall be
permanently reduced by the amount of each Term Loan B Advance made by it
hereunder, and Borrower may not reborrow any amount repaid with respect to any
Term Loan B Advance.
6
(b) Borrower shall give Agent notice of each borrowing, which notice
shall be in the form of the Notice of Term Loan Borrowing. On the dates
specified for such borrowing, pursuant to Section 10.8, each Lender shall make
------------
available to Agent such Lender's Pro Rata Share of the Term Loan B Advance or
Advances to be made on such date to the Borrower, in immediately available
funds. Agent shall notify each other Lender of the consummation of each
Eligible Acquisition financed hereby.
(c) Borrower shall execute and deliver to each Lender a note in the
principal amount of the Term Loan B Commitment of such Lender, dated the Closing
Date and substantially in the form of Exhibit A-2 (each, a "Note B" and,
----------- ------
collectively, the "Note B"). Each Note B shall represent the obligation of
------
Borrower to pay the amount of each Lender's Term Loan B Commitment or, if less,
the aggregate amount of the Term Loan B Advances made by such Lender, together
with interest thereon as prescribed in Section 1.6. The date, amount and
-----------
interest rate of each Term Loan B Advance made by each Lender and each payment
of principal and interest with respect thereto shall be recorded on the books
and records of Agent which books and records shall constitute prima facie
----- -----
evidence of the accuracy of the information therein recorded.
(d) The principal of each Term Loan B Advance actually funded by a
Term Lender shall be payable in equal consecutive quarterly installments in an
amount equal to two percent (2%) of the principal amount of such Term Loan B
Advance, each which shall be due commencing on the first day of the calendar
quarter immediately following the date of such Term Loan B Advance (provided
that the initial quarterly principal installment payment date for the initial
Term Loan B Advance hereunder shall be July 1, 1999), and shall continue to be
due on the first day of each calendar quarter thereafter, together with a final
installment which shall be due on the Term Loan Commitment Termination Date in
an amount equal to the entire remaining unpaid principal balance of such Term
Loan B Advance.
(e) Each payment of principal with respect to the Term Loan B
Advances shall be paid to the Agent for the ratable benefit of each Lender
making a Term Loan B Advance(s), ratably in proportion to each such Lender's
respective Term Loan B Advances.
1.4 Letters of Credit. Subject to and in accordance with the conditions
-----------------
contained in Annex G, (a) Borrower shall have the right to request, and
-------
Revolving Lenders agree to incur, or purchase participations in, Revolving Loan
Letter of Credit Obligations in respect of Borrower, and (b) Borrower shall have
the right of request, and Term Lenders with a Term Loan A Commitment agree to
incur, or purchase participations in, Term Loan Letter of Credit Obligations in
respect of Borrower.
1.5 Prepayments.
-----------
(a) Voluntary Prepayments of Term Loans. Borrower may, at any time on
-----------------------------------
at least ten (10) days' prior written notice to Agent, voluntarily prepay all or
part of the Term Loan, provided that any such prepayment shall be in a minimum
amount of $500,000 and integral
7
multiples of $250,000 in excess of such amount. Notwithstanding anything in this
Agreement to the contrary, a permanent termination of the Revolving Loan
Commitment shall not result in the Term Loan becoming at such time immediately
due and payable, if simultaneously with such termination Borrower establishes a
replacement revolving credit facility of at least $10,000,000 with another
Person pursuant to loan documentation, collateral documentation and
intercreditor agreements satisfactory to Agent and the Term Lenders. Any such
voluntary prepayment in whole or in part made prior to the third anniversary of
the Closing Date will obligate Borrower to pay the appropriate Prepayment Fee
and/or Breakage Cost if applicable as provided in Section 1.10. A prepayment of
------------
all or any part of any Advance which constitutes a LIBOR Loan may be made only
on the last day of the Interest Period applicable thereto and if any such
prepayment is made on a day that is not the last day of the applicable Interest
Period, Borrower shall be obligated to pay to the Lenders any additional amounts
due under Section 1.17 hereof. Each notice of partial prepayment shall designate
------------
the Advance(s) or other Obligations to which such prepayment is to be applied,
provided that unless otherwise provided herein, any partial prepayment of the
Term Loans (whether voluntary or mandatory) shall be applied to installments of
principal due thereon among Note A and Note B in proportion to the relative
principal amounts of Loans outstanding under each in their inverse order of
maturity.
(b) Voluntary Reduction in Revolving Loan Commitment. Borrower shall
------------------------------------------------
have the right to permanently reduce the amount of the Revolving Loan
Commitment, at any time and from time to time upon written notice to Revolving
Credit Agent of such reduction, which notice shall specify the amount of such
reduction, shall be irrevocable once given, shall be given at least 5 Business
Days prior to the end of the month, shall be applied ratably to the Revolving
Loan Commitment of each Revolving Lender and shall be effective only upon
Revolving Credit Agent's receipt thereof. The effective date of any voluntary
reduction of the amount of the Revolving Loan Commitment shall be the first day
of a month following the month in which such notice is received by Revolving
Credit Agent. In connection with any such reduction, Revolving Lenders shall be
entitled to the Prepayment Fee set forth in Section 1.10(e) hereof. If the
---------------
Revolving Loan Commitment is reduced to zero, then such reduction shall be
deemed a termination of the Revolving Loan Commitment by Borrower and shall
entitle the Revolving Lenders to the Prepayment Fee set forth in Section 1.10(e)
---------------
hereof. The Revolving Loan Commitment Amount, once reduced, may not be
reinstated without the consent of Revolving Credit Agent.
(c) Mandatory Repayments.
--------------------
(i) Borrower shall prepay the Term Loans in amounts equal to
fifty percent (50%) of Borrower's Excess Cash Flow with respect to each Fiscal
Year of Borrower during the term hereof, such prepayments to be made within five
(5) Business Days following the due date for delivery by Borrower to Agent of
the annual financial statements required by Section 4.1 hereof.
-----------
(ii) Except as set forth in Section 8.2(E), immediately upon
--------------
receipt by any Loan Party of Net Proceeds of any disposition of Fixed Collateral
(which shall include, without limitation, any sale of assets or properties or
any loss, destruction or condemnation
8
thereof, except as otherwise provided in Section 5.5) or any sale of Stock or
-----------
debt securities of any Subsidiary or Loan Party which exceed, in the aggregate,
$250,000 per year, Borrower shall prepay the Loans as and when received by
Borrower as a mandatory prepayment of the Loans an amount equal to the greater
of (x) the Net Proceeds received by such Loan Party from such sale or
disposition or (y) the depreciated value of such assets or properties according
to Agent's internal analysis.
(iii) If at any time the outstanding balance of the Revolving
Loan exceeds the lesser of (A) the Maximum Amount and (B) the Borrowing Base,
Borrower shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess. If any such excess
remains after repayment in full of the aggregate outstanding Revolving Credit
Advances, Borrower shall provide cash collateral for the Revolving Loan Letter
of Credit Obligations in the manner set forth in Annex G to the extent required
-------
to eliminate such excess.
(d) Application of Certain Mandatory Prepayments. Any prepayments
--------------------------------------------
made by Borrower pursuant to clauses (c)(i) or (c)(ii) above shall be applied as
-------------- -------
follows (regardless of whether such prepayment is directed to Agent or Revolving
Credit Agent, each of whom hereby agree to transfer any such prepayment, or the
appropriate balance thereof, to the other for application in accordance with
this sentence): first, to Fees and reimbursable expenses of Agent then due and
-----
payable pursuant to any of the Loan Documents; second, to interest then due and
------
payable on the Term Loans (allocated between Note A and Note B in proportion to
the relative principal amounts outstanding under each); third, to prepay the
-----
scheduled installments of the Term Loans in inverse order of maturity (allocated
between Note A and Note B in proportion to the relative principal amounts
outstanding under each), until such Loans shall have been prepaid in full;
fourth, to interest then due and payable on the Revolving Credit Advances;
------
fifth, to the outstanding principal balance of Revolving Credit Advances until
-----
the same shall have been paid in full; and, sixth, to any Letter of Credit
-----
Obligations, to provide cash collateral therefor in the manner set forth in
Annex G, until all such Letter of Credit Obligations have been fully cash
-------
collateralized in the manner set forth in Annex G. The Revolving Loan Commitment
-------
shall not be reduced by the amount of any such prepayments.
(e) Nothing in this Section 1.5 shall be construed to constitute
-----------
Agent's, Revolving Credit Agent's or any Lender's consent to any transaction
referred to in clause (c)(ii) above which is not permitted by other provisions
--------------
of this Agreement or the other Loan Documents.
1.6 Interest.
--------
(a) (i) Borrower shall pay interest on the Term Loan to Agent, for
the ratable benefit of Lenders in accordance with the various Term Loan Advances
made by each such Lender, in arrears, commencing on the first (1st) day of the
calendar month following the Closing Date, and continuing on the first (1st) day
of each calendar month thereafter; provided, however, that (A) accrued interest
-------- -------
on any Term Loan Advance that is a LIBOR Loan shall be payable by Borrower to
Agent, for the ratable benefit of Lenders in accordance with the various
9
Term Loan Advances made by each such Lender, in arrears on the last day of the
Interest Period applicable thereto, and (B) in all cases on the Term Loan
Commitment Termination Date, Borrower shall pay to Agent, for the ratable
benefit of Lenders in accordance with the various Term Loan Advances made by
each such Lender, all accrued and unpaid interest on the Term Loan. If any
interest on the Term Loan accrues or remains payable after the applicable Term
Loan Commitment Termination Date, such interest shall be payable by Borrower
upon demand.
(ii) Borrower shall pay interest on the Revolving Loans to
Revolving Credit Agent, for the ratable benefit of Revolving Lenders in
accordance with the various Revolving Loans being made by each Revolving Lender,
in arrears on the first (1st) day of each calendar month, commencing with the
calendar month following the calendar month in which the Closing Date occurs,
and continuing to be due on the first (1st) day of each succeeding calendar
month thereafter; provided, however, that (i) accrued interest on any LIBOR Loan
--------
shall be payable by Borrower to Revolving Credit Agent, for the ratable benefit
of Revolving Lenders in accordance with the various Revolving Loans being made
by each Revolving Lender, in arrears on the last day of the Interest Period
applicable thereto and (ii) in all cases accrued and unpaid interest on the
Revolving Loans shall be payable by Borrower to Revolving Credit Agent, for the
ratable benefit of Revolving Lenders in accordance with the various Revolving
Loans being made by each Revolving Lender, on the Revolving Loan Commitment
Termination Date. If any interest on the Revolving Loans accrues or remains
payable after the Revolving Loan Commitment Termination Date, such interest
shall be payable by Borrower upon demand.
(b) Borrower shall be obligated to pay interest to Agent or Revolving
Credit Agent (as appropriate in accordance with Section 1.6), for the ratable
-----------
benefit of Lenders in accordance with the Advances made by each Lender, on the
outstanding principal balance of each Advance from the date such Advance is made
until such Advance is indefeasibly repaid in full, with respect to each Advance,
at a floating rate equal to the sum of the Adjusted LIBOR for the applicable
Interest Period or the Base Rate (as appropriate), plus the Applicable Margin
----
(each Advance bearing interest based upon the Adjusted LIBOR is hereinafter
referred to as a "LIBOR Loan"). Upon determining the Adjusted LIBOR for an
----------
Interest Period requested by Borrower, the Agent or Revolving Credit Agent, as
appropriate, shall promptly notify Borrower of such determination, and such
determination shall, in the absence of manifest error, be final, conclusive and
binding for all purposes hereunder.
(c) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of Interest
Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
(d) All computations of Fees calculated on a per annum basis and
interest hereunder or under the other Loan Documents shall be made by Agent or
Revolving Credit Agent, as appropriate, on the basis of a three hundred and
sixty (360) day year, in each case for the actual number of days occurring in
the period for which such interest and Fees are payable. The Base Rate shall be
determined each day based upon the Base Rate as in effect each day.
10
Each determination by Agent or Revolving Credit Agent of an interest rate and
Fees hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(e) So long as any Event of Default shall have occurred and be
continuing, the Agent may (and, at the request of Requisite Lenders, Agent
shall) without notice increase the interest rate applicable to the Loans or
other Obligations by two percentage points (2%) per annum above the then highest
rate otherwise applicable hereunder (the "Default Rate"), payable on demand
------------
of Agent.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.6, if, at any time until payment in full of all of the Obligations,
-----------
the rate of interest payable hereunder by Borrower exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
--------------
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
----
exceeded, the rate of interest payable hereunder by Borrower shall be equal to
the Maximum Lawful Rate; provided, however, that if at any time thereafter the
--------
rate of interest payable by Borrower hereunder is less than the Maximum Lawful
Rate, Borrower shall continue to pay interest hereunder at the Maximum Lawful
Rate until such time as the total interest received by Agent, on behalf of
Lenders, from the making of advances hereunder to Borrower is equal to the total
interest which would have been received had the interest rate payable hereunder
by Borrower been (but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this Agreement.
Thereafter, the interest rate payable by Borrower hereunder shall be the rate of
interest otherwise provided in this Section 1.6, unless and until the rate of
-----------
interest again exceeds the Maximum Lawful Rate, in which event this paragraph
shall again apply. In no event shall the total interest received by any Lender
pursuant to the terms of this Agreement or any other Loan Document exceed the
amount which such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof or thereof at the Maximum
Lawful Rate. All interest paid by, charged to or collected from Borrower
hereunder or under any other Loan Document shall, to the maximum extent
permitted by applicable law, be amortized, allocated and spread throughout the
full term of the Obligation on which it accrued. In the event the Maximum Lawful
Rate is calculated pursuant to this paragraph, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made. In the event that a court of
competent jurisdiction, notwithstanding the provisions of this Section 1.6(f),
--------------
shall make a final determination that a Lender has received interest hereunder
or under any of the Loan Documents from Borrower in excess of the Maximum Lawful
Rate, Agent shall (and/or shall direct Revolving Credit Agent to), to the extent
permitted by applicable law, promptly apply such excess first to any interest
due from Borrower and not yet paid hereunder, then to the outstanding principal
of the Obligations of Borrower, then to Fees and any other unpaid Obligations
owed by Borrower and thereafter shall refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.
(g) So long as no Default or Event of Default shall have occurred and
be continuing and subject to the additional conditions precedent set forth in
Section 2.2, Borrower shall have the option to (i) request that any Advance be
-----------
made as a LIBOR Loan, (ii) convert at
11
any time all or any part of outstanding Loans from Base Rate Loans to LIBOR
Loans, (iii) convert any LIBOR Loan to a Base Rate Loan, subject to payment of
Breakage Cost in accordance with Section 1.10 if such conversion is made prior
------------
to the expiration of the Interest Period, or (iv) continue all or any portion of
any Loan as a LIBOR Loan upon the expiration of the applicable Interest Period
and the succeeding Interest Period of that continued Loan shall commence on the
last day of the Interest Period of the Loan to be continued. Any Loan to be made
or continued as, or converted into, a LIBOR Loan, must be in a minimum amount of
$1,000,000 and integral multiples of $100,000 in excess of such amount. Any such
election must be made by 11:00 a.m. (New York time) on the fourth (4th) Business
Day prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each Interest Period with respect to any LIBOR
Loans to be continued as such, or (3) the date on which Borrower wishes to
convert any Base Rate Loan to a LIBOR Loan. If no election to continue a LIBOR
Loan is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on
the fourth (4th) Business Day prior to the end of the Interest Period with
respect thereto (or if a Default or an Event of Default shall have occurred and
be continuing or the additional conditions set forth in Section 2.2 shall not
-----------
have been satisfied), such LIBOR Loan shall be converted to a Base Rate Loan at
the end of its Interest Period. Borrower must make any such election by notice
to Revolving Credit Agent, in the case of Revolving Credit Advances, and to
Agent, in the case of Term Loan Advances, by telecopy or overnight courier. In
the case of any conversion or continuation for Revolving Credit Advances, such
election must be made pursuant to a written notice (a "Notice of
---------
Conversion/Continuation for Revolving Credit Advances") in the form of Exhibit
-----------------------------------------------------
H-1, and in the case of any conversion or continuation for Term Loan Advances,
such election must be made pursuant to a written notice (a "Notice of
---------
Conversion/Continuation for Term Loan Advances") in the form of Exhibit H-2. If
---------------------------------------------- -----------
Revolving Credit Agent shall determine, in the case of Revolving Credit
Advances, or Agent shall determine, in the case of Term Loan Advances (which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties), that on any date for determining the Adjusted LIBOR Rate for
any Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market or any Lender's or Bank's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Adjusted LIBOR Rate, then, and in any such event, Revolving Credit Agent, in the
case of Revolving Credit Advances, and Agent, in the case of Term Loan Advances,
shall forthwith give notice (by telephone confirmed in writing) to Borrower of
such determination. Until Revolving Credit Agent or Agent, as the case may be,
notifies Borrower that the circumstances giving rise to the suspension described
herein no longer exist, the obligation of Lenders to make LIBOR Loans shall be
suspended, and such affected Loans then outstanding shall, at the end of the
then applicable Interest Period or at such earlier time as may be required by
Applicable Law, bear the same interest as Base Rate Loans.
1.7 Eligible Accounts. Based on the most recent Borrowing Base Certificate
-----------------
delivered by Borrower to Revolving Credit Agent and on other information
available to Revolving Credit Agent, Revolving Credit Agent shall in its sole
discretion determine which Accounts of Borrower shall be "Eligible Accounts" for
-----------------
purposes of this Agreement. Revolving Credit Agent reserves the right, at any
time and from time to time after the Closing Date, to adjust any such criteria,
to establish new criteria and to adjust advance rates with respect to Eligible
Accounts, in
12
its sole discretion, subject to the approval of Requisite Lenders in the case of
adjustments, new criteria or changes in advance rates which have the effect of
making more credit available. Without limiting the generality of the foregoing,
no Account shall be an Eligible Account if:
(a) it arises in the ordinary course of Borrower's business from the
sale of goods or rendition of services, and is payable in Dollars;
(b) it arises out of a sale made by Borrower to a Subsidiary or an
Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower;
(c) it is due or unpaid more than 90 days after the original invoice
date;
(d) 50% or more of the Accounts from the Account Debtor are not
deemed Eligible Accounts hereunder;
(e) the total unpaid Accounts of the Account Debtor exceed 20% of the
net amount of all Eligible Accounts or exceeds a credit limit established by
Revolving Credit Agent for such Account Debtor, in each case, to the extent of
such excess;
(f) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached;
(g) the Account Debtor is also Borrower's creditor or supplier, or
the Account Debtor has disputed liability with respect to such Account or the
Account otherwise is subject to any right of setoff, counterclaim, reserve or
chargeback, to the extent of such offset, counterclaim, disputed amount, reserve
or chargeback;
(h) it arises from a sale to an Account Debtor with its principal
office, assets or place of business outside the United States;
(i) it arises from a sale to the Account Debtor on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis;
(j) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns its right
to payment of such Account to Agent, in a manner satisfactory to Revolving
Credit Agent, so as to comply with the Assignment of Claims Act of 2940 (32
U.S.C. (S)3727 and 42 U.S.C. (S)25), or is a state, county or municipality, or a
political subdivision or agency thereof and Applicable Law disallows or
restricts an assignment of Accounts on which it is the Account Debtor;
(k) the Account is evidenced by chattel paper or an instrument that
has not been endorsed and delivered to Revolving Credit Agent (the parties
hereto agreeing that any such endorsement and delivery to Revolving Credit Agent
shall be for the purposes of perfection in such Collateral and shall be
delivered to Revolving Credit Agent as agent for and on behalf of Agent);
13
(l) it is not owned by Borrower or is subject to any right, claim,
security interest or other interest of any other Person, other than Liens in
favor of Agent, on behalf of itself and Lenders;
(m) Agent, on behalf of itself and Lenders, does not have a first
priority perfected Lien therein;
(n) it arises from a sale in which the Account Debtor has not
received an invoice; or
(o) it represents a progress billing consisting of an invoice for
goods sold or used or services rendered pursuant to a contract under which the
Account Debtor's obligation to pay that invoice is subject to Borrower's
completion of further performance under such contract or is subject to the
equitable lien of a surety bond issuer.
1.8 Eligible Inventory. Based on the most recent Borrowing Base
------------------
Certificate delivered by Borrower to Revolving Credit Agent and on other
information available to Revolving Credit Agent, Revolving Credit Agent shall in
its sole discretion determine which Inventory of Borrower shall be "Eligible
--------
Inventory" for purposes of this Agreement. Revolving Credit Agent reserves the
---------
right, at any time and from time to time after the Closing Date, to adjust any
such criteria, to establish new criteria and to adjust advance rates with to
Eligible Inventory in its sole discretion, subject to the approval of Requisite
Lenders in the case of adjustments, or new criteria or changes in advance rates
which have the effect of making more credit available. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory unless:
(a) it is raw materials or finished goods;
(b) it is in good, new and saleable condition;
(c) it is not slow-moving, obsolete or unmerchantable;
(d) it meets all standards imposed by any Governmental Authority;
(e) it conforms in all respects to the warranties and representations
set forth in this Agreement;
(f) it is owned by Borrower and is at all times subject to Agent's
duly perfected, first priority security interest and no other Lien except a
Permitted Lien;
(g) it is in Borrower's possession and control, situated at a
location in compliance with the Agreement and is not in transit or outside the
continental United States;
14
(h) it is not covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(i) it does not consist of goods which have been returned by the
buyer;
(j) it consists of goods held for sale or utilized in the ordinary
course of Borrower's business; and
(k) it is covered by casualty insurance acceptable to Agent and to
Revolving Credit Agent.
1.9 Cash Management Systems. On or prior to the Closing Date, Borrower
-----------------------
will establish and will maintain until the Termination Date, the cash management
systems described on Annex E (the "Cash Management Systems").
------- -----------------------
1.10 Fees.
----
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in the Fee Letter, at the times specified for payment therein.
(b) If Borrower prepays all or any portion of a LIBOR Loan, Borrower
shall pay a breakage fee (the "Breakage Cost") payable to Agent or the Revolving
-------------
Credit Agent, as appropriate, for the benefit of the affected Lenders, in an
amount equal to the present value of all remaining scheduled interest payments
on the Loan prepaid. For purposes of this paragraph, the present value of each
scheduled interest payment shall be determined by discounting such scheduled
interest payment to the date the prepayment is made at the Prepayment Treasury
Rate (hereinafter defined) in effect on the date such prepayment is made plus
fifty (50) basis points. The term "Prepayment Treasury Rate", as used in this
paragraph, means with respect to each scheduled interest payment, the yield
which shall be imputed, by linear interpolation, from the current weekly yields
of those United States Treasury Notes having maturities as close as practicable
to the date of the prepayment of the Term Loan, as published in the most recent
Federal Reserve Statistical Release H.15 (519) or any successor publication
thereto. The Breakage Cost for any partial prepayments shall be determined in
the same manner as provided above, but such principal so prepaid shall,
notwithstanding anything to the contrary contained herein, be deemed (for
purposes of calculating the Breakage Cost) applied to the principal payments in
inverse order of maturity.
(c) As additional compensation for the Revolving Lenders, Borrower
agrees to pay to Revolving Credit Agent, for the ratable benefit of the
Revolving Lenders, in arrears, on the first Business Day of each month prior to
the Revolving Loan Commitment Termination Date and on the Revolving Loan
Commitment Termination Date, a fee for Borrower's non-use of available funds in
an amount equal to (i) prior to the first anniversary of the Closing Date,
three-quarters of one percent (.75%) per annum (calculated on the basis of a 360
day year for actual days elapsed) of the difference between (x) the Maximum
Amount (as it may be reduced from
15
time to time) and (y) the average for the period of the daily closing balances
of the Revolving Loans and the Revolving Loan Letter of Credit Obligations
outstanding during the period for which the such fee is due.
