EXHIBIT 10.15
AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
by and among
REUNION INDUSTRIES, INC.
as Borrower
and
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Agent
and
BANK OF AMERICA, NATIONAL ASSOCIATION AND OTHERS
as Formula Lenders
and
BANK OF AMERICA, NATIONAL ASSOCIATION AND OTHERS
as Term Loan B Lenders
Dated as of: March 16, 2000
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................................. 1
Section 1.1 Certain Defined Terms............................................................ 1
Section 1.2 Accounting Terms and Other Definitional Provisions............................... 32
ARTICLE 2 THE CREDIT FACILITIES................................................................... 33
Section 2.1 The Revolving Credit Facility.................................................... 33
2.1.1 Revolving Credit Facility......................................................... 33
2.1.2 Procedure for Making Advances Under the Revolving Loan; Lender Protection Loans... 34
2.1.3 Borrowing Base.................................................................... 34
2.1.4 Borrowing Base Report............................................................. 35
2.1.5 Revolving Credit Notes............................................................ 36
2.1.6 Mandatory Prepayments of Revolving Loan........................................... 36
2.1.7 Optional Prepayments of Revolving Loan............................................ 36
2.1.8 The Collateral Account............................................................ 36
2.1.9 Revolving Loan Account............................................................ 37
2.1.10 Revolving Credit Unused Line Fee................................................. 38
2.1.11 Early Termination Fee............................................................ 38
2.1.12 Required Availability under the Revolving Credit Facility........................ 38
2.1.13 Right of Agent to Demand Payment and Terminate Revolving Credit Facility......... 38
Section 2.2 The Letter of Credit Facility.................................................... 39
2.2.1 Letters of Credit................................................................. 39
2.2.2 Terms of Letters of Credit........................................................ 39
2.2.3 Procedures for Letters of Credit.................................................. 40
2.2.4 Payments of Letters of Credit..................................................... 40
2.2.5 Participations.................................................................... 41
2.2.6 Recovery or Avoidance of Payments................................................. 42
2.2.7 Compensation for Letters of Credit................................................ 42
2.2.8 Indemnification; Exoneration; Power of Attorney................................... 43
2.2.9 Supporting Letter of Credit; Cash Collateral...................................... 44
2.2.10 Change in Law; Increased Cost.................................................... 45
Section 2.3 The Term Loan A Facility......................................................... 45
2.3.1 Term Loan A Commitments........................................................... 45
2.3.2 The Term Loan A Notes............................................................. 45
2.3.3 Scheduled Payments of Term Loan A................................................. 46
2.3.4 Optional Prepayments of Term Loan A............................................... 46
2.3.5 Mandatory Prepayments of Term Loan A.............................................. 46
Section 2.4 The Term Loan B Facility......................................................... 46
2.4.1 Term Loan B Commitments........................................................... 46
2.4.2 The Term Loan B Notes............................................................. 47
2.4.3 Scheduled Payments of Term Loan B................................................. 47
2.4.4 Optional Prepayments of Term Loan B............................................... 47
2.4.5 Mandatory Prepayments of Term Loan B.............................................. 47
Section 2.5 The Capital Expenditure Line Facility............................................ 48
2.5.1 Capital Expenditure Line Facility................................................. 48
2.5.2 Procedure for Making Advances Under the Capital Expenditure Line.................. 49
2.5.3 Capital Expenditure Line Notes.................................................... 49
2.5.4 Payments of Capital Expenditure Line.............................................. 50
2.5.5 Optional Prepayments of Capital Expenditure Line.................................. 50
i
2.5.6 Application of Capital Expenditure Line Partial Prepayments....................... 50
Section 2.6 Interest......................................................................... 50
2.6.1 Applicable Interest Rates......................................................... 50
2.6.2 Selection of Interest Rates....................................................... 51
2.6.3 Inability to Determine LIBOR Base Rate............................................ 52
2.6.4 Indemnity......................................................................... 53
2.6.5 Payment of Interest............................................................... 54
Section 2.7 General Financing Provisions..................................................... 55
2.7.1 Lender Authorizations............................................................. 55
2.7.2 Use of Proceeds of the Loans...................................................... 55
2.7.3 Closing Fees...................................................................... 55
2.7.4 Agency/Field Examination Fee...................................................... 55
2.7.5 Computation of Interest and Fees.................................................. 56
2.7.6 Payments.......................................................................... 56
2.7.7 Liens; Setoff..................................................................... 56
2.7.8 Requirements of Law............................................................... 57
2.7.9 Funds Transfer Services........................................................... 57
2.7.10 Mandatory Application of Net Proceeds............................................ 58
Section 2.8 Settlement Among Lenders......................................................... 59
2.8.1 Revolving Loan.................................................................... 59
2.8.2 Settlement Procedures as to Revolving Loan........................................ 59
2.8.3 Term Loan A....................................................................... 61
2.8.4 Term Loan B....................................................................... 61
2.8.5 Capital Expenditure Loan.......................................................... 61
2.8.6 Settlement of Other Obligations................................................... 62
2.8.7 Presumption of Payment............................................................ 62
2.8.8 Tax Withholding Clause............................................................ 63
Section 2.9 Amendment and Restatement........................................................ 64
ARTICLE 3 THE COLLATERAL.......................................................................... 64
Section 3.1 Debt and Obligations Secured..................................................... 64
Section 3.2 Grant of Liens................................................................... 64
Section 3.3 Collateral Disclosure List....................................................... 65
Section 3.4 Personal Property................................................................ 65
3.4.1 Securities, Instruments Chattel Paper, Promissory Notes, etc...................... 65
3.4.2 Intellectual Property............................................................. 65
Section 3.5 Record Searches.................................................................. 66
Section 3.6 Real Estate...................................................................... 66
Section 3.7 Costs............................................................................ 67
Section 3.8 Release.......................................................................... 67
Section 3.9 Inconsistent Provisions.......................................................... 67
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.......................................................... 68
Section 4.1 Representations and Warranties................................................... 68
4.1.1 Subsidiaries...................................................................... 68
4.1.2 Good Standing..................................................................... 68
4.1.3 Power and Authority............................................................... 68
4.1.4 Binding Agreements................................................................ 68
4.1.5 No Conflicts...................................................................... 68
4.1.6 No Defaults, Violations........................................................... 69
4.1.7 Compliance with Laws.............................................................. 69
4.1.8 Margin Stock...................................................................... 69
4.1.9 Investment Company Act; Margin Securities......................................... 69
4.1.10 Litigation....................................................................... 69
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4.1.11 Financial Condition of Borrower.................................................. 70
4.1.12 Proforma Financial Statements.................................................... 70
4.1.13 Full Disclosure.................................................................. 70
4.1.14 Solvency......................................................................... 71
4.1.15 Indebtedness for Borrowed Money.................................................. 71
4.1.16 Taxes............................................................................ 71
4.1.17 ERISA............................................................................ 71
4.1.18 Title to Properties.............................................................. 72
4.1.19 Patents, Trademarks, Etc......................................................... 72
4.1.20 Employee Relations............................................................... 72
4.1.21 Presence of Hazardous Materials or Hazardous Materials Contamination............. 72
4.1.22 Perfection and Priority of Collateral............................................ 73
4.1.23 Places of Business and Location of Collateral.................................... 73
4.1.24 Business Names and Addresses..................................................... 73
4.1.25 Equipment........................................................................ 73
4.1.26 Inventory........................................................................ 73
4.1.27 Accounts......................................................................... 73
4.1.28 Compliance with Eligibility Standards............................................ 74
4.1.29 Chatwins Merger.................................................................. 74
4.1.30 Oneida Merger.................................................................... 74
4.1.31 King-Way Merger.................................................................. 74
4.1.32 Year 2000 Compliance............................................................. 75
Section 4.2 Survival; Updates of Representations and Warranties.............................. 75
ARTICLE 5 CONDITIONS PRECEDENT.................................................................... 75
Section 5.1 Conditions to the Initial Advance and Initial Letter of Credit................... 75
5.1.1 Organizational Documents.......................................................... 75
5.1.2 Opinions of Counsel............................................................... 76
5.1.3 Consents, Licenses, Approvals, Etc................................................ 76
5.1.4 Notes............................................................................. 76
5.1.5 Financing Documents and Collateral................................................ 76
5.1.6 Other Financing Documents......................................................... 76
5.1.7 Other Documents, Etc.............................................................. 77
5.1.8 Payment of Fees................................................................... 77
5.1.9 Collateral Disclosure List........................................................ 77
5.1.10 Recordings and Filings........................................................... 77
5.1.11 Insurance Certificate............................................................ 77
5.1.12 Landlord's Waivers............................................................... 77
5.1.13 Bailee Acknowledgments........................................................... 77
5.1.14 Field Examination; Appraisals.................................................... 77
5.1.15 Environmental Reports............................................................ 78
5.1.16 Title Work....................................................................... 78
5.1.17 Surveys.......................................................................... 78
5.1.18 Proforma Balance Sheet and Projections........................................... 78
5.1.19 Material Adverse Change.......................................................... 78
5.1.20 Collateral Account, Lockbox, etc................................................. 78
5.1.21 Minimum Required Availability at Closing......................................... 78
5.1.22 Indenture........................................................................ 79
5.1.23 Mergers.......................................................................... 79
5.1.24 Completion of Schedules.......................................................... 79
Section 5.2 Conditions to all Extensions of Credit........................................... 79
5.2.1 Borrowing Base; Other Conditions.................................................. 79
5.2.2 Default........................................................................... 79
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5.2.3 Representations and Warranties.................................................... 79
5.2.4 Legal Matters..................................................................... 80
5.2.5 Adverse Change.................................................................... 80
ARTICLE 6 COVENANTS OF THE BORROWER............................................................... 80
Section 6.1 Affirmative Covenants............................................................ 80
6.1.1 Financial Statements.............................................................. 80
6.1.2 Reports to SEC and to Stockholders................................................ 81
6.1.3 Recordkeeping, Rights of Inspection, Field Examination, Etc....................... 82
6.1.4 Legal Existence................................................................... 83
6.1.5 Compliance with Laws.............................................................. 83
6.1.6 Preservation of Properties........................................................ 83
6.1.7 Line of Business.................................................................. 83
6.1.8 Insurance......................................................................... 83
6.1.9 Taxes............................................................................. 84
6.1.10 ERISA............................................................................ 84
6.1.11 Notification of Events of Default and Adverse Developments....................... 84
6.1.12 Hazardous Materials; Contamination............................................... 85
6.1.13 Disclosure of Significant Transactions........................................... 86
6.1.14 Financial Covenants.............................................................. 86
6.1.15 Collection of Receivables........................................................ 87
6.1.16 Assignments of Receivables....................................................... 87
6.1.17 Government Accounts.............................................................. 87
6.1.18 Notice of Returned Goods, etc.................................................... 88
6.1.19 Inventory........................................................................ 88
6.1.20 Defense of Title and Further Assurances.......................................... 88
6.1.21 Equipment........................................................................ 89
6.1.22 Business Names; Locations........................................................ 89
6.1.23 Subsequent Opinion of Counsel as to Recording Requirements....................... 89
6.1.24 Use of Premises and Equipment.................................................... 89
6.1.25 Protection of Collateral......................................................... 90
6.1.26 Retention of Investment Banking Firm............................................. 90
Section 6.2 Negative Covenants............................................................... 90
6.2.1 Merger, Acquisition or Sale of Assets............................................. 90
6.2.2 Subsidiaries...................................................................... 90
6.2.3 Purchase or Redemption of Securities, Dividend Restrictions....................... 91
6.2.4 Indebtedness...................................................................... 92
6.2.5 Investments, Loans and Other Transactions......................................... 93
6.2.6 Stock of Subsidiaries............................................................. 94
6.2.7 Liens............................................................................. 94
6.2.8 Disposition of Assets............................................................. 94
6.2.9 Transactions with Affiliates...................................................... 94
6.2.10 Other Business................................................................... 95
6.2.11 ERISA Compliance................................................................. 95
6.2.12 Prohibition on Hazardous Materials............................................... 95
6.2.13 Method of Accounting; Fiscal Year................................................ 95
6.2.14 Compensation..................................................................... 95
6.2.15 Transfer of Collateral........................................................... 96
6.2.16 Sale and Leaseback............................................................... 96
6.2.17 Capital Expenditures............................................................. 96
6.2.18 Amendments to Indenture.......................................................... 96
ARTICLE 7 DEFAULT AND RIGHTS AND REMEDIES......................................................... 96
Section 7.1 Events of Default................................................................ 96
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7.1.1 Failure to Pay.................................................................... 97
7.1.2 Breach of Representations and Warranties.......................................... 97
7.1.3 Failure to Comply with Certain Covenants.......................................... 97
7.1.4 Failure to Comply with Other Covenants............................................ 97
7.1.5 Default Under Other Financing Documents or Obligations............................ 97
7.1.6 Receiver; Bankruptcy.............................................................. 97
7.1.7 Involuntary Bankruptcy, etc....................................................... 98
7.1.8 Judgment.......................................................................... 98
7.1.9 Execution; Attachment............................................................. 98
7.1.10 Default Under Indenture.......................................................... 98
7.1.11 Default Under Other Borrowings................................................... 98
7.1.12 Challenge to Agreements.......................................................... 99
7.1.13 Material Adverse Change.......................................................... 99
7.1.14 Change in Control................................................................ 99
7.1.15 Liquidation, Termination, Dissolution, etc....................................... 99
7.1.16 Criminal Proceedings............................................................. 99
Section 7.2 Remedies......................................................................... 99
7.2.1 Acceleration...................................................................... 99
7.2.2 Further Advances.................................................................. 99
7.2.3 Uniform Commercial Code........................................................... 100
7.2.4 Specific Rights With Regard to Collateral......................................... 100
7.2.5 Application of Proceeds; Certain Intercreditor Provisions......................... 101
7.2.6 Performance by Agent.............................................................. 102
7.2.7 Other Remedies.................................................................... 103
ARTICLE 8 THE AGENT............................................................................... 103
Section 8.1 Appointment...................................................................... 103
Section 8.2 Nature of Duties................................................................. 103
8.2.1 In General........................................................................ 103
8.2.2 Express Authorization............................................................. 104
Section 8.3 Rights, Exculpation, Etc......................................................... 104
Section 8.4 Reliance......................................................................... 105
Section 8.5 Indemnification.................................................................. 105
Section 8.6 BANA Individually................................................................ 106
Section 8.7 Successor Agent.................................................................. 106
8.7.1 Affiliate Successor............................................................... 106
8.7.2 Resignation....................................................................... 106
8.7.3 Appointment of Successor.......................................................... 106
8.7.4 Successor Agent................................................................... 106
Section 8.8 Collateral Matters............................................................... 107
8.8.1 Release of Collateral............................................................. 107
8.8.2 Confirmation of Authority; Execution of Releases.................................. 107
8.8.3 Absence of Duty................................................................... 108
Section 8.9 Agency for Perfection............................................................ 108
Section 8.10 Exercise of Remedies............................................................ 108
Section 8.11 Consents........................................................................ 108
8.11.1 When Deemed to Have Been Given................................................... 108
8.11.2 Denial of Consent................................................................ 108
Section 8.12 Dissemination of Information.................................................... 109
Section 8.13 Discretionary Advances.......................................................... 109
ARTICLE 9 MISCELLANEOUS........................................................................... 109
Section 9.1 Notices.......................................................................... 109
Section 9.2 Amendments; Waivers.............................................................. 110
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9.2.1 In General........................................................................ 110
9.2.2 Circumstances Where Consent of Certain Lenders is Required........................ 111
Section 9.3 Cumulative Remedies.............................................................. 112
Section 9.4 Severability..................................................................... 113
Section 9.5 Assignments by Lenders........................................................... 113
Section 9.6 Participations by Lenders........................................................ 114
Section 9.7 Successors and Assigns........................................................... 114
Section 9.8 Continuing Agreements............................................................ 114
Section 9.9 Enforcement Costs................................................................ 114
Section 9.10 Applicable Law; Jurisdiction.................................................... 115
9.10.1 Applicable Law................................................................... 115
9.10.2 Jurisdiction..................................................................... 115
9.10.3 Consent to Service of Process.................................................... 115
Section 9.11 Duplicate Originals and Counterparts............................................ 115
Section 9.12 Headings........................................................................ 116
Section 9.13 No Agency....................................................................... 116
Section 9.14 Date of Payment................................................................. 116
Section 9.15 Entire Agreement................................................................ 116
Section 9.16 Waiver of Trial by Jury......................................................... 116
Section 9.17 Liability of the Agent and the Lenders.......................................... 117
Section 9.18 Indemnification................................................................. 117
Section 9.19 Waiver of Consequential Damages................................................. 117
Section 9.20 Syndication..................................................................... 117
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EXHIBITS
Exhibit "A" -- FORM OF BORROWING BASE REPORT
Exhibit "B" -- FORM OF REVOLVING CREDIT NOTE
Exhibit "C-1" -- FORM OF TERM LOAN A NOTE
Exhibit "C-2" -- FORM OF TERM LOAN B NOTE
Exhibit "D-1" -- FORM OF CAPITAL EXPENDITURE LINE NOTE
Exhibit "D-2" -- FORM OF CAPEX LINE INSTALLMENT PAYMENT SCHEDULE
Exhibit "E" -- WIRE TRANSFER PROCEDURES
Exhibit "F" -- FORM OF COMPLIANCE CERTIFICATE
Exhibit "G-1" -- FORM OF BAILEE WAIVER
Exhibit "G-2" -- FORM OF LANDLORD WAIVER
Exhibit "H" -- COLLATERAL ASSIGNMENT OF LIFE INSURANCE
Exhibit "I" -- FORM OF LENDER'S LOSS PAYABLE ENDORSEMENT
Exhibit "J-1" -- MORTGAGE (▇▇▇▇▇ CITY, NORTH CAROLINA)
Exhibit "J-2" -- MORTGAGE (LAFAYETTE, INDIANA)
Exhibit "J-3" -- MORTGAGE (NEW YORK)
Exhibit "J-4" -- MORTGAGE (ALLIANCE, OHIO)
Exhibit "J-5" -- MORTGAGE (MCKEESPORT, PENNSYLVANIA)
Exhibit "J-6" -- MORTGAGE (CHICAGO, ILLINOIS)
Exhibit "J-7" -- MORTGAGE (MILWAUKEE, WISCONSIN)
Exhibit "J-8" -- MORTGAGE (MIAMI, OKLAHOMA)
Exhibit "K" -- PLEDGED POLICIES
Exhibit "L-1" -- PLEDGE AGREEMENT--CPS STOCK
Exhibit "L-2" -- PLEDGE AGREEMENT--CPS DEBT SECURITIES
Exhibit "L-3" -- PLEDGE AGREEMENT--SUBSIDIARY SECURITIES
Exhibit "M-1" -- ▇▇▇▇▇▇▇ SUBORDINATION AGREEMENT
Exhibit "M-2" -- STANWICH SUBORDINATION AGREEMENT
Exhibit "N" -- ESCROW LETTER
vii
SCHEDULES
Schedule 1.1(n) -- Permitted Foreign Account Debtors
Schedule 4.1.15 -- Indebtedness for Borrowed Money
Schedule 4.1.20 -- Employee Relations
Schedule 4.1.23 -- Liens
Schedule 5.1.19 -- Financial Statements
Schedule 6.2.4 -- Indebtedness
Schedule 6.2.5 -- Investments
Schedule 6.2.8 -- Permitted Asset Dispositions
Schedule 6.2.9 -- Affiliate Transactions
Schedule 6.2.14 -- Compensation
viii
AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT is made as
of this 16th day of March, 2000 by and between REUNION INDUSTRIES, INC., a
Delaware corporation ("Borrower"), BANK OF AMERICA, NATIONAL ASSOCIATION, a
national banking association ("BANA"), and each other financial institution that
is a party to this Agreement from time to time, whether by execution of this
Agreement or otherwise (collectively, the "Lenders" and individually, a "Lender"
(which terms shall include both Formula Lenders and Term Loan B Lenders)), and
BANK OF AMERICA, NATIONAL ASSOCIATION a national banking association, in its
capacity as both collateral and administrative agent for each of the Lenders
(the "Agent").
RECITALS
A. Chatwins Group, Inc., a Delaware corporation, and BANA (formerly
known as NationsBank, N.A.) entered into that certain Financing and Security
Agreement, dated as of October 30, 1998 (the "Original Financing Agreement").
B. Chatwins Group, Inc. entered into an Amended and Restated Merger
Agreement, dated as of July 28, 1999, with Reunion Industries, Inc., a Delaware
corporation, pursuant to which Chatwins Group, Inc. will on the Closing Date
merge with and into Reunion Industries, Inc., with Reunion Industries, Inc.
surviving.
C. Borrower, as survivor of the merger described in paragraph B
above, has applied to BANA to amend and restate the Original Financing Agreement
to, among other things, become a syndicated credit with facilities consisting of
(i) a revolving credit facility in the maximum principal amount of $39,000,000,
including the Letter of Credit Obligations (as defined below) which shall not
exceed $10,000,000 in the aggregate, (ii) a term loan A facility in the maximum
principal amount of $25,800,000, (iii) a term loan B facility in the maximum
principal amount of $5,000,000, and (iv) a capital expenditure line facility in
the maximum principal amount of $2,700,000, all to be used by the Borrower for
the Permitted Uses described in this Agreement.
D. The Lenders severally are willing to make those credit facilities
available to the Borrower upon the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that (a)
the Original Financing Agreement is hereby reaffirmed and all its terms and
conditions are ratified through and including the Closing Date and (b) from and
after the Closing Date, the Original Financing Agreement shall be, and the same
hereby is, amended and restated in its entirety to read as set forth herein:
ARTICLE 1 DEFINITIONS
Section 1.1 Certain Defined Terms.
As used in this Agreement, the terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified therein, and the
following terms shall have the following meanings:
1
"Account" individually and "Accounts" collectively mean all accounts
now owned or hereafter created or acquired by Borrower, including, without
limitation, all of the following now owned or hereafter created or acquired by
Borrower: (a) accounts receivable, contract rights, book debts, notes, drafts
and other obligations or indebtedness owing to Borrower arising from the sale,
lease or exchange of goods or other property and/or the performance of services;
(b) Borrower's rights in, to and under all purchase orders for goods, services
or other property; (c) Borrower's rights to any goods, services or other
property represented by any of the foregoing (including returned or repossessed
goods and unpaid sellers' rights of rescission, replevin, reclamation and rights
to stoppage in transit); (d) monies due to or to become due to Borrower under
all contracts for the sale, lease or exchange of goods or other property and/or
the performance of services, including the right to payment of any interest or
finance charges with respect thereto (whether or not yet earned by performance
on the part of Borrower); (e) uncertificated securities; and (f) letters of
credit securing or providing for payment of any of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
"Affiliate" means, with respect to any designated Person, any other
Person, (i) directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, (ii) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in such designated Person, or (iii) five percent
(5%) or more of whose stock or other equity interest is directly or indirectly
owned or held by such designated Person. For purposes of this definition, the
term "control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities or
other equity interests or by contract or otherwise.
"Agent's Obligations" means any and all Obligations payable solely to
and for the exclusive benefit of the Agent by the Borrower under the terms of
this Agreement and/or any other Financing Documents, including without
limitation the Closing Fee and the Agency Fee.
"Agreement" means this Amended and Restated Financing and Security
Agreement, as amended, restated, supplemented or otherwise modified from time to
time in writing in accordance with the provisions of Section 9.2 of this
Agreement.
"Amortization Reduction Event" means the first date as of which the
aggregate amounts applied to the Term Loan A under Sections 2.3.5 (Mandatory
Prepayments of Term Loan A.) and 2.7.10(b) (Mandatory Application of Net
Proceeds.) equals or exceeds $5,000,000.
"Applicable Interest Rate" means (i) the LIBOR Rate, or (ii)
the Base Rate.
"Applicable Base Rate Margin" means (i) from the Closing Date until
the first Applicable Margin Adjustment Date, for each Base Rate Revolving Loan,
a rate equal to 0.50% per annum, and for each Base Rate Term Loan and each Base
Rate Capital Expenditure Loan, a rate equal to 0.75% per annum and (ii)
thereafter, a per annum rate which shall adjust as of each Applicable Margin
Adjustment Date based on the ratio of Borrower's Funded Debt to EBITDA for the
Testing Period ending on the last day of the calendar quarter immediately
preceding such Applicable Margin Adjustment Date, as determined by the Agent, in
its sole discretion, from the monthly reports required by Section 6.1.1(c)
(Monthly Statements and Certificates) (or, with respect to Applicable March 31
Margin Adjustment Dates, the annual reports required by Section 6.1.1(a)), in
accordance with the following table:
2
Applicable Margin Applicable Margin Applicable
Funded Debt to EBITDA Ratio for Base Rate for Base Rate Margin for Base
Revolving Loans Capital Rate Term Loans
Expenditure Loans
-----------------------------------------------------------------------------------------------------
Less than or equal to 3.0 to 1.0 0.0% 0.0% 0.0%
-----------------------------------------------------------------------------------------------------
Greater than 3.0 to 1.0 but less than or 0.0% 0.5% 0.5%
equal to 3.5 to 1.0
-----------------------------------------------------------------------------------------------------
Greater than 3.5 to 1.0 but less than or 0.5% 0.5% 0.5%
equal to 4.0 to 1.0
-----------------------------------------------------------------------------------------------------
Greater than 4.0 to 1.0 but less than or 0.5% 0.75% 0.75%
equal to 4.5 to 1.0
-----------------------------------------------------------------------------------------------------
Greater than 4.5 to 1.0 0.75% 1.00% 1.00%
-----------------------------------------------------------------------------------------------------
"Applicable LIBOR Margin" (i) from the Closing Date through the first
Applicable Margin Adjustment Date, for each LIBOR Revolving Loan, a rate equal
to 2.75% per annum, and for each LIBOR Term Loan and each LIBOR Capital
Expenditure Loan, a rate equal to 3.00% per annum and (ii) thereafter, a per
annum rate which shall adjust as of each Applicable Margin Adjustment Date based
on the ratio of Borrower's Funded Debt to EBITDA for the Testing Period ending
on the last day of the calendar quarter immediately preceding such Applicable
Margin Adjustment Date, as determined by the Agent, in its sole discretion, from
the monthly reports required by Section 6.1.1(c) (Monthly Statements and
Certificates) (or, with respect to Applicable March 31 Margin Adjustment Dates,
the annual reports required by Section 6.1.1(a)), in accordance with the
following table:
Applicable Margin Applicable Margin Applicable
Funded Debt to EBITDA Ratio for LIBOR for LIBOR Capital Margin for LIBOR
Revolving Loans Expenditure Loans Term Loans
-----------------------------------------------------------------------------------------------------
Less than or equal to 3.0 to 1.0 1.75% 2.0% 2.0%
-----------------------------------------------------------------------------------------------------
Greater than 3.0 to 1.0 but less than or 2.0% 2.25% 2.25%
equal to 3.5 to 1.0
-----------------------------------------------------------------------------------------------------
Greater than 3.5 to 1.0 but less than or 2.25% 2.50% 2.50%
equal to 4.0 to 1.0
-----------------------------------------------------------------------------------------------------
Greater than 4.0 to 1.0 but less than or 2.50% 2.75% 2.75%
equal to 4.5 to 1.0
-----------------------------------------------------------------------------------------------------
Greater than 4.5 to 1.0 2.75% 3.00% 3.00%
-----------------------------------------------------------------------------------------------------
3
"Applicable Margin" means (i) with respect to Base Rate Loans, the
Applicable Base Rate Margin, and (ii) with respect to LIBOR Loans, the
Applicable LIBOR Margin.
"Applicable Margin Adjustment Date" means each March 31, June 30,
September 30, and December 31, commencing with March 31, 2001.
"Asset Disposition" means the disposition of any or all of the Assets
of the Borrower or any Subsidiary of the Borrower, whether by sale, lease,
transfer or other disposition (including any such disposition effected by way of
merger or consolidation) other than sales of Inventory in the ordinary course of
business.
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated balance
sheet of the Borrower and its Subsidiaries.
"Bailee Waiver" means a bailee estoppel letter substantially in the
form attached hereto as Exhibit "G-1" and incorporated herein by reference.
"Bankruptcy Code" means the United States Bankruptcy Code, as
amended from time to time, and any successor Laws.
"Base Rate" means the sum of (i) the greater of (A) the Prime Rate,
and (B) the rate which is 0.5% in excess of the Federal Funds Rate plus (ii) the
Applicable Margin.
"Base Rate Capital Expenditure Loan" means an advance under the
Capital Expenditure Line during any period in which it bears interest based on
the Base Rate.
"Base Rate Loans" means, collectively, the Base Rate Revolving Loans,
the Base Rate Term Loans and the Base Rate Capital Expenditure Loans.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"Base Rate Term Loan" means any portion of the Term Loan A during any
period in which such portion bears interest based on the Base Rate.
"Borrower" means the "Borrower" described in the preamble of this
Agreement.
"Borrowing" or "Borrowings" means a borrowing hereunder consisting of
an advance under the Revolving Credit Facility, the Term Loan Facility or the
Capital Expenditure Line Facility.
"Borrowing Base" has the meaning described in Section 2.1.3 (Borrowing
Base).
4
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
"▇▇▇▇▇▇▇ Subordination Agreement" means a Subordination Agreement
executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. with respect to all indebtedness owing from
the Borrower to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, substantially in the form attached hereto as
Exhibit "M-1" and incorporated herein by reference.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in Illinois are authorized or required to close.
"Capital Expenditure" means an expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital Assets,
including, without limitation, the entering into of a Capital Lease.
"Capital Expenditure Line" has the meaning described in Section 2.5.1
(Capital Expenditure Line Facility).
"Capital Expenditure Line Commitment" and "Capital Expenditure Line
Commitments" have the meanings described in Section 2.5.1 (Capital Expenditure
Line Facility).
"Capital Expenditure Line Commitment Period" means the period of time
from the date on which the Borrower has repaid or prepaid $500,000 or more in
principal amount of the Term Loans to the Capital Expenditure Line Termination
Date.
"Capital Expenditure Line Committed Amount" has the meaning described
in Section 2.5.1 (Capital Expenditure Line Facility).
"Capital Expenditure Line Expiration Date" means the Revolving Credit
Expiration Date.
"Capital Expenditure Line Facility" means the facility established by
the Formula Lenders pursuant to Section 2.5 (Capital Expenditure Line Facility).
"Capital Expenditure Line Installment Payment Schedule" has the
meaning described in Section 2.5.4 (Payments of Capital Expenditure Line).
"Capital Expenditure Line Note" and "Capital Expenditure Line Notes"
have the meaning described in Section 2.5.3 (Capital Expenditure Line Notes).
"Capital Expenditure Line Notice" has the meaning described in Section
2.5.2.
"Capital Expenditure Line Optional Prepayment" and "Capital
Expenditure Line Optional Prepayments" have the meanings described in Section
2.5.5 (Capital Expenditure Line Optional Prepayment).
"Capital Expenditure Line Pro Rata Share" has the meaning described in
Section 2.5.1 (Capital Expenditure Line Facility).
"Capital Expenditure Line Termination Date" means the earlier of (a)
the Capital Expenditure Line Expiration Date, or (b) the Revolving Credit
Termination Date.
5
"Capital Expenditure Loan" means an advance under the Capital
Expenditure Line.
"Capital Lease" means with respect to any Person any lease of real or
personal property, for which the related Lease Obligations have been or should
be, in accordance with GAAP consistently applied, capitalized on the balance
sheet of that Person.
"Cash Equivalents" means (a) securities with maturities of nine (9)
months or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit with maturities of nine (9) months or less from the date of
acquisition of, or money market accounts maintained with, the Agent or any
Lender, any Affiliate of the Agent or any Lender, or any other domestic
commercial bank having capital and surplus in excess of One Hundred Million
Dollars ($100,000,000.00) or such other domestic financial institutions or
domestic brokerage houses to the extent disclosed to, and approved by, the
Agent, (c) commercial paper of a domestic issuer rated at least either A-1 by
Standard & Poor's Corporation (or its successor) or P-1 by ▇▇▇▇▇'▇ Investors
Service, Inc. (or its successor) with maturities of nine (9) months or less from
the date of acquisition, and (d) repurchase obligations with a term of not more
than seven (7) days for underlying securities of the types described in clause
(a) or deposits of the type described in clause (b) above entered into with a
bank meeting the qualifications described in clause (b) above.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Borrower to any Person other than the
Principals, (ii) the consummation of any transaction (including without
limitation any merger or consolidation) the result of which is that any Person,
other than the Principals, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934,
as amended), directly or indirectly, of more than 35% of the voting stock of the
Borrower, (iii) the consummation of the first transaction (including without
limitation any merger or consolidation) the result of which is that any Person
becomes the "beneficial owner" (as defined above), directly or indirectly, of
more of the voting stock of the Borrower than is at the time "beneficially
owned" (as defined above) by the Principals, or (iv) the first day on which a
majority of the members of the board of directors of the Borrower are not
Continuing Directors. For purposes of this definition, any transfer of an
equity interest of an entity that was formed for the purpose of acquiring voting
stock of the Borrower will be deemed to be a transfer of such portion of such
voting stock as corresponds to the portion of the equity of such entity that has
been so transferred.