(d) As additional compensation for the Lenders making Term Loan
Commitments hereunder, Borrower agrees to pay Agent, for the ratable benefit of
such Lenders, in arrears on the first Business Day of each month prior to the
Term Loan Commitment Termination Date and on the Term Loan Commitment
Termination Date, a fee for Borrower's non-use of available funds in an amount
equal to (i) prior to the first anniversary of the Closing Date, one percent
(1%) per annum, and (ii) thereafter, one-half of one percent (0.5%) per annum
(in each case, calculated on the basis of a 360 day year for actual days
elapsed) of the average for the period of the daily closing amounts of the
aggregate Term Loan Commitment (as it may be reduced from time to time) and the
Term Loan Letter of Credit Obligations during the period for which such fee is
due.
(e) If Borrower prepays all or any portion of any Term Loan or prepays the
Revolving Loan and terminates the Revolving Loan Commitment prior to the third
anniversary of the Closing Date, whether voluntarily or involuntarily and
whether before or after acceleration of the Obligations, Borrower shall pay to
Agent or Revolving Credit Agent, as applicable, for the benefit of Lenders as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount (the "Prepayment Fee") equal to one percent
--------------
(1%) of (i) in the case of a prepayment of all of the outstanding Term Loan A
Advances or all of the Term Loan B Advances, the amount of the original
applicable Term Loan Commitment (less the amount of any previous partial
----
prepayment with respect to which a Prepayment Fee had been paid pursuant to
clause (ii) of this Section 1.10(e)), (ii) in the case of a partial prepayment
----------- ---------------
of the Term Loan A Advances or the Term Loan B Advances, the amount of such
prepayment, (iii) in the case of a voluntary reduction of the Revolving Credit
Commitment by Borrower pursuant to Section 1.5(b), the amount of such voluntary
--------------
reduction, or (iv) in the case of the termination of the Revolving Credit
Commitment, the amount of the original Revolving Loan Commitment.
Notwithstanding the foregoing, no prepayment fee shall be payable by Borrower
upon a mandatory prepayment made pursuant to Section 1.5(b); provided that the
-------------- --------
transaction giving rise to the applicable prepayment is expressly permitted
under Section 6.
---------
(f) On the Closing Date, Borrower shall pay to Agent, for the ratable
benefit of the Lenders, a documentation and amendment fee equal to $200,000.
(g) Borrower shall pay to Revolving Credit Agent an annual collateral
monitoring fee of $10,000, such annual fee to be due and payable on each
anniversary of the Closing Date.
1.11 Receipt of Payments. Borrower shall make each payment under this
-------------------
Agreement not later than 11:00 a.m. (New York time) on the day when due in
lawful money of the United States of America in immediately available funds to
the appropriate Collection Account. For purposes of computing interest and Fees
and determining Borrowing Availability or Net Borrowing Availability as of any
date (a) all payments (including cash sweeps) consisting of
16
cash, wire, or electronic transfers in immediately available funds shall be
deemed received on the day of deposit in the appropriate Collection Account
prior to 11:00 a.m. (New York time) and notice to Agent or Revolving Credit
Agent, as applicable, of such deposit and (b) all payments consisting of checks,
drafts, or similar non-cash items shall be deemed received upon receipt of good
funds therefor following deposit in the appropriate Collection Account (together
with notice to Agent or Revolving Credit Agent, as applicable, of such deposit)
prior to 11:00 a.m. (New York time). Payments received after 11:00 a.m. New York
time on any Business Day shall be deemed to have been received on the following
Business Day.
1.12 Application and Allocation of Payments. (a) So long as no Default or
--------------------------------------
Event of Default shall have occurred and be continuing, and regardless of
whether Agent or Revolving Credit Agent receives such payment (each of whom
hereby agree to transfer any such payment or the appropriate balance thereof, to
the other for application in accordance with this Section), (i) payments
consisting of proceeds of Accounts received in the ordinary course of business
shall be applied to the Revolving Loan; (ii) payments matching specific
scheduled payments then due shall be applied to those scheduled payments; (iii)
voluntary prepayments shall be applied as determined by Borrower, subject to the
provisions of Section 1.5(a); and (iv) mandatory prepayments shall be applied as
--------------
set forth in Section 1.5(c). All payments and prepayments applied to the
---------------
Revolving Loan, the Term Loan A Advances or the Term Loan B Advances shall be
applied ratably to the portion thereof held by each Lender. As to each other
payment, and as to all payments made when a Default or Event of Default shall
have occurred and be continuing, or following the Revolving Loan Commitment
Termination Date or Term Loan Commitment Termination Date, Borrower irrevocably
waives the right to direct the application of any and all payments at any time
or times hereafter received from or on behalf of Borrower, and Borrower
irrevocably agrees that Agent shall have the continuing exclusive right to apply
(or to direct Revolving Credit Agent to apply) any and all such payments against
the then due and payable Obligations of Borrower and (to the extent there are no
then due and payable Obligations) in repayment of the Loans as Agent may deem
advisable notwithstanding any previous entry by Agent or Revolving Credit Agent
in any Loan Account or any other books and records. In the absence of a
specific determination by Agent, with respect thereto, the same shall be applied
in the following order: (i) then due and payable Fees and expenses owing to the
Agent; (ii) then due and payable Fees and expenses of the Lenders; (iii) then
due and payable interest payments on the Loan, ratably in proportion to the
principal owed to each Lender; (iv) Obligations to the Lenders other than Fees,
expenses, interest and principal payments; and (v) then due and payable
principal payments on the Loan, ratably in proportion to the principal balance
owed to each Lender.
(b) Revolving Credit Agent is authorized to, and at its sole
election, may, or at the direction of Agent, shall, charge to the Revolving Loan
balance on behalf of Borrower and cause to be paid all Fees, expenses, Charges,
costs (including insurance premiums in accordance with Section 5.5(a)) and
--------------
interest and principal, other than principal of the Revolving Loan, owing by
Borrower under this Agreement or any of the other Loan Documents if and to the
extent Borrower fails to promptly pay any such amounts as and when due, even if
such charges would cause the aggregate balance of the Revolving Loan to exceed
Borrowing Availability. At
17
Revolving Credit Agent's option and to the extent permitted by law, any charges
so made shall constitute part of the Revolving Loan hereunder.
1.13 Loan Account and Accounting. Each of Agent and Revolving Credit Agent
---------------------------
shall maintain a loan account (each, a "Loan Account") on its books to record:
------------
all Revolving Credit Advances (in the case of the Revolving Credit Agent) and
all Term Loan Advances (in the case of the Agent), all payments made to it by
Borrower, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in a Loan Account
shall be made in accordance with Agent's or Revolving Credit Agent's, as the
case may be, customary accounting practices as in effect from time to time. The
balance in the Loan Accounts, as recorded on Agent's and Revolving Credit
Agent's most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent, Revolving
Credit Agent and Lenders by Borrower; provided that any failure to so record or
--------
any error in so recording shall not limit or otherwise affect Borrower's duty to
pay the Obligations. Each of Agent and Revolving Credit Agent shall render to
Borrower, and to each other, a monthly accounting of transactions with respect
to the Loans setting forth the balance of the applicable Loan Account. Unless
Borrower notifies Agent or Revolving Credit Agent, as applicable, in writing of
any objection to any such accounting (specifically describing the basis for such
objection), within thirty (30) days after the date thereof, each and every such
accounting shall (absent manifest error) be deemed final, binding and conclusive
upon Borrower in all respects as to all matters reflected therein. Only those
items expressly objected to in such notice shall be deemed to be disputed by
Borrower. Agent's or Revolving Credit Agent's, as applicable, determination,
based upon the facts available, of any disputed item shall (absent manifest
error) be final, binding and conclusive on Borrower. Notwithstanding any
provision herein contained to the contrary, any Lender may elect (which election
may be revoked) to dispense with the issuance of Notes to that Lender and may
rely on the Loan Accounts as evidence of the amount of Obligations from time to
time owing to it.
1.14 Indemnity.
---------
(a) BORROWER SHALL INDEMNIFY AND HOLD EACH OF AGENT, REVOLVING
CREDIT AGENT, LENDERS AND THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS AND AGENTS (EACH, AN "INDEMNIFIED PERSON"), HARMLESS FROM
------------------
AND AGAINST ANY AND ALL SUITS, ACTIONS, COSTS, FINES, DEFICIENCIES, PENALTIES,
PROCEEDINGS, CLAIMS, DAMAGES, LOSSES, LIABILITIES AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS AND OTHER COSTS OF INVESTIGATIONS
OR DEFENSE, INCLUDING THOSE INCURRED UPON ANY APPEAL) (EACH, A "CLAIM") WHICH
-----
MAY BE INSTITUTED OR ASSERTED AGAINST OR INCURRED BY SUCH INDEMNIFIED PERSON AS
THE RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THEREUNDER, INCLUDING ANY AND ALL
ENVIRONMENTAL LIABILITIES AND COSTS, PROVIDED, THAT BORROWER SHALL NOT BE LIABLE
--------
FOR ANY INDEMNIFICATION TO SUCH
18
INDEMNIFIED PERSON WITH RESPECT TO ANY PORTION OF ANY SUCH CLAIM WHICH RESULTS
SOLELY FROM SUCH INDEMNIFIED PERSON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
DETERMINED BY A FINAL JUDGMENT OF A COURT OF COMPETENT JURISDICTION. NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THE LOAN DOCUMENTS OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) In any suit proceeding or action brought by Agent, Revolving
Credit Agent or a Lender relating to any Account, Chattel Paper, Contract,
General Intangible, Instrument, Equipment or Document for any sum owing
thereunder, or to enforce any provision of any Account, Chattel Paper, Contract,
General Intangible, Instrument or Document, Borrower shall save, indemnify and
keep Agent, Revolving Credit Agent and Lenders harmless from and against all
expense, loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by Borrower of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to, or in
favor of, such obligor or its successors from Borrower, all such obligations of
Borrower shall be and remain enforceable against, and only against, Borrower and
shall not be enforceable against Agent, Revolving Credit Agent or any Lender.
(c) Borrower hereby acknowledges and agrees that neither Agent,
Revolving Credit Agent nor any Lender (as of the date hereof) (i) is now or ever
has been in control of any of the Subject Property or the affairs of any Loan
Party, or (ii) has the capacity through the provisions of the Loan Documents to
influence conduct with respect to the ownership, operation or management of any
of the Subject Property.
1.15 Access. Borrower shall, and shall cause each of its Subsidiaries to:
------
(i) provide access during normal business hours to Agent and to Revolving Credit
Agent and any of its officers, employees and agents, as frequently as Agent and
Revolving Credit Agent determine to be appropriate, upon reasonable advance
notice (unless a Default shall have occurred and be continuing, in which event
no notice shall be required and Agent and Revolving Credit Agent shall have
access at any and all times), to the properties, facilities and managers (whom
Borrower shall instruct and authorize to cooperate with and provide requested
information to Agent and Revolving Credit Agent) of Borrower or any of its
Subsidiaries; (ii) permit Agent and Revolving Credit Agent and any of its
officers, employees and agents to inspect, audit and make extracts from all of
Borrower's records, files and books of account; and (iii) permit Agent and
Revolving Credit Agent, to conduct audits to inspect, review and evaluate the
Collateral, and Borrower agrees to render to Agent and to Revolving Credit Agent
at Borrower's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. If a Default or Event of Default
shall have occurred and be continuing or if access is necessary to preserve or
protect the Collateral as determined by Agent and Revolving Credit Agent,
Borrower shall
19
provide such access to Agent and Revolving Credit Agent and to each Lender at
all times and without advance notice. Furthermore, so long as any Event of
Default shall have occurred and be continuing, Borrower shall provide Agent and
Revolving Credit Agent and each Lender with access to their suppliers and
customers. Borrower shall, and shall cause each of its Subsidiaries to, make
available to Agent and to Revolving Credit Agent and its counsel, as quickly as
practicable under the circumstances, originals or copies of all books, records,
board minutes, contracts, insurance policies, environmental audits, business
plans, files, financial statements (actual and pro forma), filings with federal,
state and local regulatory agencies, and other instruments and documents which
Agent and Revolving Credit Agent may request. Borrower shall deliver any
document or instrument reasonably necessary for Agent and Revolving Credit
Agent, as it may from time to time request, to obtain records from any service
bureau or other Person which maintains records for Borrower, and shall maintain
duplicate records or supporting documentation on media, including, without
limitation, computer tapes and discs owned by Borrower. Borrower shall instruct
its certified public accountants and its banking and other financial
institutions to make available to Agent and Revolving Credit Agent such
information and records as Agent may reasonably request. Agent and Revolving
Credit Agent will give Lenders at least ten (10) days' prior written notice of
regularly scheduled audits. Representatives of other Lenders may accompany
Agent's and Revolving Credit Agent's representatives on regularly scheduled
audits at no charge to Borrower.
1.16 Taxes.
-----
(a) Any and all payments by or on behalf of Borrower hereunder or
under the Notes, or any other Loan Document, shall be made, in accordance with
this Section 1.16, free and clear of and without deduction for any and all
------------
present or future Taxes. If Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note or any
other Loan Document to the Lender, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 1.16) Agent, Revolving
-------------
Credit Agent or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
-----------
(c) Borrower shall indemnify and pay, within ten (10) days of demand
therefor, Agent, Revolving Credit Agent and each Lender for the full amount of
Taxes or Other Taxes (including without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 1.16) paid by
-------------
Agent, Revolving Credit Agent or such Lender, as appropriate, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted.
20
(d) Within thirty (30) days after the date of any such payment of
Taxes or Other Taxes, Borrower shall furnish to Agent, at its address referred
to in Section 11.11 the original or a certified copy of a receipt evidencing
-------------
payment thereof.
(e) If Agent, Revolving Credit Agent or any Lender subsequently
receives from a taxing authority a refund of any Tax or Other Tax previously
paid by Borrower and for which Borrower has indemnified Agent, Revolving Credit
Agent or any Lender pursuant to this Section 1.16, Agent, Revolving Credit
------------
Agent or such Lender, as applicable, shall within thirty (30) days after receipt
of such refund, and to the extent permitted by applicable law, pay to Borrower
the net amount of any such refund after deducting taxes and expenses
attributable thereto.
(f) Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
--------------
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form 4224 or Form 1001 or other applicable
form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
------------------------
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person is unable to deliver a Certificate of Exemption.
1.17 Additional Provisions.
---------------------
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
requirement that reduces the rate of return, the amount of that reduction and
showing in reasonable detail the basis of the computation thereof submitted by
such Lender to Borrower and to Agent shall, absent manifest error, be final,
conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force or law), in each case
adopted after the Closing Date, there shall be any increase in the cost
21
to any Lender of agreeing to make or making, funding or maintaining any Loan,
then Borrower shall from time to time, upon demand by such Lender (with a copy
of such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the law, regulation or request that results in such increased
cost, the amount of such increased cost and showing in reasonable detail the
basis of the computation thereof, submitted to Borrower and to Agent by such
Lender, shall be conclusive and binding on Borrower for all purposes, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, the affected Lender shall, to the extent not inconsistent
with such Lender's internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrower pursuant to this Section 1.17(b).
---------------
(c) Notwithstanding anything to contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender,
together with interest accrued thereon, unless Borrower, within five (5)
------
Business Days after the delivery of such notice and demand, converts all such
Loans into a Loan bearing interest based on the Base Rate.
(d) In order to induce each Lender to fund and maintain its share of
any LIBOR Loan on the terms provided herein, and in consideration of each
Lender's entering into funding arrangements from time to time in contemplation
thereof, Borrower agrees that if any LIBOR Loan is repaid or prepaid in full or
in part on any day other than the last day of the Interest Period therefor (if
such repayment or prepayment is voluntarily made by Borrower), Borrower shall
pay to any Lender, upon the request of such Lender, such amount or amounts as
shall compensate such Lender for any loss, cost or expense incurred by such
Lender (as determined by such Lender in its sole judgment) by reason of the
liquidation or re-employment of funds acquired or committed to be acquired by
such Lender to fund or maintain its share of such LIBOR Loan, pursuant to such
Lender's customary funding arrangements. The amount of any such loss or expense
shall include the excess, if any, of (i) such Lender's cost or deemed cost of
obtaining funding for the amount necessary to fund or maintain its share of such
LIBOR Loan for the Interest Period applicable thereto over (ii) the return such
Lender will receive on its re-employment of such funds, each as determined by
such Lender in its sole judgment. Without limiting the generality of the
foregoing, such Lender may compute such loss or expense on the basis of such
funds having been borrowed by such Lender at a rate equal to the interest rate
on United States Treasury bills or notes with a maturity that most closely
approximates the end of the relevant Interest Period as quoted by Telerate News
Service (page 5) at the close of business
22
on the first (1st) day of the Interest Period in respect of such LIBOR Loan, and
on the reinvestment by such Lender of such funds in United States Treasury bills
or notes with a maturity that most closely approximates the end of the relevant
Interest Period as quoted by Telerate News Service (page 5) at the close of
business on the date of repayment or prepayment of such LIBOR Loan (or as such
United States Treasury ▇▇▇▇ or note rates are quoted by such other nationally-
recognized quote service as may be specified by Agent to the Borrower from time
to time). Each such request shall be accompanied by a certificate of the
requesting Lender setting forth in reasonable detail the basis for computing the
amount of such loss or expense, and each such certificate shall, in the absence
of manifest error, be conclusive.
(e) The calculation of all amounts payable under this Agreement with
respect to any LIBOR Loan shall be made as though each Lender had actually
funded its share of such LIBOR Loan through the purchase of deposits in the
relevant market and in an amount equal to the amount of its share of such LIBOR
Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such loan from an offshore office of such Lender to a
domestic office of such Lender in the United States of America; provided,
--------
however, that each Lender may fund its share of each of the LIBOR Loans in any
-------
manner it sees fit and the foregoing assumptions shall be used only for
calculation of amounts which may be payable by Borrower under this Agreement
with respect thereto.
1.18 Security Interest in the Collateral.
-----------------------------------
(a) To secure the prompt and complete payment, performance and
observance of all of the Obligations, and to induce Agent, Revolving Credit
Agent and Lenders to enter into this Agreement and to make the Term Loan
(including, without limitation, all Advances made with respect to Term Loan
Letter of Credit Obligations) and the Revolving Credit Advances available to the
Borrower, Borrower hereby grants to Agent, for itself, and for Lenders, and for
Duetsche, in its capacity as Revolving Credit Agent, a security interest in all
of Borrower's right, title and interest in, to and under the following, whether
now owned by or owing to, or hereafter acquired by or arising in favor of
Borrower (including, without limitation, under any trade names, styles or
divisions thereof), and whether owned, leased or consigned by or to Borrower,
and regardless of where located:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all General Intangibles;
(vi) all Instruments;
23
(vii) all Inventory;
(viii) all Equipment;
(ix) all Intellectual Property;
(x) all Investment Property;
(xi) all money, cash or any Cash Equivalents of Borrower;
(xii) all other Goods and interests in property of any kind,
nature or description whatsoever, whether tangible or intangible, whether real
or personal, and whether now or hereafter owned or existing, leased, consigned
by or to, or acquired by, Borrower and wherever located; and
(xiii) to the extent not otherwise included, all Proceeds of
any of the foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of, each of the foregoing.
(b) In addition, to secure the prompt and complete payment,
performance and observance of the Obligations and in order to induce Lenders as
aforesaid, Borrower hereby grants to Agent, for itself and Lenders, a security
interest in all property of Borrower held by Agent including, without
limitation, all property of every description now or hereafter in the possession
or custody of, or in transit to Agent for any purpose, including safekeeping,
collection or pledge, for the account of Borrower, or as to which Borrower may
have any right or power.
(c) The security interests in the Collateral described above are
given in renewal, extension and modification of the security interests
previously granted in the Collateral to Agent, for the benefit of Lenders, by
Borrower and to Deutsche by Borrower (including, without limitation, the
security interests granted pursuant to the Original Agreement, the First
Restated Agreement, the Second Restated Agreement and the Deutsche Loan
Agreement); such existing security interests in the Collateral described above
are not extinguished hereby; and the making, perfection and priority of such
existing security interests in the Collateral described above shall continue in
full force and effect.
(d) Borrower agrees that sums owing to Revolving Credit Agent
pursuant to this Agreement or any other Loan Document are secured by the
Collateral and that Revolving Credit Lender shall be deemed to be a "Lender" for
purposes of financing statements of record in favor of Agent regarding the
Collateral.
1.19. Rights of Lender, Limitations on Obligations of Lender.
------------------------------------------------------
(a) It is expressly agreed by Borrower that, anything herein to the
contrary notwithstanding, Borrower shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed
24
by it thereunder and Agent shall have no obligation or liability under any
Contract or License by reason of or arising out of this Agreement or the
granting herein of a security interest herein or the receipt by Agent of any
payment relating to any Contract or License pursuant hereto, nor shall Agent be
required or obligated in any manner to perform or fulfill any of the obligations
of Borrower under or pursuant to any Contract or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract or License, or to present or file any claim, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
(b) Upon direction by Requisite Lenders, Revolving Credit Agent may,
after the occurrence and during the continuation of any Event of Default and
without prior notice to Borrower, notify Account Debtors, parties to the
Contracts, and obligors in respect of Instruments that the Accounts and the
right, title and interest of Borrower in and under such Contracts and
Instruments have been assigned to Agent, for itself, and Lenders, and that
payments shall be made directly to Revolving Credit Agent for the benefit of the
Lenders. Upon the request of Revolving Credit Agent, Borrower shall so notify
such Account Debtors, parties to Contracts, and obligors in respect of
Instruments. Upon direction by the Requisite Lenders, Revolving Credit Agent may
notify Account Debtors in respect of Chattel Paper that the right, title and
interest of Borrower in and under such Chattel Paper have been assigned to
Agent, for itself and Lenders, and that payments shall be made directly to
Agent.
(c) Revolving Credit Agent shall have the right from time to time to
make test verifications of the Accounts and physical verifications, appraisals
and examinations of the Inventory and other Collateral in any manner and through
any medium that it considers advisable, and Borrower agrees to furnish all such
assistance and information as Revolving Credit Agent may require in connection
therewith. Revolving Credit Agent may at any time in Revolving Credit Agent's
own name or in the name of Borrower communicate with Account Debtors, parties to
Contracts and obligors in respect of Instruments to verify with such Persons, to
Revolving Credit Agent's satisfaction, the existence, amount and terms of any
Accounts, Contracts, Instruments or Chattel Paper. Upon the occurrence and
continuation of any Event of Default, Borrower, at its own expense, shall cause
the certified independent public accountant then engaged by Borrower, to prepare
and deliver to Revolving Credit Agent at any time and from time to time promptly
upon Revolving Credit Agent's request the following reports: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as Revolving Credit
Agent may request. Borrower, at its own expense, shall cause its certified
independent public accountants to deliver to Revolving Credit Agent the results
of any physical verification of all or any portion of its Inventory made or
observed by such accountants when and if such verification is conducted.
1.20 Single Loan. All Advances to Borrower and all of the other
-----------
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured by
all of the Collateral until all Obligations have been indefeasibly paid in full
and the Lenders have no further obligation to make any further Advances.
25
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Advance. Notwithstanding any other provision
---------------------------------
of this Agreement and without affecting in any manner the rights of Agent,
Revolving Credit Agent and Lenders hereunder, Borrower shall have no rights
under this Agreement (but shall have all applicable obligations hereunder), and
Lenders shall not be obligated to make any Loan or incur any Letter of Credit
Obligations or to take, fulfill, or perform any other action hereunder, until
the following conditions have been fulfilled to the satisfaction of Agent and
Revolving Credit Agent.
(a) This Agreement or counterparts hereof shall have been duly
executed by, and delivered to, Borrower, Agent, Revolving Credit Agent and
Lenders;
(b) Revolving Credit Agent and Agent shall have received all the Loan
Documents and such other documents, instruments, certificates, opinions and
agreements as Agent shall request in connection with the transactions
contemplated by this Agreement, including without limitation all documents,
instruments, agreements and other materials listed in the Schedule of Documents
each in form and substance satisfactory to Agent and Revolving Credit Agent.
(c) Revolving Credit Agent and Agent shall have received evidence
satisfactory to Agent and Revolving Credit Agent that Borrower has obtained
consents and acknowledgments of all Persons whose consents and acknowledgments
may be required, including, but not limited to, all requisite Governmental
Authorities, to the terms and to the execution and delivery, of this Agreement
and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby;
(d) Agent shall have received evidence satisfactory to it that the
insurance policies provided for in Section 5.5 and Annex D are in full force and
----------- -------
effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements, as appropriate, in favor of Agent,
for itself and Lenders, and in form and substance satisfactory to Agent;
(e) Borrower shall have paid all Fees, costs, and expenses of closing
(including fees and expenses of consultants and counsel to Agent, Revolving
Credit Agent and Lenders presented as of the Closing Date);
(f) No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or any of the other Loan Documents or the consummation of the
transactions contemplated hereby and thereby and which, in Agent's sole
judgment, would make it inadvisable to consummate the transactions contemplated
by this Agreement or any of the other Loan Documents;
26
(g) Revolving Credit Agent and Agent, in their sole judgment, shall
not have determined that (i) Borrower shall have made any Restricted Payment;
(ii) any material increase in liabilities, liquidated or contingent, of Borrower
or Holdings, or material decrease in the assets of Borrower or Holdings, shall
have occurred since their respective last audited financial statements; (iii)
any Material Adverse Effect shall have occurred since Borrower's last certified
and audited financial statements; (iv) any material adverse effect on the
industry of Borrower shall have occurred; or (v) any change in loan syndication,
financial or capital markets conditions generally that would materially impair
the ability of Agent to syndicate the Loans;
(h) There exists no default or event of default under any of the
Subordinated Notes or the Senior Notes (or the Indenture pursuant to which they
were issued);
(i) Revolving Credit Agent and Agent shall be satisfied, in their
sole judgment, with the corporate, capital, tax, legal and management structure
of each Loan Party, and shall be satisfied, in its sole judgment exercised
reasonably, with the nature and status of all contractual obligations,
securities, labor, tax, ERISA, employee benefit, environmental, health and
safety matters, in each case, involving or affecting any Loan Party;
(j) Revolving Credit Agent and Agent shall have received a copy of
the Stock Purchase Agreement by and among Borrower and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the
"Columbia Stock Purchase Agreement") duly executed by the parties thereto and in
---------------------------------
form and substance satisfactory to Agent and Revolving Credit Agent;
(k) Revolving Credit Agent and Agent shall have received a copy of
documents evidencing the consummation on the date hereof of the merger of
Columbia Graphics Corporation into Borrower (the "Merger"), duly executed and in
------
form and substance satisfactory to Agent and Revolving Credit Agent;
(l) Revolving Credit Agent and Agent shall have received all
documents, instruments and other materials as Agent or Revolving Credit Agent
may require to evidence, perfect and establish the priority of its Liens on all
Collateral acquired by Borrower in connection with the Columbia Acquisition,
including without limitation UCC-1 Financing Statements, lien searches, and a
Collateral Assignment of Lease, all in form, scope and substance satisfactory to
Agent and Revolving Credit Agent;
(m) Revolving Credit Agent and Agent shall have received all
necessary landlord consents for each leased location to be acquired by Borrower
in connection with the acquisition of Columbia Graphics Corporation ("Columbia
--------
Acquisition"), in form and substance satisfactory to Agent and Revolving Credit
-----------
Agent;
(n) Revolving Credit Agent and Agent shall have received a letter, in
form and substance satisfactory to Agent and Revolving Credit Agent, authorizing
reliance by Agent, Revolving Credit Agent, and Lenders on the legal opinion of
counsel to the sellers in the Columbia Acquisition;
27
(o) Revolving Credit Agent and Agent shall have received a duly
executed Collateral Assignment of Stock Purchase Agreement dated the date hereof
by and between Agent, Revolving Credit Agent, and Borrower, and the consent of
the sellers thereto, in form and substance satisfactory to Agent and Revolving
Credit Agent;
(p) Revolving Credit Agent and Agent shall have received such duly
executed consents to the Columbia Acquisition and the other transactions
contemplated hereby as Agent and Revolving Credit Agent shall deem necessary,
all in form and substance satisfactory to Agent and Revolving Credit Agent;
(q) Revolving Credit Agent and Agent shall have received duly
executed payoff letters and UCC-3 Termination Statements from such other Persons
as Agent and Revolving Credit Agent shall deem necessary, all in form and
substance satisfactory to Agent and Revolving Credit Agent;
(r) Revolving Credit Agent and Agent shall have received evidence
that the assets acquired pursuant to the Columbia Acquisition are insured as
required by the Agreement, and additional insured and loss payee endorsements
corresponding to such policies in favor of Agent and in form and substance
satisfactory to Agent and Revolving Credit Agent;
(s) after giving effect to the Columbia Acquisition, the aggregate
amount of the Obligations and the Liens securing such Obligations shall
constitute "Permitted Indebtedness" and "Permitted Liens" (as such terms are
defined in the Senior Notes or the Indenture, pursuant to which they were
issued), and Borrower shall have delivered to Agent and Revolving Credit Agent a
duly executed certificate, in form and substance satisfactory to Agent and
Revolving Credit Agent, demonstrating same;
(t) Revolving Credit Agent and Agent shall have received such
documents, instruments and information relating to the financing of the Columbia
Acquisition as Agent or Revolving Credit Agent may request;
(u) Revolving Credit Agent and Agent shall have received such
additional documents, instruments and information as Agent or Revolving Credit
Agent or their respective legal counsel may request;
(v) Agent and Revolving Credit Agent shall be satisfied, in their
sole judgment, that each of (i) the Columbia Stock Purchase, and (ii) the Merger
shall have been consummated on the date hereof pursuant to documents in form and
substance satisfactory to Agent and Revolving Credit Agent;
(w) Agent and Revolving Credit Agent shall have received all
documents, instruments, certificates and agreements, and evidence of all such
matters as Agent and Revolving Credit Agent shall request in connection with the
Columbia Acquisition; and Agent and Revolving Credit Agent and their respective
counsel shall have conducted all such due
28
diligence reviews, audits and investigations as they shall deem necessary and
appropriate in connection therewith and Agent and Revolving Credit Agent shall
be satisfied, in their sole discretion, with all the foregoing; and
(x) Agent and Revolving Credit Agent shall be satisfied, in their
sole judgment, that all environmental issues and matters related to the Columbia
Acquisition have been resolved.
2.2 Further Conditions to each Advance. It shall be a further condition to
----------------------------------
the funding of the initial Advance and each subsequent Advance, to the
incurrence of any Letter of Credit Obligation and to the continuation of any
Loan as a LIBOR Loan or the conversion of a Base Rate Loan to a LIBOR Loan, that
the following statements shall be true on the date of each such funding or
continuation or conversion, as the case may be:
(a) Each Loan Party's representations and warranties contained herein
or in any of the Loan Documents shall be true and correct on and as of such date
and the Closing Date as though made on or incurred on and as of such date,
except to the extent that any such representation or warranty expressly relates
to an earlier date and except for changes therein permitted or contemplated by
this Agreement.
(b) No event shall have occurred and be continuing, or would result
from such funding, incurrence or continuation, which constitutes a Default.
(c) No event or circumstance having a Material Adverse Effect shall
have occurred since the date hereof.
(d) After giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), the aggregate amount of the Obligations, and the
Liens securing such Obligations, shall constitute "Permitted Indebtedness" (or
shall not otherwise violate the prohibition on Indebtedness as provided in the
Senior Note) and "Permitted Liens" (as such terms are defined in the Senior
Notes or the Indenture pursuant to which they were issued), respectively, and
Borrower shall have delivered to Agent a duly executed, completed certificate
substantially in the form of Exhibit C demonstrating same.
---------
(e) With respect to each Term Loan Advance or any Revolving Credit
Advance financing an Eligible Acquisition, Agent (in each event) and Revolving
Credit Agent (in the event a Revolving Credit Advance is involved in the
financing), in its respective sole discretion, shall have determined that the
proposed acquisition constitutes an Eligible Acquisition and Agent (in each
event) and Revolving Credit Agent (in the event a Revolving Credit Advance is
involved in the financing) shall have received all documents, instruments,
certificates and agreements, and evidence of all such matters, as Agent (in each
event) and Revolving Credit Agent (in the event a Revolving Credit Advance is
involved in the financing) or any Lender shall request in connection with the
applicable Eligible Acquisition (including, without limitation, those provided
to Agent and Revolving Credit Agent in connection with the Columbia
Acquisition); and Agent and Agent's counsel (and Revolving Credit Agent and
29
Revolving Credit Agent's counsel, in the event a Revolving Credit Advance is
involved in the financing) shall have conducted all such due diligence reviews,
audits and investigations as they shall deem necessary or appropriate in
connection therewith and Agent and if applicable, Revolving Credit Agent, shall
be satisfied, in its sole discretion, with all of the foregoing; Agent (in all
events) and Revolving Credit Agent (in the event a Revolving Credit Advance is
involved in the financing) shall have received and approved such documentation
relevant to an Eligible Acquisition as shall be required by Agent (in all
events) and Revolving Credit Agent (in the event a Revolving Credit Advance is
involved in the financing of the Eligible Acquisition) including, without
limitation, documentation similar to the documentation described above in
Section 2.1(j) - (r).
--------------------
(f) After giving effect to any Revolving Credit Advance (or the
incurrence of any Revolving Loan Letter of Credit Obligations), the outstanding
principal amount of the Revolving Loan shall not exceed the lesser of the
Borrowing Base and the Maximum Amount.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrower that the conditions in this Section 2.2 have been
-----------
satisfied and (ii) a confirmation by Borrower of the granting and continuance of
the Agent's Liens pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Agent, Revolving Credit Agent and Lenders to enter into this
Agreement and to make the Loans, Borrower represents and warrants to Agent,
Revolving Credit Agent and each Lender (each and all of which representations
and warranties shall survive the execution and delivery of this Agreement) that:
3.1 Corporate Existence; Compliance with Law. Each Loan Party (i) is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to do business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification; (ii) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore and
proposed to be conducted; (iii) has all licenses, permits, consents or approvals
from or by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (iv) is in compliance with its certificate or
articles of incorporation and by-laws; and (v) is in compliance in all material
respects with all applicable provisions of law.
3.2 Executive Offices; Corporate or Other Names; FEIN. The current
-------------------------------------------------
locations of each Loan Party's executive offices and principal place of business
is set forth in Schedule 3.2, and, except as set forth on Schedule 3.2, such
------------ ------------
location has not changed during the preceding
30
twelve months. During the prior five (5) years, except as set forth on Schedule
--------
3.2, no Loan Party has been known as or used any corporate, fictitious or trade
---
name other than the names of the Loan Parties set forth on Schedule 3.2. In
------------
addition, Schedule 3.2 lists the federal employer identification number of each
------------
Loan Party.
3.3 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by each Loan Party of the Loan Documents and
all other instruments and documents to be delivered by such Loan Party hereunder
and thereunder to the extent it is a party thereto and the creation of all Liens
provided for herein and therein: (i) are within such Loan Party's corporate
power; (ii) have been duly authorized by all necessary corporate and shareholder
action; (iii) are not in contravention of any provision of such Loan Party's
certificates or articles of incorporation or by-laws or other organizational
documents; (iv) will not violate any law or regulation, or any order or decree
of any court or governmental instrumentality; (v) will not conflict with or
result in the breach or termination of, constitute a default under or accelerate
any performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which any Loan Party is a party or by which any
Loan Party or any of its property is bound; (vi) will not result in the creation
or imposition of any Lien upon any of the property of any Loan Party other than
those in favor of Agent, on behalf of itself and Lenders, all pursuant to the
Loan Documents; and (vii) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
-------
2.1(c), all of which will have been duly obtained, made or complied with prior
------
to the Closing Date and which are in full force and effect. At or prior to the
Closing Date, each of the Loan Documents shall have been duly executed and
delivered for the benefit of or on behalf of each Loan Party which is a party
thereto and each shall then constitute a legal, valid and binding obligation of
such Loan Party to the extent it is a party thereto, enforceable against such
Loan Party in accordance with its terms.
3.4 Financial Statements and Projections. Borrower has delivered the
------------------------------------
financial statements and Projections identified on Schedule 3.4, and each such
------------
financial statement and Projection complies with the description thereof
contained on Schedule 3.4.
------------
3.5 Material Adverse Change. As of the date hereof, no Loan Party has any
-----------------------
material obligations, contingent liabilities, or liabilities for Charges, long-
term leases or unusual forward or long-term commitments which are not reflected
in the audited consolidated December 31, 1997 balance sheet of Holdings. As of
the date hereof, there has been no material deviation from the Projections
provided to Agent. Except as otherwise permitted hereunder or as set forth on
Schedule 3.5, no dividends, advances or other distributions have been declared,
------------
paid or made upon any Stock of Borrower and, since December 31, 1997, no shares
of Stock of Borrower have been, or are now required to be, redeemed, retired,
purchased or otherwise acquired for value by Borrower. Since December 31, 1997,
no event has occurred which would result in a Material Adverse Effect.
3.6 Ownership of Property; Liens. Except as described on Schedule 3.6, the
---------------------------- ------------
real estate listed on Schedule 3.6 constitutes all of the real property owned,
------------
leased, or used in its business by the Loan Parties. Each Loan Party holds (i)
good and marketable fee simple title to
31
all of its real estate described on Schedule 3.6, (ii) valid and marketable
------------
leasehold interests in all of such Loan Party's Leases (both as lessor and
lessee, sublessee or assignee) described on Schedule 3.6 and (iii) good and
------------
marketable title to, or valid leasehold interests in, all of its other
properties and assets. None of the properties and assets of any Loan Party are
subject to any Liens, except (x) Permitted Encumbrances and Liens set forth on
Schedule 6.7 and (y) from and after the Closing Date, the Lien in favor of
------------
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents.
Each Loan Party has received all deeds, assignments, waivers, consents, non-
disturbance and recognition or similar agreements, bills of sale and other
documents, and duly effected all recordings, filings and other actions necessary
to establish, protect and perfect such Loan Party's right, title and interest in
and to all such real estate and other assets or property. Except as described on
Schedule 3.6, (i) no Loan Party or, to Borrower's Knowledge, any other party to
------------
any such Lease described on Schedule 3.6 is in default of its obligations
------------
thereunder or has delivered or received any notice of default under any such
Lease, and no event has occurred which, with the giving of notice, the passage
of time, or both, would constitute a default under any such Lease; no Loan Party
owns or holds, or is obligated under or a party to, any option, right of first
refusal or any other contractual right to purchase, acquire, sell, assign or
dispose of any real property owned or leased by such Loan Party except as set
forth on Schedule 3.6; and (iii) no portion of any real property owned or leased
------------
by any Loan Party has suffered any material damage by fire or other casualty
loss which has not heretofore been completely repaired and restored to its
original condition. All material permits required to have been issued or
appropriate to enable the real property owned or leased by any Loan Party to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used, have been lawfully issued and are, as of the date hereof, in
full force and effect.
3.7 Restrictions; No Default; Material Contracts. No contract, lease,
--------------------------------------------
agreement or other instrument to which any Loan Party is a party or by which it
or any of its properties or assets is bound or affected and no provision of any
charter, corporate restriction, applicable law or governmental regulation has
resulted in or will result in a Material Adverse Effect. No Loan Party is in
default and, to Borrower's Knowledge, no third party is in default, under or
with respect to any material contract, agreement, lease or other instrument to
which any Loan Party is a party. No Default has occurred and is continuing.
Schedule 3.7, as supplemented from time to time by written disclosures to Agent,
------------
sets forth a complete and accurate list of all Material Contracts of the
Borrower and each of its Subsidiaries.
3.8 Labor Matters. Except as set forth on Schedule 3.8, there are no
------------- ------------
strikes or other labor disputes against any Loan Party that are pending or, to
Borrower's Knowledge, threatened. Hours worked by and payment made to employees
of each Loan Party have not been in violation of the Fair Labor Standards Act or
any other applicable law dealing with such matters which would have a Material
Adverse Effect. All material payments due from any Loan Party on account of
employee health and welfare insurance have been paid or accrued as a liability
on the books of such Loan Party. Except as set forth on Schedule 3.8, no Loan
------------
Party has any obligation under any collective bargaining agreement, management
agreement, or any employment agreement, and a correct and complete copy of each
agreement listed on Schedule 3.8 has been provided to Agent. There is no
------------
organizing activity involving any Loan Party pending or, to Borrower's
Knowledge, threatened by any labor union or group of employees. Except as set
32
forth on Schedule 3.14, there are no representation proceedings pending or, to
-------------
Borrower's Knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Loan Party has made a pending
demand for recognition, and, there are no complaints or charges against any Loan
Party pending or threatened to be filed with any federal, state, local or
foreign court, governmental agency or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Loan Party of any individual.
3.9 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------
Indebtedness. Except as set forth on Schedule 3.9, Borrower has no
------------
Subsidiaries, is not engaged in any joint venture or partnership with any other
Person, and is not an Affiliate of any other Person. The Stock of each Loan
Party owned by each of the stockholders thereof named on Schedule 3.9
------------
constitutes all of the issued and outstanding Stock of such Loan Party. Except
as set forth on Schedule 3.9, there are no outstanding rights to purchase
------------
options, warrants or similar rights or agreements pursuant to which any Loan
Party may be required to issue, sell or purchase any Stock or other equity
security. Schedule 3.9 lists all outstanding Stock of each Loan Party as of the
------------
Closing Date. Schedule 6.3 lists all Indebtedness of each Loan Party as of the
------------
Closing Date.
3.10 Government Regulation. No Loan Party is (i) an "investment company"
---------------------
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended; (ii) is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or any
other federal or state statute that restricts or limits such Loan Party's
ability to incur Indebtedness, pledge its assets, or to perform its obligations
hereunder, or under any other Loan Document, and the making of the Loans by
Lenders, the application of the proceeds and repayment thereof by each Loan
Party, and the consummation of the transactions contemplated by this Agreement
and the other Loan Documents, will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.11 Margin Regulations. No Loan Party is engaged in the business of
------------------
extending credit for the purpose of purchasing or carrying Margin Stock and no
proceeds of the Loans or any other extensions of credit under this Agreement
will be used to purchase or carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock. Following
application of the proceeds of each Loan, none of the assets (either of Borrower
only or of Borrower and its Subsidiaries on a consolidated basis) subject to the
provisions of Section 6.3, 6.7 or 6.22 will be Margin Stock. Borrower will not
------------------------
take or permit to be taken any action which might cause any Loan Document or any
document or instrument delivered pursuant hereto or thereto violate any
regulation of the Board of Governors of the Federal Reserve Board.
3.12 Taxes. All federal, state, local and foreign tax returns, reports and
-----
statements, including, but not limited to, information returns (Form 1120-S)
required to be filed by each Loan Party, have been filed with the appropriate
Governmental Authority and all Charges and other impositions shown thereon to be
due and payable have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, or any
33
such fine, penalty, interest, late charge or loss has been paid. Each Loan Party
has paid when due and payable all material Charges required to be paid by it.
Proper and accurate amounts have been withheld by each Loan Party from their
respective employees for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities. Schedule 3.12 sets forth those
-------------
taxable years for which any of the tax returns of each Loan Party are currently
being audited by the IRS or any other applicable Governmental Authority; and any
assessments or threatened assessments in connection with such audit or otherwise
currently outstanding. Except as described in Schedule 3.12, no Loan Party has
-------------
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment or collection of any Charges. No Loan Party has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f) (2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4)). None of the property owned by any Loan Party is property
which is required to treat as being owned by any other Person pursuant to the
provisions of IRC Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, and in effect immediately prior to the enactment of the Tax Reform Act
of 1986 or is "tax-exempt use property" within the meaning of IRC Section
168(h). No Loan Party has agreed or been requested to make any adjustment under
IRC Section 481 (a) by reason of a change in accounting method or otherwise. No
Loan Party has any obligation under any written tax sharing agreement except as
described on Schedule 3.12.
-------------
3.13 ERISA. Schedule 3.13 lists all Plans maintained or contributed to by
----- -------------
any Loan Party and all Qualified Plans maintained or contributed to by any ERISA
Affiliate, and separately identifies the Title IV Plans, Multiemployer Plans,
any multiple employer plans subject to Section 4064 of ERISA, unfunded Pension
Plans, Welfare Plans and Retiree Welfare Plans. IRS determination letters
regarding the qualified status under Section 401 of the IRC of each Qualified
Plan have been received as of the dates listed on Schedule 3.13. Each of the
-------------
Qualified Plans has subsequently been amended to comply with the Tax Reform Act
of 1986 and to make other necessary or desirable changes. To the Knowledge of
Borrower, the Qualified Plans as amended continue to qualify under Section 401
of the IRC, the trusts created thereunder continue to be exempt from tax under
the provisions of Section 501(a) of the IRC, and nothing has occurred which
would cause the loss of such qualification or tax-exempt status. Each Qualified
Plan so amended will be submitted to the IRS for a determination letter as to
the ongoing qualified status of the Plan under the IRC within the applicable IRC
401(b) remedial amendment period for the Tax Reform Act of 1986; and each such
Plan shall be amended, including retroactive amendments, as required during such
determination letter process to maintain the qualified status of such Plans. To
the Knowledge of Borrower, each Plan is in compliance in all material respects
with the applicable provisions of ERISA and the IRC, including the filing of all
reports required under the IRC or ERISA which are true and correct as of the
date filed, and all required contributions and benefits have been paid in
accordance with the provisions of each such Plan. No Loan Party or other ERISA
Affiliate, with respect to any Qualified Plan, has failed to make any
contribution or pay any amount due as required by Section 412 of the IRC or
Section 302 of ERISA. With respect to all Retiree Welfare Plans, the present
value of future anticipated expenses pursuant to the latest actuarial
projections of liabilities does
34
not exceed $100,000.00, and copies of such latest projections have been provided
to Agent; with respect to Pension Plans, other than Qualified Plans and the
unfunded Pension Plans listed in Schedule 3.13, the present value of the
-------------
liabilities for current participants thereunder using interest assumptions
described in IRC 411(a)(ii) does not exceed $100,000.00. No Loan Party has
engaged in a prohibited transaction, as defined in Section 4975 of the IRC or
Section 406 of ERISA, in connection with any Plan which would subject any such
Person (after giving effect to any exemption) to a material tax on prohibited
transactions imposed by Section 4975 of the IRC or any other material liability.
Except as set forth on Schedule 3.13: (i) no Title IV Plan has any
-------------
Unfunded Pension Liability; (ii) no ERISA Event or event described in Section
4062 (e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the Knowledge of
Borrower, threatened claims, actions or lawsuits (other than claims for benefits
in the normal course), asserted or instituted against (x) any Plan or its
assets, (y) any fiduciary with respect to any Plan or (z) any Loan Party or any
ERISA Affiliate with respect to any Plan; (iv) no Loan Party or any ERISA
Affiliate has incurred or reasonably expects to incur any Withdrawal Liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 of ERISA as a
result of a complete or partial withdrawal from a Multiemployer Plan; (v) within
the last five years no Loan Party or other ERISA Affiliate has engaged in a
transaction which resulted in a Title IV Plan with Unfunded Pension Liabilities
being transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of any such entity; (vi) no Plan which is a
Retiree Welfare Plan provides for continuing benefits or coverage for any
participant or any beneficiary of a participant after such participant's
termination of employment (except as may be required by Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant); (vii) each Loan Party or other ERISA Affiliate have complied with
the notice and continuation coverage requirements of Section 4980B of the IRC
and the proposed or final regulations thereunder; and (viii) no liability under
any Plan has been funded, nor has such obligation been satisfied with, the
purchase of a contract from an insurance company that is not rated AAA by
Standard & Poor's Corporation and the equivalent by each other nationally
recognized rating agency.