"Chatwins Merger Agreement" means that certain Amended and Restated
Merger Agreement, dated as of July 28, 1999, by and between Chatwins Group,
Inc., a Delaware corporation and Reunion Industries, Inc., with Reunion
Industries, Inc. being the surviving entity, together with any and all
amendments, modifications, and supplements thereto, or restatements thereof.
"Chatwins Merger Documents" means collectively, the Chatwins Merger
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by the Reunion Industries,
Inc., Chatwins Group, Inc. or any other Person in connection with the Chatwins
Merger.
"Chatwins Merger" means the merger on the Closing Date of Chatwins
Group, Inc. with and into Reunion Industries, Inc., under the terms of the
Chatwins Merger Agreement.
6
"Closing Date" means March 16, 2000, or such later Business Day on
which the Agent shall be satisfied that the conditions precedent set forth in
Section 5.1 (Conditions to the Initial Advance and Initial Letter of Credit.)
have been fulfilled.
"Closing Fee" has the meaning described in Section 2.7.3 (Closing
Fee).
"Collateral" has the meaning described in Section 3.2 (Grant of
Liens).
"Collateral Account" has the meaning described in Section 2.1.8 (The
Collateral Account).
"Collateral Assignment of Life Insurance" means, with respect to each
of the Pledged Policies, a Collateral Assignment of Life Insurance Policy
executed by the Borrower, substantially in the form attached hereto as Exhibit
"H", or such other form as is acceptable to the Agent, in its sole discretion,
and incorporated herein by reference.
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
"Commitment" means (a) with respect to each Formula Lender, each of
such Formula Lender's Formula Loan Commitments, and (b) with respect to each
Term Loan B Lender, such Lender's Term Loan B Commitment, and "Commitments"
means the collective reference to the Formula Loan Commitments and the Term Loan
B Commitments of all of the Lenders.
"Committed Amount" means with respect to each Lender, such Lender's
Revolving Credit Committed Amount, Term Loan A Committed Amount, Term Loan B
Committed Amount or Capital Expenditure Line Committed Amount, as the case may
be, and "Committed Amounts" means collectively the Total Revolving Credit
Committed Amount, Total Term Loan A Committed Amount, Total Term Loan B
Committed Amount and Capital Expenditure Line Committed Amount.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or (c) of the Internal Revenue Code.
"Compliance Certificate" means a periodic Compliance Certificate
described in Section 6.1.1 (Financial Statements).
"Continuing Directors" means, as of any date of determination, any
member of the board of directors of the Borrower who (i) was a member of such
board of directors on the Closing Date, or (ii) was nominated for election or
elected to such board of directors by the Principals or with the approval of a
majority of the Continuing Directors of such board of directors at the time of
such nomination or election.
"Copyrights" means collectively all of the following:
7
(a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations and copyright
applications now owned or hereafter created or acquired by Borrower;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements of any of the
foregoing;
(d) the right to ▇▇▇ for past, present and future infringements of any
of the foregoing; and
(e) all rights corresponding to any of the foregoing throughout the
world.
"Copyright License" means any written agreement now or hereafter in
existence granting to the Borrower any right to use any Copyright, as may be
amended, modified or supplemented from time to time.
"Credit Facility" means with respect to each Lender, such Lender's Pro
Rata Share of the Revolving Credit Facility, the Term Loan A Facility, the Term
Loan B Facility, the Letter of Credit Facility or the Capital Expenditure Line
as the case may be, and "Credit Facilities" means collectively with respect to
each Lender, such Lender's Pro Rata Share of the Revolving Credit Facility, the
Term Loan A Facility, the Term Loan B Facility, the Letter of Credit Facility
and the Capital Expenditure Line and any and all other credit facilities now or
hereafter extended under or secured by this Agreement.
"Credit Support" has the meaning described in Section 2.2.1 (Letters
of Credit).
"Current Letter of Credit Obligations" shall have the meanings
described in Section 2.2.4 (Payments of Letters of Credit) of this Agreement.
"Default" means an event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default under the provisions of this
Agreement.
"Depository Account" means one or more depository accounts established
by the Borrower at such banks or other financial institutions as are acceptable
to the Agent or at a centrally located bank or financial institution.
"Documents" means all documents or other receipts covering, evidencing
or representing goods now owned or hereafter acquired by Borrower, including,
without limitation, all bills of lading, dock warrants, dock receipts, warehouse
receipts and orders for the delivery of goods, and any other document which in
the regular course of business or financing is treated as adequately evidencing
that the Person in possession of it is entitled to receive, hold and dispose of
the document and the goods it covers.
"Domestic Subsidiary" means a Subsidiary organized under the laws of
any jurisdiction in the United States.
"Early Termination Fee" has the meaning described in Section 2.1.11
(Early Termination Fee).
"EBITDA" means as to the Borrower for any period of determination
thereof, and excluding any amounts related to Subsidiaries, the sum of (a)
income before equity income (or loss) from Affiliates, plus (b) interest expense
and income tax provisions for such period, plus (c) depreciation and
amortization of assets for such period.
8
"Eligible Inventory" means the collective reference to all Inventory
of the Borrower held for sale in the ordinary course of business, valued at the
lowest of (i) the net purchase cost or net manufacturing cost or (ii) prevailing
market value, excluding, however, any Inventory which consists of:
(a) any Inventory located outside of the United States;
(b) any Inventory located outside of a jurisdiction in which the Agent
has perfected the Liens of the Agent and the Lenders under this Agreement
by filing in that jurisdiction, free and clear of all other Liens;
(c) any Inventory not in the actual possession of the Borrower, or any
Inventory which is in transit to or from the Borrower, except to the extent
provided in subsection (d) below;
(d) any Inventory in the possession of a bailee, warehouseman,
consignee or similar third party, except to the extent that such bailee,
warehouseman, consignee or similar third party has entered into an
agreement with the Agent in the form of Exhibit "G-1" in which such bailee,
warehouseman, consignee or similar third party consents and agrees to the
Agent's Lien on such Inventory and to such other terms and conditions as
may be reasonably required by the Agent;
(e) any Inventory located on premises leased or rented to the Borrower
or otherwise not owned by the Borrower, unless the Agent has received a
waiver and consent from the lessor, landlord and/or owner in the form of
Exhibit "G-2" hereto or otherwise, in form and substance reasonably
satisfactory to the Agent and from any mortgagee of such lessor, landlord
or owner to the extent required by the Agent;
(f) any Inventory the sale or other disposition of which has given
rise to a Receivable;
(g) any Inventory which fails to meet all standards and requirements
imposed by any Governmental Authority over such Inventory or its
production, storage, use or sale;
(h) work-in-process, displays, supplies, hot stamp leaf, processed
materials, packaging and promotional materials;
(i) any Inventory which the Agent determines, in the exercise of its
Good Faith discretion, is not in good condition or is defective,
unmerchantable, post-seasonal, slow moving, obsolete, or an unreconciled
variance to the Borrower's general ledger; or
(j) any Inventory which the Agent, in exercise of its Good Faith
discretion, has deemed to be ineligible because the Agent considers the
collateral value to the Agent and the Lenders to be impaired or its and
their ability to realize such value to be insecure.
In the event of any dispute under the foregoing criteria, as to whether
Inventory is, or has ceased to be, Eligible Inventory, the decision of the Agent
in the Good Faith exercise of its discretion shall control.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the collective reference to the unpaid portion of each
Account (net of any returns, discounts, claims, credits, charges, accrued
rebates or other allowances, offsets, deductions, counterclaims, disputes or
other defenses and reduced by the aggregate amount of all
9
reserves, limits and deductions provided for in this definition and elsewhere in
this Agreement) in United States Dollars by the Borrower, provided each Account
conforms and continues to conform to the following criteria to the satisfaction
of the Agent, in the exercise of its Good Faith discretion:
(a) the Account arose in the ordinary course of the Borrower's
business from a bona fide outright sale of Inventory by the Borrower or
from services performed by the Borrower and (i) (A) except with respect to
Permitted ▇▇▇▇ and Hold Sales, such Inventory has been delivered to the
appropriate Account Debtors or their respective designees, (B) except with
respect to Permitted ▇▇▇▇ and Hold Sales, the Borrower has in its
possession shipping receipts evidencing such shipment, and (C) no return,
rejection, or repossession has occurred or (ii) such services have been
completed (or, with respect to Accounts arising from contracts of the
Borrower that contemplate milestone payments, have been rendered to the
extent necessary under such contracts to create a valid and binding
unconditional obligation of the Account Debtor for payment of the portion
of the Account included in the computation of Eligible Accounts) in a
manner consistent with the agreement with the Account Debtor,
(b) the Account is a valid, legally enforceable obligation of the
Account Debtor and requires no further act on the part of any Person under
any circumstances to make the Account payable by the Account Debtor;
(c) the Account is based upon an enforceable order or contract,
written or oral, for Inventory shipped or for services performed, and the
same were shipped (except with respect to Permitted ▇▇▇▇ and Hold Sales) or
performed in accordance with such order or contract;
(d) if the Account arises from the sale of Inventory, the Inventory
the sale of which gave rise to the Account has been shipped or delivered to
the Account Debtor on an absolute sale basis and not on a ▇▇▇▇ and hold
sale basis (except with respect to Permitted ▇▇▇▇ and Hold Sales), a
consignment sale basis, a guaranteed sale basis, a sale or return basis, or
on the basis of any other similar understanding;
(e) if the Account arises from the performance of services, such
services have been fully rendered (or, with respect to Accounts arising
from contracts of the Borrower that contemplate milestone payments, have
been rendered to the extent necessary under such contracts to create a
valid and binding unconditional obligation of the Account Debtor for
payment of the portion of the Account included in the computation of
Eligible Accounts) and do not relate to any warranty claim or obligation;
(f) the Account is evidenced by an invoice or other documentation in
form acceptable to the Agent, dated no later than the date of shipment in
the case of the sale of goods (other than Permitted ▇▇▇▇ and Hold Sales),
or dated promptly (but in no event later than the last day of the
Borrower's billing cycle during which the services were completed) after
completion of the performance of services, and containing only terms
normally offered by the Borrower;
(g) the amount shown on the books of the Borrower and on any invoice,
certificate, schedule or statement delivered to the Agent is owing to the
Borrower and no partial payment has been received unless reflected with
that delivery;
(h) the Account is not outstanding more than ninety (90) days from the
date of the invoice therefor or past due more than sixty (60) days after
its due date, which shall not be later than thirty (30) days after the
invoice date;
10
(i) the Account is not owing by any Account Debtor for which fifty
percent (50%) or more of such Account Debtor's other Accounts due to the
Borrower are non-Eligible Receivables;
(j) the Account is not owing by an Account Debtor or a group of
affiliated Account Debtors to the Borrower whose then existing Accounts
owing to the Borrower individually exceed in aggregate face amount twenty
percent (20%) of the Borrower's total Eligible Receivables;
(k) the Account Debtor has not returned, rejected or refused to
retain, or otherwise notified the Borrower of any dispute concerning, or
claimed nonconformity of, any of the Inventory or services from the sale or
furnishing of which the Account arose;
(l) the Account is not subject to any present or contingent (and no
facts exist which are the basis for any future) offset, claim, deduction or
counterclaim, dispute or defense in law or equity on the part of such
Account Debtor, or any debit memo or claim for credits, allowances, or
adjustments by the Account Debtor because of returned, inferior, or damaged
Inventory or unsatisfactory services, or for any other reason including,
without limitation, those arising on account of a breach of any express or
implied representation or warranty, provided, however, that if such Account
otherwise meets the conditions for inclusion among the Eligible
Receivables, such Account, minus the amount of the offset, claim,
deduction, counterclaim, dispute or defense, may be included among the
Eligible Receivables;
(m) the Account Debtor is not a Subsidiary or Affiliate of the
Borrower or an employee, officer, director or shareholder of the Borrower
or any Subsidiary or Affiliate of the Borrower, provided, however, that
Eligible Receivables may include at any time up to $500,000 of Accounts
arising from sales by the CP Industries division of the Borrower to NPS
Acquisition Corp., in each case so long as such Accounts would otherwise
meet the conditions for inclusion among Eligible Receivables;
(n) the Account Debtor is not incorporated or primarily conducting
business in any jurisdiction outside of the United States of America or
Canada (other than, with respect to each of the Account Debtors set forth
in Schedule 1.1(n) attached hereto and made a part hereof, (i) up to
$500,000 each of the Accounts owing from Xerox and ▇▇▇▇ Deere, and (ii) up
to $600,000 in aggregate of the Accounts owing from all of the remaining
Account Debtors set forth on Schedule 1.1(n); the foregoing sublimits and
the Account Debtors appearing on Schedule 1.1(n) are subject to the Agent's
continued approval based upon the Agent's reasonable credit judgment)
unless the Account Debtor's obligations with respect to such Account are
secured by a letter of credit, guaranty or banker's acceptance having terms
and from such issuers and confirmation banks as are acceptable to the Agent
in its sole and absolute discretion;
(o) the Account Debtor with respect to such Account is not insolvent
or the subject of any bankruptcy or insolvency proceedings of any kind;
(p) the Account Debtor is not a Governmental Authority, unless the
Borrower has complied with the Federal Assignment of Claims Act or any
comparable state statute or regulation;
(q) the Borrower is not indebted in any manner to the Account Debtor
(as creditor, lessor, supplier or otherwise), with the exception of
customary credits, warranty obligations, adjustments and/or discounts given
to an Account Debtor by the Borrower in the ordinary course of its
business, provided, however, that if such Account otherwise
11
meets the conditions for inclusion among the Eligible Receivables, such
Account, minus the amount of such indebtedness, may be included among the
Eligible Receivables;
(r) the Account does not arise from services under or related to any
warranty obligation of the Borrower or out of service charges, finance
charges or other fees for the time value of money;
(s) the Account is not evidenced by chattel paper or an instrument of
any kind and is not secured by any letter of credit unless the original of
such chattel paper, instrument or letter of credit has been transferred,
assigned and/or pledged to the Agent, for the benefit of the Lenders and
the Agent, in a manner satisfactory to the Agent as security for the
Obligations;
(t) the title of the Borrower to the Account is absolute and is not
subject to any Lien (other than in favor of the Agent, for the benefit of
the Lenders and the Agent);
(u) the Borrower has the full and unqualified right and power to
assign and grant a security interest in, and Lien on, the Account to the
Agent, for the benefit of the Lenders and the Agent, as security and
collateral for the payment of the Obligations;
(v) the Account is subject to a Lien in favor of the Agent, for the
benefit of the Lenders and the Agent, which Lien is perfected as to the
Account by the filing of financing statements and which Lien upon such
filing constitutes a first priority security interest and Lien;
(w) the Inventory giving rise to the Account was not, at the time of
the sale thereof, subject to any Lien, except those in favor of the Agent,
for the benefit of the Lenders and the Agent,
(x) the Account Debtor is not located in Minnesota, unless the
Borrower shall have properly qualified to do business in Minnesota or shall
have filed a Notice of Business Activities Report with the Minnesota
Division of Taxation for the then current year, provided, however, that
Eligible Receivables may include at any time up to $100,000 of Accounts
arising from sales to Account Debtors located in Minnesota, so long as such
Accounts would otherwise meet the conditions for inclusion among Eligible
Receivables;
(y) the Account Debtor is not located in New Jersey, unless the
Borrower shall have properly qualified to do business in New Jersey or
shall have filed a Notice of Business Activities Report with the New Jersey
Division of Taxation for the then current year, provided, however, that
Eligible Receivables may include at any time up to $400,000 of Accounts
arising from sales to Account Debtors located in New Jersey, so long as
such Accounts would otherwise meet the conditions for inclusion among
Eligible Receivables;
(z) the Account Debtor is not located in any other jurisdiction which
requires that the Borrower, in order to ▇▇▇ any Person in such
jurisdiction's courts, either (i) qualify to do business in such
jurisdiction, or (ii) file a report with taxation division of such
jurisdiction for the then current year, unless the Borrower shall have
fulfilled either of such requirements for the then current year with
respect to such jurisdiction;
(aa) the Account does not represent tooling; and
12
(bb) the Agent in the Good Faith exercise of its discretion has not
deemed the Account ineligible because of uncertainty as to the
creditworthiness of the Account Debtor or because the Agent considers the
collateral value of such Account to the Agent and the Lenders to be
impaired or its or their ability to realize such value to be insecure.
In the event of any dispute, under the foregoing criteria, as to whether an
account is, or has ceased to be, an Eligible Receivable, the decision of the
Agent in the Good Faith exercise of its discretion shall control.
"Enforcement Costs" means all reasonable out-of-pocket expenses,
charges, costs and fees whatsoever (including, without limitation, reasonable
attorney's fees and expenses) of any nature whatsoever paid or incurred by or on
behalf of the Agent and/or any Lender in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents (but
excluding, so long as no Event of Default then exists, fees and expenses
incurred by the Lenders (including attorney's fees) in preparing, reviewing,
negotiating and finalizing the Financing Documents (including any amendments and
supplements thereto) from time to time), and (b) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Collateral, this
Agreement or any of the other Financing Documents, including, without
limitation, those costs and expenses more specifically enumerated in Section 3.7
(Costs) and/or Section 9.9 (Enforcement Costs).
"Environmental Compliance Reserve" means any reserves which the Agent
establishes from time to time in the Good Faith Exercise of its discretion for
amounts that are reasonably likely to be expended by the Borrower in order for
the Borrower and its operations and property (a) to comply with any notice from
a Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent or the Lenders in connection with the transactions
contemplated by this Agreement.
"Equipment" means all equipment, machinery, computers, chattels,
tools, parts, machine tools, furniture, furnishings, fixtures and supplies of
every nature, presently existing or hereafter acquired or created and wherever
located, whether or not the same shall be deemed to be affixed to real property,
together with all accessions, additions, fittings, accessories, special tools,
and improvements thereto and substitutions therefor and all parts and equipment
which may be attached to or which are necessary or beneficial for the operation,
use and/or disposition of such personal property, all licenses, warranties,
franchises and general intangibles related thereto or necessary or beneficial
for the operation, use and/or disposition of the same, together with all
Accounts, Chattel Paper, Instruments and other consideration received by the
Borrower on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all proceeds
(cash and non-cash) of the foregoing.
"Equity" means, at any date as to the Borrower and its Subsidiaries,
the total of capital stock (except treasury stock and net of any note receivable
received upon the issuance of any shares of capital stock) and contributed
capital, as determined on a consolidated basis in accordance with GAAP
consistently applied, after eliminating all intercompany items.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Business Day" means any Business Day on which dealings in
United States Dollar deposits are carried out on the London interbank market and
on which commercial
13
banks are open for domestic and international business (including dealings in
United States Dollar deposits) in London, England.
"Eurodollar Lending Office" means with respect to each Lender such
branch or office of such Lender or an Affiliate of such Lender designated by
such Lender, as applicable, from time to time as the branch or office at which
the LIBOR Loans are to be made or maintained.
"Event of Default" has the meaning described in ARTICLE 7.
"Excess Cash Flow" means, with respect to the Borrower, for any
period, an amount equal to EBITDA for such period minus the sum of (1)
principal, interest and other payments on Indebtedness for Borrowed Money, (2)
non-financed Capitalized Expenditures, and (3) cash income taxes paid for such
period.
"Federal Funds Rate" means for any day of determination, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, by the Federal Reserve Bank for the
next preceding Business Day) by the Federal Reserve Bank of Chicago, Illinois,
or, if such rate is not so published for any day that is a Business Day, the
average of quotations for such day on such transactions received by the Agent
from three (3) Federal funds brokers of recognized standing selected by the
Agent.
"Fees" means the collective reference to each fee payable to the
Agent, for its own account or for the benefit of the Lenders, under the terms of
this Agreement or under the terms of any of the other Financing Documents,
including, without limitation, the Revolving Credit Unused Line Fees, the Letter
of Credit Fees, the Letter of Credit Fronting Fees, the Early Termination Fee,
the Closing Fee, and, the Agency Fee.
"Financial Institution" means any bank, finance company or other
Person or Governmental Authority which in the ordinary course of business makes
or purchases interests in commercial credit facilities.
"Financing Documents" means, at any time, collectively this Agreement,
the Notes, the Security Documents, the Letter of Credit Documents, the Escrow
Letter, the ▇▇▇▇▇▇▇ Subordination Agreement, the Stanwich Subordination
Agreement, the Post Closing Agreement and any other instrument, agreement or
document previously, simultaneously or hereafter executed and delivered by the
Borrower, any guarantor and/or any other Person, singly or jointly with another
Person or Persons, evidencing, securing, guarantying or in connection with this
Agreement, any Note, any of the Security Documents, any of the Credit
Facilities, and/or any of the Obligations.
"Fixed Charge Coverage Ratio" means, with respect to the Borrower for
the period of any determination thereof, the ratio of (a) EBITDA minus cash
income tax paid for such period, minus non-financed Capital Expenditures, to (b)
Fixed Charges.
"Fixed Charges" means for any period of determination, the scheduled
or required payments (including, without limitation, principal and interest) on
all Indebtedness for Borrowed Money of the Borrower.
"Fixed or Capital Assets" of a Person at any date means all assets
which would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date.
14
"Formula Lender" means each Lender with any Revolving Credit
Commitment, Letter of Credit Commitment, Term Loan A Commitment or Capital
Expenditure Line Commitment.
"Formula Loan Commitment" means with respect to each Formula Lender,
such Lender's Revolving Credit Commitment, Term Loan A Commitment, Letter of
Credit Commitment, and Capital Expenditure Line Commitment as the case may be,
and "Formula Loan Commitments" means the collective reference to the Revolving
Credit Commitments, Term Loan A Commitments, Letter of Credit Commitments, and
Capital Expenditure Line Commitments of all of the Formula Lenders.
"Formula Loan Pro Rata Share" means, at any time and as to any Formula
Lender, the percentage derived by dividing the unpaid principal amount of the
Revolving Loans, Term Loan A, Capital Expenditure Loans and Letter of Credit
Obligations owing to that Formula Lender by the aggregate unpaid principal
amount of all Revolving Loans, Term Loans A, Capital Expenditure Loans and
Letter of Credit Obligations then outstanding; or if no such Revolving Loans,
Term Loans A, Capital Expenditure Loans or Letter of Credit Obligations are
outstanding, by dividing the total amount of the sum of such Formula Lender's
Revolving Credit Commitment, Term Loan A Commitment, Letter of Credit Commitment
and Capital Expenditure Line Commitment by the total amount of the Revolving
Credit Commitments, Term Loan A Commitments, Letter of Credit Commitments and
Capital Expenditure Commitments of all of the Formula Lenders.
"Funded Debt" means as to the Borrower, as of any date of
determination, the aggregate of all Indebtedness for Borrowed Money of the
Borrower, whether secured or unsecured, having a final maturity (or which by the
terms thereof is renewable or extendible at the option of the obligor for a
period ending) more than a year after that date, including current maturities of
long-term Indebtedness for Borrowed Money (as determined in accordance with
GAAP).
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time, or in the case of the calculation
of the financial covenants contained in Section 6.1.14 (Financial Covenants) and
with respect to the definitions used therein, "GAAP" means generally accepted
accounting principles in the United States of America in effect on the Closing
Date.
"General Intangibles" means all general intangibles, now owned or
hereafter acquired by Borrower, including, without limitation, all right, title
and interest of Borrower in and to: (i) all tax refunds and tax refund claims;
(ii) Intellectual Property (as hereinafter defined); (iii) all choses in action
and causes of action; and (iv) all trade secrets and other confidential
information relating to the business of Borrower including by way of
illustration and not limitation: systems and techniques for the analysis,
diagnosis and correction of malfunctions of products used by Borrower's
customers; the names and addresses of, and credit and other business information
concerning, Borrower's past, present or future customers; the prices which
Borrower obtains for its services or at which it sells merchandise; estimating
and cost procedures; profit margins; policies and procedures pertaining to the
manufacture, sale and design of equipment, components, devices and services
furnished by Borrower; and information concerning the manner of operation,
business plans, pledges, projections, and all other information of any kind or
character, whether or not reduced to writing, with respect to the conduct by
Borrower of its business not generally known by the public.
"Good Faith" has the meaning set forth in Section 1301.01(S) of the
Ohio Revised Code as in effect on the Closing Date.
15
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any department, agency or instrumentality thereof.
"Hanjung Escrow Agent" means the law firm of ▇▇▇▇▇▇, Larchuk &
Middleman, P.C.
"Hanjung Escrow Amount" means an amount equal to the lesser of (i)
Five Hundred Fifty-Three Thousand Dollars ($553,000), or (ii) the amount of cash
on deposit with the Hanjung Escrow Agent to which the Borrower is entitled as a
result of transactions with Hanjung, Ltd. and as to which the Escrow Agent has
acknowledged, in a writing upon which the Agent can rely, that the Escrow Agent
(A) is in possession of such cash, and (B) is authorized to deliver, and will in
fact deliver, such cash to the Borrower (or the Borrower's designee) upon the
Borrower's request therefor.
"Hanjung Escrow Letter" means the letter, dated as of the Closing
Date, from Chatwins Group, Inc. (prior to the Chatwins Merger) to the Hanjung
Escrow Agent, and the acknowledgement of the Hanjung Escrow Agent thereto, with
respect to certain cash being held by the Hanjung Escrow Agent for the account
of Chatwins Group, Inc. in the amount of $552,908.39, a copy of which letter is
attached hereto as Exhibit "N" and incorporated herein by reference.
"▇▇▇▇▇ Real Property" means the real property and improvements thereon
of the Borrower located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Hazardous Materials" means (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976, as amended from time to
time, and regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated
thereunder; (c) any substance the presence of which on any property now or
hereafter owned, acquired or operated by the Borrower is prohibited by any Law
similar to those set forth in this definition; and (d) any other substance which
by Law requires special handling in the collection, storage, treatment or
disposal of a substance.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned or operated by the Borrower or for which the
Borrower has responsibility, including, without limitation, improvements,
facilities, soil, ground water, air or other elements on, or of, any property
now or hereafter owned, acquired or operated by the Borrower, and any other
contamination by Hazardous Materials for which the Borrower is, or is claimed to
be, responsible.
"Immediate Family Member" means, with respect to any natural person,
such person's parents, spouse, children, grandchildren, siblings, nieces and
nephews.
"Inactive Subsidiary" means a Subsidiary of the Borrower that carries
on no business operations or other activities and has aggregate assets of
$100,000 or less.
"Indebtedness for Borrowed Money" of a Person means at any time the
sum at such time of (a) Liabilities of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c)
16
Lease Obligations of such Person with respect to Capital Leases, (d) all
liabilities secured by any Lien on any property owned by such Person, to the
extent attached to such Person's interest in such property, even though such
Person has not assumed or become personally liable for the payment thereof, (e)
obligations of third parties which are being guarantied or indemnified against
by such Person or which is secured by the property of such Person; and (f) any
obligations, liabilities or indebtedness, contingent or otherwise, under or in
connection with, each Interest Rate/Currency Protection Agreement and other
similar agreements and arrangements; but excluding trade and other accounts
payable in the ordinary course of business in accordance with customary trade
terms and which are not overdue (as determined in accordance with customary
trade practices).
"Indemnitee" has the meaning set forth in Section 9.18.
"Indenture" means the Indenture, dated as of May 1, 1993, by and
between the Borrower, as issuer, and The First National Bank of Boston, as
trustee, in connection with the issue of $50,000,000 13% Senior Notes due 2003
and 13% Senior Exchange Notes due 2003, as modified by (i) that certain First
Supplemental Indenture and Waiver of Covenants, dated as of June 20, 1995, (ii)
that certain Second Supplemental Indenture, dated as of June 20, 1995, (iii)
that certain Third Supplemental Indenture, dated as of May 28, 1999, (iv) that
certain Fourth Supplemental Indenture, dated as of March 8, 2000, and (v) that
certain Fifth Supplemental Indenture, dated as of March 16, 2000, as the same
now exists or may hereafter be amended, supplemented, renewed, restated or
replaced.
"Indenture Maximum Amount" means, as at any time, an amount equal to
the sum of (i) eighty percent (80%) of the book value of the Borrower's Accounts
at such time, plus (ii) seventy percent (70%) of the book value of the
Borrower's Inventory at such time, minus (iii) the aggregate amount of all net
cash proceeds applied to permanently reduce the Total Revolving Credit Committed
Amount outstanding under this Agreement pursuant to this Agreement or pursuant
to Section 4.10 of the Indenture.
"Inserts" means raw materials Inventory of the Borrower consisting of
metal inserts designed for screws and positioned in the dye just prior to adding
the mixed resin.
"Instruments and Chattel Paper" means instruments and chattel paper
and any replacements therefor and other writings which evidence a right to the
payment of money and which are not themselves security agreements or leases and
are of a type which in the ordinary course of business are transferred by
delivery with any necessary endorsement or assignment, including, without
limitation, all checks, drafts, notes, bonds, debentures, government securities,
certificates of deposit, options and warrants in which the Borrower now has or
hereafter acquires any rights.
"Intellectual Property" shall mean collectively all of the following:
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses, and all other rights, title and interest in and to any other
intellectual property of any kind whatsoever.
"Interest Payment Date" means the dates provided for the payment of
interest on the Loans in Section 2.6.5 of this Agreement.
"Interest Period" means as to any LIBOR Loan, the period commencing on
and including the date such LIBOR Loan is made (or on the effective date of the
Borrower's election to convert any Base Rate Loan to a LIBOR Loan in accordance
with the provisions of this Agreement) and ending on and including the day which
numerically corresponds to such date thirty (30), sixty (60), ninety (90), one
hundred twenty (120), or one hundred eighty (180) days thereafter as selected by
the Borrower in accordance with the provisions of this Agreement, and
17
thereafter, each period commencing on the last day of the then preceding
Interest Period for such LIBOR Loan and ending on and including the day which
numerically corresponds to such date thirty (30), sixty (60), ninety (90), one
hundred twenty (120), or one hundred eighty (180) days thereafter (or, if such
month has no numerically corresponding day, on the last Business Day of such
month) as selected by the Borrower in accordance with the provisions of this
Agreement, provided, however, that:
(a) the first day of any Interest Period shall be a Eurodollar
Business Day;
(b) if any Interest Period would end on a day that shall not be a
Eurodollar Business Day, such Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless such next succeeding Eurodollar
Business Day would fall in the next calendar month, in which case, such
Interest Period shall end on the next preceding Eurodollar Business Day;
and
(c) no Interest Period for a particular Loan shall extend beyond the
respective Revolving Credit Expiration Date, the Capital Expenditure Line
Expiration Date, or the earliest scheduled maturity date of Term Loan A or
Term Loan B, as applicable.
"Interest Rate Election Notice" has the meaning described in Section
2.6.2(f).
"Interest Rate/Currency Protection Agreement" means, for any Person,
any interest rate swap, cap, floor or collar agreements, currency agreements,
currency spot, foreign exchange and forward contracts or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest or currency risks either generally or under
specific contingencies.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued and proposed to
be issued thereunder.
"Inventory" means all inventory now owned or hereafter acquired by
Borrower, wherever located, including, without limitation, finished goods, raw
materials, work-in-process and other materials and supplies (including packaging
and shipping materials) used or consumed in the manufacture or production
thereof and goods which are returned to or repossessed by Borrower.
"Item of Payment" means each check, draft, cash, money, instrument,
item, and other remittance in payment or on account of payment of the
Receivables or otherwise with respect to any Collateral, including, without
limitation, cash proceeds of any returned, rejected or repossessed goods, the
sale or lease of which gave rise to a Receivable, and other proceeds of
Collateral; and "Items of Payment" means the collective reference to all of the
foregoing.
"King-Way Merger Agreement" means that certain Merger Agreement, dated
as of March 30, 1999, by and between Stanwich Acquisition Corp., a Delaware
corporation doing business as King-Way Material Handling Company, and Reunion
Industries, Inc., with Reunion Industries, Inc. being the surviving entity,
together with any and all amendments, modifications, and supplements thereto, or
restatements thereof.
"King-Way Merger Documents" means collectively, the King-Way Merger
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by the Reunion Industries,
Inc., Stanwich Acquisition Corp., doing business as King-Way Material Handling
Company or any other Person in connection with the King-Way Merger.