3.14 No Litigation. Except as set forth on Schedule 3.14, no action, claim
------------- -------------
or proceeding is now pending or, to the Knowledge of Borrower, threatened
against any Loan Party, at law, in equity or otherwise, before any court, board,
commission, agency or instrumentality of any federal, state, or local government
or of any agency or subdivision thereof, or before any arbitrator or panel of
arbitrators, (i) which challenges any such Person's right, power, or competence
to enter into or perform any of its obligations under the Loan Documents, or the
validity or enforceability of any Loan Document or any action taken thereunder
or (ii) which if determined adversely, could have or result in a Material
Adverse Effect. To the Knowledge of Borrower, there does not exist a state of
facts which is reasonably likely to give rise to such proceedings.
3.15 Brokers. Except as set forth on Schedule 3.15, no broker or finder
------- -------------
acting on behalf of any Loan Party brought about the obtaining, making or
closing of the credit extended
35
pursuant to this Agreement or the transactions contemplated by the Loan
Documents and no Loan Party has any obligation to any Person in respect of any
finder's or brokerage fees in connection therewith.
3.16 Patents, Trademarks, Copyrights and Licenses. Except as otherwise set
--------------------------------------------
forth on Schedule 3.16, each Loan Party owns all licenses, patents, patent
-------------
applications, copyrights, service marks, trademarks, trademark applications and
trade names which are necessary to continue to conduct its business as
heretofore conducted by it, now conducted by it and proposed to be conducted by
it, each of which is listed, together with Patent and Trademark Office
application or registration numbers, where applicable, on Schedule 3.16. Each
-------------
Loan Party conducts business without infringement or claim of infringement of
any license, patent, copyright, service ▇▇▇▇, trademark, trade name, trade
secret or other intellectual property right of others, except where such
infringement or claim of infringement could not have or result in a Material
Adverse Effect. Except as set forth on Schedule 3.16, to Borrower's Knowledge,
-------------
there is no infringement or claim of infringement by others of any material
license, patent, copyright, service ▇▇▇▇, trademark, trade name, trade secret or
other intellectual property right of any Loan Party.
3.17 Full Disclosure. No information contained in this Agreement, the
---------------
other Loan Documents, the Financials or any written statement furnished by or on
behalf of any Loan Party or any Affiliate thereof pursuant to the terms of this
Agreement or any other Loan Document, which has previously been delivered to
Agent, Revolving Credit Agent or any Lender, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. With respect to all business plans and other forecasts
and projections (including, without limitation, the Projections) furnished by or
on behalf of Borrower and made available to Agent, Revolving Credit Agent or any
Lender relating to the financial condition, operations, business, properties or
prospects of Borrower or any Subsidiary thereof (i) all facts stated as such
therein are true and complete in all material respects, (ii) all facts upon
which the forecasts or projections therein contained are based are true and
complete in all material respects and no material fact was omitted therefrom,
(iii) all assumptions made on that basis are reasonable under the circumstances
and are disclosed therein, and (iv) the forecasts or projections are reasonably
based on those facts and assumptions. With respect to any such forecasts or
projections made available to Agent, Revolving Credit Agent or any Lender after
the Closing Date, the foregoing clauses (i) through (iv) shall be true and
correct in all respects as of the date of such projections or forecasts.
3.18 Hazardous Materials. Except as set forth on Schedule 3.18 or routine
------------------- -------------
operations in the ordinary course of business in compliance with applicable
permits issued by a Governmental Authority, the Subject Property is free of any
Hazardous Material. In addition, Schedule 3.18 discloses existing or potential
-------------
environmental liabilities of each Loan Party of which Borrower, after due
inquiry, has Knowledge, which could constitute or result in a Material Adverse
Effect or Environmental Liabilities and Costs. Except as set forth on Schedule
--------
3.18, no Loan Party has caused or suffered to occur any Release at, under, above
----
or within any Subject Property. No Loan Party is involved in operations which
could lead to the imposition of any
36
liability or Lien on it, or any owner of any premises which it occupies, under
the Environmental Laws, and no Loan Party has permitted any tenant or occupant
of such premises to engage in any such activity.
3.19 Insurance Policies. Schedule 3.19 lists all insurance of any nature
------------------ -------------
maintained for current occurrences by each Loan Party, as well as a summary of
the terms of such insurance. Borrower covenants that such insurance complies
with and shall at all times comply with the standards set forth on Annex D.
-------
3.20 Deposit and Disbursement Accounts. Schedule 3.20 lists all banks and
--------------------------------- -------------
other financial institutions at which Borrower or any Subsidiary thereof
maintains deposits and/or other accounts and/or post office lock boxes, and such
Schedule correctly identifies the name, address and telephone number of each
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number.
3.21 Subordinated Notes and Senior Notes. None of the Subordinated Notes
-----------------------------------
or the Senior Notes has been amended or modified in any respect and no provision
therein has been waived, and no default or event of default under the
Subordinated Notes or the Senior Notes (or the Indenture pursuant to which they
were issued) has occurred and is continuing. Neither the execution and delivery
by Borrower and each of the other Loan Parties of the Loan Documents to which it
is a party nor the consummation by each of the Borrower and the other Loan
Parties of the transactions contemplated thereby violates or results in the
breach of, or constitutes a default under, or requires any consent under the
Subordinated Notes or the Senior Notes (or the Indenture pursuant to which they
were issued).
3.22 Representations and Warranties Regarding the Collateral.
-------------------------------------------------------
(a) Borrower is the sole owner of each item of the Collateral in
which it purports to grant a security interest hereunder, having good and
marketable title thereto free and clear of any and all Liens except (i) the
security interest granted to Agent, for itself and Lenders under this Agreement
and (ii) Permitted Encumbrances. Borrower will warrant and defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest thereon.
(b) No effective security agreement, financing statement, equivalent
security or Lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except (i) such
as have been filed in favor of Agent, for itself and for Lenders, pursuant to
this Agreement or (ii) such as relate to Permitted Encumbrances.
(c) As a result of the filing of appropriate financing statements in
the jurisdictions listed on Schedule 3.22(c) hereto, this Agreement is effective
----------------
to create a valid and continuing Lien on and perfected security interest in
favor of Agent, for itself and for Lenders, in the Collateral with respect to
which a security interest may be perfected by filing pursuant to the Code, which
Lien and security interest is prior to all other Liens except those Liens
specifically designated on Schedule 6.7 as being prior to the Lien of this
------------
Agreement as a matter of law, and is
37
enforceable as such as against creditors of and purchasers from Borrower (other
than purchasers of Inventory in the ordinary course of business). All action
(including, without limitation, all filings, registrations and recordings)
necessary or desirable to create, protect and perfect the security interest
granted to Agent, for itself and for Lenders, hereby in respect of each item of
the Collateral has been duly accomplished.
(d) Schedule 3.22(d) hereto lists all Instruments of Borrower. All
----------------
action necessary or desirable to protect and perfect the security interest of
Agent, for itself and for Lenders, granted hereby in each item set forth on
Schedule 3.22(d), including the delivery of all originals thereof to Agent, for
----------------
itself and for Lenders, has been duly taken. The security interest of Agent, for
itself and for Lenders, in the Collateral listed on Schedule 3.22(d) hereto is
----------------
prior to all other Liens and is enforceable as such against creditors of and
(except as provided by the Code) purchasers from Borrower.
(e) Borrower's chief executive office, principal place of business,
corporate offices, all warehouses and premises within which Collateral is stored
or located, and the locations of all of its records concerning the Collateral
are set forth on Schedule 3.22(c). Such Schedule 3.22(c) correctly identifies
---------------- ----------------
any of such facilities or locations that are not owned by Borrower and sets
forth the names of the owners and lessors or collateral of, and the holders of
any mortgages on, such facilities and locations. Borrower shall not change its
chief executive office, principal place of business, corporate offices, or
warehouses or Collateral premises, or the location of its records concerning the
Collateral without giving thirty (30) days prior written notice thereof to Agent
and taking all actions deemed by Agent necessary or appropriate to protect and
perfect Agent's interest in the Collateral.
(f) (i) Each Account represents a bona fide sale of Inventory to
---- ----
customers in the ordinary course of Borrower's business completed in accordance
with the terms and provisions contained in the documents available to Agent with
respect thereto and is not evidenced by either a Document, Instrument or Chattel
Paper; (ii) the amounts shown on any aged receivable trial balance delivered by
Borrower to Revolving Credit Agent and on Borrower's books and records and all
invoices and statements which may be delivered to Revolving Credit Agent with
respect thereto are actually and absolutely owing to Borrower and are not in any
way contingent; (iii) there are no setoffs, claims or disputes existing or
asserted with respect to any Account and Borrower has not made any agreement
with any Account Debtor for any deduction therefrom except a discount or
allowance allowed by Borrower in the ordinary course of its business for prompt
payment; (iv) to the best of Borrower's Knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforcement of any Account
or tend to reduce the amount payable thereunder as shown on the respective aged
receivable trial balances, Borrower's books and records and all invoices and
statements delivered to Revolving Credit Agent with respect thereto; (v) to the
best of Borrower's Knowledge, all Account Debtors have the capacity to contract;
(vi) Borrower has received no notice of proceedings or actions which are
threatened or pending against any Account Debtor which might result in any
material adverse change in such Account Debtor's financial condition; and (vii)
Borrower has no Knowledge that any Account Debtor is unable generally to pay its
debts as they become due.
38
(g) With respect to any Inventory, (i) such property is located at
one of the locations set forth on Schedule 3.22(c), (ii) Borrower has good,
----------------
indefeasible and marketable title to such property and such property is not
subject to any Lien whatsoever, except for Permitted Encumbrances, (iii) such
property is of good and merchantable quality, free from any defects, (iv) except
as noted on Schedule 3.16, such property is not subject to any licensing,
-------------
patent, royalty, trademark, tradename or copyright agreements with any third
parties, and (v) the completion of manufacture, sale or other disposition of
such property by Agent following a Default shall not require the consent of any
person and shall not constitute a breach or default under any contract or
agreement to which Borrower is a party or to which such property is subject.
3.23 Solvency. Both before and after giving effect to (a) the Loans to be
--------
made or extended on the Closing Date or such other date as Loans requested
hereunder are made or extended, (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower, (c) any Acquisition and the
consummation of the other transactions contemplated hereby and (d) the payment
and accrual of all transaction costs in connection with the foregoing, each Loan
Party is Solvent.
3.24 Year 2000 Problems. Each Loan Party has completed and delivered to
------------------
Agent a Year 2000 Assessment and each Loan Party will complete and deliver a
Year 2000 Corrective Plan by April 30, 1999. On or prior to August 31, 1999, no
Loan Party shall have any Year 2000 Problems, except where the existence of such
Year 2000 Problems could not reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Borrower covenants and agrees that from and
-------------------
after the Closing Date and until the Termination Date, it shall deliver to the
Agent, Revolving Credit Agent and Lenders, the Financial Statements, Projections
and notices at the times and in the manner set forth on Annex C.
-------
(b) Borrower hereby agrees that from time to time after the Closing
Date and until the Termination Date, it shall deliver to Agent, Revolving Credit
Agent and/or Lenders, as required, the various Collateral Reports (including
borrowing Base Certificates in the form of Exhibit 4.1(b) at the times, to the
--------------
Persons and in the manner set forth in Annex H.
-------
4.2 Communication with Accountants. Borrower (for itself and each
------------------------------
Subsidiary thereof) authorizes to Agent, Revolving Credit Agent and, so long as
a Default or Event of Default shall have occurred and be continuing, each Lender
to communicate directly with its and its Subsidiaries' independent certified
public accountants and tax advisors and authorizes those accountants to disclose
to Agent, Revolving Credit Agent and each Lender any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial
condition and other affairs of Borrower and each Subsidiary thereof. At or
before the Closing Date, Borrower shall deliver a letter
39
addressed to such accountants and tax advisors instructing them to comply with
the provisions of this Section 4.
---------
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees (for itself and its Subsidiaries) that,
unless Agent shall otherwise consent in writing, from and after the date hereof
and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Borrower shall (and
------------------------------------------------
shall cause each of its Subsidiaries to) (a) do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and its rights and franchises; (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; (c) at all
times maintain, preserve and protect all of its Intellectual Property, and
preserve all the remainder of its property, in use or useful in the conduct of
its business and keep the same in good repair, working order and condition
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; and (d) transact business only under the names set forth on
Schedule 3.2.
------------
5.2 Payment of Charges and Claims. Borrower shall pay and discharge, or
-----------------------------
cause to be paid and discharged in accordance with the terms thereof, (A) all
Charges imposed upon it or any Subsidiary or its or their income and profits, or
any of its property (real, personal or mixed), and (B) lawful claims for labor,
materials, supplies and services or otherwise, which if unpaid might by law
become a Lien on its property; provided, that Borrower or any Subsidiary shall
--------
not be required to pay any such Charge or claim which is being contested in good
faith by proper legal actions or proceedings, so long as at the time of
commencement of any such action or proceeding and during the pendency thereof
(i) no Default shall have occurred and be continuing, (ii) adequate reserves
with respect thereto are established and are maintained in accordance with GAAP,
(iii) such contest operates to suspend collection of the contested Charges or
claims and is maintained and prosecuted continuously with diligence, (iv) none
of the Collateral would be subject to forfeiture or loss or any Lien by reason
of the institution or prosecution of such contest, (v) no Lien shall exist, be
imposed or be attempted to be imposed for such Charges or claims during such
action or proceeding unless the full amount of such Charge or claim is covered
by insurance satisfactory in all respects to Agent, and (vi) Borrower shall
promptly pay or discharge such contested Charges and all additional charges,
interest penalties and expenses, if any, and shall deliver to Agent evidence
acceptable to Agent of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to Borrower.
5.3 Books and Records. Borrower shall (and shall cause each Subsidiary to)
-----------------
keep adequate records and books of account with respect to its business
activities, in which proper entries, reflecting all of its consolidated and
consolidating financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financials referred to in paragraph I of Schedule 3.4.
------------
40
5.4 Litigation. Borrower shall notify Agent in writing, promptly upon
----------
learning thereof, of any litigation, Claim or other action commenced or
threatened against Borrower or any Subsidiary, and of the institution against
any such Person of any suit or administrative proceeding which (i) may involve
an amount in excess of $250,000.00 individually or in the aggregate or (ii)
could have or result in a Material Adverse Effect if adversely determined.
5.5 Insurance.
---------
(a) Borrower shall, at its (or its Subsidiary's) sole cost and
expense maintain or cause to be maintained, the policies of insurance in such
amounts and as otherwise described in Annex D and Section 2.1(d). Borrower shall
------- --------------
notify Agent promptly of any occurrence causing a material loss or decline in
value of any real or personal property and the estimated (or actual, if
available) amount of such loss or decline, except as specified otherwise on
Annex D. Borrower hereby directs all present and future insurers under its "All
-------
Risk" policies of insurance to pay all proceeds payable thereunder directly to
Agent for the benefit of Lenders (provided, however, that if the amount of the
-------- -------
proceeds of any such loss or decline are less than $500,000, then upon
Borrower's request, Agent shall deliver such proceeds to Borrower to be used
solely to repair or replace the affected property). Borrower irrevocably makes,
constitutes and appoints Agent (and all officers, employees or agents designated
by Agent) as Borrower's true and lawful agent and attorney in-fact for the
purpose of making, settling and adjusting claims under the "All Risk" policies
of insurance, endorsing the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such "All Risk" policies of insurance,
and for making all determinations and decisions with respect to such "All Risk"
policies of insurance. In the event Borrower at any time or times hereafter
shall fail to obtain or maintain (or fail to cause to be obtained or maintained)
any of the policies of insurance required above or to pay any premium in whole
or in part relating thereto, Agent, without waiving or releasing any Obligations
or Default hereunder, may at any time or times thereafter (but shall not be
obligated to) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Agent deems
advisable. All sums so disbursed, including attorneys' fees, court costs and
other charges related thereto, shall be payable, on demand, by Borrower to Agent
and shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time, upon review of Borrower's
risk profile, to require additional forms and limits of insurance to, in the
Lender's sole opinion, adequately protect interests of Agent and the Lenders.
Borrower shall, if so requested by Agent, deliver to Agent, as often as Agent
may request, a report of a reputable insurance broker satisfactory to Agent with
respect to its insurance policies.
(c) Borrower shall deliver to Agent endorsements to all of its and
its Subsidiaries' (i) "All Risk" and business interruption insurance naming
Agent, on behalf of itself and the Lenders, as loss payee, and (ii) general
liability and other liability policies naming Agent, on behalf of itself and the
Lenders, as additional insureds.
5.6 Compliance with Laws. Borrower shall (and shall cause each of its
--------------------
Subsidiaries to) comply in all material respects with all federal, state and
local laws, permits and regulations
41
applicable to it, including, without limitation, those relating to licensing,
environmental, ERISA and labor matters.
5.7 Agreements. Borrower shall (and shall cause each of its Subsidiaries
----------
to) perform, within all required time periods (after giving effect to any
applicable grace periods), all of its obligations and enforce all of its rights
under each agreement, contract, instrument or other document to which it is a
party, including, without limitation, any leases and customer contracts to which
it is a party where the failure to so perform and enforce could have or result
in a Material Adverse Effect. Borrower shall not (and shall not permit any of
its Subsidiaries to) terminate or modify any provision of any agreement,
contract, instrument or other document to which it is a party which termination
or modification could have or result in a Material Adverse Effect. Borrower
shall (and shall cause each of its Subsidiaries to) perform and comply with all
obligations in respect of Accounts, Chattel Paper, Contracts, Licenses,
Instruments, Documents and all other agreements constituting or giving rise to
Collateral. Borrower shall not, without Agent's prior written consent, with
respect to any of the Accounts, Chattel Paper, Instruments or amounts due under
any Contract (i) grant any extension of the time of payment of any thereof,
other than those granted in the ordinary course of business; (ii) compromise or
settle the same for less than the full amount thereof (other than the compromise
or settlement, for adequate consideration, of Accounts in the ordinary course of
business consistent with past practices the aggregate amount of which Accounts
does not exceed $500,000.00 in any Fiscal Year); (iii) release, in whole or in
part, any Person liable for the payment thereof; or (iv) allow any credit or
discount whatsoever thereon other than trade discounts granted in the ordinary
course of business of Borrower.
5.8 Supplemental Disclosure. At the request of Agent (in the event that
-----------------------
such information is not otherwise delivered by Borrower to Agent pursuant to
this Agreement) but not more frequently than every three months, Borrower will
supplement (or cause to be supplemented) each Schedule hereto, or representation
herein or in any other Loan Document with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in such Schedule or as an
exception to such representation or which is necessary to correct any
information in such Schedule or representation which has been rendered
inaccurate thereby; provided however, that such supplement to such Schedule or
-------- -------
representation shall not be deemed an amendment thereof unless expressly
consented to in writing by Agent, and no such amendments, except as the same may
be consented to in a writing which expressly includes a waiver, shall be or be
deemed a waiver by Agent of any Default disclosed therein. Borrower shall, if
so requested by Agent or Revolving Credit Agent, furnish to Agent and Revolving
Credit Agent, as often as either of them reasonably requests, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Agent or Revolving Credit Agent may
reasonably request, all in reasonable detail, and, Borrower shall advise Agent
promptly, in reasonable detail, of (i) any Lien, other than as permitted
pursuant to Section 6.7, attaching to or asserted against any of the Collateral,
-----------
(ii) any material change in the composition of the Collateral and (iii) the
occurrence of any other event which would have a Material Adverse Effect upon
the Collateral and/or the Lien of the Agent, for the benefit of itself and
Lenders, thereon.
42
5.9 Environmental Matters. Borrower shall
---------------------
(i) except as has been otherwise disclosed to Agent in connection
with the Site (as defined below), comply with the Environmental Laws and permits
applicable to it,
(ii) notify Agent promptly after Borrower becomes aware of any
Release upon any Subject Property,
(iii) promptly forward to Agent a copy of any order, notice, permit,
application, or any communication or report received by any Loan Party in
connection with any such Release or any other matter relating to the
Environmental Laws that may affect any Subject Property or any Loan Party. The
provisions of this Section 5.9 shall apply whether or not the Environmental
-----------
Protection Agency, any other federal agency or any state or local environmental
agency has taken or threatened any action in connection with any Release or the
presence of any Hazardous Materials,
(iv) within fourteen (14) days following the date hereof, conduct an
asbestos survey of the property located at 2600, 2640, and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (collectively, the "Site") by an environmental
----
consultant acceptable to Agent, in accordance with the conclusions and
recommendations set forth in that certain Phase I Environmental Assessment
prepared by ENVIRON International Corporation ("ENVIRON") for GE Capital, dated
February, 1999 (the "Phase I Assessment") and promptly thereafter take such
------------------
appropriate action as such consultant shall deem reasonably necessary in order
to ▇▇▇▇▇ all friable asbestos, if any, located on the Site, including, but not
limited to engaging a contractor acceptable to Agent to perform such abatement,
all of which actions, including, without limitation, such abatement, shall be in
accordance with all Environmental Laws and all procedures adopted by appropriate
Governmental Authorities, and
(v) within thirty (30) days following the date hereof, engage an
environmental consultant, acceptable to Agent, to evaluate the environmental
practices which were addressed in the conclusions of the Phase I Assessment and
promptly thereafter take such action as such consultant shall deem reasonably
necessary with respect to the operation of Borrower's business at the Site and,
following such evaluation, filing all appropriate permit applications related to
such business operation (to the extent such permit applications have not been
filed or permits granted).
5.10 Landlord's and Mortgagee's Agreements. Except as disclosed in Schedule
--------
5.10, Borrower shall obtain a landlord's agreement in form and substance
----
acceptable to Agent from the lessor of any present or future leased premises of
Borrower and mortgagee's agreement in form and substance acceptable to Agent
from each mortgagee of a Loan Party or a Loan Party's lessor, agreeing (among
other things) to waive any lien any of said entities may have upon the
Collateral.
43
5.11 Certain Obligations Respecting Subsidiaries. Borrower will, and will
-------------------------------------------
cause each of its Subsidiaries to, take such action from time to time as shall
be necessary to ensure that each of its Subsidiaries is a wholly owned
Subsidiary. Borrower will not permit any of its Subsidiaries to enter into,
after the date of this Agreement, any indenture, agreement, instrument or other
arrangement that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence or payment of Indebtedness, the granting of Liens, the
declaration or payment of dividends or other Restricted Payments, the making of
loans, advances or Investments or the sale, assignment, transfer or other
disposition of any property or assets.
5.12 Application of Proceeds. Borrower shall use the proceeds of (i) the
-----------------------
Term Loan Advances as provided in Sections 1.2(a) and 1.3(a); and (ii) the
--------------- ------
Revolving Credit Advances as provided in Section 1.1(a).
--------------
5.13 Fiscal Year. Borrower shall, and shall cause each Subsidiary to,
-----------
maintain as its Fiscal Year the twelve month period ending on December 31 of
each year.
5.14 Casualty and Condemnation.
-------------------------
(a) Borrower shall promptly notify Agent of any loss, damage, or
destruction to any Collateral or any real property owned by Borrower whether or
not constituting Collateral (collectively, "Property") or arising from its use,
--------
whether or not covered by insurance. Agent is hereby authorized to adjust losses
and collect all insurance proceeds (related to the Collateral) directly. If,
notwithstanding the provisions hereof which require that Agent, on behalf of
itself and the Lenders, be the sole loss payee, a check or other instrument from
an insurer is made payable to Borrower or Borrower and Agent jointly, Agent may
endorse Borrower's name thereon and take such other action as Agent may elect to
obtain the proceeds thereof. After deducting from such proceeds the expenses, if
any, incurred by Agent in the collection or handling thereof, Agent may apply
such proceeds to the reduction of the Obligations in the manner set forth in
Section 1.12 or, at Agent's option in its sole discretion, may permit or require
------------
Borrower to use such proceeds, or any part thereof, to replace, repair or
restore such Collateral as provided in paragraph (c) below.
(b) Borrower shall promptly upon learning of the institution of any
proceeding for the condemnation or other taking of any of its Property, notify
Agent of the pendency of such proceeding, and agrees that Agent may participate
in any such proceeding and Borrower from time to time will deliver to Agent all
instruments reasonably requested by Agent to permit such participation. Agent
shall (and is hereby authorized to) collect any and all awards, payments or
other proceeds of any such condemnation or taking and apply such proceeds to the
reduction of the Obligations in the manner set forth in Section 1.12 or, at
------------
Agent's option in its sole discretion, may permit or require Borrower to use
such proceeds, or any part thereof, to replace, repair or restore such
Collateral as provided in paragraph (c) below.
(c) Any Collateral which is to be replaced, repaired or restored
pursuant to paragraph (a) or (b) above shall be replaced, repaired or restored
pursuant to such terms and
44
conditions as Agent may require and with materials and workmanship of
substantially as good a quality as existed before such loss or taking, and
Borrower shall commence such replacement, repair or restoration as soon as
practicable and proceed diligently with it until completion to Agent's
satisfaction. Borrower shall provide to Agent written progress reports, other
information and evidence of its compliance with the foregoing.
5.15 Covenants Regarding the Collateral.
----------------------------------
(a) Further Assurances; Pledge of Instruments. At any time and from
-----------------------------------------
time to time, upon the written request of Agent or, in the case of Current
Collateral, Revolving Credit Agent, and at the sole expense of Borrower,
Borrower shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as Agent or, if
applicable, Revolving Credit Agent, may reasonably deem desirable to obtain the
full benefits of this Agreement and of the rights and powers herein granted,
including (i) using its best efforts to secure all consents and approvals
necessary or appropriate for the assignment to or for the benefit of Agent of
any License (including, but not limited to software licenses) or Contract held
by Borrower or in which Borrower has any rights not heretofore assigned, (ii)
filing any financing or continuation statements under the Code with respect to
the liens and security interests granted hereunder or under any other Loan
Document, (iii) transferring Collateral to Agent's or Revolving Credit Agent's
possession (if such Collateral consists of Documents, Instruments or Chattel
Paper or if a security interest in such Collateral can be perfected only by
possession, or if requested by Agent or Revolving Credit Agent though the
parties hereto agree and understand that for perfection purposes in such
Collateral, any possession of such Collateral by Revolving Credit Agent shall be
as agent for and on behalf of Agent) and (iv) using its best efforts to obtain
waivers of liens from landlords and mortgagees (it being understood that Agent
or Revolving Credit Agent in their discretion may establish reasonable reserves
against availability under this Agreement until the same have been obtained).
Borrower also hereby authorizes each of Agent and Revolving Credit Agent to file
any such financing or continuation statement without the signature of Borrower
to the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Agent and immediately upon Borrower's receipt thereof.
(b) Maintenance of Records. Borrower shall keep and maintain, at its
----------------------
own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. Borrower shall ▇▇▇▇ its books and records pertaining to the
Collateral to evidence this Agreement and the security interests granted hereby.
All Chattel Paper shall be marked with the following legend: "This writing and
the obligations evidenced or secured hereby are subject to the security interest
of General Electric Capital Corporation, for itself and as agent for itself and
certain other Lenders." As further security, Borrower agrees that Agent shall
have a special property right and security interest in all of Borrower's books
and records pertaining to the Collateral and, upon the occurrence and during the
continuation of a Default, Borrower shall deliver and turn over any such books
and records to Agent or Revolving
45
Credit Agent or to its representatives at any time on demand of Agent or
Revolving Credit Agent. Prior to the occurrence of a Default and upon reasonable
notice from Agent or Revolving Credit Agent or the Lenders, Borrower shall
permit any representative of Agent or Revolving Credit Agent to inspect such
books and records and shall provide photocopies thereof to Agent and Revolving
Credit Agent as more specifically set forth in Section 1.15 of this Agreement.
------------
(c) Continuous Perfection. Borrower shall not change its name,
---------------------
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code unless (except in the case of the merger of Harperprints
into Borrower) Borrower shall have given Agent at least thirty (30) days' prior
written notice thereof and shall have taken all action (or made arrangements to
take such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably requested by
Agent to amend such financing statement or continuation statement so that it is
not seriously misleading.
(d) Provisions Regarding Accounts.
-----------------------------
(i) Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in Borrower's business or extend
or modify any Account (other than corrections of errors in the ordinary course
of business). If Borrower becomes aware of any matter materially affecting any
Account, including information regarding the Account Debtor's creditworthiness,
and such Account could have a Material Adverse Effect, Borrower will promptly so
advise Agent and Revolving Credit Agent.
(ii) Borrower shall not release, in whole or in part, the
obligations of any Person liable for payment in respect of any Account nor shall
Borrower, without Revolving Credit Agent's and Agent's written consent accept
any note or other Instrument (except a check or other Instrument for the
immediate payment of money) for an amount in excess of $100,000.00, individually
or in the aggregate, with respect to any Accounts of one Account Debtor. Any
such Instrument shall be considered as evidence of the Account or Accounts and
not payment thereof and Borrower will promptly deliver such Instrument to
Revolving Credit Agent appropriately endorsed in favor of Agent, for the benefit
of Agent and the Lenders. Regardless of the form of presentment, demand, notice
of dishonor, protest, and notice of protest with respect thereto, the maker
thereof will remain liable thereon until such Instrument is paid in full.
(iii) Borrower shall not, without Revolving Credit Agent's prior
written consent, compromise, settle or adjust any Account for less than the full
amount thereof if the reduction in the amounts payable under any Accounts as a
result of any such compromise, settlement or adjustment would exceed $100,000.00
in the aggregate in any Fiscal Year.
(e) Provisions Regarding Inventory. Borrower agrees that all
------------------------------
Inventory manufactured or processed by Borrower will be manufactured and
processed in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations, and orders
46
thereunder. Borrower will not, without Revolving Credit Agent's written consent,
sell any Inventory on a guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis.
(f) Provisions Regarding Equipment. Borrower represents and warrants
------------------------------
to and agrees with Agent that all of the Equipment is and will be used or held
for use in Borrower's business. Borrower shall keep and maintain the Equipment
in good operating condition and repair (ordinary wear and tear excepted) and
shall make all necessary replacements thereof. Borrower shall promptly inform
Agent of any material additions to or deletions from the Equipment. Borrower
shall not permit any Equipment to become a fixture to real property or an
accession to other personal property, unless Agent has a valid, perfected, and
first priority Lien in such real or personal property. Borrower will not,
without Agent's prior written consent, alter or remove any identifying symbol or
number on the Equipment. Except as otherwise permitted pursuant to Section 6.8,
-----------
Borrower shall not, without the prior written consent of Agent, sell, lease as a
lessor, or otherwise dispose of any of the Equipment.
(g) Provisions Regarding Trademark Collateral.
-----------------------------------------
(i) Borrower shall notify Revolving Credit Agent and Agent
immediately if it knows or has reason to know that any application or
registration relating to any Trademark that is material to the conduct of
Borrower's business may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding Borrower's ownership of any
Trademark which is material to the conduct of Borrower's business, its right to
register the same, or to keep and maintain the same.
(ii) In no event shall Borrower, either itself or through any
agent, employee, licensee or designee, file an application for the registration
of any Trademark with the United States Patent or Trademark Office or any
similar office or agency in any other country or any political subdivision
thereof without giving Agent and Revolving Credit Agent prior written notice
thereof, and, upon request of Agent or Revolving Credit Agent, Borrower shall
execute and deliver any and all agreements, instruments, documents and papers as
Agent or Revolving Credit Agent may request to evidence Agent's security
interest in such Trademark and the General Intangibles, including the goodwill,
of Borrower relating thereto or represented thereby.
(iii) Borrower shall take all necessary actions to maintain and
pursue each application, to obtain the relevant registration, and to maintain
the registration of each of the Trademarks which is material to the conduct of
Borrower's business, including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings.
(iv) In the event that any of the Collateral that is composed of
Trademarks ("Trademark Collateral") is infringed upon, or misappropriated or
--------------------
diluted by a third party, Borrower shall notify Agent and Revolving Credit Agent
promptly after Borrower learns
47
thereof and shall, unless Borrower shall reasonably determine that such
Trademark Collateral is not material to the conduct of Borrower's business,
promptly ▇▇▇ for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and shall
take such other actions as Borrower shall reasonably deem appropriate under the
circumstances to protect such Trademark Collateral.
(h) Provisions Regarding Patents and Copyrights.
-------------------------------------------
(i) Borrower agrees not to divest its rights under a Patent or
Copyright, without the prior written approval of Agent and Revolving Credit
Agent, and will take all action necessary or advisable to maintain each Patent
or Copyright that directly contributes to five percent (5%) of Borrower's
revenues.
(ii) Borrower agrees, promptly upon learning of the same, to
furnish Agent and Revolving Credit Agent in writing with all pertinent
information available to Borrower with respect to any infringement or other
violation of Borrower's rights in any material Patent or Copyright, or with
respect to any claim that practice of any material Patent or Copyright violates
any property right of that party. Borrower further agrees, absent direction of
Agent and Revolving Credit Agent to the contrary, to prosecute any person
infringing any significant Patent or Copyright.
5.16 Agent's and Revolving Credit Agent's Appointment as Attorneys-in-Fact.
---------------------------------------------------------------------
(a) Borrower hereby irrevocably constitutes and appoints Agent and
any officer or agent (including, if so authorized by Agent, Revolving Credit
Agent) thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Borrower and in the name of Borrower or in its own name, from time to
time in Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby grants to Agent the power and right, on behalf of
Borrower, without notice to or assent by Borrower, and at any time, to do the
following:
(i) in the name of Borrower, in its own name or otherwise, take
possession of, endorse and receive payment of any checks, drafts, notes,
acceptances, or other Instruments for the payment of monies due under any
Collateral;
(ii) continue any insurance existing pursuant to the terms of
the Loan Documents, and pay all or any part of the premiums therefor and the
costs thereof; and
(iii) receive payment of any and all monies, claims, and other
amounts due or to become due at any time arising out of or in respect of any
Collateral.
48
(b) Borrower hereby irrevocably constitutes and appoints Agent and
any officer or agent thereof (including, if so authorized by Agent, Revolving
Credit Agent), with full power of substitution, as its true and lawful attorney-
in-fact with full irrevocable power and authority in the place and stead of
Borrower and in the name of Borrower or in its own name, from time to time in
Agent's discretion, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement and, without limiting the generality of the
foregoing, hereby grants to Agent the power and right, on behalf of Borrower,
without notice to or assent by Borrower, upon the occurrence and during the
continuation of an Event of Default, to do the following:
(i) ask, demand, collect, receive and give acquittances and
receipts for any and all money due or to become due under any Collateral;
(ii) pay or discharge taxes, liens, security interest, or other
encumbrances levied or placed on or threatened against the Collateral;
(iii) effect any repairs or obtain any insurance called for by
the terms of this Agreement and pay all or any part of the premiums therefor and
costs thereof;
(iv) direct any party liable for any payment under or in
respect of any of the Collateral to make payment of any and all monies due or to
become due thereunder, directly to Agent or as Agent shall direct;
(v) sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, and notices in connection with accounts and other
documents constituting or related to the Collateral;
(vi) settle, compromise or adjust any suit, action, or
proceeding described above and, in connection therewith, give such discharges or
releases as Agent may deem appropriate;
(vii) file any claim or take or commence any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
Agent for the purpose of collecting any and all such monies due under any
Collateral whenever payable;
(viii) commence and prosecute any suits, actions or proceedings
of law or equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of any
Collateral;
(ix) defend any suit, action or proceeding brought against
Borrower with respect to any Collateral if Borrower does not defend such suit,
action or proceeding or if Agent believes that Borrower is not pursuing such
defense in a manner that will maximize the recovery with respect to such
Collateral;
49
(x) license or, to the extent permitted by an applicable
license, sublicense whether general, specific or otherwise, and whether on an
exclusive or non-exclusive basis, any Patent or Trademark throughout the world
for such or terms on such conditions and in such manner as Agent shall, in its
sole discretion, determine; and
(xi) sell, transfer, pledge, make any agreement with respect to,
or otherwise deal with any of the Collateral as fully and completely as though
Agent were the absolute owner thereof for all purposes, and to do, at Agent's
option and Borrower's expense, at any time, or from time to time, all acts and
things which Agent reasonably deems necessary to perfect, preserve, or realize
upon the Collateral and Agent's Lien therein in order to effect the intent of
this Agreement, all as fully and effectively as Borrower might do.
(c) Borrower hereby ratifies, to the extent permitted by law, all
that said attorneys shall lawfully do or cause to be done by virtue hereof. The
power of attorney granted pursuant to this Section 5.16 is a power coupled with
------------
an interest and shall be irrevocable until the Termination Date.
(d) The powers conferred on Agent hereunder are solely to protect the
Lenders' security interests in the Collateral and shall not impose any duty upon
it to exercise any such powers. Agent shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and none of its
officers, directors, employees, agents or representatives shall be responsible
to Borrower for any act or failure to act, except for their own gross negligence
or willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(e) Borrower also authorizes Agent, at any time and from time to
time, to (i) communicate in its own name with any party to any Contract with
regard to the assignment of the right, title and interest of Borrower in and
under the Contracts and other matters relating thereto and (ii) execute, in
connection with the sale provided for in Section 8.2 hereof, any endorsements,
-----------
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
5.17 Maintenance Covenant. Borrower shall duly pay and discharge in
---------------------
accordance with Borrower's customary business practices in respect thereto, all
current debts, obligations and accounts payable as they become due, except for
such debts, obligations and accounts payable the validity of which are being
contested in good faith by appropriate proceedings, diligently pursued and
available to Borrower, with respect to which adequate reserves have been set
aside on its books.
5.18 Year 2000 Problems.
------------------
On or prior to April 1, 1999, each Loan Party shall implement Year
2000 Corrective Actions. On or before May 31, 1999, each Loan Party shall
complete Year 2000 Corrective Actions and Year 2000 Implementation Testing. On
or before August 31, 1999, each Loan Party shall eliminate all Year 2000
Problems, except where the failure to correct the same
50
could not reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate.
6. NEGATIVE COVENANTS
Borrower covenants and agrees (for itself and each Subsidiary) that,
without the prior written consent of the Requisite Lenders, from and after the
date hereof and until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. Borrower shall not (and shall not permit
---------------------------
any of its Subsidiaries to), directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or substantially all of the
assets or capital stock of, or otherwise combine with, any Person, except as
part of an Eligible Acquisition, or form or acquire any Subsidiary, other than a
Special Purpose Subsidiary. Prior to forming any Subsidiary, Borrower shall (a)
provide not less than thirty (30) days prior written notice to Agent, (b) take
all actions requested by Agent to protect and preserve the Collateral, and (c)
receive the prior written consent of Agent.
6.2 Investments. Borrower shall not (and shall not permit any of its
-----------
Subsidiaries to), directly or indirectly, make or maintain any Investment except
(i) as otherwise permitted by Section 6.3 or 6.4; (ii) Investments outstanding
------------------
on the date hereof and listed on Schedule 6.2; (iii) advances constituting trade
------------
credit representing the purchase price of Inventory or supplies sold to any
Person (other than a Subsidiary or Affiliate of Borrower) in the ordinary course
of business and payable on terms not exceeding one hundred twenty (120) days;
(iv) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States government is pledged in support
thereof), having maturities of not more than twelve (12) months from the date of
acquisition; (v) advances to White Arts, Inc. in an aggregate amount not to
exceed $1,700,000, secured by accounts receivable and inventory of White Arts,
Inc. pursuant to documents in form and substance satisfactory to Agent and
collaterally assigned to Agent, for the benefit of itself and the Lenders; and
(vi) Investments constituting Eligible Acquisitions.
6.3 Indebtedness. Borrower shall not (and shall not permit any of its
------------
Subsidiaries to) create, incur, assume or permit to exist any Indebtedness,
except (i) the Obligations; (ii) Deferred Taxes; (iii) the Subordinated Notes;
(iv) Capital Lease Obligations permitted under clause (iv) of Section 6.7 and
----------- -----------
Indebtedness secured by purchase money Liens permitted under clause (iv) of
-----------
Section 6.7 in a maximum aggregate amount outstanding not to exceed $2,500,000;
-----------
(v) the ▇▇▇▇▇▇▇▇ Note; (vi) Indebtedness owing to any of its Affiliates in an
aggregate amount not to exceed $500,000; (vii) the Senior Notes; (viii)
Indebtedness incurred by a Special Purpose Subsidiary in connection with an
asset securitization; (ix) Indebtedness owing under the Bond Assumption
Documents; and (x) other Indebtedness set forth on Schedule 6.3.
------------
6.4 Affiliate and Employee Loans and Transactions; Employment Agreements.
--------------------------------------------------------------------
Except as otherwise expressly permitted hereunder, Borrower shall not (and shall
not permit any of its Subsidiaries to) enter into any management agreements,
service agreements, lending, borrowing or other commercial transaction with any
of its Subsidiaries, Affiliates, officers,
51
directors or employees, including, without limitation, payment of any
management, consulting, advisory or similar fee; provided, however, Borrower may
-------- -------
(i) on the date of any Advance financing an Eligible Acquisition, extend a loan
to Holdings to enable Holdings to pay a portion of the amount due to the
applicable Sellers, such loan to be evidenced by a promissory note executed by
Holdings and payable to Borrower, (ii) extend loans to its officers, directors
and employees in a maximum aggregate principal amount outstanding at any time
for all officers, directors and employees of $250,000.00, except as stated on
Schedule 6.4, (iii) incur Indebtedness owing to any of its Affiliates as
------------
described in clause (vi) of Section 6.3; (iv) extend loans to Harperprints in a
----------- -----------
maximum aggregate amount outstanding not to exceed $150,000, such loans to be
evidenced by a promissory note executed by Harperprints and payable to Borrower
and (v) transfer assets to a Special Purpose Subsidiary as described in Section
-------
6.8. Set forth on Schedule 6.4 is a list of all such management agreements,
--- ------------
service agreements, lending, borrowing or other commercial transactions existing
or outstanding as of the Closing Date.
6.5 Capital Structure and Business. Except as permitted under Section 5.1,
------------------------------ -----------
Borrower shall not (and shall not permit any of its Subsidiaries to) (i) make
any changes in its business objectives, purposes, or operations which could in
any way adversely affect the repayment of the Obligations or have or result in a
Material Adverse Effect, (ii) make any change in its capital structure as
described on Schedule 3.9 and Schedule 6.3 (including, without limitation, the
------------ ------------
issuance or recapitalization of any shares of Stock or other securities
convertible into Stock or any revision of the terms of its outstanding Stock),
(iii) amend its articles or certificate of incorporation, charter, by-laws or
other organizational documents, or (iv) engage in any business other than the
business currently engaged in by such Person.
6.6 Guaranteed Indebtedness. Borrower shall not (and shall not permit any
-----------------------
of its Subsidiaries to) incur any Guaranteed Indebtedness except (i) by
endorsement of instruments or items of payment for deposit to the general
account of such Person or (ii) for Guaranteed Indebtedness incurred for the
benefit of Borrower if the primary obligation is permitted by this Agreement for
Borrower to incur (and such Guaranteed Indebtedness shall be treated as a
primary obligation for all purposes hereof).
6.7 Liens. Borrower shall not (and shall not permit any of its
-----
Subsidiaries to) create or permit to exist any Lien on any of its properties or
assets except for (i) presently existing or hereafter created Liens in favor of
Agent, for the benefit of itself and the Lenders, to secure the Obligations;
(ii) Liens set forth on Schedule 6.7 existing on the Closing Date; (iii)
------------
Permitted Encumbrances; (iv) purchase money liens or purchase money security
interests upon or in Equipment acquired by Borrower or any of its Subsidiaries
in the ordinary course of business to secure the purchase price of such
Equipment or to secure Indebtedness or Capital Lease Obligations permitted under
Section 6.3 incurred solely for the purpose of financing the acquisition of such
-----------
Equipment, so long as such Equipment is not a component, part or accessory
installed on, or an accession, addition or attachment to, any other Equipment or
other property of Borrower or any Subsidiary thereof (except other Equipment on
which a security interest exists under this clause); (v) extensions, renewals
and replacements of Liens referred to in clauses (ii) and (iv) above, provided
------------ ----
that any such extension, renewal or replacement Lien is limited to the property
or assets covered by the Lien extended, renewed or replaced and does not secure
52
Indebtedness in an amount greater than the amount of the outstanding
Indebtedness secured thereby immediately prior to such extension, renewal or
replacement; provided that Borrower shall not create or permit any Lien to exist
--------
on any of the Stock of Borrower's Subsidiaries or any of Borrower's Accounts
(other than Liens described in clause (i) above); (vi) Liens on the capital
----------
stock and/or assets of a Special Purpose Subsidiary in connection with an asset
securitization; and (vii) presently existing Liens in favor of Deutsche, with
Deutsche hereby agreeing to assign such Liens to Agent, for the benefit of Agent
and the Lenders, to secure the Obligations.
6.8 Sale of Assets. Borrower shall not (and shall not permit any of its
--------------
Subsidiaries to) sell, transfer, convey, assign or otherwise dispose of any of
its assets or properties, including, without limitation, any Collateral;
provided, however, that the foregoing shall not prohibit (i) the sale of
-------- -------
Inventory in the ordinary course of business; (ii) the sale or disposition of
any assets which have become obsolete or surplus to the business of Borrower or
any of its Subsidiaries which either (x) give rise to Net Proceeds which do not
exceed $500,000 per year, in the aggregate, or (y) have a depreciated value
according to Agent's internal analysis which does not exceed $500,000 in the
aggregate; (iii) the sale or disposition of assets which either (x) give rise to
Net Proceeds which do not exceed $500,000 per year, in the aggregate, or (y)
have a depreciated value according to Agent's internal analysis which does not
exceed $500,000 per year, in the aggregate, (iv) the sale by Borrower of assets
to a Special Purpose Subsidiary for consideration greater than or equal to the
fair market value of such assets in connection with an asset securitization, or
(v) the transfer by a Special Purpose Subsidiary of assets acquired from
Borrower in connection with an asset securitization.
6.9 Material Contracts. Borrower shall not (and shall not permit any of
------------------
its Subsidiaries to) cancel or terminate any Material Contract or any other
contract pursuant to which it has acquired a division or amend or otherwise
modify any Material Contract or such other contract, or waive or fail to enforce
any provision of or breach any Material Contract or such other contract, or take
or fail to take any other action in connection with any Material Contract or
such other contract that would have a Material Adverse Effect.