18
"King-Way Merger" means the merger on the Closing Date of Stanwich
Acquisition Corp., doing business as King-Way Material Handling Company with and
into Reunion Industries, Inc., under the terms of the King-Way Merger Agreement.
"Landlord Waiver" means a Landlord Estoppel Letter executed in favor
of the Agent substantially in the form attached hereto as Exhibit "G-2" and
incorporated herein by reference.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority or agent thereof.
"Lease Obligations" of a Person means for any period the rental
commitments of such Person for such period under leases for real and/or personal
property (net of rent from subleases thereof, but including taxes which such
Person, as the lessee, is obligated to pay under the terms of said leases,
except to the extent that such taxes are payable by sublessees), including
rental commitments under Capital Leases.
"Lenders" has the meaning described in the Preamble to this Agreement.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit) of this Agreement.
"Letter of Credit Agreement" means the collective reference to each
letter of credit application and agreement substantially in the form of the
Agent's then standard form of application for letter of credit or such other
form as may be approved by the Agent, executed and delivered by the Borrower in
connection with the issuance of a Letter of Credit, as the same may from time to
time be amended, restated, supplemented or modified; and "Letter of Credit
Agreements" means all of the foregoing in effect at any time and from time to
time.
"Letter of Credit Cash Collateral Account" shall have the meaning
described in Section 2.2.9 (Supporting Letter of Credit; Cash Collateral) of
this Agreement.
"Letter of Credit Commitment" means the agreements of a Formula Lender
to issue, cause to be issued or participate in Letters of Credit, all subject to
and in accordance with the provisions of this Agreement; and "Letter of Credit
Commitments" means the collective reference to the Letter of Credit Commitment
of each Formula Lender.
"Letter of Credit Documents" means any and all drafts under or
purporting to be under a Letter of Credit, any Letter of Credit Agreement, and
any other instrument, document or agreement executed and/or delivered by the
Borrower or any other Person under, pursuant to or in connection with a Letter
of Credit or any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established pursuant to
Section 2.2 (Letter of Credit Facility) of this Agreement.
"Letter of Credit Fee" and "Letter of Credit Fees" shall have the
meanings described in Section 2.2.7 (Compensation for Letters of Credit.) of
this Agreement.
"Letter of Credit Fronting Fee" and "Letter of Credit Fronting Fees"
shall have the meanings described in Section 2.2.7 (Compensation for Letters of
Credit.) of this Agreement.
"Letter of Credit Obligations" means the collective reference to all
Obligations of the Borrower with respect to the Letters of Credit and the Letter
of Credit Agreements.
19
"Liabilities" means at any date all liabilities that in accordance
with GAAP consistently applied should be classified as liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries.
"LIBOR Base Rate" means for any Interest Period with respect to any
LIBOR Loan, the per annum interest rate (rounded upward, if necessary, to the
nearest next 1/100 of 1%) quoted to the Agent or an Affiliate of the Agent, on
an immediately available funds basis, at or about 11:00 a.m. (London time) on
the date that is two (2) Eurodollar Business Days prior to the first day of such
Interest Period, for the offering by leading banks in the London interbank
Eurodollar market of United States Dollar deposits with the Agent or such
Affiliate for a period comparable in time to the duration of such Interest
Period and in amounts comparable to the amount of such LIBOR Loan as to which
the LIBOR Base Rate is to be determined. If the Agent shall be unable or shall
otherwise fail to so obtain the LIBOR Base Rate, the LIBOR Base Rate shall be
the average of those rates quoted on the REUTERS SCREEN "LIBO" page for a period
comparable to the applicable Interest Period (rounded upward, if necessary, to
the nearest next 1/100 of 1%).
"LIBOR Capital Expenditure Loan" means an advance under the Capital
Expenditure Line during any period in which it bears interest based on the LIBOR
Rate.
"LIBOR Loans" means, collectively, the LIBOR Revolving Loans, the
LIBOR Term Loans and the LIBOR Capital Expenditure Loans.
"LIBOR Rate" means for any Interest Period with respect to any LIBOR
Loan, (i) the Applicable Margin, plus (ii) the per annum rate of interest
calculated pursuant to the following formula (rounded up to the nearest 1/100th
of 1%):
LIBOR Base Rate
------------------------
1.00 - Reserve Percentage
"LIBOR Revolving Loan" means an advance under the Revolving Credit
Facility during any period in which it bears interest based on the LIBOR Rate.
"LIBOR Term Loan" means any portion of a Term Loan A during any period
in which such portion bears interest based on the LIBOR Rate.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, claim or charge of any
kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction,
excluding the precautionary filing of any financing statement by any lessor in a
true lease transaction, by any ▇▇▇▇▇▇ in a true bailment transaction or by any
consignor in a true consignment transaction under the Uniform Commercial Code of
any jurisdiction or the agreement to give any financing statement by any lessee
in a true lease transaction, by any bailee in a true bailment transaction or by
any consignee in a true consignment transaction.
"Loan" means each of the Revolving Loan, the Term Loans or the Capital
Expenditure Line as the case may be, and "Loans" means the collective reference
to the Revolving Loan, the Term Loans and the Capital Expenditure Line.
20
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure
for Making Advances).
"Lockbox" has the meaning described in Section 2.1.8 (The Collateral
Account).
"Majority Lenders" means, at any time of determination, one or more of
the Formula Lenders holding at least fifty-one percent (51%) of the Formula Loan
Commitments, or, if the Formula Loan Commitments have been terminated pursuant
to the terms of this Agreement, one or more Formula Lenders having at least
fifty-one percent (51%) of the Revolving Loans, Term Loan A and Capital
Expenditure Loans outstanding.
"Material Adverse Effect" means either in any case or in the
aggregate, a material adverse effect on (w) the business, condition, properties,
affairs or operations of the Borrower, (x) the right or ability of the Borrower
to carry on a substantial portion of its operations as now conducted or proposed
to be conducted, (y) the value of, or the ability of the Agent or any Lender to
realize upon, the Collateral, or (z) the rights of or benefits available to the
Agent or the Lenders under any of the Financing Documents.
"Mergers" means, collectively, each of the Chatwins Merger, the King-
Way Merger and the Oneida Merger.
"Merger Documents" means, collectively, the Chatwins Merger Documents,
the King-Way Merger Documents and the Oneida Merger Documents.
"Merger Parties" means the Borrower and each of Persons merged with
and into the Borrower in connection with of any of the Mergers.
"Mortgages" means, collectively, the (a) Deed of Trust (With Power of
Sale, Assignment of Rents and Security Agreement) with respect to the Borrower's
owned property located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
(b) Open End Mortgage, Assignment of Rents, and Security Agreement with respect
to the Borrower's owned property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, (c) Open End Mortgage, Assignment of Rents, and Security Agreement with
respect to the Borrower's owned property located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ and at South Warner Street, Oneida, New York, (d) Open End Mortgage,
Assignment of Rents, and Security Agreement with respect to the Borrower's owned
property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇, (e) Open End Mortgage,
Assignment of Rents, and Security Agreement with respect to the Borrower's owned
property located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, (f) Open End
Mortgage, Assignment of Rents, and Security Agreement with respect to the
Borrower's owned property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, (g) Open End Mortgage, Assignment of Rents, and Security Agreement
with respect to the Borrower's owned property located at 2233-43 and ▇▇▇▇-▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, and (h) Open End Mortgage, Assignment of
Rents, and Security Agreement with respect to the Borrower's owned property
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and "Mortgage" means any
of them, as amended, supplemented or otherwise modified in writing from time to
time, a copy of each as in effect on the Closing Date is respectively attached
hereto as Exhibit "J-1", Exhibit "J-2", Exhibit "J-3", Exhibit "J-4", Exhibit
"J-5", Exhibit "J-6", Exhibit "J-7" and Exhibit "J-8", and is herein
incorporated by reference.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Outstandings" of any Formula Lender means, at any time, the sum
of (a) all amounts paid by such Formula Lender (other than pursuant to Section
8.5 (Indemnification)) to
21
the Agent in respect to the Revolving Loan or otherwise under this Agreement,
minus (b) all amounts paid by the Agent to such Formula Lender which are
received by the Agent and which, pursuant to this Agreement, are paid over to
such Formula Lender for application in reduction of the outstanding principal
balance of the Revolving Loan.
"Net Proceeds" means gross proceeds (cash and non-cash) or other
consideration paid to, or received by the Borrower or any of its Subsidiaries
from any Asset Disposition, net of costs of sale including, without limitation,
(i) income taxes reasonably estimated to be actually payable as a result of such
Asset Disposition within one year of the date of receipt of such proceeds (but
only to the extent actually paid within such one-year period), (ii) transfer,
sales, use and other taxes payable in connection with such Asset Disposition,
(iii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness for Borrowed Money (other than the
Obligations, except that portion of the Obligations consisting of repayments of
Revolving Loans which result from a reduction in the Borrowing Base as a result
of such Asset Disposition) that is secured by a Lien on the stock or assets in
question and that is required to be (and which is in fact) repaid under the
terms thereof as a result of such Asset Disposition, and (iv) severance
payments, employee costs, broker's commissions and reasonable fees and expenses
of counsel, accountants and other professional advisors in connection with such
Asset Disposition.
"Net Worth" means, as to the Borrower, its shareholders equity, as
applicable, (including, without limitation, preferred stock), determined in
accordance with GAAP.
"Non-Ratable Loan" means an advance under the Revolving Loan made by
BANA in accordance with the provisions of Section 2.8.2(c) (Non-Ratable Loans
and Payments).
"Note" means any Revolving Credit Note, any Term Note, or any Capital
Expenditure Line Note as the case may be, and "Notes" means collectively each
Revolving Credit Note, each Term Note, each Capital Expenditure Line Note and
any other promissory note which may from time to time evidence all or any
portion of the Obligations.
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of the Borrower to the Lenders and/or the Agent under, arising pursuant
to, in connection with and/or on account of the provisions of this Agreement,
each Note, each Security Document, and/or any of the other Financing Documents,
the Loans, and/or any of the Credit Facilities including, without limitation,
the principal of, and interest on, each Note, late charges, the Fees,
Enforcement Costs, and prepayment fees, letter of credit fees or fees charged
with respect to any guaranty of any letter of credit, and also means all other
present and future indebtedness, liabilities and obligations, whether now
existing or contemplated or hereafter arising, of the Borrower to the Agent or
its Affiliates with respect to the Letters of Credit, the Interest Rate/Currency
Protection Agreements, deposit or other cash management or credit services of
any nature whatsoever, regardless, in any such case, of whether such debts,
obligations and liabilities be direct, indirect, primary, secondary, joint,
several, joint and several, fixed or contingent; and also means any and all
renewals, extensions, substitutions, amendments, restatements and rearrangements
of any such debts, obligations and liabilities.
"Oneida Merger Documents" means collectively, any and all agreements,
documents or instruments, previously, now or hereafter executed and delivered by
Reunion Industries, Inc., Oneida Rostone Corp. or any other Person in connection
with the Oneida Merger.
22
"Oneida Merger" means the merger on the Closing Date of Oneida Rostone
Corp. with and into Reunion Industries, Inc., under the terms of the Oneida
Merger Documents.
"Outstanding Letter of Credit Obligations" has the meaning described
in Section 2.2.2 (Terms of Letters of Credit) of this Agreement.
"Patents" means collectively all of the following: (a) all United
States and foreign patents and patent applications now owned or hereafter
created or acquired by Debtor and the inventions and improvements described and
claimed therein, and all patentable inventions; (b) reissues, divisions,
continuations, renewals, extensions and continuations-in-part of any of the
foregoing; (c) all income, royalties, damages or payments now or hereafter due
and/or payable under any of the foregoing with respect to any of the foregoing,
including, without limitation, damages or payments for past or future
infringements of any of the foregoing; (d) the right to ▇▇▇ for past, present
and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.
"Patent License" means any written agreement now or hereafter in
existence granting to the Borrower any right to use any invention on which a
Patent is in existence, as may be amended, modified or supplemented from time to
time.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Asset Dispositions" means each of the Asset Dispositions
described on Schedule 6.2.8 attached hereto, but only if and to the extent (a)
the Borrower receives fair value in connection with such Asset Disposition, and
(b) the Net Proceeds of each such Asset Disposition are remitted to the Agent
for the benefit of the Agent and the Lenders and applied to the Obligations in
accordance with Section 2.7.10.
"Permitted ▇▇▇▇ and Hold Sales" means up to $1,000,000 at any one time
outstanding of sales of Inventory by the Borrower in the ordinary course of its
business with respect to which (a) the goods that are the subject matter of the
sale are located, pursuant to the Account Debtor's written instructions, on the
Borrower's premises, (b) the Borrower has received and maintains a copy of the
Account Debtor's written instruction to invoice the Account Debtor for such
sale, (c) title to the goods that are the subject matter of the sale has passed
to the Account Debtor, and (d) the goods that are the subject matter of the sale
are clearly identified as ▇▇▇▇-and-hold inventory and segregated from Borrower's
Inventory.
"Permitted Indenture Refinancing" means Indebtedness incurred to
extend, refinance, refund or renew the Indebtedness for Borrowed Money under the
Indenture (the "Refinancing Debt"), provided that:
(i) the aggregate outstanding principal amount of the Refinancing
Debt shall not at any time exceed the amount of principal, accrued interest
and premium (including any prepayment penalties) under the Indenture;
(ii) the scheduled final maturity date of the Refinancing Debt is
not earlier than March 16, 2003;
(iv) the Refinancing Debt is unsecured;
(v) the Refinancing Debt bears interest at market rates
prevailing at its date of issuance and in any event at a rate that is no
higher than the rate charged under the Indenture;
23
(vi) both at the time of and immediately after giving effect to
the incurrence of the Refinancing Debt and the retirement of the Indenture,
no Default or Event of Default shall have occurred and be continuing; and
(vii) the terms and conditions of the Refinancing Debt are no
more restrictive or adverse to Borrower or its Subsidiaries or the rights
of the Agent or any Lender under this Agreement and other Financing
Documents than those in the Indenture as in effect on the date hereof
(after giving effect to the amendment or waiver described in Section 5.1.22
of this Agreement) (including, without limitation, with respect to the
ability to incur indebtedness and grant Liens to secure indebtedness,
financial performance, and events of default).
"Permitted Liens" means (a) Liens for Taxes which are not delinquent
or which (i) are being diligently contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained on the
books of the Borrower or its Subsidiaries, (ii) the Borrower has the financial
ability to pay, with all penalties and interest, at all times without materially
and adversely affecting the Borrower, and (iii) are not, and will not be with
appropriate filing, the giving of notice and/or the passage of time, entitled to
priority over any Lien of the Agent or any of the Lenders; (b) deposits or
pledges to secure obligations under workers' compensation, social security or
similar laws, or under unemployment insurance in the ordinary course of
business; (c) Liens securing the Obligations; (d) judgment Liens to the extent
the entry of such judgment does not constitute an Event of Default under the
terms of this Agreement or result in the sale or levy of, or execution on, any
of the Collateral; (e) statutory liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than thirty (30)
days delinquent or which are being contested in good faith by appropriate
proceedings and for which reserves shall have been set aside on the Borrower's
books, all as determined by the Agent in the Good Faith exercise of its
discretion; (f) Liens against cash deposits to secure the performance of
tenders, statutory obligations, surety, customs bonds, bids, government
contracts, performance bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money); (g) deposits, made in the
ordinary course of business to secure liability to insurance carriers; (h)
Purchase Money Security Interests; provided that: the aggregate Liabilities
secured by any such Liens that may be incurred during any calendar year may not
exceed $2,500,000; (i) easements, rights-of-way, restrictions and other similar
encumbrances on real property incurred in the ordinary course of business which
are not substantial in amount and which do not in any case materially detract
from the value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower and its Subsidiaries, (j) Liens
permitted by the Mortgages, and (k) such other Liens, if any, as are set forth
on Schedule 4.1.23 attached hereto and made a part hereof.
"Permitted Uses" means (a) with respect to the Term Loans and the
initial advance on the Revolving Loan, the redemption of up to $25,000,000 of
the Senior Notes, the payment of accrued interest on the Senior Notes, the
repayment and refinancing of certain existing indebtedness of the Borrower and
of the other Merger Parties in connection with the consummation of the Mergers,
the payment of up to $100,000 of cash purchase price in connection with the
King-Way Merger, and all transaction costs related to such redemption, payments,
repayment and refinancings and to the transactions contemplated by this
Agreement, (b) with respect to subsequent advances under the Revolving Loan,
general corporate purposes other than (i) except to the extent permitted in
Section 6.2.3, payments of principal on and repurchases or redemptions of the
Senior Notes and (ii) any other purposes that are prohibited under this
Agreement, and (c) with respect to the Capital Expenditure Line, the purchase of
Equipment or the repayment of any advances under the Revolving Loan used for the
purchase of Equipment.
24
"Person" or "person" means any individual, sole proprietorship,
partnership, limited liability company, corporation (including, without
limitation, any corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), business trust, unincorporated association,
joint stock corporation, trust, joint venture or other entity or any government
or any agency or instrumentality or political subdivision thereof.
"Plan" means any pension plan which is covered by Title IV of ERISA
and in respect of which the Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3 of ERISA.
"Pledge Agreements--CPS Stock" means, collectively, (a) the Pledge and
Security Agreement executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. in favor of the Agent for
the benefit of the Agent and the Lenders with respect to his stock in Consumer
Portfolio Services, Inc., (b) the Pledge and Security Agreement executed by
Stanwich Financial Services Corp., a Rhode Island corporation, in favor of the
Agent for the benefit of the Agent and the Lenders with respect to its stock in
Consumer Portfolio Services, Inc., and (c) the Pledge and Security Agreement
executed by Stanwich Partners, Inc., a Delaware corporation, in favor of the
Agent for the benefit of the Agent and the Lenders with respect to its stock in
Consumer Portfolio Services, Inc., each to be substantially in the form attached
hereto as Exhibit "L-1" and incorporated herein by reference.
"Pledge Agreement--CPS Debt Securities" means a Pledge and Security
Agreement executed by Stanwich Financial Services Corp. in favor of the Agent
for the benefit of the Agent and the Lenders with respect to a certain Consumer
Portfolio Services, Inc. Partially Convertible Subordinated 9% Note in original
principal amount of $5,000,000, dated June 12, 1997, of Consumer Portfolio
Services, Inc., substantially in the form attached hereto as Exhibit "L-2" and
incorporated herein by reference.
"Pledge Agreements--Subsidiary Securities" means, collectively, (a)
the Pledge and Security Agreement executed by the Borrower in favor of the Agent
for the benefit of the Agent and the Lenders with respect to its stock and/or
other equity interests each of DPL Acquisition Corp., a Delaware corporation,
and ▇▇▇▇▇▇▇ Vineyards, a California corporation, (b) the Pledge and Security
Agreement executed by DPL Acquisition Corp. in favor of the Agent for the
benefit of the Agent and the Lenders with respect to its stock and/or other
equity interests in RII Investment Corp., a Delaware corporation, and (c) the
Pledge and Security Agreement executed by RII Investment Corp. in favor of the
Agent for the benefit of the Agent and the Lenders with respect to its stock
and/or other equity interests in Data Packaging Holdings Limited, an Ireland
corporation, each such agreement to be substantially in the form attached hereto
as Exhibit "L-3" and incorporated herein by reference.
"Pledge Agreements" means each Pledge Agreement--CPS Stock, each
Pledge Agreement--CPS Debt Securities and each Pledge Agreement--Subsidiary
Securities.
"Pledged Policies" means those policies of insurance described on
Exhibit "K" attached hereto and by reference made a part hereof, together with
such additional or replacement policies as shall be approved by the Agent or the
Requisite Lenders from time to time in writing, provided that no policy shall be
considered a Pledged Policy unless and until the Agent for the benefit of itself
and the Lenders has received a Collateral Assignment of Life Insurance with
respect to such policy, granting to the Agent for the benefit of itself and the
Lenders the right to access the cash surrender value thereof and otherwise in
form and substance satisfactory to the Agent, in its sole discretion.
"Post Closing Agreement" means that certain Post Closing Agreement
dated the date hereof between the Borrower and the Agent as the same may from
time to time be amended, restated, supplemented or otherwise modified.
25
"Post-Default Rate" means (a) with respect to the principal balance of
the Notes (other than the Term Loan B Notes), the respective Applicable Interest
Rates under the Notes from time to time plus two hundred (200) basis points per
annum, (b) with respect to the principal balance of the Term Loan B Notes,
seventeen percent (17%) per annum, and (c) with respect to all other
Obligations, the Applicable Interest Rates under the Revolving Credit Note from
time to time plus two hundred (200) basis points per annum.
"Prepayment" means a Revolving Loan Mandatory Prepayment, a Revolving
Loan Optional Prepayment, a Term Loan A Optional Prepayment, a Term Loan A
Mandatory Prepayment, a Term Loan B Optional Prepayment, a Term Loan B Mandatory
Prepayment, or a Capital Expenditure Line Optional Prepayment as the case may
be, and "Prepayments" mean collectively Revolving Loan Mandatory Prepayments,
Revolving Loan Optional Prepayments, Term Loan A Optional Prepayments, Term Loan
A Mandatory Prepayments, Term Loan B Optional Prepayments, Term Loan B Mandatory
Prepayments, and Capital Expenditure Optional Prepayments.
"Prime Rate" means the floating and fluctuating per annum prime
commercial lending rate of interest of the Agent, as established and publicly
declared by the Agent at any time or from time to time. The Prime Rate shall be
adjusted automatically, without notice, as of the effective date of any change
in such prime commercial lending rate. The Prime Rate does not necessarily
represent the lowest rate of interest charged by the Agent to its borrowers.
"Principals" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇. ▇▇▇▇▇, or any trust or partnership established for estate planning purposes
of which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇, or any
Immediate Family Member of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇.
▇▇▇▇▇ is a beneficiary (and over which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or Stanwich Partners, Inc. retains sole voting power and
control).
"Pro Rata Share" means (a) at any time and as to any Formula Lender,
the Formula Loan Pro Rata Share, and (b) at any time and as to any Term Loan B
Lender, the Term Loan B Pro Rata Share.
"Proforma Balance Sheet" has the meaning described in Section 4.1.12
(Proforma Financial Statements) below.
"Proforma Financial Projections" has the meaning described in Section
4.1.12 (Proforma Financial Statements) below.
"Purchase Money Security Interest" means the interest of a lessor
under a Capital Lease and also means a purchase money security interest,
attaching at the time of acquisition, in Equipment acquired after the date of
this Agreement; provided, however, that (i) the indebtedness secured by any such
security interest shall not exceed one hundred percent (100%) of the cost of the
Equipment covered, (ii) each such security interest shall attach only to the
Equipment so acquired for the purchase money for that Equipment, and (iii) the
acquisition to which any such security interest relates shall not result in a
Default or Event of Default under this Agreement.
"Receivable" means the Borrower's now owned and hereafter owned,
acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments; and "Receivables" means all of the Borrower's now or hereafter
owned, acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments, and all cash and non-cash proceeds and products thereof.
26
"Records" means all of Borrower's present and future books of account
of every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to any of the foregoing or any
account debtor, together with the tapes, disks, diskettes or other data and
software storage media and devices, file cabinets or containers in or on which
the foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person)
"Refinanced Indenture" means the indenture or financing agreement that
would replace the Indenture in connection with a Permitted Indenture
Refinancing.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder.
"Requisite Lenders" means, at any time of determination, one or more
of the Formula Lenders holding at least sixty-six and two-thirds percent (66-
2/3%) of the Formula Loan Commitments, or, if the Formula Loan Commitments have
been terminated pursuant to the terms of this Agreement, one or more Formula
Lenders having at least sixty-six and two-thirds percent (66-2/3%) of the
Revolving Credit Loans, Term Loan A, and Capital Expenditure Line Loans
outstanding at such time.
"Reserve Amount" shall mean an amount determined by Agent, in its sole
discretion, as a reserve against Collateral values and potential or anticipated
obligations of the Borrower, including, without limitation, (i) tax liabilities
and other obligations owing to governmental entities including all amounts
referred to in Section 6.1.9 hereof, (ii) litigation liabilities, (iii) the
anticipated costs and expenses relating to the liquidation of Collateral, (iv)
unpaid sales taxes, (vi) those reserve amounts as required to be held as
reserves under GAAP, (vii) liabilities and other obligations owing by the
Borrower to any lessor of real property leased by the Borrower or to any
warehouseman, (viii) the Environmental Compliance Reserve, and (ix) all other
reserves which the Agent deems necessary in the exercise of its reasonable
credit judgment to maintain with respect to the Borrower's account, including,
without limitation, reserves against Eligible Inventory for shrinkage and
valuation and reserves for any amounts which the Lender may be obligated to pay
in the future for the account of the Borrower.
"Reserve Percentage" means, at any time, the then current maximum rate
(expressed as a decimal) for which reserves (including any basic, supplemental,
marginal and emergency reserves) are required to be maintained by member banks
of the Federal Reserve System under Regulation D of the Board of Governors of
the Federal Reserve System against "Eurocurrency liabilities", as that term is
defined in Regulation D. The LIBOR Rate shall be adjusted automatically on and
as of the effective date of any change in the Reserve Percentage.
"Responsible Officer" means the Borrower's chief executive officer,
president or any vice president.
"Revolving Credit Availability" means, as at any time, an amount equal
to (a) the least of (i) the Revolving Credit Committed Amount, (ii) the then
Borrowing Base minus the Reserve Amount then in effect, or (iii) the Indenture
Maximum Amount, minus (b) the then aggregate outstanding principal balance of
the Revolving Loan, minus (c) the then current stated amount of all outstanding
Letters of Credit.
"Revolving Credit Commitment" means the agreement of a Formula Lender
relating to the making of the Revolving Loan and advances thereunder subject to
and in accordance with the provisions of this Agreement, and "Revolving Credit
Commitments" means the collective reference to the Revolving Credit Commitment
of each Formula Lender.
27
"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" has the meaning described in
Section 2.1.1 (Revolving Credit Facility).
"Revolving Credit Expiration Date" means March 16, 2003, or any
anniversary thereof to the extent the provisions of the immediately succeeding
sentence shall have been complied with. Subject to continued credit approval by
the Agent and the Formula Lenders, the Revolving Credit Expiration Date shall be
extended beyond March 16, 2003, for successive one (1) year periods, unless any
of the Formula Lenders shall have notified the Borrower in writing or the
Borrower shall have notified the Agent in writing, by no later than January 16,
2003, or January 16 of the applicable succeeding calendar year, of its desire to
terminate this Agreement; provided, however, that in no event shall the
Revolving Credit Expiration Date be extended to a date beyond March 16, 2010.
"Revolving Credit Facility" means the facility established by the
Formula Lenders pursuant to Section 2.1 (Revolving Credit Facility) of this
Agreement.
"Revolving Credit Note" and "Revolving Credit Notes" have the meaning
described in Section 2.1.5 (Revolving Credit Note).
"Revolving Credit Pro Rata Share" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Termination Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the Revolving Credit
Commitments are terminated pursuant to Section 7.2 (Remedies) or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line
Fees" have the meanings described in Section 2.1.10 (Revolving Credit Unused
Line Fee).
"Revolving Loan" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Loan Account" has the meaning described in Section 2.1.9
(Revolving Loan Account).
"Revolving Loan Mandatory Prepayment" and "Revolving Loan Mandatory
Prepayments" have the meanings described in Section 2.1.6 (Mandatory Prepayments
of Revolving Loan).
"Revolving Loan Optional Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.7 (Optional Prepayment
of Revolving Loan).
"Securities" means the collective reference to each and every
certificated or uncertificated security which constitutes a "security" or an
"investment security" under the provisions of Article 8 of the Uniform
Commercial Code and to each and every "investment property" under the provisions
of Article 9 of the Uniform Commercial Code (if that definition is included in
that Article), and all proceeds (cash and non-cash) of the foregoing.
"Security Documents" means collectively any assignment, pledge
agreement, security agreement, mortgage, deed of trust, deed to secure debt,
financing statement and any
28
similar instrument, document or agreement under or pursuant to which a Lien is
now or hereafter granted to, or for the benefit of, the Agent and/or the Lenders
on any real or personal property of any Person to secure all or any portion of
the Obligations, all as the same may from time to time be amended, restated,
supplemented or otherwise modified, including, without limitation, this
Agreement, the Collateral Assignments of Life Insurance, the Pledge Agreements,
the Landlord Waivers, the Bailee Waivers, and the Mortgages.
"Security Procedures" means the rules, policies and procedures adopted
and implemented by the Agent and its Affiliates at any time and from time to
time with respect to security procedures and measures relating to electronic
funds transfers, all as the same may be amended, restated, supplemented,
terminated, or otherwise modified at any time and from time to time by the Agent
in its sole and absolute discretion.
"Senior Notes" means the 13% Senior Notes due 2003 and the 13% Senior
Exchange Notes due 2003 issued pursuant to the Indenture in the aggregate
principal amount of Fifty Million Dollars ($50,000,000).
"Settlement Date" means each Business Day after the Closing Date
selected by the Agent in its sole discretion subject to and in accordance with
the provisions of Section 2.8.2 (Settlement Procedures as to Revolving Loan) as
of which a Settlement Report is delivered by the Agent and on which settlement
is to be made among the Formula Lenders in accordance with the provisions of
Section 2.8.2 (Settlement Procedures as to Revolving Loan).
"Settlement Report" means each report prepared by the Agent and
delivered to each Formula Lender and setting forth, among other things, as of
the Settlement Date indicated thereon and as of the next preceding Settlement
Date, the aggregate outstanding principal balance of the Revolving Loan, each
Formula Lender's Revolving Credit Pro Rata Share thereof, each Formula Lender's
Net Outstandings and all Non-Ratable Loans made, and all payments of principal,
interest and Fees received by the Agent from the Borrower during the period
beginning on such next preceding Settlement Date and ending on such Settlement
Date.
"State" means the State of Ohio.
"Stanwich Subordination Agreement" means a Subordination Agreement
executed by Stanwich Financial Services Corp. with respect to all indebtedness
owing from the Borrower to Stanwich Financial Services Corp., substantially in
the form attached hereto as Exhibit "M-2" and incorporated herein by reference.
"Subordinated Indebtedness" means all Indebtedness incurred at any
time by the Borrower, which is in amounts, subject to repayment terms, and
subordinated to the Obligations, as set forth in one, or more written
agreements, all in form and substance satisfactory to the Agent and the
Requisite Lenders.
"Subsidiary" means any corporation, limited liability company,
partnership, joint venture, unincorporated association or other entity, the
majority of the voting shares, units or ownership interests of which at the time
are owned directly by the Borrower and/or by one or more Subsidiaries of the
Borrower.
"Supporting Letter of Credit" has the meaning described in Section
2.2.9 (Supporting Letter of Credit; Cash Collateral).
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental
29
Authority on the Borrower or any of its properties or assets or any part thereof
or in respect of any of its or their franchises, businesses, income or profits.
"Term Loan" means any of Term Loan A or Term Loan B and "Term Loans"
means the collective reference to Term Loan A and Term Loan B.
"Term Loan A" has the meaning described in Section 2.3.1 (Term Loan A
Commitments).
"Term Loan A Commitment" and "Term Loan A Commitments" have the
meanings described in Section 2.3.1 (Term Loan A Commitments).
"Term Loan A Committed Amount" has the meaning described in Section
2.3.1 (Term Loan A Commitments).
"Term Loan A Facility" means the term loan facility established by the
Formula Lenders pursuant to Section 2.3 (Term Loan A Facility).
"Term Loan A Installment Payment Amount" means the following:
Term Loan A Installment Payment Date Term Loan A Installment Payment Amount
April 1, 2000, through February 1, 2007 $307,143.00
------------------------------------------------------------------------------------------------------
March 1, 2007 $307,131.00
------------------------------------------------------------------------------------------------------
"Term Loan A Installment Payment Date" means the first day of each
calendar month commencing April 1, 2000.
"Term Loan A Maturity Date" means the earlier of March 1, 2007, or the
Revolving Credit Termination Date.
"Term Loan A Mandatory Prepayment" and "Term Loan A Mandatory
Prepayments" have the meanings described in Section 2.3.5 (Mandatory Prepayments
of Term Loan A).
"Term Loan A Note" and "Term Loan A Notes" have the meaning described
in Section 2.3.2 (The Term Loan A Notes).
"Term Loan A Optional Prepayment" and "Term Loan A Optional
Prepayments" have the meanings described in Section 2.3.4 (Optional Prepayments
of Term Loan A).
"Term Loan B" has the meaning described in Section 2.4.1 (Term Loan B
Commitments).