6.10 ERISA. Neither Borrower nor any ERISA Affiliate shall acquire any new
-----
ERISA Affiliate that maintains or has an obligation to contribute to a Pension
Plan that has either an "accumulated funding deficiency," as defined in Section
302 of ERISA, or any "unfunded vested benefits," as defined in Section
4006(a)(3)(E)(iii) of ERISA in the case of any Pension Plan other than a
Multiemployer Plan and in Section 4211 of ERISA in the case of a Multiemployer
Plan. Additionally, neither Borrower nor any ERISA Affiliate shall permit or
suffer any condition set forth on Schedule 3.13 to cease to be met and satisfied
-------------
at any time; terminate any Pension Plan that is subject to Title IV of ERISA
where such termination could reasonably be anticipated to result in liability to
Borrower; (b) permit any accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA, to be incurred with respect to any Pension Plan; fail to
make any contributions or fail to pay any amounts due and owing as required by
the terms of any Plan before such contributions or amounts become delinquent;
make a complete or partial withdrawal (within the meaning of Section 4201 of
ERISA) from any Multiemployer Plan; at any time fail to provide the Agent with
copies of any Plan documents or governmental reports or filings, if reasonably
requested by Agent.
53
6.11 Financial Covenants. Borrower shall not breach or fail to comply with
-------------------
any of the following financial covenants, each of which shall be calculated in
accordance with GAAP consistently applied (and based upon the financial
statements delivered hereunder):
(a) Capital Expenditures. Holdings shall not make aggregate non-
--------------------
financed Capital Expenditures (excluding any Capital Expenditures made by
Borrower pursuant to Section 5.14 to replace, repair or restore any Property
------------
subject to any loss or taking described therein) in any Fiscal Year in excess of
$5,000,000, determined on a consolidated basis in accordance with GAAP,
provided, however that any portion of such amount not utilized for Capital
-------- -------
Expenditures during a Fiscal Year may be carried over for one (1) year only to
the next Fiscal Year, provided that any amount so carried over shall be deemed
--------
to have been utilized only after all otherwise permitted amounts for that Fiscal
Year have been utilized.
(b) Fixed Charge Coverage Ratio. Borrower shall not permit the Fixed
---------------------------
Charge Coverage Ratio of Holdings, determined on a consolidated basis in
accordance with GAAP, at the end of each Fiscal Quarter to be less than 1.2:1.0.
The parties hereto agree that the preceding Fixed Charge Coverage Ratio will not
be accurate in the event of an asset securitization involving a Special Purpose
Subsidiary. Therefore, in the event of the occurrence of such an asset
securitization, the parties hereto agree that the Fixed Charge Coverage Ratio
will need to be revised in a manner mutually agreed upon by Requisite Lenders,
such a revision to be a condition precedent to Borrower being able to effectuate
such an asset securitization.
(c) Senior Leverage Ratio. Borrower shall not permit the Senior
---------------------
Leverage Ratio at the end of each Fiscal Quarter set forth below to be more than
the corresponding ratio set forth below:
Fiscal Quarter Ending Ratio
--------------------- -----
31-Mar-99 5.00:1.0
30-June-99 5.00:1.0
30-Sep-99 5.00:1.0
31-Dec-99 5.00:1.0
31-Mar-00 4.75:1.0
30-June-00 4.75:1.0
30-Sep-00 4.75:1.0
31-Dec-00 4.75:1.0
31-Mar-01 4.50:1.0
30-June-01 4.50:1.0
30-Sep-01 4.50:1.0
31-Dec-01 4.50:1.0
31-Mar-02 4.25:1.0
30-June-02 4.25:1.0
30-Sep-02 4.25:1.0
31-Dec-02 4.25:1.0
54
Fiscal Quarter Ending Ratio
--------------------- -----
31-Mar-03 4.00:1.0
The parties hereto agree that the preceding Senior Leverage Ratio will not be
accurate in the event of an asset securitization involving a Special Purpose
Subsidiary. Therefore, in the event of the occurrence of such an asset
securitization, the parties hereto agree that the Senior Leverage Ratio will
need to be revised in a manner mutually agreed upon by Requisite Lenders, such a
revision to be a condition precedent to Borrower being able to effectuate such
an asset securitization.
6.12 Hazardous Materials. Except as set forth in Schedule 3.18, Borrower
------------------- -------------
shall not and shall not permit any of its Subsidiaries or any other Person
within the control of Borrower to (a) cause or permit a Release of Hazardous
Material on, under in or about any Subject Property; (b) use, store, generate,
treat or dispose of Hazardous Materials, except in compliance with Environmental
Laws; or (c) transport any Hazardous Materials to or from any Subject Property,
except in compliance with Environmental Laws.
6.13 Sale-Leasebacks. Borrower shall not (and shall not permit any of its
---------------
Subsidiaries to) engage in any sale-leaseback or similar transaction involving
any of its property or assets.
6.14 Cancellation of Indebtedness. Borrower shall not (and shall not
----------------------------
permit any of its Subsidiaries to) cancel any claim or Indebtedness owing to it,
except for reasonable consideration and in the ordinary course of its business,
or voluntarily prepay any Indebtedness (other than the Obligations).
6.15 Restricted Payments. Borrower shall not make any Restricted Payment
-------------------
to any Person and Borrower shall not permit any Subsidiary to make any
Restricted Payment other than to Borrower, provided, however, that Borrower may
-------- -------
pay dividends or payment of fees to Holdings made solely to enable Holdings to
pay (i) officers' salaries pursuant to applicable Employment Agreements and
operating expenses (including without limitation rental payments on leased real
property), (ii) interest on the Subordinated Indebtedness payable to the Sellers
(other than the McQuiddy Sellers) in accordance with the terms of the
Subordination Agreements, or (iii) principal and interest on the ▇▇▇▇▇▇▇▇ Note
when due pursuant to the terms thereof.
6.16 Real Property Leases. Borrower shall not (and shall not permit any of
--------------------
its Subsidiaries to) enter into or renew (by amendment, modification or
otherwise) any Lease, except that Borrower (i) may renew existing Leases upon
substantially the same terms as are in effect on the Closing Date, and (ii) may
assume Leases pursuant to Eligible Acquisitions.
6.17 Bank Accounts. Borrower shall not (and shall not permit any of its
-------------
Subsidiaries to) maintain any deposit, operating or other bank accounts except
for those accounts identified on Schedule 3.20.
-------------
55
6.18 Subordinated Notes. Neither Borrower nor any of its Subsidiaries
------------------
shall purchase, redeem, retire or otherwise acquire for value, or set apart any
money for a sinking, defeasance or other analogous fund for, the purchase,
redemption, retirement or other acquisition of, or make any payment (scheduled,
voluntary or other) of principal of or interest on, or any other amount owing in
respect of, any Subordinated Notes, except that, so long as no Default shall
have occurred and be continuing (or would occur as a result of any such
payment), Borrower may, on regularly scheduled interest payment dates (which
shall be no more frequent than quarterly, unless Agent otherwise consents), make
payments of interest on the Subordinated Notes at the interest rate listed on
each Subordinated Note respectively, subject to satisfaction of the following
conditions: (i) no Default shall have occurred and be continuing (or would occur
as a result of such payment) on the date of such payment; (ii) Borrower shall
have provided Agent evidence reasonably satisfactory in the judgment of Agent
that the condition set forth in the foregoing clause (i) will be satisfied on
and as of the date of such payment; and (iii) upon Agent's request, Borrower
shall have given Agent at least five (5) Business Days prior written notice of
its intention to make any such payment. Borrower will not consent to any
amendment, modification, supplement or waiver of any of the provisions of the
Subordinated Notes or the ▇▇▇▇▇▇▇▇ Note.
6.19 No Speculative Transactions. Borrower shall not (and shall not permit
---------------------------
any of its Subsidiaries to) engage in any speculative transaction or any
transaction involving commodity options or futures contracts (other than in the
ordinary course of business consistent with past practice).
6.20 Margin Regulations. Borrower shall not use the proceeds of any Loan
------------------
to purchase or carry any Margin Stock or any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of 1934.
6.21 Limitation on Negative Pledge Clauses. Borrower shall not (and shall
-------------------------------------
not permit any of its Subsidiaries to), directly or indirectly, enter into any
agreement with any Person, other than Agent and the Lenders pursuant to a Loan
Document, or the trustee for the holders of the Senior Notes pursuant to the
Indenture under which such notes were issued, which prohibits or limits the
ability of Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
6.22 Accounting Changes. Borrower shall not (and shall not permit any of
------------------
its Subsidiaries to) make, any significant change in accounting treatment and
reporting practices except for changes concurred in by Borrower's independent
public accountants and approved by Agent.
6.23 Senior Notes. Borrower shall not consent, agree to or permit any
------------
amendment or other modification of any of the provisions of the Senior Notes or
the Indenture pursuant to which they were issued.
56
7. TERM
7.1 Duration. The financing arrangement contemplated hereby shall be in
--------
effect until the respective Term Loan Commitment Termination Date or Revolving
Loan Termination Date, as applicable. On the Revolving Loan Commitment
Termination Date, the Revolving Loan Commitment shall terminate and the
Revolving Loans, the Revolving Loan Letter of Credit Obligations and all other
amounts owing to the Revolving Lenders hereunder shall immediately become due
and payable in full, in cash. On the Term Loan Commitment Termination Date
applicable to Term Loan A Advances, the Term Loan A Commitment shall terminate
and any amounts outstanding under Note A shall immediately become due and
payable in full, in cash. On the Term Loan Commitment Termination Date
applicable to Term Loan B Advances, the Term Loan B Commitment shall terminate
and any amounts outstanding under Note B shall immediately become due and
payable in full, in cash. On the Termination Date, all other Obligations shall
immediately become due and payable in full, in cash.
7.2 Survival of Obligations. No termination or cancellation (regardless of
-----------------------
cause or procedure) of any financing arrangement under this Agreement shall in
any way affect or impair the Obligations, duties, indemnities, and liabilities
of any Loan Party, or the rights of Agent, Revolving Credit Agent and Lenders
relating to any Obligations, due or not due, liquidated, contingent or
unliquidated or any transaction or event occurring prior to such termination, or
any transaction or event, the performance of which is not required until after
the Termination Date. All undertakings, agreements, covenants, warranties and
representations of or binding upon any Loan Party, and all rights of Agent,
Revolving Credit Agent and each Lender, all as contained in the Loan Documents
shall not terminate or expire, but rather shall survive such termination or
cancellation and shall continue in full force and effect until such time as all
of the Obligations have been indefeasibly paid in full in accordance with the
terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the following
-----------------
events (regardless of the reason therefor) shall constitute an "Event of
--------
Default" hereunder:
-------
(a) Borrower shall fail to make any payment in respect of any
Obligations hereunder or under any of the other Loan Documents when due and
payable or declared due and payable, including, without limitation, any payment
of principal of, or interest on, the Term Loans or Revolving Credit Advances,
and the same shall remain unpaid for a period ending three (3) days after the
date such payment was due and payable or declared due and payable.
(b) Borrower shall fail or neglect to perform, keep or observe any of
the provisions of Section 1.9, Section 5.9, Section 5.5, Section 5.1 or Section
----------- ----------- ----------- ----------- -------
6 or any of the provisions set forth on Annex C or Annex H.
- ------- -------
(c) Any Loan Party shall fail or neglect to perform, keep or observe
any term or provision of this Agreement (other than any such term or provision
referred to in paragraph
---------
57
(a) or (b) above) or of any of the other Loan Documents, and the same shall
--- ---
remain unremedied for a period ending on the first to occur of ten (10) days
after Borrower shall receive written notice of any such failure from Agent or
thirty (30) days after any Loan Party shall become aware thereof.
(d) A default shall occur under any other agreement, document or
instrument to which any Loan Party is a party or by which any such Person or its
property is bound, and such default (i) involves the failure to make any payment
(whether of principal, interest or otherwise, and after giving effect to any
applicable grace or cure period) due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of
such Person in an aggregate amount exceeding $250,000.00 or (ii) causes (or
permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness, or a portion thereof in an aggregate amount exceeding $250,000.00,
to become due prior to its stated maturity or prior to its regularly scheduled
dates of payment.
(e) Any information contained in any Borrowing Base Certificate or
any Certificate delivered pursuant to Section 2.2(d) is untrue or incorrect in
--------------
any material respect, or any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto, any report,
financial statement or certificate made or delivered to Agent or any Lender by
any Loan Party shall be untrue or incorrect in any material respect as of the
date when made or deemed made (including those made or deemed made pursuant to
Section 2.2 and Section 4).
----------- ---------
(f) Any of the assets of any Loan Party shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of such Loan Party and shall remain unstayed or undismissed for sixty
(60) consecutive days; or any Person other than a Loan Party shall apply for the
appointment of a receiver, trustee or custodian for any Loan Party's assets and
shall remain unstayed or undismissed for sixty (60) consecutive days; or any
Loan Party shall have concealed, removed or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any Loan
Party in a court having competent jurisdiction seeking a decree or order (i)
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of any Loan Party or of any
substantial part of its properties, or (iii) ordering the winding up or
liquidation of the affairs of any Loan Party and such case or proceeding shall
remain undismissed or unstayed for sixty (60) consecutive days or such court
shall enter a decree or order granting the relief sought in such case or
proceeding.
(h) Any Loan Party shall (i) file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal,
58
state or foreign bankruptcy or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of any Loan Party or of
any substantial part of any Loan Party's properties, (iii) fail generally to pay
its debts as such debts become due, or (iv) take any corporate action in
furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $500,000.00 in the
aggregate shall be rendered against any Loan Party, unless the same shall be (i)
fully covered by insurance in accordance with Section 5.5, or (ii) vacated,
-----------
stayed, bonded, paid or discharged within a period of fifteen (15) days from the
date of such judgment.
(j) There shall occur any Material Adverse Effect since the Closing
Date which shall not have been cured (or waived by the Lender) within ten days
of notice thereof from Agent to Borrower.
(k) Any provision of any Loan Document shall for any reason cease to
be valid, binding and enforceable in accordance with its terms; or any Lien
created under any Collateral Document shall cease to be a valid and perfected
Lien having the first priority in any of the Collateral purported to be covered
thereby, except for Permitted Encumbrances.
(l) ▇▇▇▇ ▇. ▇▇▇▇▇▇ ceases for any reason whatsoever (other than as a
result of his death) to be actively engaged in the management of Borrower.
(m) Any of the Persons identified on Schedule 8.1(m) (as such
---------------
Schedule may be supplemented from time to time in connection with Eligible
Acquisitions or otherwise) ceases for any reason whatsoever (other than as a
result of his or her death) to be actively engaged in the management of the
division of the Borrower corresponding to such Person on said Schedule and is
not replaced by an individual acceptable to Agent within a reasonable period of
time.
(n) Holdings ceases for any reason whatsoever to employ individuals
acceptable to Agent in each of the following positions and any such position is
not filled by an individual satisfactory to Agent within sixty (60) days
thereafter: Chief Financial Officer, Senior Vice President-Marketing, Chief
Operating Officer, Chief Information Officer and Chief Accounting Officer.
(o) There shall occur a Change of Control.
(p) There shall occur any "Event of Default" under and as defined in
the Subordinated Notes or any "Event of Default" under and as defined in the
Senior Notes or the Indenture pursuant to which they were issued.
(q) An event or condition specified in Section 6.10 hereof shall
------------
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
Borrower, any Subsidiary thereof or any ERISA
59
Affiliate shall incur or in the opinion of the Agent shall be reasonably likely
to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination
of the foregoing) in excess of $100,000.00 in the aggregate.
(r) The occurrence of a default under the provisions of any of the
other Loan Documents and expiration of any cure or grace period applicable
thereto.
(s) The liquidation, termination or dissolution of the Borrower or
Holdings without the prior written consent of the Lender.
(t) The repudiation of any guaranty of the Obligations by any
Guarantor.
(u) Harperprints shall not have merged with and into Borrower on
terms and pursuant to documents in form and substance satisfactory to Agent on
or before July 1, 1999.
(v) Holdings shall cancel, terminate, amend or modify any agreement
or contract to which it is a party, pursuant to which a division of Borrower is
acquired, or waive or fail to enforce any provision of or breach any such
agreement or contract, or take or fail to take any other action in connection
with any such agreement or contract that would have a Material Adverse Effect.
8.2 Remedies.
--------
(a) (i) If any Event of Default shall have occurred and be
continuing, or if a Default shall have occurred and be continuing and Requisite
Lenders (which in all events for this purpose must include Deutsche) shall have
determined that no Revolving Credit Advances shall be made and that no Revolving
Loan Letter of Credit Obligations shall be incurred so long as that specific
Default or Event of Default is continuing, Revolving Credit Agent shall, without
notice, suspend the Revolving Loan facility with respect to further Revolving
Credit Advances and/or the incurrence of further Revolving Loan Letter of Credit
Obligations whereupon any further Revolving Credit Advances and Revolving Loan
Letter of Credit Obligations shall be made or extended in the sole discretion of
the Requisite Lenders (which in all events for this purpose must include
Deutsche), so long as such Default or Event of Default is continuing.
(ii) If any Event of Default shall have occurred and be
continuing or if a Default shall have occurred and be continuing and Requisite
Lenders shall have determined that no Term Loan Advances shall be made and that
no Term Loan Letter of Credit Obligations shall be incurred so long as that
specific Default is continuing, Agent shall, without notice, suspend the Term
Loan facility with respect to further Term Loan Advances and/or the incurrence
of further Term Loan Letter of Credit Obligations whereupon any further Term
Loan Advances and Term Loan Letter of Credit Obligations shall be made or
extended in the sole discretion of the Requisite Lenders, so long as such
Default or Event of Default is continuing.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the request of Requisite Lenders shall) without notice except
as expressly provided
60
herein, increase the rate of interest applicable to the Loans and the other
Obligations, effective as of the date of the occurrence of the Default giving
rise to such Event of Default, to the Default Rate as provided in Section
-------
1.6(e). If any Event of Default shall have occurred and be continuing Agent may
------
(and at the request of Requisite Lenders shall), without notice, take any one or
more of the following actions: (a) terminate the Revolving Credit Commitment and
the Term Loan Commitments whereupon Lenders' obligation to make further Advances
shall terminate; or (b) declare all or any portion of the Obligations to be
forthwith due and payable whereupon such Obligations shall become and be due and
payable; or (c) exercise any rights and remedies provided to Agent under the
Loan Documents and/or at law or equity, including all remedies provided under
the Code; provided, however, that upon the occurrence of an Event of Default
-------- -------
specified in Section 8.1 (f), (g) or (h), the rate of interest applicable to all
---------------------------
Obligations shall be increased automatically to the Default Rate as provided in
Section 1.6(e), and the Revolving Credit Commitment and the Term Loan
--------------
Commitments shall immediately terminate and the Obligations shall become
immediately due and payable, in each case, without declaration, notice or demand
by any Person.
Without limiting the generality of the foregoing, Borrower expressly
agrees that in any such event Agent without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon Borrower or any other
Person (all and each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code and other
applicable law), may forthwith enter upon the premises of Borrower where any
Collateral is located through self-help, without judicial process, without first
obtaining a final judgment or giving Borrower notice and opportunity for a
hearing on Agent's or Lenders' claim or action, and without paying rent to
Borrower, and collect, receive, assemble, process, appropriate and realize upon
the Collateral, or any part thereof, and may forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Agent shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase for its benefit and the benefit of Lenders the whole or any part of
said Collateral so sold, free of any right or equity of redemption, which equity
of redemption Borrower hereby releases. Such sales may be adjourned or continued
from time to time with or without notice. Agent shall have the right to conduct
such sales on Borrower's premises or elsewhere and shall have the right to use
Borrower's premises without charge for such sales for such time or times as
Agent deems necessary or advisable.
Borrower further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at places which Agent shall reasonably
select, whether at Borrower's premises or elsewhere. Until Agent is able to
effect a sale, lease, or other disposition of the Collateral, Agent shall have
the right to use or operate the Collateral on behalf of Lenders, or any part
thereof, to the extent that it deems appropriate for the purpose of preserving
the Collateral or its value or for any other purpose deemed appropriate by
Agent. Agent shall have no obligation to Borrower to maintain or preserve the
rights of Borrower as against third parties with respect to
61
the Collateral while the Collateral is in the possession of Agent. Agent may, if
it so elects, seek the appointment of a receiver or keeper to take possession of
the Collateral and to enforce any of Agent's remedies with respect to such
appointment without prior notice or hearing. Agent shall apply the net proceeds
of any such collection, recovery, receipt, appropriation, realization or sale,
as provided in paragraph (d) below, Borrower remaining liable for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by Agent of any other amount required by any
provision of law, including section 9-504(1)(c) of the Code (but only after
Agent has received what Agent considers reasonable proof of a subordinate
party's security interest), need Agent account for the surplus, if any, to
Borrower. To the maximum extent permitted by applicable law, Borrower waives all
claims, damages, and demands against Agent arising out of the repossession,
retention or sale of the Collateral except such which may arise out of the gross
negligence or willful misconduct of such party. Borrower agrees that five (5)
days' prior notice by Agent of the time and place of any public sale or of the
time after which a private sale may take place is reasonable notification of
such matters. Borrower shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all amounts to
which Agent, for itself and Lenders is entitled, Borrower also being liable for
any attorneys' fees incurred by Agent to collect such deficiency.
(c) Borrower agrees to pay any and all costs of Agent, including,
without limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder.
(d) Except as otherwise specifically provided herein, Borrower hereby
waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Agreement or
any Collateral.
(e) The Proceeds of any sale, disposition or other realization upon
all or any part of the Collateral shall be distributed by Agent upon receipt, in
the following order of priorities:
First, to Revolving Credit Agent to pay principal and accrued interest
-----
on any portion of the Revolving Loans which Revolving Credit Agent may have
advanced on behalf of any Revolving Lender other than Deutsche and for which
Revolving Credit Agent has not been reimbursed by such Lender or Borrower;
provided, however, that the amounts received by Revolving Credit Agent pursuant
-------- -------
to this clause shall in no event exceed twenty-five percent (25%) of the unpaid
principal and accrued interest on the outstanding Revolving Loans;
Second, to Agent and Revolving Credit Agent to pay the amount of
------
reasonable expenses of Agent and Revolving Credit Agent in connection with any
sale, disposition or other realization, including all expenses, liabilities and
advances incurred or made by Agent or Revolving Credit Agent in connection
therewith, including reasonable attorneys' fees;
Third, to Agent and Revolving Credit Agent to pay any fees due and
-----
payable to Agent and Revolving Credit Agent;
62
Fourth, on a ratable basis, to (i) Lenders in payment of the unpaid
------
principal and accrued interest in respect of the Loans (including without
limitation to Deutsche in respect of Settlement Loans, to be shared with Lenders
that have acquired a participating interest in such Settlement Loans) and any
other Obligations then outstanding to be shared among Lenders on a ratable
basis, or on such other basis as may be agreed upon in writing by Lenders (which
agreement or agreements may be entered into without notice to or the consent or
approval of Borrower), (ii) Agent in payment of principal and accrued interest
on any portion of Loans which Agent may have advanced on behalf of any Term
Lender and for which Agent has not been reimbursed by such Lender, and (iii)
Revolving Credit Agent in payment of principal and accrued interest on any
portion of Loans which Revolving Credit Agent may have advanced on behalf of any
Revolving Lender and for which Revolving Credit Agent has not been reimbursed by
such Lender (except to the extent paid pursuant to clause First of this Section
------------ -------
8.2(e)); and
-------
Finally, to the Borrower, or its successors and assigns, or as a
-------
court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
The allocations set forth in this Section 8.2(e) are solely to
--------------
determine the rights and priorities of Agent, Revolving Credit Agent and Lenders
as among themselves and may be changed by Agent, Revolving Credit Agent and
Lenders without notice to or the consent or approval of Borrower or any other
Person.