"Term Loan B Commitment" and "Term Loan B Commitments" have the
meanings described in Section 2.4.1 (Term Loan B Commitments).
"Term Loan B Committed Amount" has the meaning described in Section
2.4.1 (Term Loan B Commitments).
30
"Term Loan B Facility" means the term loan facility established by the
Term Loan B Lenders pursuant to Section 2.4 (Term Loan B Facility).
"Term Loan B Installment Payment Amount" means the following:
Term Loan B Installment Payment Date Term Loan B Installment Payment Amount
April 1, 2000, through February 1, 2003 $138,889.00
------------------------------------------------------------------------------------------------------
March 1, 2003 $138,885.00
------------------------------------------------------------------------------------------------------
"Term Loan B Installment Payment Date" means the first day of each
calendar month commencing April 1, 2000.
"Term Loan B Lender" means each Lender with any Term Loan B
Commitment.
"Term Loan B Maturity Date" means the earlier of March 1, 2003, or the
Revolving Credit Termination Date.
"Term Loan B Mandatory Prepayment" and "Term Loan B Mandatory
Prepayments" have the meanings described in Section 2.4.5 (Mandatory Prepayments
of Term Loan B).
"Term Loan B Note" and "Term Loan B Notes" have the meaning described
in Section 2.4.2 (The Term Loan B Notes).
"Term Loan B Optional Prepayment" and "Term Loan B Optional
Prepayments" have the meanings described in Section 2.4.4 (Optional Prepayments
of Term Loan B).
"Term Loan B Pro Rata Share" means, at any time and as to any Term
Loan B Lender, the percentage derived by dividing the unpaid principal amount of
each Term Loan B owing to that Term Loan B Lender by the aggregate unpaid
principal amount of all Term Loan B then outstanding.
"Term Note" means a Term Loan A Note or a Term Loan B Note, and "Term
Notes" means the collective reference to all Term Loan A Notes and Term Loan B
Notes.
"Testing Period" means (a) with respect to any date of determination
occurring on the Borrower's June 30, 2000 fiscal quarter end, the period
commencing on April 1, 2000 and continuing through June 30, 2000, (b) with
respect to any date of determination occurring on the Borrower's September 30,
2000 fiscal quarter end, the period commencing on April 1, 2000 and continuing
through September 30, 2000, (c) with respect to any date of determination
occurring on the Borrower's December 31, 2000 fiscal year end, the period
commencing on April 1, 2000 and continuing through December 31, 2000, and (d)
from and after December 31, 2000, with respect to any date of determination, a
single period consisting of the four consecutive fiscal quarters of the Borrower
then last ended (whether or not such quarters are all within the same fiscal
year).
"Total Revolving Credit Committed Amount" has the meaning described in
Section 2.1.1 (Revolving Credit Facility).
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"Total Term Loan A Committed Amount" has the meaning described in
Section 2.3.1 (Term Loan A Commitments).
"Total Term Loan B Committed Amount" has the meaning described in
Section 2.4.1 (Term Loan B Commitments).
"Trademarks" means collectively all of the following now owned or
hereafter created or acquired by the Borrower:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
logos, other business identifiers, prints and labels in which any of the
foregoing have appeared or appear, all registrations and recordings thereof,
and all applications in connection therewith including registrations,
recordings and applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof
or any other country or any political subdivision thereof;
(b) all reissues, extensions or renewals thereof;
(c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or with respect to any of the
foregoing including damages or payments for past or future infringements of
any of the foregoing;
(d) the right to ▇▇▇ for past, present and future infringements of any
of the foregoing;
(e) all rights corresponding to any of the foregoing throughout the
world; and
(f) all goodwill associated with and symbolized by any of the
foregoing.
"Trademark License" means any written agreement now or hereafter in
existence granting to the Borrower any right to use any Trademark, as may be
amended, modified or supplemented from time to time.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.
"United States Dollar", "Dollar", "Dollars" and "$" means the lawful
money of the United States of America.
"Wholly Owned Subsidiary" means any Domestic Subsidiary, all the
shares of stock of all classes (or, with respect to non-corporate entities,
equity interests) of which (other than directors' qualifying shares) at the time
are owned directly or indirectly by the Borrower and/or by one or more Wholly
Owned Subsidiaries of the Borrower.
"Wire Transfer Procedures" means the rules, policies and procedures
adopted and implemented by the Agent and its Affiliates at any time and from
time to time with respect to electronic funds transfers to or on behalf of the
Borrower, including, without limitation, the Security Procedures, all as the
same may be amended, restated, supplemented, terminated or otherwise modified at
any time and from time to time by the Agent in its sole and absolute discretion.
Section 1.2 Accounting Terms and Other Definitional Provisions.
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined
32
herein, and accounting terms only partly defined herein, to the extent not
defined, shall have the respective meanings given to them under GAAP, as
consistently applied to the applicable Person. Unless otherwise defined herein,
all terms used herein which are defined by the Uniform Commercial Code shall
have the same meanings as assigned to them by the Uniform Commercial Code unless
and to the extent varied by this Agreement. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, subsection, schedule and exhibit references are
references to articles, sections or subsections of, or schedules or exhibits to,
as the case may be, this Agreement unless otherwise specified. As used herein,
the singular number shall include the plural, the plural the singular and the
use of the masculine, feminine or neuter gender shall include all genders, as
the context may require. Reference to any one or more of the Financing Documents
shall mean the same as the foregoing may from time to time be amended, restated,
substituted, extended, renewed, supplemented or otherwise modified.
ARTICLE 2 THE CREDIT FACILITIES
Section 2.1 The Revolving Credit Facility.
2.1.1 Revolving Credit Facility.
Subject to and upon the provisions of this Agreement, the Formula
Lenders collectively, but severally, establish a revolving credit facility in
favor of the Borrower. The aggregate of all advances under the Revolving Credit
Facility are sometimes referred to in this Agreement collectively as the
"Revolving Loan."
Each Formula Lender's commitment to make advances under the Revolving
Credit Facility to the Borrower is set forth opposite each Formula Lender's name
on Schedule 2.1.1 and is herein called such Formula Lender's "Revolving Credit
Committed Amount." The total of the Formula Lenders' Revolving Credit Committed
Amounts is $39,000,000 and is herein called the "Total Revolving Credit
Committed Amount". The proportionate share of the Total Revolving Credit
Committed Amount set forth opposite each Formula Lender's name on the signature
page is herein called such Formula Lender's "Revolving Credit Pro Rata Share."
The obligation of each Formula Lender to make advances under the Revolving
Credit Facility is several and is limited to its Revolving Credit Committed
Amount, and such obligation of each Formula Lender is herein called its
"Revolving Credit Commitment" and the Revolving Credit Commitment of each of the
Formula Lenders is collectively referred to as the "Revolving Credit
Commitments."
Neither the Agent, the Term Loan B Lenders, nor any of the Formula Lenders
shall be responsible for the Revolving Credit Commitment of any other Formula
Lender, nor will the failure of any Formula Lender to perform its obligations
under its Revolving Credit Commitment in any way relieve any other Formula
Lender from performing its obligations under its Revolving Credit Commitment.
During the Revolving Credit Commitment Period, the Borrower may request
advances under the Revolving Credit Facility in accordance with the provisions
of this Agreement; provided that after giving effect to the Borrower's request,
the outstanding principal balance of each Formula Lender's Pro Rata Share of the
Revolving Loan and the Letter of Credit Obligations would not exceed an amount
equal to the lesser of (i) such Formula Lender's Revolving Credit Committed
Amount, (ii) such Formula Lender's Pro Rata Share of the then most current
Borrowing Base minus such Formula Lender's Pro Rata Share of the Reserve Amount
then in effect, or (iii) such Formula Lender's Pro Rata Share of the Indenture
Maximum Amount.
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2.1.2 Procedure for Making Advances Under the Revolving Loan; Lender
Protection Loans.
The Borrower may borrow, pay, prepay and reborrow under the Revolving
Credit Facility on any Business Day. Advances under the Revolving Loan shall be
deposited to a demand deposit account of the Borrower with the Agent or shall be
otherwise applied as directed by the Borrower, which direction the Agent may
require to be in writing. Not later than 12:00 noon (Chicago, Illinois Time) on
the date of the requested borrowing, the Borrower shall give the Agent oral or
written notice (a "Loan Notice") of the amount and (if requested by the Agent)
the purpose of the requested borrowing. Any oral Loan Notice shall be confirmed
in writing by the Borrower within three (3) Business Days after the making of
the requested advance under the Revolving Loan. Each Loan Notice shall be
irrevocable. Subject to Section 2.8, upon receipt of such Loan Notice, the Agent
shall promptly notify each Formula Lender of the amount of each advance to be
made by such Formula Lender on the requested borrowing date under such Formula
Lender's Revolving Credit Commitment.
Subject to Section 2.8, not later than 2:00 p.m. (Chicago, Illinois Time)
on each requested borrowing date for the making of advances under the Revolving
Loan, each Formula Lender shall, if it has received timely notice from the Agent
of the Borrower's request for such advances, make available to the Agent, in
funds immediately available to the Agent at the Agent's office as specified by
the Agent from time to time, such Formula Lender's Revolving Credit Pro Rata
Share of the advances to be made on such date.
In addition, the Borrower hereby irrevocably authorizes the Formula Lenders
at any time without further request from or notice to the Borrower, to make
advances under the Revolving Loan which the Agent, in the Good Faith exercise of
its reasonable discretion, deems necessary or appropriate to protect the rights
and benefits of the Agent and/or any or all of the Lenders under this Agreement,
including, without limitation, advances under the Revolving Loan to cover debit
balances in the Revolving Loan Account, principal of, and/or interest on, any
Loan, the Obligations (including any Letter of Credit Obligations), and/or
Enforcement Costs, prior to, on, or after the termination of other advances
under this Agreement, regardless of whether the outstanding principal amount of
the Revolving Loan which the Formula Lenders may advance hereunder exceeds the
Total Revolving Credit Committed Amount.
2.1.3 Borrowing Base.
As used in this Agreement, the term "Borrowing Base" means at any
time, an amount equal to the aggregate of:
(a) eighty-five percent (85%) of the amount of Eligible Receivables,
plus
(b) the lesser of (i) Fifteen Million Dollars ($15,000,000) or (ii)
the sum of (y) sixty percent (60%) of the amount of Eligible Inventory
consisting of finished goods and raw materials other than Inserts, plus (z)
the lesser of (A) Six Hundred Fifty Thousand Dollars ($650,000) or (B)
forty percent (40%) of the amount of Eligible Inventory consisting of
Inserts, plus
(c) the lesser of (i) One Million Four Hundred Thousand Dollars
($1,400,000) or (ii) one hundred percent (100%) of the cash surrender value
of the Pledged Policies, as determined by the Agent, in its Good Faith
discretion, plus
(d) an amount equal to (i) during the period commencing on the Closing
Date and continuing through the earlier to occur of (A) April 1, 2000, and
(B) the date on which the cash deposited with the Hanjung Escrow Agent is
received by the Agent for the
34
benefit of itself and the Lenders, the Hanjung Escrow Amount, and (ii) at
all times thereafter, Zero Dollars.
The Borrowing Base shall be computed based on the Borrowing Base Report
most recently delivered to the Agent in conformity with this Agreement. In the
event the Borrower fails to furnish a Borrowing Base Report required by Section
2.1.4 (Borrowing Base Report) below, or in the event the Agent determines, in
its reasonable discretion, that a Borrowing Base Report is no longer accurate,
the Agent may direct the Formula Lenders to suspend the making of or limit
advances under the Revolving Credit Facility. The Borrowing Base shall be
subject to reduction by amounts credited to the Collateral Account since the
date of the most recent Borrowing Base Report and by the amount of any
Receivable or any Inventory which was included in the Borrowing Base but which
the Agent determines, in its reasonable discretion, fails to meet the respective
criteria applicable from time to time for Eligible Receivables or Eligible
Inventory.
If at any time the total of the aggregate principal amount of the Revolving
Loan plus the Outstanding Letter of Credit Obligations exceeds an amount equal
to the least of (i) the Borrowing Base minus the Reserve Amount (if then in
effect), (ii) the Indenture Maximum Amount, or (iii) the Revolving Credit
Committed Amount, a borrowing base deficiency ("Borrowing Base Deficiency")
shall exist. Each time a Borrowing Base Deficiency exists, the Borrower, at the
sole and absolute discretion of the Agent or the Majority Lenders exercised from
time to time, shall pay the Borrowing Base Deficiency ON DEMAND to the Agent,
for the benefit of itself and the Formula Lenders.
Without implying any limitation on the Agent's discretion with respect to
the Borrowing Base, the criteria for Eligible Receivables and for Eligible
Inventory contained in the respective definitions of Eligible Receivables and of
Eligible Inventory are in part based upon the business operations of the
Borrower existing on or about the Closing Date and upon information and records
furnished to the Agent by the Borrower. If at any time or from time to time
hereafter, the business operations of the Borrower change or such information
and records furnished to the Agent are incorrect or misleading, the Agent in its
Good Faith discretion may at any time and from time to time during the duration
of this Agreement change such criteria or add new criteria. The Agent may
communicate such changed or additional criteria to the Borrower from time to
time either orally or in writing.
2.1.4 Borrowing Base Report.
The Borrower shall furnish to the Agent no less frequently than weekly
and at such other times as may be requested by the Agent a report of the
Borrowing Base (each a "Borrowing Base Report"; collectively, the "Borrowing
Base Reports") in the form attached hereto as Exhibit "A" and made a part
hereof, appropriately completed and duly signed. Each Borrowing Base Report
shall be as of a date that is not more than five (5) Business Days before the
delivery date of such Borrowing Base Report and shall contain the amount and
payments on the Receivables, the value of Inventory, and the calculations of the
Borrowing Base and the Indenture Maximum Amount, all in such detail, and
accompanied by such supporting and other information, as the Agent may from time
to time reasonably request. Upon the Agent's request and upon the creation of
any Receivables, or at such intervals as the Agent may require, the Borrower
shall provide the Agent with such further schedules, documents and/or
information regarding the Receivables and the Inventory as the Agent may
reasonably require. The items to be provided under this Section 2.1.4 shall be
in form satisfactory to the Agent, and certified as true and correct by a
Responsible Officer of the Borrower, and delivered to the Agent from time to
time solely for the Agent's convenience in maintaining records of the
Collateral. The Borrower's failure to deliver any of such items to the Agent
shall not affect, terminate, modify, or otherwise limit the Liens of the Lenders
or the Agent in the Collateral.
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2.1.5 Revolving Credit Notes.
The obligation of the Borrower to pay each Formula Lender's Revolving
Credit Pro Rata Share of the Revolving Loan, with interest, shall be evidenced
by a series of promissory notes executed by the Borrower (as from time to time
extended, amended, restated, supplemented, replaced or otherwise modified,
individually, the "Revolving Credit Note", and collectively, the "Revolving
Credit Notes") substantially in the form of Exhibit "B" attached hereto and made
a part hereof, with appropriate insertions. Each Formula Lender's Revolving
Credit Note shall be dated as of the Closing Date, shall be payable to the order
of such Formula Lender at the times provided in such Revolving Credit Note, and
shall be in the principal amount of such Formula Lender's Revolving Credit
Committed Amount. The Borrower acknowledges and agrees that, if the outstanding
principal balance of the Revolving Loan outstanding from time to time exceeds
the aggregate face amount of the Revolving Credit Notes, the excess shall bear
interest at the rates provided from time to time for advances under the
Revolving Loan evidenced by the Revolving Credit Notes and shall be payable,
with accrued interest, ON DEMAND. The Revolving Credit Notes shall not operate
as a novation of any of the Obligations or nullify, discharge, or release any
such Obligations or the continuing contractual relationship of the parties
hereto in accordance with the provisions of this Agreement.
2.1.6 Mandatory Prepayments of Revolving Loan.
The Borrower shall make the mandatory prepayments (each a "Revolving
Loan Mandatory Prepayment" and collectively, the "Revolving Loan Mandatory
Prepayments") of the Revolving Loan at any time and from time to time in such
amounts requested by the Agent or the Majority Lenders pursuant to Section 2.1.3
(Borrowing Base) of this Agreement in order to cover any Borrowing Base
Deficiency and in order to cover any deficiency under Section 2.1.12 (Required
Availability under the Revolving Credit Facility).
2.1.7 Optional Prepayments of Revolving Loan.
The Borrower shall have the option at any time and from time to time
to prepay (each a "Revolving Loan Optional Prepayment" and collectively the
"Revolving Loan Optional Prepayments") the Revolving Loan, in whole or in part
without premium or penalty (other than any amounts due in respect thereof under
Section 2.1.11 and Section 2.6.4 hereof).
2.1.8 The Collateral Account.
The Borrower shall deposit, or cause to be deposited, all Items of
Payment to a bank account designated by the Agent and from which the Agent alone
has power of access and withdrawal (the "Collateral Account"). Each deposit
shall be made not later than the next Business Day after the date of receipt of
the Items of Payment. The Items of Payment shall be deposited in precisely the
form received, except for the endorsements of the Borrower where necessary to
permit the collection of any such Items of Payment, which endorsement the
Borrower hereby agrees to make. In the event the Borrower fails to do so, the
Borrower hereby authorizes the Agent to make the endorsement in the name of the
Borrower. Prior to such a deposit, the Borrower shall not commingle any Items
of Payment with the Borrower's other funds or property, but will hold them
separate and apart in trust and for the account of the Agent for the ratable
benefit of the Formula Lenders and the Agent.
In addition, the Borrower shall direct the mailing of all Items of Payment
from its Account Debtors that customarily mail Items of Payment to one or more
post-office boxes designated by the Agent, or to such other additional or
replacement post-office boxes pursuant to the request of the Agent from time to
time (collectively, the "Lockbox"). The Agent shall have unrestricted and
exclusive access to the Lockbox. If and to the extent any Account Debtors of
36
the Borrower customarily send Items of Payment by wire transfer, the Borrower
will instruct such Account Debtors to direct such wire transfers to the
Collateral Account.
The Borrower hereby authorizes the Agent to inspect all Items of Payment,
endorse all Items of Payment in the name of the Borrower, and deposit such Items
of Payment in the Collateral Account. The Agent reserves the right, to provide
to the Collateral Account credit prior to final collection of an Item of Payment
and to disallow credit for any Item of Payment which to the Agent determines is
not collectible. In the event Items of Payment are returned to the Agent for
any reason whatsoever, the Agent may forward such Items of Payment a second
time. Any returned Items of Payment shall be charged back to the Collateral
Account, the Revolving Loan Account, or other account, as appropriate.
Except after the occurrence and during the continuance of an Event of
Default, as of the Business Day of receipt by the Agent, the Agent will apply
the whole or any part of the collected funds credited to the Collateral Account
first against the Revolving Loan and thereafter against any of the Obligations
then due, the order and method of such application to be in the sole discretion
of the Agent. Following the occurrence and during the continuance of an Event
of Default, as of the Business Day of receipt by the Agent, the Agent may apply
the whole or any part of the collected funds credited to the Collateral Account
against any of the Obligations (whether or not then due) in such order and
manner as shall be determined by the Agent in its sole discretion. In
consideration for the Agent's agreement to credit the Collateral Account as of
the Business Day on which the Agent receives Items of Payment and to reimburse
the Agent for the cost of delays in the collection and clearance of computing
interest on the Obligations, all Items of Payment shall be deemed received by
the Agent one (1) Business Day after the Agent's actual receipt thereof, which
amount the Agent may calculate on an average monthly basis. Any resulting
increase in the amount of interest payable by the Borrower shall be a part of
the Obligations owing to the Agent, shall be for the sole and exclusive benefit
of the Agent and shall not be shared with or payable to any of the Lenders.
2.1.9 Revolving Loan Account.
The Agent will establish and maintain a loan account on its books (the
"Revolving Loan Account") to which the Agent will (a) debit (i) the principal
amount of each advance under the Revolving Loan made by the Formula Lenders
hereunder as of the date made, (ii) the amount of any interest accrued on the
Revolving Loan as and when due, and (iii) any other amounts due and payable by
the Borrower to the Agent and/or Lenders from time to time under the provisions
of this Agreement in connection with the Revolving Loan and the other
Obligations, including, without limitation, Enforcement Costs, Fees, late
charges, and service, collection and audit fees and (b) credit all payments made
by the Borrower to the Agent on account of the Revolving Loan, subject to
Section 2.1.8, as of the date made including, without limitation, subject to
Section 2.1.8, funds credited to the Revolving Loan Account from the Collateral
Account. The Agent may debit the Revolving Loan Account for the amount of any
Item of Payment which is returned to the Agent unpaid. All credit entries to
the Revolving Loan Account are conditional and shall be readjusted as of the
date made if final and indefeasible payment is not received by the Agent in cash
or solvent credits. The Borrower hereby promises to pay to the order of the
Agent for the benefit of the Lenders, on the Revolving Credit Termination Date,
an amount equal to the excess, if any, of all debit entries over all credit
entries recorded in the Revolving Loan Accounts under the provisions of this
Agreement. Any and all periodic or other statements or reconciliations, and the
information contained in those statements or reconciliations, of the Revolving
Loan Account shall be final, binding and conclusive upon the Borrower in all
respects, absent manifest error, and shall constitute an account stated between
the Agent, the Lenders and the Borrower unless the Agent receives specific
written objection thereto from the Borrower and/or any Lender within thirty (30)
days after such statement or reconciliation shall have been sent by the Agent.
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2.1.10 Revolving Credit Unused Line Fee.
The Borrower shall pay to the Agent for the ratable benefit of the
Formula Lenders a monthly revolving credit facility fee (collectively, the
"Revolving Credit Unused Line Fees" and individually, a "Revolving Credit Unused
Line Fee") in an amount equal to one-half of one percent (0.5%) per annum of an
amount equal to (a) the average daily unused and undisbursed portion of the
Total Revolving Credit Committed Amount less (b) the average aggregate face
amount of all Letters of Credit outstanding during the period in question in
effect from time to time accruing during each calendar month, calculated in
arrears. The accrued and unpaid portion of the Revolving Credit Unused Line Fee
shall be paid by the Borrower to the Agent on the first day of each month,
commencing on the first such date following the date hereof, and on the
Revolving Credit Termination Date.
2.1.11 Early Termination Fee.
In the event of the termination by, or on behalf of, the Borrower, of
the Commitments (other than a termination of the Commitments in connection with
or as a result of the acceleration of the Obligations under Section 7.2,
(Remedies) unless such acceleration arises from or in connection with a bad
faith failure by the Borrower to act in accordance with its Obligations under
this Agreement or the other Financing Documents), or in the event of the payment
in full of the aggregate outstanding principal amount of the Loans, in each case
on or prior to the second anniversary of the Closing Date, the Borrower shall
pay to the Agent for the ratable benefit of the Lenders a fee (the "Early
Termination Fee") in the amount of (a) two percent (2.0%) of the aggregate
Committed Amounts of all Lenders if such termination occurs on or prior to the
first anniversary of the Closing Date, and (b) one percent (1.0%) of the
aggregate Committed Amounts of all Lenders if such termination occurs during the
period after the first anniversary of the Closing Date, but on or prior to the
second anniversary of the Closing Date. Payment of the Loans in whole or in
part by or on behalf of the Borrower, by court order or otherwise, following and
as a result of the institution of any bankruptcy proceeding by or against the
Borrower, shall be deemed to be a prepayment of the Loans subject to the Early
Termination Fee provided in this subsection.
2.1.12 Required Availability under the Revolving Credit Facility.
(a) On the Closing Date and at all times thereafter, the aggregate
outstanding principal amount of the Revolving Loan and the current stated
amounts of the Letters of Credit shall not exceed an amount equal to the least
of (A) the Borrowing Base minus the Reserve Amount, (B) the Indenture Maximum
Amount, or (C) the Total Revolving Credit Committed Amount, such amount to be
determined after application of the Permitted Uses of the Revolving Loan
required to be made on the Closing Date, the amount of the costs relating to the
closing of this Agreement (including, without limitation, applicable Fees,
recording costs, recording taxes, and the fees and expenses of the Borrower's
and the Agent's and each Lender's professionals).
(b) The Borrower shall make a Revolving Loan Mandatory Prepayment
pursuant to the provisions of Section 2.1.6 to the extent necessary to achieve
compliance with this Section.
2.1.13 Right of Agent to Demand Payment and Terminate Revolving Credit
Facility.
Notwithstanding any other provision of this Agreement, the Revolving
Credit Notes or any of the other Financing Documents, following and during the
continuance of an Event of Default, the Agent, on behalf of the Formula Lenders,
may at any time, in its sole and
38
absolute discretion, and shall at the direction of the Requisite Lenders, demand
payment of the Revolving Loan in whole or in part and/or terminate, suspend or
limit the Revolving Credit Commitments. Upon termination of the Revolving Credit
Facility, the outstanding principal balance under the Revolving Loan, and any
accrued and unpaid interest thereon, shall be immediately due and payable, and
the Formula Lenders shall not make any further advances under the Revolving
Loan, unless all Formula Lenders elect to do so in the exercise of their sole
and absolute discretion.
Section 2.2 The Letter of Credit Facility.
2.2.1 Letters of Credit.
Subject to the terms and conditions of this Agreement, and in reliance
upon the representations and warranties of the Borrower herein set forth, the
Agent agrees (i) to issue or take reasonable steps to cause to be issued for the
account of the Borrower one or more commercial/documentary and standby letters
of credit (as the same may from time to time be amended, supplemented or
otherwise modified, each a "Letter of Credit" and collectively, the "Letters of
Credit") and (ii) to provide credit support or other enhancement to banks
acceptable to Agent, which issue Letters of Credit for the account of the
Borrower (any such credit support or enhancement being herein referred to as a
"Credit Support") in accordance with this Section 2.2 from time to time from the
Closing Date until the Business Day preceding the Revolving Credit Termination
Date. The Borrower will not be entitled to obtain a Letter of Credit unless (a)
the Borrower is then able to obtain a Revolving Loan from the Formula Lenders in
an amount not less than the proposed face amount of the Letter of Credit
requested by the Borrower, and (b) the sum of the then Outstanding Letter of
Credit Obligations (including the amount of the requested Letter of Credit) does
not exceed Ten Million Dollars ($10,000,000).
2.2.2 Terms of Letters of Credit.
The Agent shall not have any obligation to take steps to cause to be
issued any Letter of Credit or to provide Credit Support for any Letter of
Credit at any time if such Letter of Credit has an expiration date later than
thirty (30) days prior to the Revolving Credit Expiration Date or more than
twelve (12) months from the date of issuance. In addition to being subject to
the satisfaction of the applicable conditions precedent contained in ARTICLE 5
hereof, the obligation of the Agent to take reasonable steps to cause to be
issued any Letter of Credit or to provide Credit Support for any Letter of
Credit is subject to the following conditions precedent having been satisfied in
a manner satisfactory to the Agent:
(a) The Borrower shall have delivered to the proposed issuer of such
Letter of Credit, at such times and in such manner as such proposed issuer may
prescribe, an application in form and substance satisfactory to such proposed
issuer and the Agent for the issuance of the Letter of Credit and such other
documents as may be required pursuant to the terms thereof, and the form and
terms of the proposed Letter of Credit shall be satisfactory to the Agent and
such proposed issuer; and
(b) As of the date of issuance, no order of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
39
The aggregate face amount of all Letters of Credit at any one time outstanding
and issued pursuant to the provisions of this Agreement, plus the amount of any
unpaid Letter of Credit Fees, unpaid Letter of Credit Fronting Fees and unpaid
issuer fees and charges accrued or scheduled to accrue thereon, and less the
aggregate amount of all drafts issued under or purporting to have been issued
under such Letters of Credit that have been paid by the Agent and for which the
Agent has been reimbursed by the Borrower in full in accordance with Section
2.2.4 (Payments of Letters of Credit) and the Letter of Credit Agreements, and
for which the Agent has no further obligation or commitment to restore all or
any portion of the amounts drawn and reimbursed, is herein called the
"Outstanding Letter of Credit Obligations".
2.2.3 Procedures for Letters of Credit.
(a) The Borrower shall give the Agent five (5) Business Days' prior
written notice of the Borrower's request for the issuance of a Letter of Credit.
Such notice shall be irrevocable and shall specify the original face amount of
the Letter of Credit requested, the effective date (which date shall be a
Business Day) of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit is to expire (which date shall be a Business
Day), the purpose for which such Letter of Credit is to be issued, and the
beneficiary of the requested Letter of Credit. The Borrower shall attach to such
notice the proposed form of the Letter of Credit.
(b) The Agent shall determine, as of the Business Day immediately
preceding the requested effective date of issuance of the Letter of Credit set
forth in the notice from the Borrower pursuant to Section 2.2.3(a) hereof,
whether the conditions set forth in the last sentence of Section 2.2.1 hereof
shall be satisfied. If such conditions shall be satisfied, the Agent shall issue
or take reasonable steps to cause to be issued the requested Letter of Credit on
such requested effective date of issuance.
(c) On each Settlement Date the Agent shall give notice to each
Formula Lender of the issuance of all Letters of Credit issued since the last
Settlement Date.
(d) The Agent shall not be obligated to cause any Letter of Credit to
be extended or amended unless the requirements of this Section 2.2.3 are met as
though a new Letter of Credit were being requested and issued. With respect to
any Letter of Credit which contains any "evergreen" or automatic renewal
provision, each Formula Lender shall be deemed to have consented to any such
extension or renewal unless any such Formula Lender shall have provided to the
Agent, not less than thirty (30) days prior to the last date on which the
applicable issuer can in accordance with the terms of the applicable Letter of
Credit decline to extend or renew such Letter of Credit, written notice that it
declines to consent to any such extension or renewal, provided, that if all of
the requirements of this Section 2.2 are met and no Default or Event of Default
exists, no Formula Lender shall decline to consent to any such extension or
renewal.
2.2.4 Payments of Letters of Credit.
(a) The Borrower agrees to reimburse the issuer for any draw under
any Letter of Credit and the Agent for the account of the Formula Lenders upon
any payment pursuant to any Credit Support immediately upon demand, and to pay
the issuer of the Letter of Credit the amount of all other obligations and other
amounts payable to such issuer under or in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or other right
which the Borrower may have at any time against such issuer or any other Person
(all of the foregoing being collectively referred to herein as the "Current
Letter of Credit Obligations").
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(b) In the event that the issuer of any Letter of Credit honors a
draw under such Letter of Credit or the Agent shall have made any payment
pursuant to any Credit Support and the Borrower shall not have repaid such
amount to the issuer of such Letter of Credit or the Agent, as applicable,
pursuant to Section 2.2.4(a), the Agent shall, upon receiving notice of such
failure, notify each Formula Lender of such failure, and each Formula Lender
shall unconditionally pay to the Agent, for the account of such issuer or the
Agent, as applicable, as and when provided hereinbelow, an amount equal to such
Formula Lender's Revolving Credit Pro Rata Share of the amount of such payment
in Dollars and in same day funds. If the Agent so notifies the Formula Lenders
prior to 12:00 noon (Chicago, Illinois Time) on any Business Day, each Formula
Lender shall make available to the Agent the amount of such payment, as provided
in the immediately preceding sentence, by 2:00 p.m. (Chicago, Illinois Time) on
such Business Day. Such amounts paid by the Formula Lenders to the Agent shall
constitute Borrowings under the Revolving Credit Facility which shall be deemed
to have been requested by the Borrower pursuant to Section 2.1 hereof.
The Letter of Credit Obligations shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any portion of
the Letter of Credit Obligations is rescinded or must otherwise be restored or
returned by the Agent or any of the Formula Lenders upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Person, or upon or
as a result of the appointment of a receiver, intervenor, or conservator of, or
trustee or similar officer for, any Person, or any substantial part of such
Person's property, all as though such payments had not been made.
2.2.5 Participations.
(a) Immediately upon issuance of any Letter of Credit in accordance
with Section 2.2.3, each Formula Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty, an
undivided interest and participation in the Letter of Credit or the Credit
Support provided through the Agent to such issuer in connection with the
issuance of such Letter of Credit, equal to such Formula Lender's Revolving
Credit Pro Rata Share of the face amount of such Letter of Credit or the amount
of such Credit Support (including, without limitation, all obligations of the
Borrower with respect thereto, and any security therefor or guaranty pertaining
thereto).
(b) Whenever the Agent receives a payment from the Borrower on
account of reimbursement obligations in respect of a Letter of Credit or Credit
Support as to which the Agent has previously received for the account of the
issuer thereof payment from a Formula Lender pursuant to Section 2.2.4(b), the
Agent shall promptly pay to such Formula Lender such Formula Lender's Revolving
Credit Pro Rata Share of such payment from the Borrower in Dollars. Each such
payment shall be made by the Agent on the Business Day on which the Agent
receives immediately available funds paid to such Person pursuant to the
immediately preceding sentence, if received prior to 12:00 noon (Chicago,
Illinois Time) on such Business Day and otherwise on the next succeeding
Business Day.
(c) Upon the request of any Formula Lender, the Agent shall furnish
to such Formula Lender copies of any Letter of Credit, reimbursement agreements
executed in connection therewith, application for any Letter of Credit and
Credit Support or enhancement provided through the Agent in connection with the
issuance of any Letter of Credit, and such other documentation as may reasonably
be requested by such Formula Lender.
(d) The obligations of each Formula Lender to make payments to the
Agent with respect to any Letter of Credit or with respect to any Credit Support
provided through the Agent with respect to a letter of credit, and the
obligations of the Borrower to make payments to the Agent, for the account of
the Formula Lenders, shall be irrevocable, not subject to any
41
qualification or exception whatsoever, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Financing Documents;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit or letter of credit for
which Credit Support has been provided (or any Person for whom any such
transferee may be acting), any Formula Lender, the Agent, the issuer of
such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transactions between
the Borrower or any other Person and the beneficiary named in any Letter of
Credit);
(iii) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Financing Documents; or
(v) the occurrence of any Default or Event of Default.
2.2.6 Recovery or Avoidance of Payments.
In the event any payment by or on behalf of the Borrower received by
the Agent with respect to any Letter of Credit or Credit Support provided for
any letter of credit (or any guaranty by the Borrower or reimbursement
obligation of the Borrower relating thereto) and distributed by the Agent to the
Formula Lenders on account of their respective participations therein is
thereafter set aside, avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Formula Lenders shall,
upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of
such amount set aside, avoided or recovered, together with interest at the rate
required to be paid by the Agent upon the amount required to be repaid by it.
2.2.7 Compensation for Letters of Credit.
(a) The Borrower agrees to pay to the Agent with respect to each
Letter of Credit, for the ratable account of the Formula Lenders, a fee (the
"Letter of Credit Fee" and collectively the "Letter of Credit Fees") equal to
two percent (2.0%) per annum of the undrawn face amount of each Letter of Credit
issued for the Borrower's account at the Borrower's request, plus all out-of-
pocket costs, fees and expenses incurred by the Agent in connection with the
application for, issuance of, or amendment to any Letter of Credit; the Letter
of Credit Fee shall be payable monthly in arrears on the first day of each month
following any month in which a Letter of Credit was issued and/or in which a
Letter of Credit remains outstanding. The Letter of Credit Fee shall be computed
on the basis of a 360-day year for the actual number of days elapsed.
(b) In addition to the Letter of Credit Fees, with respect to each
Letter of Credit, the Borrower shall pay to the Agent, for the account of the
issuer of any Letter of Credit, an issuance fee of one-half of one percent
(0.5%) per annum of the stated amount of such Letter of Credit (the "Letter of
Credit Fronting Fee" and, collectively, the "Letter of Credit
42
Fronting Fees"), together with such fees and other charges as are charged by the
Agent for letters of credit issued by it, including, without limitation, its
standard fees for issuing, administering, amending, renewing, paying and
canceling letters of credit and all other fees associated with issuing or
servicing letters of credit, as and when assessed. The Letter of Credit Fronting
Fee shall be payable monthly in arrears on the first day of each month following
any month in which a Letter of Credit was issued and/or in which a Letter of
Credit remains outstanding. The Letter of Credit Fronting Fee shall be computed
on the basis of a 360-day year for the actual number of days elapsed.
2.2.8 Indemnification; Exoneration; Power of Attorney.
(a) In addition to amounts payable as elsewhere provided in this
Section 2.2 the Borrower hereby agrees to protect, indemnify, pay and save the
Formula Lenders and the Agent harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) which any Formula Lender or the Agent may incur or
be subject to as a consequence, direct or indirect, of the issuance of any
Letter of Credit or the provision of any Credit Support or enhancement in
connection therewith. The agreement in this Section 2.2.8(a) shall survive
payment of all Obligations.
(b) As among the Borrower, the Formula Lenders, and the Agent, the
Borrower assumes all risks of the acts and omissions of, or misuse of any of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Formula Lenders and the
Agent shall not be responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of drafts
with respect to any of the Letters of Credit or Credit Support, even if it
should prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or letter of credit for which Credit Support has been provided or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (C) the failure of the
beneficiary of any Letter of Credit or letter of credit for which Credit Support
has been provided to comply duly with conditions required in order to draw upon
such Letter of Credit or letter of credit for which Credit Support has been
provided; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order make a drawing under any Letter of Credit or letter of credit for which
Credit Support has been provided or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit or letter of credit
for which Credit Support has been provided of the proceeds of any drawing under
such Letter of Credit or letter of credit for which Credit Support has been
provided; or (H) any consequences arising from causes beyond the control of the
Formula Lenders or the Agent, including, without limitation, any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority, unless any of the foregoing arises out of the
gross negligence or willful misconduct of the Agent or any Formula Lender as
determined by courts of competent jurisdiction after exhaustion of all appeals.
None of the foregoing shall affect, impair or prevent the vesting of any rights
or powers of the Agent or any Formula Lender under this Section 2.2.8.
(c) In furtherance and extension, and not in limitation, of the
specific provisions set forth above, any action taken or omitted by the Agent or
any Formula Lender under or in connection with any of the Letters of Credit or
any related certificates, if taken or omitted in the absence of gross negligence
or willful misconduct as determined by courts of competent jurisdiction after
exhaustion of all appeals, shall not put the Agent or any Lender
43
under any resulting liability to the Borrower or relieve the Borrower of any of
its obligations hereunder to any such Person.
(d) In connection with all Inventory financed by Letters of Credit,
the Borrower hereby appoints the Agent, or the Agent's designee, as its
attorney, with full power and authority: (a) to sign and/or endorse the
Borrower's name upon any warehouse or other receipts; (b) to sign the Borrower's
name on bills of lading and other negotiable and non-negotiable documents; (c)
to clear Inventory through customs in the Agent's or the Borrower's name, and to
sign and deliver to customs officials powers of attorney in the Borrower's name
for such purpose; (d) to complete in the Borrower's or the Agent's name, any
order, sale, or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof; and (e) to do such other acts and
things as are necessary in order to enable the Agent to obtain possession of the
Inventory and to obtain payment of the Obligations. Neither the Agent nor its
designee, as the Borrower's attorney, will be liable for any acts or omissions,
nor for any error of judgment or mistakes of fact or law. This power, being
coupled with an interest, is irrevocable until all Obligations have been paid
and satisfied.
(e) The Borrower hereby authorizes and directs any issuer of a Letter
of Credit to name the Borrower as the "Account Party" therein and to deliver to
the Agent all instruments, documents and other writings and property received by
the issuer pursuant to the Letter of Credit, and to accept and rely upon the
Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the application therefor.
(f) In connection with all Inventory financed by Letters of Credit,
the Borrower will, at the Agent's request, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which the Agent holds a security interest to deliver
them to the Agent and/or subject to the Agent's order, and if they shall come
into the Borrower's possession, to deliver them, upon request, to the Agent in
their original form. The Borrower shall also, at the Agent's request, designate
the Agent as the consignee on all bills of lading and other negotiable and non-
negotiable documents.
2.2.9 Supporting Letter of Credit; Cash Collateral.
If, notwithstanding the provisions of Section 2.2.2 and Article VII,
any Letter of Credit is outstanding upon the termination of this Agreement, then
upon such termination the Borrower shall deposit with the Agent, for the ratable
benefit of the Agent and the Formula Lenders, with respect to each Letter of
Credit then outstanding, as the Agent, in its discretion shall specify, either
(A) a standby letter of credit (a "Supporting Letter of Credit") in form and
substance satisfactory to the Agent, issued by an issuer satisfactory to the
Agent in an amount equal to the greatest amount for which such Letter of Credit
may be drawn plus any fees and expenses associated with such Letter of Credit,
under which Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Formula Lenders for payments made by
the Agent and the Formula Lenders under such Letter of Credit or under any
credit support or enhancement provided through the Agent with respect thereto
and any fees and expenses associated with such Letter of Credit, or (B) cash in
amounts necessary to reimburse the Agent and the Formula Lenders for payments
made by the Agent or the Formula Lenders under such Letter of Credit or under
any credit support or enhancement provided through the Agent with respect
thereto and any fees and expenses associated with such Letter of Credit. The
Agent shall deposit such cash into one or more non-interest bearing accounts
with and in the name of the Agent and over which Agent alone shall have
exclusive power of access and withdrawal (collectively, the "Letter of Credit
Cash Collateral Account"). Such Supporting Letter of Credit or deposit of cash
shall be held by the Agent, for the ratable benefit of the Agent and the Formula
Lenders, as security for, and to provide for the payment of, the aggregate
undrawn amount of such Letters of Credit remaining outstanding. The Borrower
hereby assigns,
44
pledges, grants and sets over to the Agent for the benefit of the Lenders, a
first priority security interest in, and Lien on, all of such cash on deposit in
the Letter of Credit Cash Collateral Account and/or Supporting Letter of Credit,
together with any and all proceeds (cash and non-cash) and products thereof as
additional security for the Obligations.
2.2.10 Change in Law; Increased Cost.
If after the Closing Date any change in any law or regulation or in
the interpretation thereof by any court or other Governmental Authority charged
with the administration thereof shall either (a) impose, modify or deem
applicable any reserve, special deposit or similar requirement against Letters
of Credit issued hereunder, or (b) impose on the Agent or any of the Lenders any
other condition regarding this Agreement or any Letter of Credit, and the result
of any event referred to in clauses (a) or (b) above shall be to increase the
cost to the Agent of issuing, maintaining or extending the Letter of Credit or
the cost to any of the Formula Lenders of funding any obligation under or in
connection with the Letter of Credit, then, upon demand by the Agent, the
Borrower shall promptly pay to the Agent from time to time as specified by the
Agent, additional amounts which shall be sufficient to compensate the Agent and
the Formula Lenders for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the then highest current rate of interest on the Revolving Loan. A
certificate as to such increased cost incurred by the Agent and/or any of the
Formula Lenders, setting forth, at the Borrower's request, in reasonable detail
the calculation of such costs, submitted by the Agent to the Borrower, shall be
conclusive, absent manifest error.
Section 2.3 The Term Loan A Facility.
2.3.1 Term Loan A Commitments.
Subject to and upon the provisions of this Agreement, each Formula
Lender severally agrees to make a term loan (each a "Term Loan A") to the
Borrower on the Closing Date in the principal amount set forth opposite such
Formula Lender's name on the signature page (herein called such Formula Lender's
"Term Loan A Committed Amount"). The total of each Formula Lender's Term Loan A
Committed Amount is herein called the "Total Term Loan A Committed Amount",
which amount is Twenty-Five Million Eight Hundred Thousand Dollars
($25,800,000).
The obligation of each Formula Lender to make a Term Loan A is several
and is limited to its Term Loan A Committed Amount and such obligation of each
Formula Lender is herein called its "Term Loan A Commitment." The Term Loan A
Commitment of each of the Formula Lenders is collectively referred to as the
"Term Loan A Commitments".
Neither the Agent nor any Term Loan B Lender shall be responsible for
the Term Loan A Commitment of any Formula Lender; and similarly, none of the
Formula Lenders shall be responsible for the Term Loan A Commitment of any of
the other Formula Lenders; the failure, however, of any Formula Lender to
perform its Term Loan A Commitment shall not relieve any of the other Formula
Lenders from the performance of their respective Term Loan A Commitments.
2.3.2 The Term Loan A Notes.
The obligation of the Borrower to pay each Term Loan A with interest
shall be evidenced by a series of promissory notes (each as from time to time
extended, amended, restated, supplemented or otherwise modified, the "Term Loan
A Note" and collectively, the "Term Loan A Notes") substantially in the form of
Exhibit "C-1" attached hereto and made a
45
part hereof with appropriate insertions. Each Term Loan A Note shall be dated as
of the Closing Date, shall be payable to the order of a Formula Lender at the
times provided in the Term Loan A Note, and shall be in the principal amounts of
such Formula Lender's Term Loan A Committed Amount, as applicable in accordance
with the provisions of Section 2.3.1 (Term Loan A Commitments).
2.3.3 Scheduled Payments of Term Loan A
(a) The Borrower shall make installment payments of principal of each
Term Loan A equal to the Term Loan A Installment Payment Amount on each Term
Loan A Installment Payment Date.
(b) If not sooner paid, the entire unpaid principal balance of any
Term Loan A shall be due and payable in full on Term Loan A Maturity Date.
2.3.4 Optional Prepayments of Term Loan A.
The Borrower may, without penalty or premium (other than any amounts
due in respect thereof under Sections 2.6.4 or 2.1.11 hereof) and at their
option, at any time and from time to time, prepay (each a "Term Loan A Optional
Prepayment" and collectively the "Term Loan A Optional Prepayments") each Term
Loan A, in whole or in part, upon two (2) Business Days prior written notice,
specifying the date and amount of prepayment. The amount to be so prepaid,
together with interest accrued thereon to date of prepayment if the amount is
intended as a prepayment of the Term Loans A in whole, shall be paid by the
Borrower to the Agent for the ratable benefit of the Formula Lenders on the date
specified for such prepayment. Partial Term Loan A Optional Prepayments shall
be in an amount not less $100,000 and shall be applied first to all accrued and
unpaid interest on the principal of the Term Loan A Notes, then against
principal under the Term Loan A Notes, in the inverse order of maturity.
2.3.5 Mandatory Prepayments of Term Loan A.
From and after the date that Term Loan B is paid in full, but only
until the date of an Amortization Reduction Event, the Borrower shall make
mandatory prepayments (each a "Term Loan A Mandatory Prepayment" and
collectively, the "Term Loan A Mandatory Prepayments") of the Term Loan A to the
Agent for the Formula Lenders in accordance with their respective Pro Rata
Shares annually in an amount equal to twenty-five percent (25%) of the
Borrower's Excess Cash Flow for such fiscal year, which shall be payable (with
respect to each such fiscal year) on April 1 of each year (or, if earlier, ten
(10) days after the date on which Borrower delivers the financial statements
required to be delivered under Section 6.1.1(a)) immediately following the
annual period of determination; provided that the Term Loan A Mandatory
Prepayment shall be applied to the Term Loan A in inverse order of maturity.
Section 2.4 The Term Loan B Facility.
2.4.1 Term Loan B Commitments.
Subject to and upon the provisions of this Agreement, each Term Loan B
Lender severally agrees to make a term loan (each a "Term Loan B") to the
Borrower on the Closing Date in the principal amount set forth opposite such
Term Loan B Lender's name on the signature page (herein called such Term Loan B
Lender's "Term Loan B Committed Amount"). The total of each Term Loan B
Lender's Term Loan B Committed Amount is herein called the "Total Term Loan B
Committed Amount", which amount is Five Million Dollars ($5,000,000).
46
The obligation of each Term Loan B Lender to make a Term Loan B is
several and is limited to its Term Loan B Committed Amount and such obligation
of each Term Loan B Lender is herein called its "Term Loan B Commitment." The
Term Loan B Commitment of each of the Term Loan B Lenders is collectively
referred to as the "Term Loan B Commitments".
Neither the Agent nor any Formula Lender shall be responsible for the
Term Loan B Commitment of any Term Loan B Lender; and similarly, none of the
Term Loan B Lenders shall be responsible for the Term Loan B Commitment of any
of the other Term Loan B Lenders; the failure, however, of any Term Loan B
Lender to perform its Term Loan B Commitment shall not relieve any of the other
Lenders from the performance of their respective Commitments.
2.4.2 The Term Loan B Notes.
The obligation of the Borrower to pay each Term Loan B with interest
shall be evidenced by a series of promissory notes (each as from time to time
extended, amended, restated, supplemented or otherwise modified, the "Term Loan
B Note" and collectively, the "Term Loan B Notes") substantially in the form of
Exhibit "C-1" attached hereto and made a part hereof with appropriate
insertions. Each Term Loan B Note shall be dated as of the Closing Date, shall
be payable to the order of a Term Loan B Lender at the times provided in the
Term Loan B Note, and shall be in the principal amounts of such Term Loan B
Lender's Term Loan B Committed Amount, as applicable in accordance with the
provisions of Section 2.4.1 (Term Loan B Commitments).
2.4.3 Scheduled Payments of Term Loan B.
(a) The Borrower shall make installment payments of principal of each
Term Loan B equal to the Term Loan B Installment Payment Amount on each Term
Loan B Installment Payment Date.
(b) If not sooner paid, the entire unpaid principal balance of any
Term Loan B shall be due and payable in full on Term Loan B Maturity Date.
2.4.4 Optional Prepayments of Term Loan B.
The Borrower may, without penalty or premium (other than any amounts
due in respect thereof under Sections 2.6.4 or 2.1.11 hereof) and at their
option, at any time and from time to time, prepay (each a "Term Loan B Optional
Prepayment" and collectively the "Term Loan B Optional Prepayments") each Term
Loan B, in whole or in part, upon two (2) Business Days prior written notice,
specifying the date and amount of prepayment. The amount to be so prepaid,
together with interest accrued thereon to date of prepayment if the amount is
intended as a prepayment of the Term Loan B in whole, shall be paid by the
Borrower to the Agent for the ratable benefit of the Term Loan B Lenders on the
date specified for such prepayment. Partial Term Loan B Optional Prepayments
shall be in an amount not less $50,000 and shall be applied first to all accrued
and unpaid interest on the principal of the Term Loan B Notes, then against
principal under the Term Loan B Notes, in the inverse order of maturity.
2.4.5 Mandatory Prepayments of Term Loan B.
The Borrower shall make mandatory prepayments (each a "Term Loan B
Mandatory Prepayment" and collectively, the "Term Loan B Mandatory Prepayments")
of the Term Loan B to the Agent for the Term Loan B Lenders in accordance with
their respective Pro Rata Shares annually beginning for the fiscal year ending
December 31, 2000, in an amount
47
equal to fifty percent (50%) of the Borrower's Excess Cash Flow for such fiscal
year, which shall be payable (with respect to each such fiscal year) on April 1
of each year (or, if earlier, ten (10) days after the date on which Borrower
delivers the financial statements required to be delivered under Section
6.1.1(a)) immediately following the annual period of determination; provided
that the Term Loan B Mandatory Prepayment shall be applied to the Term Loan B in
inverse order of maturity.
Section 2.5 The Capital Expenditure Line Facility.
2.5.1 Capital Expenditure Line Facility.
Subject to and upon the provisions of this Agreement, the Formula
Lenders collectively, but severally, establish a capital expenditure line
facility in favor of the Borrower. The aggregate of all advances under the
Capital Expenditure Line Facility are sometimes referred to in this Agreement
collectively as the "Capital Expenditure Line".
The amount set forth below each Formula Lender's signature to this
Agreement is herein called such Formula Lender's "Capital Expenditure Line
Committed Amount" and the total of each Formula Lender's Capital Expenditure
Line Committed Amount equals Two Million Seven Hundred Thousand Dollars
($2,700,000) and is herein called the "Total Capital Expenditure Line Committed
Amount". The proportionate share set forth below each Formula Lender's
signature to this Agreement is herein called such Formula Lender's "Capital
Expenditure Line Pro Rata Share."
The obligation of each Formula Lender to make an advance under the
Capital Expenditure Line is several and is limited to its Capital Expenditure
Line Committed Amount, and such obligation of each Formula Lender is herein
called its "Capital Expenditure Line Commitment". The Capital Expenditure Line
Commitment of each of the Formula Lenders are herein collectively referred to as
the "Capital Expenditure Line Commitments". Neither the Agent nor any Term Loan
B Lender shall be responsible for the Capital Expenditure Line Commitment of any
Formula Lender; and similarly, none of the Formula Lenders shall be responsible
for the Capital Expenditure Line Commitment of any of the other Formula Lenders;
the failure, however, of any Formula Lender to perform its Capital Expenditure
Line Commitment shall not relieve any of the other Formula Lenders from the
performance of their respective Capital Expenditure Line Commitments.
During the Capital Expenditure Line Commitment Period, the Borrower
may request advances under the Capital Expenditure Line Facility in accordance
with the provisions of this Agreement; provided that after giving effect to the
Borrower's request the following conditions must apply:
(a) the outstanding principal balance of each Formula Lender's
Capital Expenditure Line Pro Rata Share of the Capital Expenditure Line
would not exceed such Formula Lender's Capital Expenditure Line Committed
Amount; and
(b) the aggregate outstanding principal balance of the Capital
Expenditure Line would not exceed (i) prior to the delivery by the Borrower
to the Agent of certified copies of its resolutions authorizing the
borrowings under the Capital Expenditure Line up to the Total Capital
Expenditure Line Committed Amount, $2,500,000, and (ii) on the date of such
delivery and thereafter, the Total Capital Expenditure Line Committed
Amount.
Amounts repaid on the Capital Expenditure Line may not
be reborrowed.
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2.5.2 Procedure for Making Advances Under the Capital Expenditure Line.
The Borrower may borrow under the Capital Expenditure Line Facility on
any Business Day. The Borrower shall give the Agent written notice (a "Capital
Expenditure Line Notice") at least five (5) Business Days prior to the date on
which such Borrower desires an advance under the Capital Expenditure Line.
Each Capital Expenditure Line Notice shall be accompanied by (a) a contract of
sale, purchase order or invoice, in form and substance reasonably satisfactory
to the Agent, which accurately and completely describes the Equipment which is
the subject of the requested advance, the purchase price therefor, and expressly
identifying and excluding the costs of delivery, installation, taxes, and other
"soft" costs, and (b) evidence satisfactory to the Agent indicating that such
Equipment has been delivered to and accepted by the Borrower. Each Capital
Expenditure Line Notice shall also be accompanied by such other information,
certificates, confirmations, and other items as the Agent may require to
determine the value and the delivery of the subject Equipment and compliance
with the other terms of this Agreement. The amount to be advanced with respect
to a Capital Expenditure Line Notice shall not exceed the lesser of (a) the
amount requested by the Borrower or (b) eighty percent (80%) of the purchase
price of the subject Equipment less costs of delivery, installation, taxes and
any other "soft" costs. Upon receipt of any such Capital Expenditure Line
Notice, the Agent shall promptly notify each Formula Lender of the amount of
each advance to be made by such Formula Lender on the requested borrowing date
under such Formula Lender's Capital Expenditure Line Commitment. Each advance
under the Capital Expenditure Line shall be not less than Three Hundred Thousand
Dollars ($300,000). The maximum number of advances under the Capital Expenditure
Line shall be nine (9).
Not later than 12:00 p.m. (Chicago, Illinois Time) on each requested
borrowing date for the making of advances under the Capital Expenditure Line,
each Formula Lender shall, if it has received timely notice from the Agent of
the Borrower's request for such advances, make available to the Agent, in funds
immediately available to the Agent at the Agent's office set forth in Section
9.1 (Notices) such Formula Lender's Capital Expenditure Line Pro Rata Share of
the advances to be made on such date.
2.5.3 Capital Expenditure Line Notes.
The respective obligations of the Borrower to pay each Formula
Lender's Capital Expenditure Line Pro Rata Share of the Capital Expenditure
Line, with interest, shall be evidenced by a series of promissory notes (as from
time to time extended, amended, restated, supplemented or otherwise modified,
collectively the "Capital Expenditure Line Notes" and individually a "Capital
Expenditure Line Note") substantially in the form of Exhibit "D-1" attached
hereto and made a part hereof, with appropriate insertions including, without
limitation, for principal payments required by Section 2.5.4. Whenever the
Borrower obtains a Capital Expenditure Loan, each Formula Lender shall make an
appropriate entry on its Capital Expenditure Line Note or in a separate loan
account, or both, to evidence such Capital Expenditure Loan. Each such entry
shall be prima facie evidence of the data entered, but such entries shall not be
a condition to the Borrower's obligation to repay. The Borrower acknowledges
and agrees that, if the outstanding principal balance of the Capital Expenditure
Line outstanding from time to time exceeds the aggregate of all Formula Lenders'
Capital Expenditure Line Committed Amounts, then the excess shall bear interest
at the rates provided from time to time for the Capital Expenditure Line
evidenced by the Capital Expenditure Line Notes and shall be payable, with
accrued interest, ON DEMAND. The Capital Expenditure Line Notes shall not
operate as a novation of any of the Obligations or nullify, discharge, or
release any such Obligations or the continuing contractual relationship of the
parties hereto in accordance with the provisions of this Agreement.
49
2.5.4 Payments of Capital Expenditure Line.
Each advance under the Capital Expenditure Line shall be repayable in
installment payments of principal monthly (on the first day of each month after
the date of such advance) in an amount equal to 1/60th of the amount of the
advance. At the time of each advance under the Capital Expenditure Line, the
Borrower shall furnish a "Capital Expenditure Line Installment Payment Schedule"
for each Formula Lender substantially in the form of Exhibit "D-2" attached
hereto and made a part hereof, with appropriate insertions, which shall set
forth aggregate installment payments due thereafter on all Capital Expenditure
Line advances. Notwithstanding any amortization schedule for the Capital
Expenditure Line, the unpaid principal sum of the Capital Expenditure Line,
together with interest accrued and unpaid thereon, together with interest
accrued and unpaid thereon, shall be due and payable in full on the Capital
Expenditure Line Termination Date. The Capital Expenditure Line Installment
Payment Schedules shall not operate as a novation of any of the Obligations or
nullify, discharge, or release any such Obligations or the continuing
contractual relationship of the parties hereto in accordance with the provisions
of this Agreement or the Capital Expenditure Line Note.
2.5.5 Optional Prepayments of Capital Expenditure Line
The Borrower may, at its option, at any time and from time to time
prepay (each a "Capital Expenditure Line Optional Prepayment" and collectively
the "Capital Expenditure Line Optional Prepayments") the Capital Expenditure
Line, in whole or in part without premium or penalty (other than any amounts due
in respect thereof under Sections 2.6.4 or 2.1.11 hereof). The amount to be so
prepaid, together with interest accrued thereon to date of prepayment if the
amount is intended as a prepayment of the Capital Expenditure Line in whole,
shall be paid by the Borrower to the Agent for the ratable (based upon each
Formula Lender's Capital Expenditure Line Pro Rata Share) benefit of the Formula
Lenders on the date specified for such prepayment.
2.5.6 Application of Capital Expenditure Line Partial Prepayments
Partial Capital Expenditure Line Optional Prepayments shall be in an
amount not less than the aggregate amount of the next principal installment
under the Capital Expenditure Line Notes and shall be applied first to all
accrued and unpaid interest on the principal of the Capital Expenditure Line
Note, and then pro rata to the balloon payment due at maturity and to the
principal installment payments, which proration for each payment shall be equal
to the amount to be prepaid times a fraction, the numerator of which is the
amount of the balloon or installment (as applicable) payment and the denominator
of which is the aggregate outstanding principal balance of the Capital
Expenditure Line immediately prior to the prepayment.
Section 2.6 Interest.
2.6.1 Applicable Interest Rates.
(a) Each Loan (other than Term Loan B) shall bear interest until
maturity (whether by acceleration, declaration, extension or otherwise) at
either the Base Rate or the LIBOR Rate, as selected and specified by the
Borrower in an Interest Rate Election Notice furnished to the Agent in
accordance with the provisions of Section 2.6.2(f), or as otherwise determined
in accordance with the provisions of this Section 2.6 and as may be adjusted
from time to time in accordance with the provisions of Section 2.6.3.
(b) Term Loan B shall bear interest until maturity (whether by
acceleration, declaration, extension or otherwise) at a fixed rate equal to
fifteen percent (15%) per annum.
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(c) In addition to interest payable under Section 2.6.1(b),
additional interest on Term Loan B ("Special Term Loan B Interest") shall accrue
and be owing by the Borrower. Such Special Term Loan B Interest shall equal the
amount by which, as of any date of determination, (A) twenty percent (20%) per
annum of the average daily principal balance of Term Loan B from the Closing
Date through such date of determination exceeds (B) the sum of (x) the aggregate
interest required to be paid on Term Loan B under Section 2.6.1(b) above from
the Closing Date through such date of determination, and (y) the amount of the
Closing Fee paid to the Agent for the ratable benefit of the Term Loan B Lenders
under Section 2.7.3(c). The accrued Special Term Loan B Interest shall be paid
by the Borrower upon maturity or payment in full of Term Loan B (whether by
acceleration, declaration, extension or otherwise). The Borrower shall have the
right at any time and from time to time to prepay all or any part of the
outstanding Special Term Loan B Interest, but only to the extent that the
Borrower specifically so directs the Agent in writing. The proceeds of any such
prepayment or payment of Special Term Loan B Interest shall be applied first to
all accrued and unpaid interest on Special Term Loan B Interest.
(d) Notwithstanding the foregoing, following the occurrence and
during the continuance of an Event of Default, at the option of the Agent, all
Loans and all other Obligations shall bear interest at the Post-Default Rate.
2.6.2 Selection of Interest Rates.
(a) The Borrower may select the initial Applicable Interest Rate or
Applicable Interest Rates to be charged on the Base Rate Loans and the LIBOR
Loans.
(b) From time to time after the date of this Agreement as provided in
this Section, by a proper and timely Interest Rate Election Notice furnished to
the Agent in accordance with the provisions of Section 2.6.2(f) the Borrower may
select an initial Applicable Interest Rate or Applicable Interest Rates for any
Base Rate Loan or LIBOR Loan or may convert the Applicable Interest Rate and,
when applicable, the Interest Period, for any existing Base Rate Loan or LIBOR
Loan to any other Applicable Interest Rate or, when applicable, any other
Interest Period.
(c) The Borrower's selection of an Applicable Interest Rate and/or an
Interest Period, its election to convert an Applicable Interest Rate and/or an
Interest Period to another Applicable Interest Rate or Interest Period, and any
other adjustments in an interest rate are subject to the following limitations:
(i) the Borrower shall not at any time select or change to an
Interest Period that extends beyond (A) the Revolving Credit Expiration
Date in the case of the Revolving Loan, (B) the earlier of (1) the last
scheduled principal installment payment date set forth in the Capital
Expenditure Line Installment Payment Schedules from time to time or (2) the
Capital Expenditure Line Expiration Date, in the case of the Capital
Expenditure Line, or (C) the earlier of (y) January 1, 2007, or (z) the
Revolving Credit Termination Date, in the case of the Term Loan A;
(ii) no change from the LIBOR Rate to the Base Rate shall become
effective on a day other than a Business Day and on a day which is the last
day of the then current Interest Period; no change of an Interest Period
shall become effective on a day other than the last day of the then current
Interest Period; and no change from the Base Rate to the LIBOR Rate shall
become effective on a day other than a day which is a Eurodollar Business
Day;
51
(iii) any Applicable Interest Rate change for any Base Rate Loan or
LIBOR Loan to be effective on a date on which any principal payment on
account of such Base Rate Loan or LIBOR Loan is scheduled to be paid shall
be made only after such payment shall have been made;
(iv) no more than five (5) different LIBOR Rates may be outstanding
at any time and from time to time with respect to the Revolving Loan;
(v) the first day of each Interest Period shall be a Eurodollar
Business Day; and
(vi) if, as of the effective date of a selection, a Default or an
Event of Default exists, the Agent, in the exercise of its sole and
absolute discretion, may elect that no such selection, election or
adjustment shall be allowed.
(d) The minimum principal amount of a LIBOR Loan shall be One Million
Dollars ($1,000,000), and each such LIBOR Loan shall be an integral multiple of
Two Hundred Fifty Thousand Dollars ($250,000).
(e) If a request for an advance under the Loans is not accompanied by
an Interest Rate Election Notice or does not otherwise include a selection of an
Applicable Interest Rate and, if applicable, an Interest Period, or if, after
having made a selection of an Applicable Interest Rate and, if applicable, an
Interest Period, the Borrower fails or is not otherwise entitled under the
provisions of this Agreement to continue such Applicable Interest Rate or
Interest Period, the Borrower shall be deemed to have selected the Base Rate as
the Applicable Interest Rate until such time as the Borrower has selected a
different Applicable Interest Rate and specified an Interest Period in
accordance with, and subject to, the provisions of this Section.
(f) Neither the Agent nor the Lenders will be obligated to make
Loans, to convert the Applicable Interest Rate on Loans to another Interest
Rate, or to change Interest Periods, unless the Agent shall have received an
irrevocable written or telephonic notice (an "Interest Rate Election Notice")
from the Borrower specifying the following information:
(i) the amount to be borrowed or converted or continued;
(ii) a selection of the Base Rate or the LIBOR Rate;
(iii) the length of the Interest Period if the Applicable Interest
Rate selected is the LIBOR Rate; and
(iv) the requested date on which such election is to be effective.