8.3 Grant of License to Use Patent and Trademark Collateral. For the
-------------------------------------------------------
purpose of enabling Agent to exercise rights and remedies under Section 8.2
-----------
hereof (including, without limiting the terms of Section 8.2 hereof, in order to
-----------
take possession of, hold, preserve, process, assemble, prepare for sale, market
for sale, sell or otherwise dispose of Collateral) at such time as Agent shall
be lawfully entitled to exercise such rights and remedies, Borrower hereby
grants to Agent, for the benefit of itself and Lenders, an irrevocable, non-
exclusive license (exercisable without payment of royalty or other compensation
to Borrower) to use, transfer, license or sublicense any Patent, Trademark,
Copyrights or trade secret now owned or hereafter acquired by Borrower, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer and automatic machinery software and programs used for the
compilation or printout thereof.
8.4 Waivers by Borrower. Except as otherwise provided for in this
-------------------
Agreement and applicable law to the full extent permitted by applicable law,
Borrower waives (i) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all Loan Documents, notes, commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent, Revolving Credit Agent or Lenders on which Borrower may in
any way be liable, and Borrower hereby ratifies and confirms whatever Agent,
Revolving Credit Agent or Lenders may do in this regard, (ii) all rights to
notice and a hearing prior to Agent's taking possession or control of, or to
Agent's replevin, attachment or levy upon, the Collateral or any bond or
security which might be required
63
by any court prior to allowing Agent to exercise any of its remedies, and (iii)
the benefit of any right of redemption and all valuation, appraisal and
exemption laws. Borrower acknowledges that it has been advised by counsel of its
choice with respect to this Agreement, the other Loan Documents and the
transactions contemplated by this Agreement and the other Loan Documents.
8.5 Revolving Credit Agent as Sub-Agent in Connection with Current
--------------------------------------------------------------
Collateral. Notwithstanding anything herein to the contrary, the Lenders hereby
----------
agree that decisions in relation to the commencement of any rights and remedies
of Lenders against the Current Collateral (which rights and remedies shall
include, without limitation, initiating foreclosure action against any Current
Collateral, notifying Account Debtors of Agent's security interest in the
Accounts and directing such Account Debtors to make payment directly to Agent or
Revolving Credit Agent, enforcement of any security interest of Agent in the
Current Collateral, commencing any type of judicial or quasi-judicial action
against the Current Collateral, commencing any self-help remedies against the
Current Collateral, and commencement of any other rights or remedies available
under the Code, under the Loan Documents, or otherwise available under
Applicable Laws) shall be made by the Requisite Lenders; provided, however, that
-------- -------
once such decision is made, it is the intent of the Lenders that Revolving
Credit Agent shall be responsible for the undertaking and completion of the
procedures reasonably required to actually implement such decision.
Accordingly, upon the receipt of a written request from Revolving Credit Agent,
Agent shall appoint Revolving Credit Agent as Agent's agent for the limited
purposes necessary in order for Revolving Credit Agent to so undertake and
complete such procedures to the extent such rights and remedies are otherwise
granted to Agent in this Agreement with respect to the Current Collateral, and
shall for such limited purposes authorize Revolving Credit Agent as Borrower's
attorney-in-fact pursuant to Section 5.16 with respect to such rights and
------------
remedies as to the Current Collateral.
9. SUCCESSORS AND ASSIGNS
9.1 Successors and Assigns. This Agreement and the other Loan Documents
----------------------
shall be binding on and shall inure to the benefit of Borrower, Agent, Revolving
Credit Agent, Lenders and their respective successors and assigns, except as
otherwise provided herein or therein. Borrower may not assign, delegate,
transfer, hypothecate or otherwise convey its rights, benefits, obligations or
duties hereunder or under any of the Loan Documents without the prior express
written consent of Agent, Revolving Credit Agent and Lenders. Any such
purported assignment, transfer, hypothecation or other conveyance by Borrower
without such prior express written consent shall be void. The terms and
provisions of this Agreement and the other Loan Documents are for the purpose of
defining the relative rights and obligations of Borrower, Agent, Revolving
Credit Agent and the Lenders with respect to the transactions contemplated
hereby and there shall be no third party beneficiaries of any of the terms and
provisions of this Agreement or any of the other Loan Documents.
64
10. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
10.1 Assignment and Participations.
-----------------------------
(a) The Loan Parties signatory hereto consent to any Lender's
assignment of, and/or sale of participations in, at any time or times, the Loan
Documents, Loans and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not. Any assignment by a
Lender shall (i) require the consent of Agent and, in the case of an assignment
of Revolving Loans or Revolving Credit Commitments, the Revolving Credit Agent
(neither of which consents shall be unreasonably withheld or delayed) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
--------------------
in the form attached hereto as Exhibit D and otherwise in form and substance
---------
satisfactory to, and acknowledged by, Agent and, in the case of an assignment of
Revolving Loans or Revolving Credit Commitments, the Revolving Credit Agent;
(ii) be conditioned on such assignee Lender representing to the assigning Lender
and Agent that (x) it is purchasing the applicable Loans to be assigned to it
for its own account, for investment purposes and not with a view to the
distribution thereof, and (y) that it, or its parent, has assets in excess of
$100,000,000; (iii) if a partial assignment to a Person other than a Lender, be
in an amount at least equal to $5,000,000 and, after giving effect to any such
partial assignment, the assigning Lender shall have retained Commitments in an
amount at least equal to $5,000,000; and (iv) include a payment to Agent of an
assignment fee of $3,500. In the case of an assignment by a Lender under this
Section 10.1, the assignee shall have, to the extent of such assignment, the
------------
same rights, benefits and obligations as it would if it were a Lender hereunder.
The assigning Lender shall be relieved of its obligations hereunder with respect
to its Commitments or assigned portion thereof from and after the date of such
assignment. Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of Borrower to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
obligation to make Advances hereunder shall be several and not joint and shall
be limited to such Lender's Commitments. In the event any Agent or Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute and deliver to Agent or such Lender as applicable,
new Notes A, Notes B or Revolving Notes, in exchange for such documents
evidencing the Obligations being assigned or transferred. Notwithstanding the
foregoing provisions of this Section 10.1(a), any Lender may at any time pledge
---------------
the Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any Lender that is an
investment fund may assign the Obligations held by it and such Lender's rights
under this Agreement and the other Loan Documents to another investment fund
managed by the same investment advisor; provided, however, that no such pledge
-------- -------
to a Federal Reserve Bank shall release such Lender from such Lender's
obligations hereunder or under any other Loan Document. Notwithstanding anything
herein to the contrary, each Lender now or hereafter a signatory to this
Agreement hereby grants to GE Capital a right of first refusal with respect to
such Lender's right, title and interest in the Loan Documents, the Loans and any
Commitment and hereby agrees that no assignment of all or any portion of such
Lender's right, title and interest in the Loan Documents, the Loans and any
Commitment shall be valid unless such Lender complies with this right of first
refusal. Therefore, each Lender hereby
65
agrees to give GE Capital prior written notice of such Lender's intent to assign
all or a portion of such Lender's right, title and interest in the Loan
Documents, the Loans and any Commitment (which notice shall include the proposed
assignee, the purchase price, and the portion of such Lender's interest to be
assigned), whereupon for the ten Business Day period beginning the day after
receipt of such notice, GE Capital shall have the right to purchase such
described interest of such Lender upon the same terms as those described in such
notice. If GE Capital purchases such an interest, such interest shall be
assigned to GE Capital pursuant to and on the terms set forth in the Assignment
Agreement and the preceding provisions of this Section 10.1(a) shall be
---------------
applicable other than that no assignment fee shall be required to be paid to
Agent. If GE Capital does not purchase such an interest within such ten Business
Day period, such Lender shall be entitled to so assign such an interest in the
manner and pursuant to the provisions specified in such notice, provided that
such assignment otherwise complies with the provisions of this Agreement.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.14,
-------------
1.15, 1.16 and 10.7, Borrower acknowledges and agrees that a participation shall
---- ---- ----
give rise to a direct obligation of Borrower to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence neither Borrower nor any Loan Party shall have any obligation
or duty to any participant. Neither Agent, Revolving Credit Agent nor any Lender
(other than the Lender selling a participation) shall have any duty to any
participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 10.1, no Lender
------------
shall, as between Borrower and that Lender, or Agent or Revolving Credit Agent
and that Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment, transfer or negotiation of, or granting of participation
in, all or any part of the Loans, the Notes or other Obligations owed to such
Lender.
(d) Each Loan Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 10.1 as
------------
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested
(provided, however, that no such document, agreement, note or instrument shall
-------- -------
modify the economic terms of the Loans to the detriment of Borrower or increase
any Loan Party's obligations under any Loan Document) and, if requested by
Agent, the preparation of informational materials for, and the participation of
management in meetings with, potential
66
assignees or participants. Each Loan Party executing this Agreement shall
certify the correctness, completeness and accuracy of all descriptions of the
Loan Parties and their affairs contained in any selling materials provided by
them and all other information provided by them and included in such materials,
except that any Projections delivered by Borrower shall only be certified by
Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4.
-----------
(e) A Lender may furnish any information concerning Loan Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants).
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.17(a),
---------------
increased costs under Section 1.17(b), an inability to fund LIBOR Loans under
---------------
Section 1.17(c), or withholding taxes in accordance with Section 1.16(a).
--------------- --------------
10.2. Appointment of Agent and Revolving Credit Agent. GE Capital and
-----------------------------------------------
Deutsche are hereby appointed to act on behalf of all Lenders as Agent and
Revolving Credit Agent, respectively, under this Agreement and the other Loan
Documents. The provisions of this Section 10.2 are solely for the benefit of
------------
Agent, Revolving Credit Agent and Lenders and no Loan Party nor any other Person
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and the
other Loan Documents, each of Agent and Revolving Credit Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Loan Party or any other Person. Neither Agent nor Revolving Credit Agent shall
have any duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of Agent and Revolving
Credit Agent shall be mechanical and administrative in nature. Neither Agent
nor Revolving Credit Agent shall have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor Revolving Credit Agent nor any of
their respective Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct.
If Agent or Revolving Credit Agent shall request instructions from
Requisite Lenders or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, then Agent or Revolving Credit Agent, as the case may be, shall be
entitled to refrain from such act or taking such action unless and until Agent
or Revolving Credit Agent, as the case may be, shall have received instructions
from Requisite Lenders or all affected Lenders, as the case may be, and Agent or
Revolving Credit Agent, as the case may be, shall not incur liability to any
Person by reason of so
67
refraining. Agent or Revolving Credit Agent, as the case may be, shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, or Revolving
Credit Agent, as the case may be, be contrary to law or the terms of this
Agreement or any other Loan Document, (b) if such action would, in the opinion
of Agent, or Revolving Credit Agent, as the case may be, expose it to
Environmental Liabilities and Costs or (c) if Agent or Revolving Credit Agent,
as the case may be, shall not first be indemnified to its reasonable
satisfaction against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against Agent
or Revolving Credit Agent, as the case may be, as a result of Agent or Revolving
Credit Agent, as the case may be, acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite
Lenders or all affected Lenders, as applicable.
Agent, at its sole discretion, may delegate any of its rights or
responsibilities hereunder to Revolving Credit Agent, and, upon receiving notice
of any such delegation, Borrower hereby agrees that it shall comply with any
instructions of and otherwise cooperate with Revolving Credit Agent, while
acting within the terms of such delegation, as if it were Agent.
10.3 Agent's and Revolving Credit Agent's Reliance, Etc. Neither Agent nor
--------------------------------------------------
Revolving Credit Agent any of their respective Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages caused by its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Agent and/or Revolving Credit Agent, as applicable:
(a) may treat the payee of any Note as the holder thereof until it receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to it; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Loan Party or to inspect the Collateral (including the books and records) of any
Loan Party; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (f) shall incur no liability under or
in respect of this Agreement or the other Loan Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
10.4 GE Capital, Deutsche and Affiliates. With respect to their respective
-----------------------------------
Commitments hereunder, each of GE Capital and Deutsche shall have the same
rights and powers under this Agreement and the other Loan Documents as any other
Lender and may
68
exercise the same as though it were not Agent or Revolving Credit Agent,
respectively; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital and Deutsche in their individual
capacities. GE Capital and Deutsche and their Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any Loan Party,
any of their Affiliates and any Person who may do business with or own
securities of any Loan Party or any such Affiliate, all as if GE Capital were
not Agent, or Deutsche were not Revolving Credit Agent, and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Loan Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. GE
Capital has also purchased certain equity interests in Holdings and received a
warrant from Holdings, which is a corporation which currently owns one hundred
percent (100%) of the outstanding Stock of Borrower. Each Lender acknowledges
the potential conflict of interest between GE Capital as a Lender holding
disproportionate interests in the Loans, GE Capital as a stockholder, and/or
warrant holder of Holdings, and GE Capital as Agent.
10.5 Indemnification. Lenders agree to indemnify each of Agent and
---------------
Revolving Credit Agent (to the extent not reimbursed by Loan Parties and without
limiting the obligations of Borrower hereunder), ratably according to their
respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Agent or Revolving Credit Agent, 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 Revolving Credit
Agent, as the case may be, in connection therewith; provided, however, that no
-------- -------
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's or Revolving Credit Agent's, as the case may be, gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent and Revolving Credit Agent promptly upon demand for
its ratable share of any reasonable out-of-pocket expenses (including counsel
fees) incurred by Agent or Revolving Credit Agent's, as the case may be, in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent or Revolving Credit Agent's, as the case may be, is not
reimbursed for such expenses by Loan Parties.
10.6 Successor Agent. Agent or Revolving Credit Agent may resign at any
---------------
time by giving not less than thirty (30) days' prior written notice thereof to
Lenders and Borrower (and in the case of a resignation by Revolving Credit
Agent, Agent.) Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent, and Agent shall have the right to appoint a
successor Revolving Credit Agent, as the case may be. If no successor Agent
shall have been so appointed by the Requisite Lenders and shall have accepted
such appointment within 30 days after the resigning Agent's giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank or financial institution or
a subsidiary of a commercial bank or financial institution if such commercial
bank
69
or financial institution is organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder,
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent or Revolving Credit Agent appointed
hereunder shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not be
--------
required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Agent or Revolving Credit
Agent hereunder by a successor Agent or Revolving Credit Agent, as the case may
be, such successor Agent or Revolving Credit Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the resigning Agent
or Revolving Credit Agent, as the case may be. Upon the earlier of the
acceptance of any appointment as Agent or Revolving Credit Agent hereunder by a
successor Agent or Revolving Credit Agent, as the case may be, or the effective
date of the resigning Agent's or Revolving Credit Agent's resignation, the
resigning Agent or Revolving Credit Agent, as the case may be, shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent or Revolving Credit Agent shall continue. After any
resigning Agent's or Revolving Credit Agent's resignation hereunder, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
----------
or omitted to be taken by it while it was Agent or Revolving Credit Agent, as
the case may be, under this Agreement and the other Loan Documents.
10.7 Setoff and Sharing of Payments. In addition to any rights now or
------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to any Loan Party or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all balances held by it at any of its offices for the account of
Borrower or any Guarantor (regardless of whether such balances are then due to
Borrower or such Guarantor) and any other properties or assets any time held or
owing by that Lender or that holder to or for the credit or for the account of
Borrower or any Guarantor against and on account of any of the Obligations which
are not paid when due. Any Lender or holder of any Note exercising a right to
set off or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so set off or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares. Borrower
and each Loan Party that is a Guarantor agrees, to the fullest extent permitted
by law, that (a) any Lender or holder may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such amount so set off to other Lenders and holders and
(b) any Lender or holders so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as
70
if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the set-off amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of set-off,
the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
10.8 Fundings; Payments; Non-Funding Lenders; Information; Actions in
----------------------------------------------------------------
Concert.
-------
(a) Revolving Credit Fundings; Payments. (i) Subject to its
-----------------------------------
receipt of notice from Revolving Credit Agent of a Notice of Borrowing as
provided in Section 1.1 (except in the case of a deemed request by Borrower for
-----------
a Revolving Credit Advance as provided in Section 1.1(b)(ii) hereof, in which
------------------
event no Notice of Borrowing need be submitted), each Revolving Lender shall
timely honor its Revolving Loan Commitment by funding its Pro Rata Share of each
Revolving Credit Advance that is properly requested by Borrower and that
Borrower is entitled to receive under this Agreement. Revolving Credit Agent
shall notify Revolving Lenders of each Notice of Borrowing by 12:00 noon (New
York time) on the proposed funding date (in the case of Base Rate Loans) or by
3:00 p.m. (New York time) at least 2 Business Days before the proposed funding
date (in the case of LIBOR Loans). Each Revolving Lender shall deposit with
Revolving Credit Agent an amount equal to its Pro Rata Share of the Revolving
Credit Advance requested by Borrower at Revolving Credit Agent's designated bank
in immediately available funds not later than 1:00 p.m. (New York time) on the
date of funding of such Revolving Credit Advance, unless Revolving Credit
Agent's notice to Revolving Lenders is received after 12:00 noon (New York time)
on the proposed funding date of a Base Rate Loan, in which event Revolving
Lenders shall deposit with Revolving Credit Agent their respective Pro Rata
Shares of the requested Revolving Credit Advance on or before 11:00 a.m. (New
York time) of the next Business Day. Subject to its receipt of such amounts from
Revolving Lenders, Revolving Credit Agent shall make the proceeds of the
Revolving Credit Advances received by it available to Borrower by disbursing
such proceeds in accordance with Borrower's disbursement instructions set forth
in the applicable Notice of Borrowing. Unless Revolving Credit Agent shall have
been notified in writing by a Revolving Lender prior to the proposed time of
funding that such Revolving Lender does not intend to deposit with Revolving
Credit Agent an amount equal to such Lender's Pro Rata share of the requested
Revolving Credit Advance, Revolving Credit Agent may assume that such Revolving
Lender has deposited or promptly will deposit its share with Revolving Credit
Agent and Revolving Credit Agent may in its discretion disburse a corresponding
amount to Borrower on the applicable funding date. If a Revolving Lender's Pro
Rata Share of such Revolving Credit Advance is not in fact deposited with
Revolving Credit Agent, then, if Revolving Credit Agent has disbursed to
Borrower an amount corresponding to such share, then such Revolving Lender
agrees to pay, and in addition Borrower agrees to repay, to Revolving Credit
Agent forthwith on demand such corresponding amount, together with interest
thereon, for each day from the date such amount is disbursed by Revolving Credit
Agent to or for the benefit of Borrower until the date such amount is paid or
repaid to Revolving Credit Agent, (A) in the case of Borrower, at the interest
rate applicable to such Revolving Credit Advance and (B) in the case of such
Revolving Lender, at the Federal Funds Rate. If such Revolving Lender repays to
Revolving Credit Agent such corresponding amount, such amount so repaid shall
constitute a Revolving Credit Advance, and
71
if both such Revolving Lender and Borrower shall have repaid such corresponding
amount, Revolving Credit Agent shall promptly return to Borrower such
corresponding amount in same day funds.
(ii) (A) In order to facilitate the administration of the
Revolving Credit Advances under this Agreement, Revolving Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that
settlement among them with respect to the Revolving Loan may take place on a
periodic basis on dates determined from time to time by Revolving Credit Agent
(each a "Revolving Credit Settlement Date"), which may occur before or after the
--------------------------------
occurrence or during the continuance of a Default or Event of Default and
whether or not all of the conditions set forth in Section 2 of this Agreement
---------
have been met. On each Revolving Credit Settlement Date, payment shall be made
by or to each Revolving Lender in the manner provided herein and in accordance
with the settlement report delivered by Revolving Credit Agent to Revolving
Lenders with respect to such Revolving Credit Settlement Date so that, as of
each Revolving Credit Settlement Date and after giving effect to the transaction
to take place on such Revolving Credit Settlement Date, each Revolving Lender
shall hold its Pro Rata Share of all Revolving Loans and participations in
Revolving Loan LC Outstandings then outstanding. Revolving Credit Agent shall
request settlement with the Revolving Lenders on a basis not less frequently
than once every 5 Business Days.
(B) Between Settlement Dates, Revolving Credit Agent may
request Deutsche to advance, and Deutsche may, but shall in no event be
obligated to, advance to Borrower out of Deutsche's own funds the entire
principal amount of any Revolving Credit Advances that are Base Rate Loans
requested or deemed requested pursuant to this Agreement (any such Revolving
Credit Advance funded exclusively by Deutsche being referred to as a "Settlement
----------
Loan"). Each Settlement Loan shall constitute a Revolving Credit Advance
----
hereunder and shall be subject to all of the terms, conditions and security
applicable to other Revolving Credit Advances, except that all payments thereon
shall be payable to Deutsche solely for its own account. The obligation of
Borrower to repay such Settlement Loans to Deutsche shall be evidenced by the
records of Deutsche and need not be evidenced by any promissory note. Revolving
Credit Agent shall not request Deutsche to make any Settlement Loan if (x)
Revolving Credit Agent shall have received written notice from any Lender that
one or more of the applicable conditions precedent set forth in Section 2 hereof
---------
will not be satisfied on the requested funding date for the applicable Revolving
Credit Advance or (Y) the requested Revolving Credit Advance would exceed the
amount of Net Borrowing Availability on the funding date or would cause the then
outstanding principal balance of all Settlement Loans to exceed $5,000,000.
Deutsche shall not be required to determine whether the applicable conditions
precedent set forth in Section 2 hereof have been satisfied or the requested
---------
Revolving Credit Advance would exceed the amount of Net Borrowing Availability
on the funding date applicable thereto prior to making, in its sole discretion,
any Settlement Loan. On each Revolving Credit Settlement Date, or, if earlier,
upon demand by Revolving Credit Agent for payment thereof, the then outstanding
Settlement Loans shall be immediately due and payable. As provided in Section
-------
1.1(b)(ii), Borrower shall be deemed to have requested (without the necessity of
----------
submitting any Notice of Borrowing) Revolving Credit Advances to be made on each
Revolving Credit Settlement Date in the amount of all outstanding Settlement
Loans and to
72
have Revolving Credit Agent to cause the proceeds of such Revolving Credit
Advances to be applied to the repayment of such Settlement Loans and interest
accrued thereon. Revolving Credit Agent shall notify the Revolving Lenders of
the outstanding balance of Revolving Credit Advances prior to 11:00 a.m. (New
York time) on each Revolving Credit Settlement Date and each Revolving Lender
(other than Deutsche) shall deposit with Revolving Credit Agent (without setoff,
counterclaim or reduction of any kind) an amount equal to its Pro Rata Share of
the amount of Revolving Credit Advances deemed requested in immediately
available funds not later than 12:00 noon (New York time) on such Revolving
Credit Settlement Date, and without regard to whether any of the conditions
precedent set forth in Section 2 hereof are satisfied or the Revolving
---------
Commitment Termination Date has occurred. If any Settlement Loan is not repaid
on the due date thereof, then on the second Business Day after Deutsche's
request each Revolving Lender (other than Deutsche) shall purchase a
participating interest in such Settlement Loan in an amount equal to its Pro
Rata Share of such Settlement Loan by transferring to Deutsche, in immediately
available funds, the amount of such participation. The proceeds of Settlement
Loans may be used solely for purposes for which Revolving Credit Advances
generally may be used in accordance with Section 1.1(c) hereof. If any amounts
--------------
received by Deutsche in respect of any Settlement Loans are later required to be
returned or repaid by Deutsche to Borrower or any other obligor or their
respective representatives or successors-in-interest, whether by court order,
settlement or otherwise, the other Revolving Lender shall, upon demand by
Deutsche with notice to Revolving Credit Agent, pay to Revolving Credit Agent
for the account of Deutsche, an amount equal to each other Revolving Lender's
Pro Rata Share of all such amounts required to be returned by Deutsche.
(b) Term Loan Fundings; Payments. (i) Agent shall notify Lenders,
----------------------------
promptly after receipt of a Notice of Term Loan Borrowing by telecopy, telephone
or other similar form of transmission. Each Term Loan Lender shall make the
amount of such Lender's Pro Rata Share of such Term Loan Advance available to
Agent in same day funds by wire transfer to Agent's account as set forth in
Annex I not later than 11:00 a.m. (New York time) on the requested funding date.