Any telephonic notice must be confirmed in writing within three (3) Business
Days. Each Interest Rate Election Notice must be received by the Agent not
later than 12:00 noon (Chicago, Illinois Time) on the Business Day of any
requested borrowing or conversion in the case of a selection of the Base Rate
and not later than 12:00 noon (Chicago, Illinois Time) on the third (3rd)
Business Day before the effective date of any requested borrowing or conversion
or continuation in the case of a selection of the LIBOR Rate.
2.6.3 Inability to Determine LIBOR Base Rate.
(a) In the event that (i) the Agent shall have determined that, by
reason of circumstances affecting the London interbank eurodollar market,
adequate and reasonable
52
means do not exist for ascertaining the LIBOR Base Rate for any requested
Interest Period with respect to a Loan the Borrower has requested to be made or
to be converted to a LIBOR Loan or (ii) any Formula Lender shall determine that
the LIBOR Base Rate for any requested Interest Period with respect to a Loan the
Borrower has requested to be made or to be converted to a LIBOR Loan does not
adequately and fairly reflect such cost to the Formula Lender of funding or
converting such Loan, the Agent shall give telephonic or written notice of such
determination to the Borrower at least one (1) day prior to the proposed date
for funding or converting such Loan. If such notice is given, any request for a
LIBOR Loan shall be made or converted to a Base Rate Loan. Until such notice has
been withdrawn by the Agent, the Borrower will not request that any Loan be made
or converted to a LIBOR Loan.
(b) If applicable Laws shall (i) make it unlawful for any Formula
Lender to fund through the purchase of Dollar deposits with respect to any
portion of a Loan that is based, or requested by the Borrower to be based, on
LIBOR or otherwise give effect to the Formula Lender's obligations as
contemplated under this Section with respect to the use of the LIBOR Rate, or
(ii) impose on any Formula Lender any costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Formula Lender which includes deposits by reference to which
the LIBOR Rate is determined as provided herein or a category of extensions of
credit or other assets of such Formula Lender which includes a LIBOR Rate, or
(iii) impose on any Formula Lender any restrictions on the amount of such a
category of liabilities or assets which such Formula Lender may hold, then, in
each such case, the Agent may, by notice thereof to the Borrower, terminate the
LIBOR option. Any portion of the Loans subject thereto shall immediately bear
interest thereafter at the Base Rate.
2.6.4 Indemnity.
The Borrower agrees to indemnify and reimburse the Agent and the
Formula Lenders and to hold the Agent and the Formula Lenders harmless from any
loss, cost (including administrative costs) or expense (including, without
limitation, any such loss or expense arising from the reemployment of funds
obtained by the Agent or any Formula Lender to maintain any LIBOR Loan or from
fees payable to terminate the deposits from which such funds were obtained)
which the Agent or any Formula Lender may sustain or incur as a consequence of
(a) a default by the Borrower in payment when due of the principal amount of or
interest on any LIBOR Loan, (b) the failure of the Borrower to make, or convert
the Applicable Interest Rate of, a Loan after the Borrower has given a Loan
Notice or an Interest Rate Election Notice, (c) the failure of the Borrower to
make any prepayment of a LIBOR Loan after the Borrower has given notice of such
intention to make such a prepayment, (d) the termination of the LIBOR option
pursuant to Section 2.6.3(b), and/or (e) the making by the Borrower of a
prepayment of a LIBOR Loan on a day which is not the last day of the Interest
Period for such LIBOR Loan. This agreement and covenant of the Borrower shall
survive termination or expiration of this Agreement and payment of the other
Obligations.
Contemporaneously with any prepayment of principal of a LIBOR Loan, a
prepayment fee shall be due and payable to the Formula Lenders in an amount
equal to the product of
(a) the amount so prepaid
multiplied by
(b) the difference (but not less than zero) of
53
(i) the constant maturity 360-day interest yield (as of the
first day of the then effective Interest Period and expressed as a decimal)
for a United States Treasury ▇▇▇▇, note, or bond (a "Treasury obligation")
selected by the Agent, in an aggregate amount comparable to the amount
prepaid, and having, as of the first day of the then effective Interest
Period, a remaining term approximately equal to the original Interest
Period,
minus
(ii) the 360-day interest yield (as of the Business Day
immediately preceding the prepayment date and expressed as a decimal) on
such Treasury obligation and having, as of the Business Day immediately
preceding the prepayment date, a remaining term until maturity
approximately equal to the unexpired portion of the Interest Period,
multiplied by
(c) the quotient of
(i) the number of calendar days in the unexpired portion of the
Interest Period,
divided by
(ii) 360.
The applicable yields on the Treasury obligations described above
shall be determined based upon the Federal Reserve statistical release H.15
published for the applicable determination dates set forth above. Any Treasury
obligation selected when the related Interest Period is one year or less shall
be United States Treasury Bills. The Formula Lenders shall not be obligated or
required to have actually reinvested the prepaid amount of the LIBOR Loan in any
such Treasury obligation as a condition precedent to the Borrower's being
obligated to pay a prepayment fee as outlined above. The Formula Lenders shall
not be obligated to accept any prepayment of principal unless it is accompanied
by the prepayment fee, if any, due in connection therewith as calculated
pursuant to the provisions of this paragraph. No prepayment fee payable in
connection herewith shall in any event or under any circumstances be deemed or
construed as a penalty.
2.6.5 Payment of Interest.
(a) Unpaid and accrued interest on Term Loan B (other than Special
Term Loan B Interest) and on any advance of the Loans which consists of a Base
Rate Loan shall be paid monthly, in arrears, on the first day of each calendar
month, commencing on April 1, 2000, and on the first day of each calendar month
thereafter, and at maturity (whether by acceleration, declaration, extension or
otherwise).
(b) Notwithstanding the foregoing, any and all unpaid and accrued
interest on any Base Rate Loan converted to a LIBOR Loan or prepaid shall be
paid immediately upon such conversion and/or prepayment, as appropriate.
(c) Unpaid and accrued interest on any LIBOR Loan shall be paid on
the last Business Day of each Interest Period for such LIBOR Loan (and, in
addition, for any Interest Period of one hundred twenty (120) or one hundred
eighty (180) days, on the first Business Day after the 89th day after the
commencement of the Interest Period) and at maturity
54
(whether by acceleration, declaration, extension or otherwise); provided,
however, that any and all unpaid and accrued interest on any LIBOR Loan prepaid
prior to expiration of the then current Interest Period for such LIBOR Loan
shall be paid immediately upon prepayment.
(d) Special Term Loan B Interest shall be paid as outlined in Section
2.6.1(c).
Section 2.7 General Financing Provisions.
2.7.1 Lender Authorizations.
The Borrower hereby irrevocably authorizes the Agent and each of the
Lenders to make Loans to the Borrower, and hereby irrevocably authorizes the
Agent and each of the Formula Lenders to issue Letters of Credit for the account
of the Borrower, pursuant to the provisions of this Agreement upon the written,
oral or telephone request of any one (1) of the Persons who is from time to time
a Responsible Officer of the Borrower under the provisions of the most recent
"Certificate" of corporate resolutions and/or incumbency of the Borrower on file
with the Agent. Neither the Agent nor any of the Lenders assumes any
responsibility or liability for any errors, mistakes, and/or discrepancies in
the oral, telephonic, written or other transmissions of any instructions,
orders, requests and confirmations between the Agent and the Borrower or the
Agent and any of the Lenders in connection with the Credit Facilities, any Loan,
any Letter of Credit or any other transaction in connection with the provisions
of this Agreement.
2.7.2 Use of Proceeds of the Loans.
The proceeds of each Loan shall be used by the Borrower for Permitted
Uses, and for no other purposes except as may otherwise be agreed by the
Requisite Lenders in writing.
2.7.3 Closing Fees.
The Borrower shall pay, on or before the Closing Date, each of the
following fees (collectively, the "Closing Fees"):
(a) Syndication, Documentation and Agency Fee. On or before the
Closing Date, the Borrower shall pay to the Agent, for its sole account and
benefit, a syndication, documentation and agency fee in the amount of Three
Hundred Thirty-Seven Thousand Five Hundred Dollars ($337,500), which fee has
been fully earned and is non-refundable.
(b) Formula Lenders' Closing Fee. On or before the Closing Date, the
Borrower shall pay to the Agent, for the ratable benefit of the Formula Lenders,
a closing fee in the amount of Five Hundred Six Thousand Two Hundred Fifty
Dollars ($506,250), which fee has been fully earned and is non-refundable.
(c) Term Loan B Lenders' Closing Fee. On or before the Closing Date,
the Borrower shall pay to the Agent, for the ratable benefit of the Term Loan B
Lenders, a closing fee in the amount of One Hundred Fifty Thousand Dollars
($150,000), which fee has been fully earned and is non-refundable.
2.7.4 Agency/Field Examination Fee.
The Borrower shall pay to the Agent, for its sole account and benefit,
an annual fee in the amount of One Hundred Thousand Dollars ($100,000), payable
quarterly in arrears, which fee has been fully earned and is non-refundable and
shall be paid on the Closing
55
Date. In addition, from and after the occurrence of an Event of Default, the
Borrower shall pay to the Agent, for its sole account and benefit, a fee in the
amount of $750 per day per auditor dispatched by Agent in connection with such
Event of Default, to cover expenses relating to field examinations performed by
such auditors, plus all out-of-pocket expenses of the Agent associated with
----
such Event of Default. All fees described in this Section 2.7.4 shall be
referred to herein as the "Agency Fee."
2.7.5 Computation of Interest and Fees.
All applicable Fees and interest shall be calculated on the basis of
a year of three hundred sixty (360) days for the actual number of days elapsed.
Any change in the interest rate on any of the Obligations resulting from a
change in the Base Rate shall become effective as of the opening of business on
the day on which such change in the Base Rate is announced.
2.7.6 Payments.
All payments of the Obligations, including, without limitation,
principal, interest, Prepayments, and Fees, shall be paid by the Borrower
without setoff or counterclaim to the Agent (except as otherwise provided
herein) at the Agent's office specified in Section 9.1 (unless the Agent
specifies a different address) in immediately available funds not later than
12:00 noon (Chicago, Illinois Time) on the due date of such payment. All
payments received by the Agent after such time shall be deemed to have been
received by the Agent for purposes of computing interest and Fees and otherwise
as of the next Business Day. Payments shall not be considered received by the
Agent until such payments are paid to the Agent in immediately available funds.
Unless otherwise provided in this Agreement or in the other Financing Documents,
prior to the occurrence of an Event of Default, all payments shall be applied as
follows: first to any Fees, second to any and all accrued and unpaid late
charges and Enforcement Costs, third to any and all accrued but unpaid interest
on the Agent's Obligations, fourth to the then unpaid balance of the Agent's
Obligations, fifth to any and all accrued and unpaid interest on the
Obligations, and then to the then unpaid principal balance of the other
Obligations. Following the occurrence of an Event of Default, subject to Section
7.2.5, all payments shall be applied to the Obligations in such order and manner
as shall be determined by the Agent in its sole and absolute discretion.
2.7.7 Liens; Setoff.
In addition to the Liens set forth in ARTICLE 3, the Borrower hereby
grants to the Agent and to each of the Lenders a continuing Lien as security for
all of the Obligations upon any and all monies, securities, and other property
of the Borrower and the proceeds thereof, now or hereafter held or received by
or in transit to, the Agent, any of the Lenders, and/or any Affiliate of the
Agent and/or any of the Lenders, from or for the Borrower, and also upon any and
all deposit accounts (general or special) and credits of the Borrower, if any,
with the Agent, any of the Lenders or any Affiliate of the Agent or any of the
Lenders, at any time existing, excluding any deposit accounts held by the
Borrower in its capacity as trustee. Without implying any limitation on any
other rights the Agent and/or any of the Lenders may have under the Financing
Documents or applicable Laws, during the continuance of an Event of Default, the
Agent is hereby authorized by the Borrower at any time and from time to time,
without notice to the Borrower, to set off, appropriate and apply any or all
items hereinabove referred to against all Obligations (including without
limitation the Agent's Obligations) then outstanding (whether or not then due),
all in such order and manner as shall be determined by the Agent in its sole and
absolute discretion.
56
2.7.8 Requirements of Law.
In the event that any Lender shall have determined in Good Faith that
(a) the adoption after the Closing Date of any Laws regarding capital adequacy,
or (b) any change after the Closing Date therein or in the interpretation or
application thereof or (c) compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or Governmental
Authority, does or shall have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender, as a
consequence of the obligations of such Lender hereunder to a level below that
which such Lender or any corporation controlling such Lender would have achieved
but for the adoption, change or compliance (taking into consideration the
policies of such Lender and the corporation controlling such Lender, with
respect to capital adequacy) by an amount reasonably deemed by such Lender to be
material, then from time to time, after submission by such Lender to the
Borrower of a written request therefor and a statement of the basis for such
determination setting forth in reasonable detail the calculation of such amount,
the Borrower shall pay to such Lender such additional amount or amounts in order
to compensate for such reduction.
2.7.9 Funds Transfer Services.
(a) The Borrower acknowledges that the Agent has made available to
the Borrower Wire Transfer Procedures, a copy of which is attached to this
Agreement as Exhibit "E" and which include a description of the Security
Procedures. The Borrower and the Agent agree that the Security Procedures are
commercially reasonable. The Borrower further acknowledges that the full scope
of the Security Procedures which the Agent or an Affiliate bank of the Agent
offers and strongly recommends for funds transfers is available only if the
Borrower communicates directly with the Agent or such Affiliate bank as
applicable in accordance with said procedures. If the Borrower attempts to
communicate by any other method or otherwise not in accordance with the Security
Procedures or other security procedures of which the Borrower has received
notice after the date hereof, the Agent or such Affiliate bank, as applicable,
shall not be required to execute such instructions, but if the Agent or such
Affiliate bank, as applicable, does so, the Borrower will be deemed to have
refused the Security Procedures that the Agent or such Affiliate bank as
applicable offers and strongly recommends, and the Borrower will be bound by any
funds transfer, whether or not authorized, which is issued in the Borrower's
name and accepted by the Agent or such Affiliate bank, as applicable, in Good
Faith. The Agent or such Affiliate bank, as applicable, may modify Wire Transfer
Procedures including, without limitation, the Security Procedures at such time
or times and in such manner as the Agent or such Affiliate bank, as applicable,
in its sole discretion, deems appropriate to meet prevailing standards of good
banking practice. By continuing to use the Agent's or such Affiliate bank's, as
applicable, wire transfer services after receipt of any modification of the Wire
Transfer Procedures including, without limitation, the Security Procedures, the
Borrower agrees that the Security Procedures, as modified, are likewise
commercially reasonable. The Borrower further agrees to establish and maintain
procedures to safeguard the Security Procedures and any information related
thereto. Neither the Agent nor any Affiliate of the Agent is responsible for
detecting any error in payment order sent by the Borrower to the Agent or any of
the Lenders.
(b) The Agent or such Affiliate bank, as applicable, will generally
use the Fedwire funds transfer system for domestic funds transfers, and the
funds transfer system operated by the Society for Worldwide International
Financial Telecommunication (SWIFT) for international funds transfers.
International funds transfers may also be initiated through the Clearing House
InterBank Payment System (CHIPs) or international cable. However, the Agent or
such Affiliate bank, as applicable, may use any means and routes that the Agent
or such Affiliate bank, as applicable, in its sole and absolute discretion, may
consider suitable for the transmission of funds under the circumstances. Each
payment order, or cancellation thereof,
57
carried out through a funds transfer system or a clearinghouse will be governed
by all applicable funds transfer system rules and clearing house rules and
clearing arrangements, whether or not the Agent or such Affiliate bank, as
applicable, is a member of the system, clearinghouse or arrangement and the
Borrower acknowledges that the Agent's or such Affiliate bank's, as applicable,
right to reverse, adjust, stop payment or delay posting of an executed payment
order is subject to the laws, regulations, rules, circulars and agreements.
2.7.10 Mandatory Application of Net Proceeds.
(a) The Borrower shall apply all Net Proceeds promptly upon receipt
thereof to prepay the Obligations outstanding at the time of such receipt;
provided, however, that nothing in this Section 2.7.10 or in the definition of
"Net Proceeds" shall constitute authorization for the Borrower or any of the
Borrower's Subsidiaries to enter into any transaction that would generate Net
Proceeds.
(b) Subject to Section 7.2.5, Net Proceeds of Permitted Asset
Dispositions shall be applied as follows:
(i) if any portion of such Net Proceeds are attributable to
dispositions of Equipment or real property owned by the Borrower (other
than the Phoenix, New York real property), Net Proceeds shall be applied to
payments of the Term Loan A, in the inverse order of maturity, for the
ratable benefit of the Formula Lenders, in an amount equal to that
percentage of the then outstanding principal balance of Term Loan A that
equals the percentage supported on the Closing Date by such Equipment or
real property (as the case may be),
(ii) so long as any portion of Term Loan B is outstanding, (a)
seventy-five percent (75%) of any amount thereof remaining after the
application described in clause (b)(i) above shall be applied to the
outstanding principal amount, if any, of Term Loan B, in the inverse order
of maturity, for the ratable benefit of the Term Loan B Lenders, until Term
Loan B is paid in full, and (b) any amount thereof remaining after the
applications described in clauses (b)(i) and (b)(ii)(a) above shall be
applied to the outstanding principal of the Term Loan A, for the ratable
benefit of the Formula Lenders,
(iii) after Term Loan B is paid in full but only until the date
of an Amortization Reduction Event, (a) fifty percent (50%) of each amount
thereof remaining after the application described in clause (b)(i) above
shall be applied to the outstanding principal amount, if any, of Term Loan
A, in the inverse order of maturity, for the ratable benefit of the Formula
Lenders, (b) any amount thereof remaining after the applications described
in clauses (b)(i) and (b)(iii)(a) above shall be applied to the outstanding
principal of the Revolving Loans (but not to reduce any Formula Lender's
Revolving Credit Committed Amount), for the ratable benefit of the Formula
Lenders, and
(iv) from and after the date of an Amortization Reduction
Event, each amount thereof remaining after the application described in
clause (b)(i) above shall be applied to the outstanding principal of the
Revolving Loans (but not to reduce any Formula Lender's Revolving Credit
Committed Amount), for the ratable benefit of the Formula Lenders.
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Section 2.8 Settlement Among Lenders.
2.8.1 Revolving Loan.
It is agreed that each Formula Lender's Net Outstandings are intended
by the Formula Lenders to be equal at all times to such Formula Lender's
Revolving Credit Pro Rata Share of the aggregate outstanding principal amount of
the Revolving Loan outstanding. Notwithstanding such agreement, the several and
not joint obligation of each Formula Lender to fund the Revolving Loan made in
accordance with the terms of this Agreement ratably in accordance with such
Formula Lender's Revolving Credit Pro Rata Share and each Formula Lender's right
to receive its ratable share of principal payments on the Revolving Loan in
accordance with its Revolving Credit Pro Rata Share, the Lenders agree that in
order to facilitate the administration of this Agreement and the Financing
Documents that settlement among them may take place on a periodic basis in
accordance with the provisions of this Section 2.8.
2.8.2 Settlement Procedures as to Revolving Loan.
(a) In General. To the extent and in the manner hereinafter provided
in this Section 2.8.2, settlement among the Formula Lenders as to the Revolving
Loan may occur periodically on Settlement Dates determined from time to time by
the Agent, 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 5.2 (Conditions to all Extensions of Credit)
have been met. As of the Closing Date, the Agent has determined that the
Settlement Dates shall occur on Wednesday of each week. On each Settlement Date
payments shall be made by or to BANA and the other Formula Lenders in the manner
provided in this Section 2.8.2 in accordance with the Settlement Report
delivered by the Agent pursuant to the provisions of Section 2.8.2(b) in respect
of such Settlement Date so that as of each Settlement Date, and after giving
effect to the transactions to take place on such Settlement Date, each Formula
Lender's Net Outstandings shall equal such Formula Lender's Revolving Credit Pro
Rata Share of the Revolving Loan outstanding.
(b) Selection of Settlement Dates. If the Agent elects, in its
discretion, but subject to the consent of BANA, to settle accounts among the
Formula Lenders with respect to principal amounts of the Revolving Loan less
frequently than each Business Day, then the Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the Closing Date;
provided, however, that the Agent shall designate as a Settlement Date any
Business Day which is an Interest Payment Date; and provided further, that a
Settlement Date shall occur at least once during each seven-day period. The
Agent shall designate a Settlement Date by delivering to each Formula Lender a
Settlement Report not later than 12:00 noon (Chicago, Illinois Time) on the
proposed Settlement Date, which Settlement Report shall be with respect to the
period beginning on the next preceding Settlement Date and ending on such
designated Settlement Date.
(c) Non-Ratable Loans and Payments. Between Settlement Dates, the
Agent shall request and BANA may (but shall not be obligated to) advance to the
Borrower out of BANA's own funds, the entire principal amount of any advance
under the Revolving Loan requested or deemed requested pursuant to Section 2.1.2
(Procedure for Making Advances Under the Revolving Loan; Lender Protection
Loans) (any such advance under the Revolving Loan being referred to as a "Non-
Ratable Loan"). The making of each Non-Ratable Loan by BANA shall be deemed to
be a purchase by BANA of a one hundred percent (100%) participation in each
other Formula Lender's Revolving Credit Pro Rata Share of the amount of such
Non-Ratable Loan. All payments of principal, interest and any other amount with
respect to such Non-Ratable Loan shall be payable to and received by the Agent
for the account of BANA. On each Settlement Date, with notice to the Agent, each
other Formula Lender shall (without
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duplication with Section 2.8.1) pay to BANA, as the repurchase of such
participation, an amount equal to one hundred percent (100%) of such Formula
Lender's Revolving Credit Pro Rata Share of the principal amount of such Non-
Ratable Loan. Any payments or Net Proceeds received by the Agent between
Settlement Dates which in accordance with the terms of this Agreement are to be
applied to the reduction of the outstanding principal balance of Revolving Loan,
shall be paid over to and retained by BANA for such application, and such
payment to and retention by BANA shall be deemed, to the extent of each other
Formula Lender's Revolving Credit Pro Rata Share of such payment, to be a
purchase by each such other Formula Lender of a participation in the advance
under the Revolving Loan (including the repurchase of participations in Non-
Ratable Loans) made by BANA. Upon demand by another Formula Lender, with notice
thereof to the Agent, BANA shall pay to the Agent, for the account of such other
Formula Lender, as a repurchase of such participation, an amount equal to such
other Formula Lender's Revolving Credit Pro Rata Share of any such amounts
(after application thereof to the repurchase of any participations of BANA in
such other Formula Lender's Revolving Credit Pro Rata Share of any Non-Ratable
Loans) paid only to BANA by the Agent.
(d) Net Decrease in Outstandings. If on any Settlement Date the
increase, if any, in the dollar amount of any Formula Lender's Net Outstandings
which is required to comply with the first sentence of Section 2.8.1 (Revolving
Loan) is less than such Formula Lender's Revolving Credit Pro Rata Share of
amounts received by the Agent but paid only to BANA since the next preceding
Settlement Date, such Formula Lender and the Agent, in their respective records,
shall apply such Formula Lender's Revolving Credit Pro Rata Share of such
amounts to the increase in such Formula Lender's Net Outstandings, and BANA
shall pay to the Agent, for the account of such Formula Lender, the excess
allocable to such Formula Lender.
(e) Net Increase in Outstandings. If on any Settlement Date the
increase, if any, in the dollar amount of any Formula Lender's Net Outstandings
which is required to comply with the first sentence of Section 2.8.1 (Revolving
Loan) exceeds such Formula Lender's Revolving Credit Pro Rata Share of amounts
received by the Agent but paid only to BANA since the next preceding Settlement
Date, such Formula Lender and the Agent, in their respective records, shall
apply such Formula Lender's Revolving Credit Pro Rata Share of such amounts to
the increase in such Formula Lender's Net Outstandings, and such Formula Lender
shall pay to the Agent, for the account of BANA, any excess.
(f) No Change in Outstandings. If a Settlement Report indicates that
no advance under the Revolving Loan has been made during the period since the
next preceding Settlement Date, then such Formula Lender's Revolving Credit Pro
Rata Share of any amounts received by the Agent but paid only to BANA shall be
paid by BANA to the Agent, for the account of such Formula Lender. If a
Settlement Report indicates that the increase in the dollar amount of a Formula
Lender's Net Outstandings which is required to comply with the first sentence of
Section 2.8.1 (Revolving Loan) is exactly equal to such Formula Lender's
Revolving Credit Pro Rata Share of amounts received by the Agent but paid only
to BANA since the next preceding Settlement Date, such Formula Lender and the
Agent, in their respective records, shall apply such Formula Lender's Revolving
Credit Pro Rata Share of such amounts to the increase in such Formula Lender's
Net Outstandings.
(g) Return of Payments. If any amounts received by BANA in respect of
the Obligations are later required to be returned or repaid by BANA to the
Borrower or any other obligor or their respective representatives or successors
in interest, whether by court order, settlement or otherwise, in excess of the
BANA's Revolving Credit Pro Rata Share of all such amounts required to be
returned by all Formula Lenders, each other Formula Lender shall, upon demand by
BANA with notice to the Agent, pay to the Agent for the account of BANA, an
amount equal to the excess of such Formula Lender's Revolving Credit Pro Rata
Share of all
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such amounts required to be returned by all Formula Lenders over
the amount, if any, returned directly by such Formula Lender.
(h) Payments to Agent, Formula Lenders.
(i) Payment by any Formula Lender to the Agent shall be made
not later than 2:00 p.m. (Chicago, Illinois Time) on the Business Day
such payment is due, provided that if such payment is due on demand by
the Agent or another Formula Lender, such demand is made on the paying
Formula Lender not later than 10:00 a.m. (Chicago, Illinois Time) on
such Business Day. Payment by the Agent to any Formula Lender shall be
made by wire transfer, promptly following the Agent's receipt of funds
for the account of such Formula Lender and in the type of funds
received by the Agent, provided that if the Agent receives such funds
at or prior to 12:00 noon (Chicago, Illinois Time), the Agent shall
pay such funds to such Formula Lender by 2:00 p.m. (Chicago, Illinois
Time) on such Business Day. If a demand for payment is made after the
applicable time set forth above, the payment due shall be made by 2:00
p.m. (Chicago, Illinois Time) on the first Business Day following the
date of such demand.
(ii) If a Formula Lender shall, at any time, fail to make any
payment to the Agent required hereunder, the Agent may, but shall not
be required to, retain payments that would otherwise be made to such
Formula Lender hereunder and apply such payments to such Formula
Lender's defaulted obligations hereunder, at such time, and in such
order, as the Agent may elect in its sole discretion.
(iii) With respect to the payment of any funds under this
Section 2.8.2, whether from the Agent to a Formula Lender or from a
Formula Lender to the Agent, the party failing to make full payment
when due pursuant to the terms hereof shall, upon demand by the other
party, pay such amount together with interest on such amount at the
Federal Funds Rate.
2.8.3 Term Loan A.
The Agent shall pay to each Formula Lender on each Interest Payment
Date, each Term Loan A Installment Payment Date, and on the date of each
mandatory prepayment of Term Loan A, as the case may be, such Formula Lender's
ratable share of all payments received by the Agent in immediately available
funds on account of the Term Loan A, net of any amounts payable by such Formula
Lender to the Agent, by wire transfer of same day funds; the amount payable to
each Formula Lender shall be based on the principal amount of the Term Loan A
owing to such Formula Lender.
2.8.4 Term Loan B.
The Agent shall pay to each Term Loan B Lender on each Interest
Payment Date, each Term Loan B Installment Payment Date, and on the date of each
mandatory prepayment of Term Loan B, as the case may be, such Term Loan B
Lender's ratable share of all payments received by the Agent in immediately
available funds on account of the Term Loan B, net of any amounts payable by
such Term Loan B Lender to the Agent, by wire transfer of same day funds; the
amount payable to each Term Loan B Lender shall be based on the principal amount
of the Term Loan B owing to such Term Loan B Lender.
2.8.5 Capital Expenditure Loan.
The Agent shall pay to each Formula Lender on each Interest Payment
Date and date provided in the Capital Expenditure Line Notes or Capital
Expenditure Line Installment
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Payment Schedule, as the case may be, such Formula Lender's Capital Expenditure
Line Pro Rata Share of all payments received by the Agent in immediately
available funds on account of the Capital Expenditure Line, net of any amounts
payable by such Formula Lender to the Agent, by wire transfer of same day funds;
the amount payable to each Formula Lender shall be based on the principal amount
of the Capital Expenditure Line owing to such Formula Lender.
2.8.6 Settlement of Other Obligations.
All other amounts received by the Agent on account of, or applied by
the Agent to the payment of, any Obligation owed to the Lenders (including,
without limitation, Fees payable to the Lenders and proceeds from the sale of,
or other realization upon, all or any part of the Collateral following an Event
of Default) that are received by the Agent not later than 12:00 noon (Chicago,
Illinois Time) on a Business Day will be paid by the Agent to each Lender by
2:00 p.m. (Chicago, Illinois Time) on the same Business Day, and any such
amounts that are received by the Agent after 12:00 noon (Chicago, Illinois Time)
will be paid by the Agent to each Lender by 2:00 p.m. (Chicago, Illinois Time)
on the following Business Day. Unless otherwise stated herein, the Agent shall
distribute Fees payable to the Formula Lenders ratably to the Formula Lenders
based on each Formula Lender's Revolving Credit Pro Rata Share and shall
distribute Fees payable to the Term Loan B Lenders ratably to the Term Loan B
Lenders based on each Term Loan B Lender's Pro Rata Share. The Agent shall
distribute proceeds from the sale of, or other realization upon, all or any part
of the Collateral following an Event of Default to the Lenders in the manner
described in Section 7.2.5.
2.8.7 Presumption of Payment.
(a) Unless the Agent shall have received notice from a Formula Lender
prior to 12:00 noon (Chicago, Illinois Time) on the date of the requested date
for the making of advances under the Revolving Loan that such Formula Lender
will not, subject to the provisions of Section 2.8.3 hereof, make available to
the Agent such Formula Lender's Revolving Credit Pro Rata Share of the advances
to be made on such date, the Agent may assume that such Formula Lender has made
such amount available to the Agent on such date in accordance with this Section
2.8, and the Agent, in its sole discretion may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount
on behalf of such Formula Lender.
(b) Subject to the provisions of Sections 2.8.2 and 2.8.3 hereof, if
and to the extent such Formula Lender shall not have so made available to the
Agent its Revolving Credit Pro Rata Share of the advances under the Revolving
Loan made on such date, and the Agent shall have so made available to the
Borrower a corresponding amount on behalf of such Formula Lender, such Formula
Lender shall, on demand, pay to the Agent such corresponding amount, together
with interest thereon, at the Federal Funds Rate, for each day from the date
such corresponding amount shall have been so available by the Agent to the
Borrower until the date such amount shall have been repaid to the Agent. Such
Formula Lender shall not be entitled to payment of any interest which accrues on
the amount made available by the Agent to the Borrower for the account of such
Formula Lender until such time as such Formula Lender reimburses the Agent for
such amount, together with interest thereon, as provided in this Section 2.8.7.
(c) A certificate of the Agent submitted to any Formula Lender with
respect to any amounts owing to the Agent by such Formula Lender under this
Section 2.8.7 shall be rebuttably presumptive evidence of such amounts, absent
manifest error. If such Formula Lender does not pay any amounts owing to the
Agent promptly upon the Agent's demand, the Agent shall promptly notify the
Borrower of such Formula Lender's failure to make payment, and the Borrower
shall immediately repay such amounts to the Agent, together with
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accrued interest thereon at the applicable rate on the Revolving Loan, all
without prejudice to the rights and remedies of the Agent against any defaulting
Formula Lender. Any and all amounts due and payable to the Agent by the Borrower
under this Section 2.8.7 constitute and shall be part of the Agent's
Obligations.
(d) Unless the Agent shall have otherwise received notice from the
Borrower prior to the date on which any payment is due to the Agent that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower have made such payment in full to the Agent on such date and the Agent
in its sole discretion may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Borrower shall not have so made such
payment in full to the Agent and the Agent shall have distributed to any Lender
all or any portion of such amount, such Lender shall repay to the Agent on
demand the amount so distributed to such Lender, together with interest thereon
at the Federal Funds Rate, for each day from the date such amount is distributed
to such Lender until the date such Lender repays such amount to the Agent.
2.8.8 Tax Withholding Clause.
Each Lender or Assignee or participant of a Lender that is not
incorporated or organized under the Laws of the United States of America or a
state thereof agrees that it will deliver to the Borrower and the Agent two (2)
duly completed copies of the following: (a) Internal Revenue Service Form W-9,
4224 or 1001, or other applicable form prescribed by the Internal Revenue
Service, certifying that such Lender, Assignee or participant is entitled to
receive payments under this Agreement and the other Financing Documents without
deduction or withholding of any United States federal income taxes, or is
subject to such tax at a reduced rate under an applicable tax treaty, or (b)
Internal Revenue Service Form W-8 or other applicable form or a certificate of
such Lender, Assignee or participant indicating that no such exemption or
reduced rate is allowable with respect to such payments. Each Lender, Assignee
or participant required to deliver to the Borrower and the Agent a form or
certificate pursuant to the preceding sentence shall deliver such form or
certificate as follows: (i) each Lender which is a party hereto on the Closing
Date shall deliver such form or certificate at least five (5) Business Days
prior to the first date on which any interest or fees are payable by the
Borrower hereunder for the account of each Lender; (ii) each Assignee or
participant shall deliver such form or certificate at least five (5) Business
Days before the effective date of such assignment or participation (unless the
Agent in its sole discretion shall permit such Assignee or participant to
deliver such form or certificate less than five (5) Business Days before such
date in which case it shall be due on the date specified by the Agent). Each
Lender, Assignee or participant which so delivers a Form W-8, W-9, 4224 or 1001
further undertakes to deliver to the Borrower and the Agent two (2) additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Agent, either certifying that such Lender, Assignee or participant is
entitled to receive payments under this Agreement and the other Financing
Documents without deduction or withholding of any United States federal income
taxes or is subject to such tax at a reduced rate under an applicable tax treaty
or stating that no such exemption or reduced rate is allowable. The Agent shall
be entitled to withhold United States federal income taxes at the full
withholding rate unless the Lender, Assignee or participant establishes an
exemption or that it is subject to a reduced rate as established pursuant to the
above provisions.
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Section 2.9 Amendment and Restatement.
This Agreement amends and restates the Original Financing Agreement.
As such, this Agreement represents in part a renewal of, and is issued in
substitution and exchange for, and not in satisfaction of, the loans and the
other obligations under the Original Financing Agreement. The loans and the
other obligations under the Original Financing Agreement are continuing
obligations of the Borrower to the Bank, and nothing herein shall be construed
to deem such loans or obligations paid, or to release or terminate any lien or
security interest given to secure such original Loans or obligations. Bank may
satisfy all or a portion of its obligation to make the Loans on the Closing Date
by converting the original loans into Loans under this Amended and Restated
Financing and Security Agreement, and payment in full of and the satisfaction of
all Obligations under this Amended and Restated Financing and Security Agreement
shall also be deemed to be payment in full and satisfaction of such original
loans.
ARTICLE 3 THE COLLATERAL
Section 3.1 Debt and Obligations Secured.
All property and Liens assigned, pledged or otherwise granted under or
in connection with this Agreement (including, without limitation, those under
Section 3.2 (Grant of Liens) below) or any of the Financing Documents shall
secure (a) the payment of all of the Obligations, including, without limitation,
any and all Letter of Credit Obligations and any and all Agent's Obligations,
and (b) the performance, compliance with and observance by the Borrower of the
provisions of this Agreement and all of the other Financing Documents or
otherwise under the Obligations. Subject to Section 7.2.5, the security interest
and Lien of each Lender and the Agent in such property shall rank equally in
priority with the interest of each other Lender.
Section 3.2 Grant of Liens.
The Borrower hereby assigns, pledges and grants to the Agent, for the
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent's Obligations, and agrees that the Agent and the Lenders shall have a
perfected and continuing security interest in, Lien on, and a right of set-off
against the following property and interests in property, whether now owned or
hereafter acquired or existing, and wherever located (the "Collateral"): (a) all
of Borrower's rights, title and interest in and to its Accounts, Inventory,
Chattel Paper, Documents, Instruments, Equipment, Securities, and General
Intangibles, whether now owned or existing or hereafter acquired or arising, (b)
all returned, rejected or repossessed goods, the sale or lease of which shall
have given or shall give rise to an Account or Chattel Paper, (c) all insurance
policies relating to the foregoing, (d) all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to the
foregoing and all equipment and general intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and (e) all cash and non-cash proceeds and products of the foregoing.
The Borrower further agrees that the Agent, for the benefit of the Lenders and
for the benefit of the Agent with respect to the Agent's Obligations, shall have
in respect thereof all of the rights and remedies of a secured party under the
Uniform Commercial Code as well as those provided in this Agreement, under each
of the other Financing Documents and under applicable Laws.
The Agent, the Lenders and the Borrower agree that this ARTICLE 3 is
intended to grant and govern Liens on the assets of the Borrower. Any and all
references to Collateral included elsewhere in this Agreement (other than in
this ARTICLE 3) are intended to include and govern the Collateral of the
Borrower, whether the Liens on such Collateral arise under the provisions of
this Agreement or under any of the other Security Documents.
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Section 3.3 Collateral Disclosure List.
On or prior to the Closing Date, the Borrower shall deliver to the
Agent a list (the "Collateral Disclosure List") which shall contain such
information with respect to the Borrower's business and real and personal
property as the Agent may require and shall be certified by a Responsible
Officer of the Borrower, all in the form provided to the Borrower by the Agent.
Without implying any limitation on any other provision of this Agreement, the
Borrower shall furnish to the Agent an update of the information contained in
the Collateral Disclosure List at any time and from time to time as may be
necessary to make the information contained in the Collateral Disclosure List
complete and correct and at other times as may be requested by the Agent. Such
updates shall be deemed to be included in the definition of "Collateral
Disclosure List."
Section 3.4 Personal Property.
The Borrower acknowledges and agrees that it is the intention of the
parties to this Agreement that the Agent, for the benefit of the Lenders and the
Agent shall have a first priority, perfected Lien, in form and substance
satisfactory to the Agent and its counsel, on all of the Borrower's Collateral,
whether now owned or hereafter arising or acquired: In furtherance of the
foregoing:
3.4.1 Securities, Instruments Chattel Paper, Promissory Notes, etc.
(a) On the Closing Date and without implying any limitation on the
scope of Section 3.2 (Grant of Liens) above, the Borrower shall deliver to
Agent, for the benefit of the Lenders and the Agent, all originals of all of the
Collateral consisting of Securities, Instruments, Chattel Paper and Documents
(other than checks for deposit in the ordinary course) and, if the Agent so
requires, shall execute and deliver a separate pledge, assignment and security
agreement in form and content reasonably acceptable to the Agent, which pledge,
assignment and security agreement shall assign, pledge and ▇▇▇▇▇ ▇ ▇▇▇▇ to the
Agent, for the benefit of the Lenders and the Agent, on all of such Collateral.
(b) In the event that the Borrower shall acquire after the Closing
Date any Collateral consisting of Securities, Instruments, Chattel Paper or
Documents, (other than checks for deposit in the ordinary course) the Borrower
shall promptly so notify the Agent and deliver the originals of all of the
foregoing to the Agent promptly and in any event within ten (10) days of each
acquisition.
(c) All Collateral consisting of Securities, Instruments, Chattel
Paper and Documents (other than checks for deposit in the ordinary course) shall
be delivered to the Agent endorsed and/or assigned as required by the pledge,
assignment and security agreement and/or as the Agent may require and, if
applicable, shall be accompanied by blank irrevocable and unconditional stock or
bond powers.
3.4.2 Intellectual Property.
(a) On the Closing Date and without implying any limitation on the
scope of Section 3.2 (Grant of Liens) above, the Borrower shall execute and
deliver all Financing Documents and take all actions requested by the Agent in
order to perfect a first priority assignment of Patents, Copyrights, Trademarks,
customer lists or any other type or kind of intellectual property owned by the
Borrower on the Closing Date. In addition, the Borrower agrees to take those
actions consistent with this Agreement and the other Financing Documents to
perfect a collateral assignment of such property acquired by such Borrower after
the Closing Date.
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(b) The Borrower grants to the Agent the nonexclusive right and
license after and during the continuance of an Event of Default to use any and
all Intellectual Property of the Borrower for the purposes set forth in Section
7.2 (Remedies) and for the purpose of enabling the Agent to process and realize
on the Collateral and to permit any purchaser of any portion of the Collateral
through a foreclosure sale or any other exercise of the rights and remedies of
the Agent and/or any of the Lenders under this Agreement, under any of the
Financing Documents or under applicable Laws, to use, sell or otherwise dispose
of the Collateral. Such right and license is granted free of charge, without the
requirement that any monetary payment whatsoever be made to the Borrower or any
other Person by the Agent, any Lender or any purchaser or purchasers of the
Collateral. The Borrower hereby represents, warrants, covenants and agrees that
it presently has, and shall continue to have, the right, without the approval or
consent of others, to grant the license set forth in this Section.
Section 3.5 Record Searches.
As of the Closing Date and thereafter at the time any Financing
Document is executed and delivered by the Borrower pursuant to this Section, the
Agent shall have received, in form and substance satisfactory to the Agent, such
Lien or record searches with respect to the Borrower and/or any other Person, as
appropriate, and the property covered by such Financing Document showing that
the Lien of such Financing Document will be a perfected first priority Lien on
the property covered by such Financing Document subject only to Permitted Liens,
to the extent permitted under Section 3.4 (Personal Property.), or to such other
matters as the Requisite Lenders may approve.
Section 3.6 Real Estate.
The Borrower acknowledges and agrees that it is the intention of the
parties to this Agreement that the Agent, for the benefit of the Lenders and the
Agent, shall have a first priority, perfected Lien, in form and substance
reasonably satisfactory to the Agent and its counsel, on all of Borrower's real
property of any kind and nature whatsoever, whether now owned or hereafter
acquired, subject only to the Permitted Liens, if any.
With respect to each parcel of real property now owned by the Borrower, the
Borrower, as appropriate, shall on the Closing Date execute and deliver the
Mortgages. With respect to real property acquired by the Borrower on or after
the Closing Date, the Borrower shall, promptly after acquisition thereof, ▇▇▇▇▇
▇ ▇▇▇▇ covering such real property to the Agent, for the benefit of the Lenders
and the Agent, under the provisions of a mortgage, deed of trust, or other
document, as appropriate. Each Financing Document to be executed and delivered
pursuant hereto shall:
(a) be in form and substance reasonably satisfactory to the Agent;
(b) create a first priority Lien in such real property in favor of the
Agent, for the benefit of the Lenders and the Agent, subject only to Permitted
Liens, and such other matters as the Agent may approve;
(c) be accompanied by a current appraisal of the fair market value of
the subject real property prepared by appraisers satisfactory to the Agent;
(d) be accompanied by a current survey satisfactory in all respects to
the Agent of the subject real property, prepared by a registered land surveyor
or engineer satisfactory to the Agent;
(e) be accompanied by evidence satisfactory to the Agent and Lenders
regarding the current and past pollution control practices at such real property
in connection with
66
the discharge, emission, handling, disposal or existence of Hazardous Materials,
which may include, at the reasonable request of the Agent or the Requisite
Lenders, an environmental audit of such real property prepared by a person or
firm reasonably acceptable to the Agent;
(f) be accompanied by a mortgagee's title insurance policy or marked-
up unconditional commitment or binder for such insurance in form and substance
satisfactory to the Agent and issued by a title insurance company satisfactory
to the Agent; and
(g) be accompanied by a signed opinion of counsel addressed to the
Agent and each of the Lenders, in form and substance reasonably satisfactory to
the Agent.
Section 3.7 Costs.
The Borrower agrees to pay, as part of the Enforcement Costs and to
the fullest extent permitted by applicable Laws, on demand all reasonable costs,
fees and expenses incurred by the Agent or any Lender in connection with the
taking, perfection, preservation, protection and/or release of a Lien on the
Collateral, including, without limitation:
(a) reasonable fees and expenses incurred by the Agent in
preparing, reviewing, negotiating and finalizing the Financing
Documents from time to time (including, without limitation, reasonable
attorneys' fees incurred in connection with preparing, reviewing,
negotiating, and finalizing any of the Financing Documents, including,
any amendments and supplements thereto);
(b) all filing and/or recording taxes or fees;
(c) all title insurance premiums and costs;
(d) all costs of Lien and record searches;
(e) reasonable attorneys' fees in connection with all legal
opinions required;
(f) appraisal and/or survey costs; and
(g) all related costs, fees and expenses.
Section 3.8 Release.
Upon the payment and performance of all Obligations of the Borrower
and all obligations and liabilities of each other Person, other than the Agent
and the Lenders, under this Agreement and all other Financing Documents, the
termination and/or expiration of all of the Commitments, all Letters of Credit,
and all Outstanding Letter of Credit Obligations, upon the Borrower's request
and at the Borrower's sole cost and expense, the Agent shall release and/or
terminate any Financing Document but only if and provided that there is no
commitment or obligation (whether or not conditional) of the Agent and/or any of
the Lenders to readvance amounts which would be secured thereby and/or no
commitment or obligation of the Agent to issue or cause to be issued any Letter
of Credit or return or restore any payment of any Current Letter of Credit
Obligations.
Section 3.9 Inconsistent Provisions.
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this Agreement
govern.
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
The Borrower represents and warrants to the Agent and the Lenders, as
follows:
4.1.1 Subsidiaries.
The Borrower has the Subsidiaries listed on the Collateral Disclosure
List attached hereto and made a part hereof and no others. Each of the
Subsidiaries is a Wholly Owned Subsidiary except as shown on the Collateral
Disclosure List, which correctly indicates the nature and amount of the
Borrower's ownership interests therein.
4.1.2 Good Standing.
Each of the Borrower and its Subsidiaries, if any, (a) is a
corporation, duly organized, existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, as applicable, (b) has the legal
power to own its property and to carry on its business as now being conducted,
and (c) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary, except
where such failure to qualify could not reasonably be expected to have a
Material Adverse Effect.
4.1.3 Power and Authority.
The Borrower has full legal power and authority to execute and deliver
this Agreement and the other Financing Documents and Merger Documents to which
it is a party, to make the borrowings and to request Letters of Credit under
this Agreement, and to incur and perform the Obligations whether under this
Agreement, the other Financing Documents or otherwise, all of which have been
duly authorized by all proper and necessary corporate action on the part of the
Borrower. No consent or approval of shareholders or any creditors of the
Borrower, and no consent, approval, filing or registration with or notice to any
Governmental Authority on the part of the Borrower, is required as a condition
to the execution, delivery, validity or enforceability of this Agreement, the
other Financing Documents, the performance by the Borrower of the Obligations,
except for consents, approvals, filings, registrations and notices that shall be
received, given or accomplished on or before the Closing Date and except for
filings necessary for perfection of Liens in favor of the Agent.
4.1.4 Binding Agreements.
This Agreement and each of the other Financing Documents and Merger
Documents executed and delivered by the Borrower have been properly executed and
delivered and constitute the valid and legally binding obligations of the
Borrower and are fully enforceable against the Borrower in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general applications affecting the rights and remedies of
creditors and secured parties, and general principles of equity regardless of
whether applied in a proceeding in equity or at law.
4.1.5 No Conflicts.
Neither the execution, delivery and performance of the terms of this
Agreement or of any of the other Financing Documents or Merger Documents
executed and delivered by the Borrower nor the consummation of the transactions
contemplated by this Agreement will conflict with, violate or be prevented by
(a) the Borrower's charter or bylaws,
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(b) any other existing mortgage, indenture, material contract or material
agreement binding on the Borrower or affecting its property, or (c) any Laws,
the conflict or violation of which could reasonably be expected to have a
Material Adverse Effect.
4.1.6 No Defaults, Violations.
(a) No Default or Event of Default has occurred and is continuing.
(b) The Borrower is not in default under or with respect to any
obligations under the Indenture.
(c) Neither the Borrower nor any of its Subsidiaries is in default
under or with respect to any obligation under any existing mortgage, indenture,
contract or agreement binding on it or affecting its property in any respect
(other than the defaults under the Indenture, as further described on Schedule
4.1.6(b)), which default could reasonably be expected to have a Material Adverse
Effect.
4.1.7 Compliance with Laws.
Neither the Borrower nor any of its Subsidiaries is in violation of
any applicable Laws (including, without limitation, any Laws relating to
employment practices, to environmental, occupational and health standards and
controls) or order, writ, injunction, decree or demand of any court, arbitrator,
or any Governmental Authority affecting Borrower or any of its Subsidiaries or
any of its or their respective properties, the violation of which, considered in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
4.1.8 Margin Stock.
None of the proceeds of the Loans will be used, directly or
indirectly, by the Borrower or any Subsidiary for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry, any "margin stock" within the meaning
of Regulation U (12 CFR Part 221), of the Board of Governors of the Federal
Reserve System or for any other purpose which might make the transactions
contemplated in this Agreement a "purpose credit" within the meaning of said
Regulation U, or cause this Agreement to violate any other regulation of the
Board of Governors of the Federal Reserve System or the Securities Exchange Act
of 1934 or the Small Business Investment Act of 1958, as amended, or any rules
or regulations promulgated under any of such statutes.
4.1.9 Investment Company Act; Margin Securities.
Neither the Borrower nor any of its Subsidiaries is an investment
company within the meaning of the Investment Company Act of 1940, as amended,
nor is it, directly or indirectly, controlled by or acting on behalf of any
Person which is an investment company within the meaning of said Act. Neither
the Borrower nor any of its Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin stock" within the meaning of Regulation U (12 CFR
Part 221), of the Board of Governors of the Federal Reserve System.
4.1.10 Litigation.
There are no proceedings, actions or investigations pending or, so far
as the Borrower knows, threatened before or by any court, arbitrator or any
Governmental
69
Authority which, in any one case or in the aggregate, as determined by the Agent
in Good Faith, could reasonably be expected to have a Material Adverse Effect.
4.1.11 Financial Condition of Borrower.
(a) The interim financial statements delivered to the Agent by the
Borrower under Section 6.1.1(c) (Financial Statements) of this Agreement from
time to time, are in all material respects complete and correct and fairly
present the financial position of the Borrower and its Subsidiaries and the
results of their operations and transactions in their surplus accounts as of the
dates and for the periods referred to and have been prepared in accordance with
GAAP applied on a consistent basis throughout the period involved (subject to
normal year-end adjustments and the absence of footnotes). There are no material
liabilities, direct or indirect, fixed or contingent, of the Borrower or any of
its Subsidiaries as of the date of such financial statements which are not
reflected therein or in the notes thereto to the extent required by GAAP. There
has been no material adverse change in the financial condition or operations of
the Borrower and its Subsidiaries since the Closing Date and to the best of the
Borrower's knowledge (after due inquiry) no such material adverse change is
pending or threatened. Neither the Borrower nor any of its Subsidiaries has
guaranteed the obligations of, or made any investment in or advances to, any
Person, except as reflected in such financial statements.
(b) The audited annual financial statements of the Borrower delivered
to the Agent by the Borrower under Section 6.1.1(a) (Financial Statements) of
this Agreement from time to time, are in all material respects complete and
correct and fairly present the financial position of the Borrower and its
Subsidiaries and the results of their operations and transactions in their
surplus accounts as of the date and for the period referred to and have been
prepared in accordance with GAAP applied on a consistent basis throughout the
period involved. There are no material liabilities, direct or indirect, fixed or
contingent, of the Borrower or its Subsidiaries as of the date of such financial
statements which are not reflected therein or in the notes thereto to the extent
required by GAAP. Neither Borrower nor any of its Subsidiaries has guaranteed
the obligations of, or made any investment in or advances to, any Person, except
as reflected in such financial statements.
4.1.12 Proforma Financial Statements.
On or before the Closing Date, the Borrower has furnished to the Agent
a proforma consolidated balance sheet of the Borrower and its Subsidiaries as of
December 31, 1999 (the "Proforma Balance Sheet"), together with proforma
financial projections for the two (2) year period subsequent to the Closing Date
(the "Proforma Financial Projections"). The Proforma Balance Sheet is correct
and complete in all material respects, and fairly presents in all material
respects the proforma consolidated financial condition of the Borrower and its
Subsidiaries. The Proforma Financial Projections represent the Borrower's good
faith estimate of the future operations of the Borrower as of the date thereof
and are based on reasonable assumptions. The Proforma Financial Projections are
not a guaranty of future performance.
4.1.13 Full Disclosure.
The financial statements referred to in Section 4.1.11 (Financial
Condition of Borrower) of this Agreement, the Financing Documents (including,
without limitation, this Agreement), and the statements, reports or certificates
furnished by the Borrower in connection with the Financing Documents (a) do not
contain any untrue statement of a material fact and (b) when taken in their
entirety, do not omit any material fact necessary to make the statements
contained therein not misleading. There is no fact known to the Borrower which
the Borrower has not disclosed to the Agent prior to the date of this Agreement
with respect to the transactions
70
contemplated by the Financing Documents which constitutes or could reasonably be
expected to have a Material Adverse Effect.
4.1.14 Solvency.
In each case after giving effect to the Indebtedness for Borrowed
Money represented by the Obligations outstanding and/or to be incurred and the
transactions contemplated by this Agreement, the Borrower is solvent, having
assets of a fair salable value which exceed the amount required to pay its debts
as they become absolute and matured (including contingent, subordinated,
unmatured and unliquidated Liabilities), and the Borrower is able to and
anticipates that it will be able to meet its debts as they mature and have
adequate capital to conduct the business in which it is or proposes to be
engaged.
4.1.15 Indebtedness for Borrowed Money.
Except for the Obligations, and except as set forth in Schedule 4.1.15
attached hereto and made a part of this Agreement or, following the Closing
Date, as otherwise permitted under Section 6.2.4 hereof, the Borrower has no
Indebtedness for Borrowed Money. The Agent has received photocopies of all
promissory notes evidencing any Indebtedness for Borrowed Money set forth in
Schedule 4.1.15, together with any and all subordination agreements, other
agreements, documents, or instruments securing, evidencing, guarantying or
otherwise executed and delivered in connection therewith.
4.1.16 Taxes.
The Borrower and its Subsidiaries have filed all returns, reports and
forms for Taxes which, to the knowledge of the Borrower, are required to have
been filed, and has paid all Taxes as shown on such returns or on any assessment
received by it, to the extent that such Taxes have become due, unless and to the
extent only that such Taxes, assessments and governmental charges are currently
contested in good faith and by appropriate proceedings by the Borrower, such
Taxes are not the subject of any Liens other than Permitted Liens, and adequate
reserves therefor have been established as required under GAAP. All tax
liabilities of the Borrower were as of the date of audited financial statements
referred to in Section 4.1.11 (Financial Condition of Borrower) above, and are
now, adequately provided for on the books of the Borrower and its Subsidiaries,
as appropriate. Except to the extent being contested diligently and in good
faith in accordance with the provisions of this Agreement, no tax liability has
been asserted by the Internal Revenue Service or any state or local authority
against the Borrower for Taxes that has not been paid or provided for.
4.1.17 ERISA.
With respect to any "pension plan" as defined in Section 3(2) of
ERISA, which plan is now or in the two years previous to the Closing Date has
been maintained or contributed to by the Borrower and/or to the Borrower's
knowledge by any commonly controlled entity: (a) no "accumulated funding
deficiency" as defined in Code (S) 412 or ERISA (S) 302 has occurred, whether or
not that accumulated funding deficiency has been waived; (b) no Reportable Event
has occurred which could reasonably be expected to have a Material Adverse
Effect; (c) no termination of any plan subject to Title IV of ERISA has occurred
which could reasonably be expected to have a Material Adverse Effect; (d)
neither the Borrower nor, to the Borrower's knowledge, any commonly controlled
entity (as defined under ERISA) has incurred a "complete withdrawal" within the
meaning of ERISA (S) 4203 from any Multiemployer Plan; (e) neither the Borrower
nor, to the Borrower's knowledge, any commonly controlled entity has incurred a
"partial withdrawal" within the meaning of ERISA (S) 4205 with respect to any
Multiemployer Plan; and (f) no Multiemployer Plan to which the Borrower or, to
the Borrower's
71
knowledge, any commonly controlled entity has an obligation to contribute is in
"reorganization" within the meaning of ERISA (S) 4241, nor has notice been
received by the Borrower or any commonly controlled entity that such a
Multiemployer Plan will be placed in "reorganization".
4.1.18 Title to Properties.
The Borrower has good and marketable title to or good leasehold
interest in all of its properties, including, without limitation, the Collateral
and the properties and assets reflected in the Pro Forma Balance Sheet and the
balance sheets described in Section 4.1.11 (Financial Condition of Borrower)
above, subject to Permitted Liens.
4.1.19 Patents, Trademarks, Etc.
The Borrower and each of its Subsidiaries owns, possesses, or has the
right to use all necessary Patents, licenses, Trademarks, Copyrights, permits
and franchises to own their respective properties and to conduct their
respective businesses as now conducted, without known conflict with the rights
of any other Person. Any and all obligations to pay royalties or other charges
with respect to such properties and assets are properly reflected on the
financial statements furnished from time to time and described in Section 4.1.11
(Financial Condition of Borrower) above to the extent required by GAAP.
4.1.20 Employee Relations.
Except as disclosed on Schedule 4.1.20 attached hereto and made a part
of this Agreement, (a) neither the Borrower nor any Subsidiary thereof nor any
of the Borrower's or its Subsidiary's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of the Borrower or any Subsidiary and to
the Borrower's knowledge no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of the Borrower or
any Subsidiary, (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Borrower, threatened
between the Borrower or any Subsidiary and its employees, and (d) neither the
Borrower nor any Subsidiary is subject to an employment contract, severance
agreement, commission contract (other than contracts with sales
representatives), consulting agreement or bonus agreement. Hours worked and
payments made to the employees of the Borrower have not been in violation of the
Fair Labor Standards Act, or any other applicable Law dealing with such matters.
All payments due from the Borrower or any of its Subsidiaries or for which any
claim may be made against the Borrower or a Subsidiary, on account of wages and
employee and retiree health and welfare insurance and other benefits have been
paid or accrued as a liability on its books in accordance with applicable Laws.
The consummation of the transactions contemplated by the Financing Agreement or
any of the other Financing Documents, will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower or any of its Subsidiaries
is a party or by which it is bound.
4.1.21 Presence of Hazardous Materials or Hazardous Materials
Contamination.
To the best of the Borrower's knowledge, (a) no Hazardous Materials
are located on any real property owned, controlled or operated by the Borrower
or any of its Subsidiaries or for which the Borrower or any of its Subsidiaries
is, or is claimed to be, responsible, except for reasonable quantities of
necessary supplies for use by the Borrower or any of its Subsidiaries in the
ordinary course of its business and stored, used, managed after use and disposed
of in compliance with applicable Laws; and (b) no property owned, controlled or
operated by the Borrower or any of its Subsidiaries or for which the Borrower or
any of its
72
Subsidiaries has, or is claimed to have, responsibility has ever been used as a
manufacturing or dump site for Hazardous Materials nor is affected by Hazardous
Materials Contamination at any other property.
4.1.22 Perfection and Priority of Collateral.
The Agent and the Lenders have, or upon execution and recording of
this Agreement and the Security Documents will have, and will continue to have
as security for the Obligations, a valid and perfected Lien on and security
interest in all Collateral, free of all other Liens, claims and rights of third
parties whatsoever except Permitted Liens.
4.1.23 Places of Business and Location of Collateral.
The information contained in the Collateral Disclosure List is
complete and correct. The Collateral Disclosure List completely and accurately
identifies the address of (a) the chief executive office of the Borrower, (b)
any and each other place of business of the Borrower, (c) the location of all
books and records pertaining to the Collateral, and (d) each location, other
than the foregoing, where any of the Collateral is located. The proper and only
places to file financing statements with respect to the Collateral within the
meaning of the Uniform Commercial Code are the filing offices for those
jurisdictions in which the Borrower maintains a place of business as identified
on the Collateral Disclosure List.
4.1.24 Business Names and Addresses.
Except as set forth in Collateral Disclosure List as in effect on the
Closing Date, in the five (5) years preceding the date hereof, the Borrower has
not changed its name, identity or corporate structure, has not conducted
business under any name other than its current name, and has not conducted its
business in any jurisdiction other than those disclosed on the Collateral
Disclosure List.
4.1.25 Equipment
No Equipment is held by the Borrower on a sale on approval basis.
4.1.26 Inventory.
As of the Closing Date, except to the extent from time to time
disclosed in Borrowing Base Reports provided to the Agent, the Inventory of the
Borrower is (a) of good and merchantable quality, free from defects, (b) not
stored with a bailee, warehouseman, carrier, or similar party, (c) not on
consignment, sale on approval, or sale or return, and (d) located at the places
of business set forth on the Collateral Disclosure List. No goods offered for
sale by the Borrower are consigned to or held on sale or return terms by the
Borrower. All Inventory manufactured or produced by the Borrower or any
Subsidiary has been and continues to be manufactured and produced in compliance
with all applicable requirements of Sections 6, 7 and 12 of the Fair Labor
Standards Act, as amended, and all regulations and orders of the United States
Department of Labor.
4.1.27 Accounts.
With respect to all of Borrower's Accounts, (a) they are genuine, and
in all respects what they purport to be, and are not evidenced by a judgment,
any Instruments and Chattel Paper (unless such judgment has been assigned and
such Instrument or Chattel Paper has been endorsed and delivered to the Agent
for the benefit of itself and the Lenders); (b) they represent bona fide
transactions completed in accordance with the terms and provisions
73
contained in the invoices, purchase orders and other contracts relating thereto,
and the underlying transaction therefor is in accordance with all applicable
Laws; (c) the amounts shown on the Borrower's books and records, with respect
thereto are actually and absolutely owing to the Borrower and are not contingent
or subject to reduction for any reason other than regular discounts, credits or
adjustments in the ordinary course of its business; (d) no payments have been or
shall be made thereon except payments turned over to the Agent by the Borrower;
(e) to the best of the Borrower's knowledge (after due inquiry), all Account
Debtors thereon have the capacity to contract; and (f) the goods sold, leased or
transferred or the services furnished giving rise thereto are not subject to any
Liens except the security interest granted to the Agent and the Lenders by this
Agreement and Permitted Liens.
4.1.28 Compliance with Eligibility Standards.
Each Account of the Borrower and all Inventory included in the
calculation of the Borrowing Base does, as of the time of the most recent
Borrowing Base Report, meet and comply with all of the standards for Eligible
Receivables and Eligible Inventory. With respect to all Eligible Receivables set
forth in the most recent Borrowing Base Report (a) there are no facts, events or
occurrences known to the Borrower which in any way materially impair the
validity, collectability or enforceability thereof or tend to reduce the amount
payable thereunder; and (b) there are no proceedings or actions known to the
Borrower which are threatened or pending against any Account Debtor which could
reasonably be expected to result in any material adverse change in the Borrowing
Base.
4.1.29 Chatwins Merger
On or before the Closing Date, the Agent has received true and correct
photocopies of the Chatwins Merger Agreement and each of the Chatwins Merger
Documents, executed, delivered, and/or furnished on or before the Closing Date
in connection with the Chatwins Merger. Neither the Chatwins Merger Agreement
nor any of the Chatwins Merger Documents have been modified, changed,
supplemented, canceled, amended or otherwise altered or affected, except as
otherwise disclosed to the Agent in writing on or before the Closing Date or
except to the extent that Agent shall have given its prior written consent
thereto after the Closing Date. On the Closing Date, the Chatwins Merger will be
effected, closed and consummated pursuant to, and in accordance with, the terms
and conditions of the Chatwins Merger Agreement and in accordance with all
applicable Laws.
4.1.30 Oneida Merger
On or before the Closing Date, the Agent has received true and correct
photocopies of each of the Oneida Merger Documents, executed, delivered, and/or
furnished on or before the Closing Date in connection with the Oneida Merger.
None of the Oneida Merger Documents have been modified, changed, supplemented,
canceled, amended or otherwise altered or affected, except as otherwise
disclosed to the Agent in writing on or before the Closing Date or except to the
extent that Agent shall have given its prior written consent thereto after the
Closing Date. On the Closing Date, the Oneida Merger will be effected, closed
and consummated pursuant to, and in accordance with, the terms and conditions of
the Oneida Merger Documents and in accordance with all applicable Laws.
4.1.31 King-Way Merger
On or before the Closing Date, the Agent has received true and correct
photocopies of the King-Way Merger Agreement and each of the King-Way Merger
Documents, executed, delivered, and/or furnished on or before the Closing Date
in connection with the King-Way Merger. Neither the King-Way Merger Agreement
nor any of the King-Way Merger
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Documents have been modified, changed, supplemented, canceled, amended or
otherwise altered or affected, except as otherwise disclosed to the Agent in
writing on or before the Closing Date or except to the extent that Agent shall
have given its prior written consent thereto after the Closing Date. On the
Closing Date, the King-Way Merger will be effected, closed and consummated
pursuant to, and in accordance with, the terms and conditions of the King-Way
Merger Agreement and in accordance with all applicable Laws.