-------
After receipt of such wire transfers (or, in the Agent's sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall make
the requested Term Loan Advance to the Borrower in the notice of Term Loan
Advance. All payments by each Term Loan Lender shall be made without setoff,
counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day after Agent has received
any payment with respect to the Term Loan (each, a "Term Loan Settlement Date"),
-------------------------
Agent will advise each Lender by telephone, or telecopy of the amount of such
Lender's Pro Rata Share of principal, interest and Fees paid for the benefit of
Lenders with respect to the Term Loan. Provided that such Lender has funded all
payments or Term Loan Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Term Loan Settlement Date, Agent will pay to each
Lender such Lender's Pro Rata Share of principal, interest and Fees paid by
Borrower to Agent since the previous Term Loan Settlement Date for the benefit
of that Lender on the Term Loan Advances made by it. To the extent that any
Lender is a Non-Funding Lender with respect to the Term Loan, Agent shall be
entitled to set off the funding short-fall against that Non-Funding Lender's Pro
Rata Share of all payments received from Borrower. Such payments shall be made
73
by wire transfer to such Lender's account (as specified by such Lender in Annex
-----
I or the applicable Assignment Agreement) not later than 2:00 p.m. (New York
-
time) on the next Business Day following each Term Loan Settlement Date.
(c) Availability of Lender's Pro Rata Share. Each of Agent and
---------------------------------------
Revolving Credit Agent may assume that each Lender will make its Pro Rata Share
of each Advance available to Agent or Revolving Credit Agent, as the case may
be, on each funding date. If such Pro Rata Share is not, in fact, paid to Agent
or Revolving Credit Agent, as the case may be, by such Lender when due, Agent or
Revolving Credit Agent, as the case may be, will be entitled to recover such
amount on demand from such Lender without set-off, counterclaim or deduction of
any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith
upon Agent's or Revolving Credit Agent's demand, Agent or Revolving Credit
Agent, as the case may be, shall promptly notify Borrower and Borrower shall
immediately repay such amount to Agent or Revolving Credit Agent, as the case
may be. Nothing in this Section 10.8(c) or elsewhere in this Agreement or the
---------------
other Loan Documents shall be deemed to require Agent or Revolving Credit Agent
to advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Borrower may have against any Lender as a result of any default by such Lender
hereunder. To the extent that Agent or Revolving Credit Agent advances funds to
Borrower on behalf of any Lender and is not reimbursed therefor on the same
Business Day as such advance is made, Agent or Revolving Credit Agent, as the
case may be, shall be entitled to retain for its account all interest accrued on
such advance until reimbursed by the applicable Lender.
(d) Return of Payments. (i) If Agent or Revolving Credit Agent pays
------------------
an amount to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent or Revolving Credit Agent,
as the case may be, from Borrower and such related payment is not received by
Agent or Revolving Credit Agent, as the case may be, then Agent or Revolving
Credit Agent, as the case may be, will be entitled to recover such amount from
such Lender on demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent or Revolving Credit Agent determines at any time that
any amount received by it under this Agreement must be returned to Borrower or
paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent or Revolving Credit Agent, as the case may be, will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent or Revolving Credit Agent, as the case may be, on
demand any portion of such amount that Agent or Revolving Credit Agent, as the
case may be, has distributed to such Lender, together with interest at such
rate, if any, as Agent or Revolving Credit Agent, as the case may be, is
required to pay to Borrower or such other Person, without set-off, counterclaim
or deduction of any kind.
(e) Non-Funding Lenders. The failure of any Non-Funding Lender to
-------------------
make any Advance or any payment required by it hereunder on the date specified
therefor shall not relieve any other Lender (each such other Lender, an "Other
-----
Lender") of its obligations to make such Advance on such date, but neither any
------
Other Lender nor Agent nor Revolving Credit Agent
74
shall be responsible for the failure of any Non-Funding Lender to make an
Advance or to purchase a participation required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a "Lender" or a "Revolving Lender" (or be included in the calculation
of "Requisite Lenders" hereunder) for any voting or consent rights under or with
respect to any Loan Document.
(f) Dissemination of Information. Each of Agent and Revolving Credit
-----------------------------
Agent will use reasonable efforts to provide each other and Lenders with any
notice of Default or Event of Default received by it from, or delivered by it
to, any Loan Party, with notice of any Event of Default of which it has actually
become aware and with notice of any action taken by it following any Event of
Default; provided, however, that neither Agent nor Revolving Credit Agent shall
-----------------
be liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent's or Revolving Credit Agent's, as the case may
be, gross negligence or willful misconduct.
(g) Actions in Concert. Anything in this Agreement to the contrary
------------------
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
10.9 Due Diligence and Non-Reliance. Each Lender hereby acknowledges and
------------------------------
represents that it has, independently and without reliance upon Agent, Revolving
Credit Agent or the other Lenders, and based upon such documents, information
and analyses as it has deemed appropriate, made its own credit analysis of each
Loan Party and its own decision to enter into this Agreement and to fund the
loans to be made by it hereunder and to purchase participations in the Letter of
Credit Obligations pursuant hereto, and each Lender has made such inquiries
concerning the Loan Documents, the Collateral and each Loan Party as such Lender
feels necessary and appropriate, and has taken such care on its own behalf as
would have been the case had it entered into the other Loan Documents without
the intervention or participation of the other Lenders, Revolving Credit Agent
or Agent. Each Lender hereby further acknowledges and represents that the other
Lenders, Revolving Credit Agent and Agent have not made any representations or
warranties to it concerning any Loan Party, any of the Collateral or the
legality, validity, sufficiency or enforceability of any of the Loan Documents.
Each Lender also hereby acknowledges that it will, independently and without
reliance upon the other Lenders, Revolving Credit Agent or Agent, and based upon
such financial statements, documents and information as it deems appropriate at
the time, continue to make and rely upon its own credit decisions in making
Advances and in taking or refraining to take any other action under this
Agreement or any of the other Loan Documents. Except for notices, reports and
other information expressly required to be furnished to Lenders by Agent or
Revolving Credit Agent hereunder, neither Agent nor Revolving Credit Agent shall
have any duty or responsibility to provide any Lender with any notices, reports
or certificates furnished to Agent or Revolving
75
Credit Agent by any Loan Party or any credit or other information concerning the
affairs, financial condition, business or property of any Loan Party (or any of
its Affiliates) which may come into possession of Agent, Revolving Credit Agent
or any of Agent's or Revolving Credit Agent's Affiliates.
10.10 Out-of-Formula Loans. Revolving Credit Agent may require Revolving
--------------------
Lenders to honor requests by Borrower for Out-of-Formula Loans (in which event,
and notwithstanding anything to the contrary set forth in Section 1.1 or
-----------
elsewhere in this Agreement, Revolving Lenders shall continue to make Revolving
Credit Advances up to their Pro Rata Share of the Revolving Loan Commitment) and
to forbear from requiring Borrower to cure an Out-of-Formula Condition, (a) when
no Event of Default exists (or if an Event of Default exists, when the existence
of such Event of Default is not known by Revolving Credit Agent), if and for so
long as (i) such Out-of-Formula Condition does not continue for a period of more
than 15 consecutive days, following which no Out-of-Formula Condition exists for
at least 15 consecutive days before another Out-of-Formula Condition exists,
(ii) the amount of the Revolving Credit Advances outstanding at any time does
not exceed the aggregate Revolving Loan Commitment at such time, and (iii) the
Out-of-Formula Condition is not known by Revolving Credit Agent at the time in
question to exceed $2,000,000; and (b) regardless of whether or not an Event of
Default exists, if Revolving Credit Agent discovers the existence of an Out-of-
Formula Condition not previously known by it to exist, but Revolving Lenders
shall be obligated to continue making such Revolving Credit Advances as directed
by Revolving Credit Agent only (A) if the amount of the Out-of-Formula Condition
is not increased by more than $500,000 above the amount determined by Revolving
Credit Agent to exist on the date of discovery thereof and (B) for a period not
to exceed 5 Business Days. In no event shall Borrower or any other Loan Party
be deemed to be a beneficiary of this Section 10.10 or authorized to enforce any
-------------
of the provisions of this Section 10.10.
-------------
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
---------------------------------------------
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest, commitment letter, and/or
------------
fee letter (other than the Fee Letter) between any Loan Party on one hand and
Agent, Revolving Credit Agent or any Lender or any of their respective
affiliates on the other hand, predating this Agreement and relating to a
financing of substantially similar form, purpose or effect shall be superseded
by this Agreement.
11.2 Amendments and Waivers. (a) Except for actions expressly permitted to
----------------------
be taken by Agent or Revolving Credit Agent, no amendment, modification,
termination or waiver of any provision of this Agreement or any of the Notes, or
any consent to any departure by any Loan Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by Agent and Borrower,
and by Requisite Lenders or all affected Lenders and/or Revolving Credit Agent,
as applicable. Except as set forth in clauses (b) and (c) below, all such
----------- ---
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.
76
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of the Borrowing Base, or which makes
less restrictive the nondiscretionary criteria for exclusion from Eligible
Accounts and Eligible Inventory set forth in Sections 1.7 and 1.8, shall be
------------ ---
effective unless the same shall be in writing and signed by Agent, Revolving
Credit Agent, Requisite Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
-----------
Obligations shall be effective unless the same shall be in writing and signed by
(i) in the case of a Term Loan Advance, Agent, Requisite Lenders and Borrower,
and (ii) in the case of Revolving Credit Advance or the incurrence of Letter of
Credit Obligations, Revolving Credit Agent, Agent, Requisite Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default (if in connection therewith
Requisite Lenders have exercised their right to suspend the making or incurrence
of further Advances or Letter of Credit Obligations pursuant to Section 8.2) or
-----------
any Event of Default shall be effective for purposes of the conditions precedent
to the making of Advances or the incurrence of Letter of Credit Obligations set
forth in Section 2.2 unless the same shall be in writing and signed by Requisite
-----------
Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent, Revolving Credit Agent and each Lender directly
affected thereby, do any of the following: (i) increase the principal amount of
any Lender's Commitment (which action shall be deemed to directly affect all
Lenders); (ii) reduce the amount due on any schedule payment date or reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan or
Letter of Credit Obligations of any affected Lender; (iv) waive, forgive, defer,
extend or postpone any payment of interest or Fees as to any affected Lender;
(v) release any Guaranty or, except as otherwise permitted herein or in the
other Loan Documents, release, or permit any Loan Party to sell or otherwise
dispose of, any Collateral with a value exceeding $2,500,000 in the aggregate
(which action shall be deemed to directly affect all Lenders) provided, however,
-------- -------
that Agent shall be authorized to release that certain web press currently
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and previously sold to ▇▇▇▇ ▇.
▇▇▇▇▇▇, without the consent of Revolving Credit Agent or any Lender; (vi) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans which shall be required for Lenders or any of them to take any action
hereunder; (vii) amend or waive this Section 11.2 or the definitions of the term
------------
"Requisite Lenders" insofar as such definition affects the substance of this
Section 11.2; (viii) increase the aggregate amount of all Commitments; and (ix)
------------
permit the payment of any Subordinated Indebtedness except in accordance with
the provisions of any subordination agreement covering such Subordinated
Indebtedness. Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of Agent or Revolving Credit Agent under this
Agreement or any other Loan Document shall be effective unless in writing and
signed by Agent or Revolving Credit Agent, as applicable, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the
77
specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Loan Party in any case
shall entitle such Loan Party or any other Loan Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 11.2
------------
shall be binding upon each holder of the Notes at the time outstanding and each
future holder of the Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
---------------
(i) requiring the consent of all affected Lenders, the consent of
one Lender is obtained, but the consent of other Lenders whose consent is
required is not obtained within two (2) weeks after the request therefor (any
such Lender whose consent is not obtained as described this clause (i) and in
----------
clause (ii) below being referred to as a "Non-Consenting Lender"), or
---------- ---------------------
(ii) requiring the consent of Requisite Lenders, the consent of
one Lender is obtained, but the consent of Requisite Lenders is not obtained
within two (2) weeks after the request therefor,
then, so long as Agent is not a Non-Consenting Lender, Agent or a Person
acceptable to Agent shall have the right with Agent's consent and in Agent's
sole discretion (but shall have no obligation) to purchase from such Non-
Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon
Agent's request, sell and assign to Agent or such Person, all of the Commitments
of such Non-Consenting Lender for an amount equal to the principal balance of
all Loans held by the Non-Consenting Lender and all accrued interest and Fees
with respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement (and that no Prepayment
Fee shall be applicable to such purchase).
(e) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations under Section 1.14),
------------
termination of the Commitments and a release of all claims against Agent,
Revolving Credit Agent and Lenders, and so long as no suits, actions,
proceedings, or claims are pending or threatened against any Indemnified Person
asserting any damages, losses or liabilities that are Indemnified Liabilities,
Agent shall deliver to Borrower termination statements, mortgage releases and
other documents necessary or appropriate to evidence the termination of the
Liens securing payment of the Obligations.
11.3 Fees and Expenses.
-----------------
(a) Borrower shall pay on demand all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) of Agent and
Revolving Credit Agent in connection with the preparation, negotiation,
approval, execution, delivery, administration,
78
modification, amendment, waiver and enforcement (whether through negotiations,
legal proceedings or otherwise) of the Loan Documents, and commitments relating
thereto, and the other documents to be delivered hereunder or thereunder and the
transactions contemplated hereby and thereby and the fulfillment or attempted
fulfillment of conditions precedent hereunder, excluding costs and expenses
incurred in connection with any sale or assignment of any of the Loans prior to
acceleration of the Obligations and including, without limitation: (i) wire
transfer fees and other costs of forwarding to Borrower or any other Person on
behalf of Borrower by Agent, Revolving Credit Agent and the Lenders of the
proceeds of the Term Loan Advances or the Advances; (ii) any amendment,
modification or waiver of, or consent with respect to, any of the Loan Documents
or advice in connection with the administration of the advances made pursuant
hereto or its rights hereunder or thereunder; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Agent, Revolving
Credit Agent, the Lenders, Borrower or any other Person) in any way relating to
the Collateral, any of the Loan Documents or any other agreements to be executed
or delivered in connection therewith or herewith, whether as party, witness, or
otherwise, including any litigation, contest, dispute, suit, case, proceeding or
action, and any appeal or review thereof, in connection with a case commenced by
or against Borrower or any other Person that may be obligated to Agent,
Revolving Credit Agent or Lenders by virtue of the Loan Documents; (iv) any
attempt to enforce any rights of Agent against Borrower or any other Person that
may be obligated to Agent, Revolving Credit Agent or the Lenders by virtue of
any of the Loan Documents; or (v) any effort to (A) evaluate, observe, assess
Borrower or its affairs, or (B) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of the Collateral. Notwithstanding
anything herein to the contrary, as long as no Event of Default is in existence,
Borrower shall not be obligated to reimburse Revolving Credit Agent for field
exam audits of Borrower in excess of $5,000 per location per year.
(b) Borrower shall pay on demand all reasonable costs and expenses
(including, without limitation, reasonable counsels' fees) of Agent, Revolving
Credit Agent and the Lenders in connection with any Default and any enforcement
or collection proceedings resulting therefrom or any amendment, modification or
waiver of, or consent with respect to, any of the Loan Documents in connection
with any Default.
(c) Without limiting the generality of clauses (a) and (b) above,
Borrower's obligation to reimburse Agent, Revolving Credit Agent and/or the
Lenders for costs and expenses shall include the reasonable fees and expenses of
counsel (and local, foreign or special counsel, advisors, consultants and
auditors retained by such counsel), accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplicating expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; expenses for travel, lodging and
food; and all other out-of-pocket costs and expenses of every type and nature
paid or incurred in connection with the performance of such legal or other
advisory services.
11.4 No Waiver. No failure on the part of Agent, Revolving Credit Agent or
---------
the Lenders, at any time or times, to require strict performance by any Loan
Party, of any provision
79
of this Agreement and any of the other Loan Documents shall waive, affect or
diminish any right of Agent , Revolving Credit Agent or such Lender thereafter
to demand strict compliance and performance therewith. Any suspension or waiver
of a Default shall not suspend, waive or affect any other Default whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of any Loan Party contained in this Agreement or any of the
other Loan Documents and no Default by any Loan Party shall be deemed to have
been suspended or waived by Agent, Revolving Credit Agent or any Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and the applicable required Lender if
required hereunder and directed to Borrower specifying such suspension or
waiver.
11.5 Remedies. The rights and remedies of Agent, Revolving Credit Agent and
--------
the Lenders under this Agreement shall be cumulative and nonexclusive of any
other rights and remedies which Agent, Revolving Credit Agent or the Lenders may
have under any other agreement, including, without limitation, the Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
11.6 Severability. Wherever possible, each provision of this Agreement shall
------------
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement or
-----------------
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provisions contained in this Agreement shall govern and control.
11.8 Right of Set-off. Subject to Section 1.5(a), upon the occurrence and
---------------- --------------
during the continuance of any Event of Default, Agent is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply in accordance with Section 1.12 any and all deposits (general or
------------
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Agent, Revolving Credit Agent and/or the
Lenders to or for the credit or the account of Borrower against any and all of
the Obligations now or hereafter existing irrespective of whether or not Agent,
Revolving Credit Agent or such Lender shall have made any demand under this
Agreement or any other Loan Document and although such Obligations may be
unmatured. Agent agrees promptly to notify the Lenders, Revolving Credit Agent
and Borrower after any such set-off and application made by Agent; provided,
--------
however, that the failure to give such notice shall not affect the validity of
-------
such set-off and application. The rights of Agent, Revolving Credit Agent and
the Lenders under this Section are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) which Agent, Revolving
Credit Agent and the Lenders may have.
80
11.9 Authorized Signature. Until Agent shall be notified by Borrower to the
--------------------
contrary, to the signature upon any document or instrument delivered pursuant
hereto and believed by Agent, Revolving Credit Agent or Lenders or any of their
officers, or employees to be that of an officer or duly authorized
representative of Borrower listed on Schedule 11.9 shall bind Borrower and be
-------------
deemed to be the act of Borrower affixed pursuant to and in accordance with
resolutions duly adopted by Borrower's Board of Directors, and Agent, Revolving
Credit Agent and the Lenders shall be entitled to assume the authority of each
signature and authority of the person whose signature it is or appears to be
unless the person acting in reliance of such signature shall have actual
knowledge of the fact that such signature is false or the person whose signature
or purported signature is presented is without authority.
11.10 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
-------------
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER, AGENT, REVOLVING
CREDIT AGENT AND LENDERS HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK CITY, NEW YORK, OR CHICAGO, ILLINOIS SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, REVOLVING CREDIT AGENT, LENDERS AND BORROWER ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK CITY OR CHICAGO, AS THE CASE MAY BE, AND, PROVIDED, FURTHER,
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
----- --- ----------
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH ON
SCHEDULE 11.11 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
--------------
COMPLETED
81
UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.11 Notices. Except as otherwise provided herein, whenever it is provided
-------
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon either of the parties by
the other party, or whenever either of the parties desires to give or serve upon
the other party any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (i) upon the earlier of actual receipt and three (3) days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (ii) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.11, (iii) one (1)
-------------
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (iv) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated on Annex J or to such other address (or facsimile
-------
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower, Agent, Revolving Credit Agent or Lenders)
designated on Annex J to receive copies shall in no way adversely affect the
-------
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.12 Section Titles. The Section titles and Table of Contents contained in
--------------
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of this Agreement.
11.13 Counterparts. This Agreement may be executed in any number of separate
------------
counterparts, each of which shall, collectively and separately, constitute one
agreement.
11.14 Time of the Essence. Time is of the essence of this Agreement and each
-------------------
of the other Loan Documents.
11.15 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
--------------------
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS
AGREEMENT
82
OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
11.16 NO ORAL AGREEMENTS. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
------------------
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
11.17 RELEASE. BORROWER ACKNOWLEDGES AND AGREES THAT (A) IT HAS NO CLAIMS,
-------
COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES OF ANY KIND OR NATURE WHATSOEVER TO
THE ORIGINAL AGREEMENT, THE FIRST RESTATED AGREEMENT, THE SECOND RESTATED
AGREEMENT AND THE OTHER LOAN DOCUMENTS (AS SUCH TERM IS DEFINED IN EACH OF THE
ORIGINAL AGREEMENT, THE FIRST RESTATED AGREEMENT AND THE SECOND RESTATED
AGREEMENT) AND THE PERFORMANCE OF ITS OBLIGATIONS THEREUNDER, OR (B) IF IT HAS
ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO SUCH DOCUMENTS
AND/OR ANY TRANSACTION RELATED TO SUCH DOCUMENTS, SAME ARE HEREBY WAIVED,
RELINQUISHED AND RELEASED IN CONSIDERATION OF EACH LENDER'S EXECUTION AND
DELIVERY OF THIS AGREEMENT.
11.18 Amendment and Restatement. This Agreement and the Notes are given in
-------------------------
amendment, consolidation, restatement, renewal and extension (but not in
novation, extinguishment or satisfaction) of (i) the Second Restated Agreement
and the promissory notes executed in connection therewith, which Second Restated
Agreement and such promissory notes were given in amendment, restatement,
renewal and extension (but not in novation, extinguishment or satisfaction of
(a) the First Restated Agreement and the promissory notes executed in connection
therewith, which First Restated Agreement and such promissory notes were given
in amendment, restatement, renewal and extension (but not in novation,
extinguishment or satisfaction) of the Original Agreement and the promissory
notes issued in connection therewith, and (b) the ▇▇▇▇▇▇▇▇ Loan Agreement, and
(ii) the Deutsche Loan Agreement and the promissory note executed in connection
therewith. All liens and security interests securing payment of the obligations
under the Original Agreement, the First Restated Agreement, the ▇▇▇▇▇▇▇▇ Loan
Agreement, the Second Restated Agreement and the Deutsche Loan Agreement, and
such promissory notes are hereby collectively renewed, extended, rearranged,
ratified and brought forward as security for the payment and performance of the
Obligations. With respect to matters relating to the period prior to the date
hereof, all of the provisions of the Original Agreement, the First Restated
Agreement, the ▇▇▇▇▇▇▇▇ Loan Agreement, the Second Restated Agreement, and the
Deutsche Loan Agreement and the promissory notes, security agreements and other
documents, instruments or agreements executed in connection therewith are hereby
ratified and confirmed and shall remain in force and effect.
11.19 References. Each of the Loan Documents, and any and all other Loan
----------
Documents, documents or instruments now or hereafter executed and delivered
pursuant to the
83
terms hereof are hereby amended so that (i) any reference in such other Loan
Documents to the Original Agreement, the First Restated Agreement, the ▇▇▇▇▇▇▇▇
Agreements, the Second Restated Agreement (including as any thereof may have
been amended) shall mean a reference to this Agreement, or the Deutsche Loan
Agreement and (ii) any reference in such other Loan Documents to Original Lender
or August 1998 Lenders or Deutsche shall mean a reference to Agent, Revolving
Credit Agent and Lenders, as context may require.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.
BORROWER:
PREMIER GRAPHICS, INC.
By:____________________
▇▇▇▇▇ ▇. Fair
Secretary
AGENT, FOR THE BENEFIT OF THE LENDERS:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:____________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Risk Manager
REVOLVING CREDIT AGENT, FOR THE BENEFIT OF
LENDERS:
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By:____________________
Name:__________________
Title:_________________
LENDERS:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:____________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Risk Manager
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By:____________________
Name:__________________
Title:_________________
TRANSAMERICA EQUIPMENT FINANCIAL
SERVICES CORPORATION
By:____________________
Name:__________________
Title:_________________