4.1.32 Year 2000 Compliance.
The Borrower has (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations (including
those affected by suppliers, vendors and customers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its Subsidiaries (or its suppliers,
vendors and customers) may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date after December
31, 1999), (ii) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis and (iii) to date, implemented that plan in accordance
with that timetable. Based on the foregoing, the Borrower believes that all
computer applications (including those of its suppliers, vendors and customers)
that are material to its or any of its Subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (that is, be
"Year 2000 compliant").
Section 4.2 Survival; Updates of Representations and Warranties.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loans and extension of
credit made hereunder, and the incurring of any other Obligations and shall be
deemed to have been made at the time of each request for, and again at the time
the making of, each advance under the Loans or the issuance of each Letter of
Credit.
ARTICLE 5 CONDITIONS PRECEDENT
Section 5.1 Conditions to the Initial Advance and Initial Letter of Credit.
Except as set forth in the Post Closing Agreement, the making of the
initial advance under the Revolving Loans and the Term Loans, and the issuance
of any initial Letter of Credit, is subject to the fulfillment on or before the
Closing Date of the following conditions precedent in a manner satisfactory in
form and substance to the Agent and its counsel:
5.1.1 Organizational Documents.
The Agent shall have received from the Borrower:
(a) a certificate of good standing/legal existence certified by the
Secretary of State, or other appropriate Governmental Authority, of the state of
incorporation/formation of the Borrower;
(b) a certificate of qualification to do business for the Borrower
certified by the Secretary of State or other Governmental Authority of each
state in which the Borrower's business requires such qualification, except for
those states where the failure to so qualify could not reasonably be expected to
have Material Adverse Effect;
75
(c) certificates dated as of the Closing Date by the Secretary or an
Assistant Secretary of the Borrower with respect to:
(i) true and complete copies of the Borrower's corporate
charter and bylaws, and all amendments thereto;
(ii) true and complete copies of the resolutions of its Board
of Directors authorizing (i) the execution, delivery and performance of the
Financing Documents to which it is a party, (ii) the borrowings by the
Borrower hereunder, and (iii) the granting of the Liens contemplated by
this Agreement and the Financing Documents to which it is a party; and
(iii) the incumbency, authority and signatures of the officers
of the Borrower authorized to sign this Agreement and the other Financing
Documents to which it is a party.
5.1.2 Opinions of Counsel.
The Agent shall have received (i) the favorable opinion of counsel for
the Borrower, (ii) the favorable opinion of each of Borrower's Pennsylvania,
North Carolina, Indiana, Wisconsin, Ohio, Oklahoma, Georgia, Illinois, Missouri,
Texas, West Virginia and Utah local counsels, and (iii) either the favorable
opinion, or the right to rely on a favorable opinion, of each counsel to any
party that is giving an opinion in connection with any of the Mergers. Each of
the foregoing opinions (or reliance documents) shall be addressed to the Agent
and each Lender in form satisfactory to the Agent and each Lender and each of
their respective counsel.
5.1.3 Consents, Licenses, Approvals, Etc.
The Agent shall have received, as certified by a Responsible Officer
of the Borrower, copies of all consents, licenses and approvals, required in
connection with the execution, delivery, performance, validity and
enforceability of the Financing Documents and such consents, licenses and
approvals shall be in full force and effect.
5.1.4 Notes.
The Agent shall have received for delivery to each of the Lenders the
Notes, each conforming to the requirements hereof and executed by a Responsible
Officer of the Borrower and attested, if required, by a duly authorized
representative of the Borrower.
5.1.5 Financing Documents and Collateral.
The Borrower shall have executed and delivered the Financing Documents
to be executed by it, and shall have delivered any Collateral consisting of
original Chattel Paper, Instruments, Securities, opinions, title insurance, and
other documents contemplated by ARTICLE 3 hereof.
5.1.6 Other Financing Documents.
In addition to the Financing Documents to be delivered by the
Borrower, the Agent shall have received the Financing Documents duly executed
and delivered by Persons other than the Borrower.
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5.1.7 Other Documents, Etc.
The Agent shall have received such other certificates, opinions,
documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Agent.
5.1.8 Payment of Fees.
The Agent and the Lenders shall have received payment of any Fees due
on or before the Closing Date.
5.1.9 Collateral Disclosure List.
The Borrower shall have delivered the Collateral Disclosure List
required under the provisions of Section 3.3 (Collateral Disclosure List) hereof
duly executed by a Responsible Officer of the Borrower.
5.1.10 Recordings and Filings.
The Borrower shall have: (a) executed and delivered all Financing
Documents (including, without limitation, UCC-1 and UCC-3 statements) required
to be filed, registered or recorded in order to create, in favor of the Agent,
for the benefit of the Lenders and the Agent, a perfected Lien in the Collateral
in form and in sufficient number for filing, registration, and recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required, and (b) delivered such evidence as the Agent may deem
satisfactory that all necessary filing fees and all recording and other similar
fees, and all Taxes and other expenses related to such filings, registrations
and recordings will be or have been paid in full.
5.1.11 Insurance Certificate.
The Agent shall have received an insurance certificate in accordance
with the provisions of Section 6.1.8 (Insurance) of this Agreement.
5.1.12 Landlord's Waivers.
The Agent shall have received a landlord's waiver from each landlord
of each and every business premise leased by the Borrower and on which any of
the Collateral is or may hereafter be located, which landlords' waivers must be
substantially in the form attached hereto as Exhibit "G-2" and otherwise
acceptable to the Agent and its counsel.
5.1.13 Bailee Acknowledgments.
The Agent shall have received an agreement acknowledging the Liens of
the Agent, for the benefit of the Lenders and the Agent, from each bailee,
warehouseman, consignee or similar third party which has possession of any of
the Collateral, which agreements must be substantially in the form attached
hereto as Exhibit "G-1" and otherwise acceptable to the Agent and its counsel.
5.1.14 Field Examination; Appraisals.
The Agent shall have completed a field examination of the Borrower's
business, operations and income, the results of which field examination shall be
in all respects acceptable to the Agent in its sole and absolute discretion and
shall include reference discussions
77
with key customers and vendors. The Agent shall have received an appraisal of
the Borrower's machinery and equipment conducted by MEI Corporation, and an
appraisal for each parcel of real property owned by the Borrower conducted by
appraisers satisfactory to the Agent, which appraisals shall each be in such
form and content as may be required by the Agent.
5.1.15 Environmental Reports.
The Agent shall have received a phase I environmental site assessment
(together with such additional reports as the Agent shall require), conducted by
an environmental firm acceptable to Agent, for each parcel of real property
covered by the Mortgages, which assessments and reports shall be satisfactory to
the Agent.
5.1.16 Title Work.
The Agent shall have received a title policy in ALTA form and
otherwise satisfactory to the Agent, for each parcel of real property covered by
the Mortgages.
5.1.17 Surveys.
The Agent shall have received a survey for each parcel of real
property covered by the Mortgages, performed by a surveyor with qualifications
acceptable to the Agent, certified to the Agent, and complying with the minimum
detail requirements for land title surveys as adopted by the American Land Title
Association and Congress on Surveying and Mapping.
5.1.18 Proforma Balance Sheet and Projections.
The Agent shall have received and approved the Borrower's Proforma
Balance Sheet and Proforma Financial Projections, which Proforma Balance Sheet
and Proforma Financial Projections must be in form and content acceptable to the
Agent.
5.1.19 Material Adverse Change.
No material adverse change shall have occurred in the condition
(financial or otherwise), operations or business of the Borrower since the date
of the financial statements attached hereto as Schedule 5.1.19.
5.1.20 Collateral Account, Lockbox, etc.
The Borrower shall have established a Collateral Account, Lockbox,
controlled disbursement account and all other accounts required under this
Agreement.
5.1.21 Minimum Required Availability at Closing.
On the Closing Date, the aggregate outstanding principal amount of the
Revolving Loan and the current stated amount of the Letters of Credit shall not
exceed an amount equal to (i) the lesser of (A) the Borrowing Base minus the
Reserve Amount or (B) the Revolving Credit Committed Amount, minus (ii) Three
Million Five Hundred Thousand Dollars ($3,500,000), such amount to be determined
after application of the Permitted Uses of the Revolving Loan required to be
made on the Closing Date, the amount of the costs relating to the closing of
this Agreement (including, without limitation, applicable Fees, recording costs,
recording taxes, and the fees and expenses of the Borrower's and the Agent's
professionals).
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5.1.22 Indenture.
The Agent shall have received evidence satisfactory to the Agent, in
its sole discretion, that the Loans and other transactions contemplated hereby
(including without limitation the Mergers) will not violate the provisions of
the Indenture, including without limitation that certain Fifth Supplemental
Indenture, dated as of March 16, 2000, pursuant to which the holders of the
Senior Notes have (i) eliminated from the Indenture and any related documents
any prohibition or limitation on the Borrower's ability to pledge any of its
assets to the Agent for the benefit of the Agent and the Lenders as security for
the Obligations (including the Agent's Obligations, (ii) waived all defaults
existing as of the Closing Date under the Indenture and any related documents,
(iii) consented to the Chatwins Merger, and (iv) waived any requirement that the
Borrower offer to repurchase any more than $2,525,000 in principal amount of the
Senior Notes in June 2000, such waivers or amendments to be satisfactory in form
and substance to the Agent, in its sole discretion.
5.1.23 Mergers.
The Agent shall have received (a) evidence satisfactory to the Agent,
in its sole discretion, that each of the Mergers has been or will be on the
Closing Date consummated in accordance with all applicable Laws, and (b) copies
of all of the Merger Documents, certified as true, correct and complete by a
Responsible Officer of the Borrower.
5.1.24 Completion of Schedules.
The Agent shall have received and approved all Schedules to this
Agreement fully completed.
Section 5.2 Conditions to all Extensions of Credit.
The making of all advances under the Loans and the issuance of all
Letters of Credit is subject to the fulfillment of the following conditions
precedent in a manner satisfactory in form and substance to the Agent and its
counsel:
5.2.1 Borrowing Base; Other Conditions.
The Borrower shall have furnished all Borrowing Base Reports required
by Section 2.1.4 (Borrowing Base Report) of this Agreement, there shall exist no
Borrowing Base Deficiency, and as evidence thereof, the Borrower shall have
furnished to the Agent such reports, schedules, certificates, records and other
papers as may be reasonably requested by the Agent and the Borrower shall have
complied with the other terms and conditions for advances and Letters of Credit
contained in ARTICLE 2.
5.2.2 Default.
There shall exist no Event of Default or Default hereunder, and none
shall arise immediately before or immediately after the making of the advance or
issuance of the Letter of Credit requested.
5.2.3 Representations and Warranties.
The representations and warranties of the Borrower contained among the
provisions of this Agreement or in any report, statement, schedule, certificate,
financial statement or other document furnished in connection with this
Agreement or any of the other Financing Documents shall be true and with the
same effect as though such representations and warranties
79
had been made at the time of the making of, and of the request for, each advance
under the Loans or the issuance of each Letter of Credit, except that the
representations and warranties which relate to financial statements which are
referred to in Section 4.1.11 (Financial Condition of Borrower) shall also be
deemed to cover financial statements furnished from time to time to the Agent
pursuant to Section 6.1.1 (Financial Statements) of this Agreement and except to
the extent such representations were made only as of a specific date.
5.2.4 Legal Matters.
All legal documents incident to each advance under the Loans and the
issuance of each Letter of Credit shall be satisfactory to counsel for the
Agent.
5.2.5 Adverse Change.
No change shall have occurred in the condition (financial or
otherwise), operations or business of the Borrower and its Subsidiaries since
the Closing Date which could reasonably be expected to constitute a Material
Adverse Effect.
ARTICLE 6 COVENANTS OF THE BORROWER
Section 6.1 Affirmative Covenants.
So long as any of the Obligations (or any of the Commitments therefor)
shall be outstanding hereunder, the Borrower agrees with the Agent and Lenders
as follows:
6.1.1 Financial Statements.
(a) Annual Statements and Certificates. The Borrower shall furnish to
the Agent and the Lenders as soon as available, but in no event more than ninety
(90) days after the close of each fiscal year of the Borrower, (i) a copy of the
annual financial statement in reasonable detail satisfactory to the Agent
relating to the Borrower and its Subsidiaries, prepared in accordance with GAAP
and examined and audited by independent certified public accountants of
nationally recognized standing, which financial statement shall include a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such fiscal year and consolidated statement of income, and consolidated
statements of cash flows and changes in shareholders equity of the Borrower and
its Subsidiaries for such fiscal year, (ii) an unaudited consolidating balance
sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and
an unaudited consolidating statement of income for such fiscal year, and (iii) a
Compliance Certificate, in substantially the form attached to this Agreement as
Exhibit "F", containing a detailed computation of each financial covenant in
this Agreement which is applicable for the period reported, and a certification
that no change has occurred to the information contained in the Collateral
Disclosure List (except as set forth any schedule attached to the
certification), each prepared by a Responsible Officer of the Borrower in a
format acceptable to the Agent and (iii) a management letter in the form
prepared by the Borrower's independent certified public accountants.
(b) Annual Opinion of Accountant. The Borrower shall furnish to the
Agent and Lenders as soon as available, but in no event more than one hundred
twenty (120) days after the close of each fiscal year of the Borrower, a letter
or opinion of the accountant who examined and certified the annual financial
statement relating to the Borrower and its Subsidiaries stating whether anything
in such accountant's examination has revealed the occurrence of a Default or an
Event of Default hereunder relating to financial and accounting matters, and, if
so, stating the facts with respect thereto.
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(c) Monthly Statements and Certificates. The Borrower shall furnish to
the Agent and Lenders as soon as available, but in no event more than thirty
(30) days after the close of each fiscal month of the Borrower (or, with respect
to any fiscal month end that is also a (i) fiscal quarter end (but not a fiscal
year end), no more than forty-five (45) days after the close of such fiscal
quarter, and (ii) fiscal year end, no more than ninety (90) days after the close
of such fiscal year), consolidated and consolidating balance sheets and income
statements of the Borrower and its Subsidiaries as of the close of and for such
period, consolidated cash flows and changes in shareholders equity statements
for such period, and a Compliance Certificate, in substantially the form
attached to this Agreement as Exhibit "F", containing a detailed computation of
each financial covenant in this Agreement which is applicable for each month
which is the end of a fiscal quarter of the Borrower and a certification that no
change has occurred to the information contained in the Collateral Disclosure
List (except as set forth on any schedule attached to the certification), all as
prepared and certified by a Responsible Officer of the Borrower and accompanied
by a certificate of that officer stating whether any event has occurred which
constitutes a Default or an Event of Default hereunder, and, if so, stating the
facts with respect thereto.
(d) Monthly Reports. The Borrower shall furnish to the Agent and
Formula Lenders within twenty (20) days after the end of each fiscal month a
report containing the following information:
(i) a detailed aging schedule of all Receivables by Account
Debtor, in such detail, and accompanied by such supporting
information, as the Agent may from time to time request;
(ii) a detailed aging of all accounts payable by supplier, in
such detail, and accompanied by such supporting information, as the
Agent may from time to time request;
(iii) a listing of all Inventory by component, category and
location, in such detail, and accompanied by such supporting
information as the Agent may from time to time request; and
(iv) such other information as the Agent may reasonably
request.
(e) Annual Budget and Projections. The Borrower shall furnish to the
Agent and Lenders as soon as available, but in no event later than the thirtieth
(30th) day after the end of each fiscal year:
(i) a consolidated budget and pro forma financial statements
(including balance sheets, cash flow statements and income statements)
on a month-to-month basis for the following fiscal year, and
(ii) one (1) year projections.
(f) Additional Reports and Information. The Borrower shall furnish to
the Agent and Lenders promptly, such additional information, reports or
statements as the Agent may from time to time reasonably request.
6.1.2 Reports to SEC and to Stockholders.
The Borrower shall furnish to the Agent (and the Agent shall promptly
furnish same to the Lenders), promptly upon the filing or making thereof, at
least one (1) copy of
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all financial statements, reports, notices and proxy statements sent by the
Borrower to its stockholders of the type customarily sent to shareholders of a
public corporation, and of all regular and other reports filed by the Borrower
with any securities exchange or with the Securities and Exchange Commission.
6.1.3 Recordkeeping, Rights of Inspection, Field Examination, Etc.
(a) The Borrower shall, and shall cause each of its Domestic
Subsidiaries to, maintain (i) a standard system of accounting in accordance with
GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.
(b) The Borrower shall, and shall cause each of its Domestic
Subsidiaries to, permit authorized representatives of the Agent, accompanied by
authorized representatives of the other Lenders, to visit and inspect the
properties of the Borrower and such Domestic Subsidiaries, to review, audit,
check and inspect the Collateral at any time with or without notice (subject to
the provisions set forth below), to review, audit, check and inspect the
Borrower's other books of record at any time with or without notice (subject to
the provisions set forth below), and to make abstracts and photocopies thereof,
and to discuss the affairs, finances and accounts of the Borrower and its
Domestic Subsidiaries, with the officers, directors, employees and other
representatives of the Borrower and its Domestic Subsidiaries and their
respective accountants, all at such times during normal business hours and other
reasonable times and as often as the Agent may reasonably request. The Agent and
the Lenders shall give reasonable notice of visits and inspections; provided
however, that the Borrower acknowledges and agrees that (i) no notice need be
given if there exists an Event of Default or a Default or if information
provided by or at the direction of the Borrower regarding the Collateral or the
Borrower's financial condition has been intentionally misstated; and (ii) the
Borrower shall not prevent any visit or inspection if the Agent, any Lender or a
representative thereof advises (which advice may be oral) the Borrower that no
notice is required because the inspection is being made pursuant to Section
6.1.3(b) of this Agreement. For the purpose of the foregoing, the Agent and
Lenders shall have, and are hereby granted, a right of ingress and egress to the
places where the Collateral is located, and may proceed over and through any of
the Borrower's owned or leased property. The Agent intends to conduct field
examinations on a quarterly basis.
(c) The Borrower hereby irrevocably authorizes and directs all
accountants and auditors employed by the Borrower and/or any of its Subsidiaries
at any time prior to the repayment in full of the Obligations to discuss freely
with the Agent or any Lender any information they may have concerning the
financial status and business operations of the Borrower and/or any Subsidiaries
and to exhibit and deliver to the Agent and Lenders copies of the financial
statements, trial balances, management letters, or other accounting records of
any nature of the Borrower and/or any of its Subsidiaries in the accountant's or
auditor's possession, provided that the Borrower shall have the right to
participate in any meetings between the Agent and/or Lenders with the Borrower's
accountants or auditors. Further, the Borrower hereby authorizes all
Governmental Authorities to furnish to the Agent and Lenders copies of reports
or examinations relating to the Borrower and/or any of its Subsidiaries, whether
made by the Borrower or otherwise.
(d) Any and all reasonable out-of-pocket costs and expenses incurred
by, or on behalf of, the Agent in connection with the conduct of any of the
foregoing (including, but not limited to, those costs and expenses of the
Agent's agents, representatives, attorneys and accounting firms) shall be part
of the Enforcement Costs and shall be payable to the Agent upon demand. The
Borrower acknowledges and agrees that such expenses may include, but shall not
be limited to, any and all reasonable out-of-pocket costs and expenses of the
Agent's employees and agents in, and when, traveling to the Borrower's
facilities.
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6.1.4 Legal Existence.
The Borrower shall, subject to Section 6.2.1 (Merger, Acquisition or
Sale of Assets.), maintain, and cause each of its Domestic Subsidiaries (other
than Inactive Subsidiaries) to maintain, its legal existence in good standing in
the jurisdiction in which it is incorporated and in each other jurisdiction
where it is required to register or qualify to do business if the failure to do
so in such other jurisdiction could reasonably be expected to have a Material
Adverse Effect.
6.1.5 Compliance with Laws.
The Borrower shall comply, and cause each of its Subsidiaries to
comply, with all applicable Laws and observe the valid requirements of
Governmental Authorities, the noncompliance with or the nonobservance of which
could reasonably be expected to have a Material Adverse Effect.
6.1.6 Preservation of Properties.
The Borrower will, and will cause each of its Domestic Subsidiaries
(other than Inactive Subsidiaries) to, at all times (a) maintain, preserve,
protect and keep its properties, whether owned or leased, in good operating
condition, working order and repair (ordinary wear and tear excepted), and from
time to time will make all proper repairs, maintenance, replacements, additions
and improvements thereto needed to maintain such properties in good operating
condition, working order and repair, and (b) do or cause to be done all things
necessary to preserve and to keep in full force and effect its material
franchises, leases of real and personal property, trade names, patents,
trademarks and permits which are necessary for the continuance of its business.
6.1.7 Line of Business.
The Borrower will continue to engage substantially only in (i) the
business of manufacturing and marketing fabricated and machined industrial parts
and products, (ii) the business of manufacturing any high volume precision
plastic products and providing engineered plastics services, and (iii) business
reasonably related thereto.
6.1.8 Insurance.
The Borrower will, and will cause each of its Domestic Subsidiaries
(other than Inactive Subsidiaries) to, at all times maintain with "A" or better
rated insurance companies (as rated by Best to the extent such rating system is
in effect) such insurance as is required by applicable Laws and such other
insurance, in such amounts, of such types and against such risks, hazards,
liabilities, casualties and contingencies as are usually insured against in the
same geographic areas by business entities engaged in the same or similar
business. In the event an insurance company's rating at any time falls below
"A", the Borrower will replace the insurance company at the next policy renewal
date or within thirty (30) days after such rating falls below "A", whichever is
later. Without limiting the generality of the foregoing, the Borrower will, and
will cause each of its Domestic Subsidiaries (other than Inactive Subsidiaries)
to, keep adequately insured all of its property against loss or damage resulting
from fire or other risks insured against by extended coverage and maintain
public liability insurance against claims for personal injury, death or property
damage occurring upon, in or about any properties occupied or controlled by it,
or arising in any manner out of the businesses carried on by it, all in such
amounts not less than the Agent shall reasonably determine from time to time
based on the foregoing standard. The Borrower shall deliver to the Agent on the
Closing Date (and thereafter on each date there is a change in the insurance
coverage) (i) a certificate of a Responsible Officer
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of the Borrower containing a detailed list of the insurance then in effect,
stating the names of the insurance companies, the types, the amounts and rates
of the insurance, dates of the expiration thereof and the properties and risks
covered thereby, (ii) certificates of insurance on ▇▇▇▇▇ 27 form, naming the
Agent as certificate holder, additional insured, mortgagee and loss payee, and
(iii) a Standard Insurance Endorsement Lender's Loss Payable Clause in
substantially the form attached to this Agreement as Exhibit "I". Within thirty
(30) days after notice in writing from the Agent, the Borrower shall obtain such
additional insurance as the Agent or Requisite Lenders may reasonably request to
comply with the provisions of this Section 6.1.8.
6.1.9 Taxes.
Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings and the Borrower has
maintained adequate reserves with respect thereto in accordance with GAAP, the
Borrower will, and will cause each of its Subsidiaries, to pay and discharge all
Taxes prior to the date when any interest or penalty would accrue for the
nonpayment thereof. The Borrower shall furnish to the Agent at such times as the
Agent may require proof reasonably satisfactory to the Agent of the making of
payments or deposits required by applicable Laws including, without limitation,
payments or deposits with respect to amounts withheld by the Borrower from wages
and salaries of employees and amounts contributed by the Borrower on account of
federal and other income or wage taxes and amounts due under the Federal
Insurance Contributions Act, as amended.
6.1.10 ERISA.
The Borrower will, and will cause each of its Domestic Subsidiaries
and Affiliates to, comply with the funding requirements of ERISA with respect to
employee pension benefit plans for its respective employees. The Borrower will
not permit with respect to any employee benefit plan or plans covered by Title
IV of ERISA (a) any prohibited transaction or transactions under ERISA or the
Internal Revenue Code, which could reasonably be expected to result in a
Material Adverse Effect, or (b) any Reportable Event if, upon termination of the
plan or plans with respect to which one or more such Reportable Events shall
have occurred, there is or would be any liability of the Borrower and/or any of
its Subsidiaries and Affiliates to the PBGC, which could reasonably be expected
to result in a Material Adverse Effect. Upon the Agent's request, the Borrower
will promptly deliver to the Agent a copy of the most recent actuarial report,
financial statements and annual report completed with respect to any "defined
benefit plan", as defined in Section 3(35) of ERISA.
6.1.11 Notification of Events of Default and Adverse Developments.
The Borrower shall promptly notify the Agent and the Lenders upon
obtaining knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened against the
Borrower or any of its Subsidiaries and of the entry of any judgment
or Lien (other than any Permitted Liens) against any of the assets or
properties of the Borrower or any Subsidiary where the claims against
the Borrower or any Subsidiary exceed Two Hundred Fifty Thousand
Dollars ($250,000) and are not covered by insurance;
(d) any event, development or circumstance whereby the
financial statements furnished hereunder fail in any material respect
to present fairly, in
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accordance with GAAP, the financial condition
and operational results of the Borrower or any Subsidiary;
(e) any judicial, administrative or arbitral proceeding pending
against the Borrower or any of its Subsidiaries and any judicial or
administrative proceeding known by the Borrower to be threatened
against the Borrower or any Subsidiary which, if adversely decided,
could reasonably be expected to have a Material Adverse Effect;
(f) the receipt by the Borrower or any Subsidiary of any
notice, claim or demand from any Governmental Authority which alleges
that the Borrower or any Subsidiary is in violation of any of the
terms of, or has failed to comply in any material respect with any
applicable Laws regulating its operation and business, including, but
not limited to, the Occupational Safety and Health Act and the
Environmental Protection Act, which could reasonably be expected to
have a Material Adverse Effect; and
(g) any other development in the business or affairs of the
Borrower or any of its Subsidiaries which could reasonably be expected
to have a Material Adverse Effect;
in each case describing in detail reasonably satisfactory to the Agent the
nature thereof and the action the Borrower proposes to take with respect
thereto.
6.1.12 Hazardous Materials; Contamination.
The Borrower agrees to:
(a) give notice to the Agent immediately upon acquiring
knowledge of the presence of any Hazardous Materials or any Hazardous
Materials Contamination on any property owned, operated or controlled by
the Borrower or for which the Borrower is, or is claimed to be, responsible
(provided that such notice shall not be required for Hazardous Materials
placed or stored on such property in accordance with applicable Laws in the
ordinary course of the Borrower's line of business described in Section
6.1.7 above), with a full description thereof;
(b) promptly comply in all material respects with any Laws
requiring the removal, treatment or disposal of Hazardous Materials or
Hazardous Materials Contamination and, if requested by the Agent or any
Lender, provide the Agent with satisfactory evidence of such compliance;
(c) provide the Agent, within ten (10) days after a demand by
the Agent, with a bond, letter of credit or similar financial assurance
evidencing to the Agent's satisfaction that the necessary funds are
available to pay the cost of removing, treating, and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging
any Lien which may be established as a result thereof on any property
owned, operated or controlled by the Borrower or for which the Borrower is,
or is claimed to be, responsible; and
(d) as part of the Obligations, defend, indemnify and hold
harmless the Agent, each of the Lenders and each of their respective
directors, officers, agents, employees, trustees, successors and assigns
from any and all claims which may now or in the future (whether before or
after the termination of this Agreement) be asserted as a result of the
presence of any Hazardous Materials or any Hazardous Materials
Contamination on any property owned, operated or controlled by the Borrower
for which the Borrower is, or is claimed to be, responsible. The Borrower
acknowledges and agrees
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that this indemnification shall survive the termination of this Agreement
and the Commitments and the payment and performance of all of the other
Obligations.
6.1.13 Disclosure of Significant Transactions.
The Borrower shall deliver to the Agent a written notice describing in
reasonable detail each transaction by it involving the purchase, sale, lease, or
other acquisition or loss or casualty to or disposition of an interest in Fixed
or Capital Assets which exceeds Two Hundred Fifty Thousand Dollars ($250,000),
said notices to be delivered to the Agent within ten (10) days of the occurrence
of each such transaction.
6.1.14 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The Borrower will maintain a Fixed
Charge Coverage Ratio, tested as of the last day of each of the Borrower's
fiscal quarters, for the Testing Period applicable to such date, of not less
than the amount set forth opposite such date below:
Date Fixed Charge Coverage Ratio
-------------------------------------------------------------------------------
June 30, 2000 1.15 to 1
-------------------------------------------------------------------------------
September 30, 2000 1.20 to 1
-------------------------------------------------------------------------------
December 31, 2000 1.25 to 1
-------------------------------------------------------------------------------
March 31, 2001, and each fiscal quarter end 1.25 to 1
thereafter
--------------------------------------------------------------------------------
(b) Funded Debt to EBITDA. The Borrower will maintain, tested as
the last day of each of the Borrower's fiscal quarters, for the Testing Period
applicable to such date, a ratio of (i) Funded Debt to (ii) EBITDA of not
greater than the amount set forth opposite such date below:
Date Funded Debt to EBITDA Ratio
-------------------------------------------------------------------------------
December 31, 2000/1/ 3.75 to 1
-------------------------------------------------------------------------------
March 31, 2001 3.75 to 1
-------------------------------------------------------------------------------
June 30, 2001 3.50 to 1
-------------------------------------------------------------------------------
September 30, 2001 3.25 to 1
-------------------------------------------------------------------------------
--------------------
/1/ For purposes of calculating the Borrower's Funded Debt to EBITDA Ratio for
this date, EBITDA for the applicable Testing Period will be annualized.
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December 31, 2001, and each fiscal quarter 3.00 to 1
end thereafter
-------------------------------------------------------------------------------
6.1.15 Collection of Receivables.
Until such time that the Agent shall have notified the Borrower of the
revocation of such privilege following the occurrence of an Event of Default and
subject to the terms and provisions of Section 2.1.8 (The Collateral Account)
hereof, the Borrower and its Subsidiaries shall at their own expense have the
privilege for the account of, and in trust for, the Agent and the Lenders of
collecting their Receivables and receiving in respect thereto all Items of
Payment and shall otherwise completely service all of the Receivables including
(a) the billing, posting and maintaining of complete records applicable thereto,
(b) the taking of such action with respect to the Receivables, as the Borrower
and each of the Subsidiaries may deem advisable; and (c) the granting, in the
ordinary course of business, to any Account Debtors rebates, refunds or
adjustments, and may accept, in connection therewith, the return of goods, the
sale or lease of which shall have given rise to a Receivable and may take such
other actions relating to the settling of any Account Debtor's claim as may be
commercially reasonable. The Agent may, at its option, and shall, at the
direction of the Requisite Lenders, at any time or from time to time following
the occurrence and during the continuance of an Event of Default revoke the
collection privilege given in this Agreement to the Borrower and each of the
Subsidiaries by either giving notice of its assignment of, and Lien on the
Collateral to the Account Debtors or giving notice of such revocation to the
Borrower. The Agent shall not have any duty to, and the Borrower hereby
releases the Agent and the Lenders from all claims of loss or damage caused by
the delay or failure to collect or enforce any of the Receivables or to preserve
any rights against any other party with an interest in the Collateral.
6.1.16 Assignments of Receivables.
The Borrower will following the occurrence and during the continuance
of an Event of Default, upon request, execute and deliver to the Agent written
assignments, in form and content acceptable to the Agent, of specific
Receivables or groups of Receivables; provided, however, the Lien and/or
security interest granted to the Agent for the benefit of the Lenders and the
Agent, under this Agreement shall not be limited to in any way to or by the
inclusion or exclusion of Receivables within such assignments. Receivables so
assigned shall secure payment of the Obligations and are not sold to the Agent
and/or the Lenders whether or not any assignment thereof, which is separate from
this Agreement, is in form absolute. The Borrower agrees that neither any
assignment to the Agent or any Lender nor any other provision contained in this
Agreement or any of the other Financing Documents shall impose on the Agent or
any Lender any obligation or liability of the Borrower with respect to that
which is assigned, and the Borrower hereby agrees to indemnify the Agent and
each Lender and hold the Agent and each Lender harmless from any and all claims,
actions, suits, losses, damages, costs, expenses, fees, obligations and
liabilities which may be incurred by or imposed upon the Agent or any Lenders by
virtue of the assignment of and Lien on the Borrower's rights, title and
interest in, to, and under the Collateral.
6.1.17 Government Accounts.
The Borrower will promptly notify the Agent if any of the Receivables
arise out of contracts with the United States or with any other Governmental
Authority, and, as appropriate, execute any Instruments and take any steps
reasonably required by the Agent in order that all moneys due and to become due
under such contracts shall be assigned to the Agent,
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for the benefit of the Lenders and the Agent, and notice thereof given to the
Governmental Authority under the Federal Assignment of Claims Act or any other
applicable Laws.
6.1.18 Notice of Returned Goods, etc.
The Borrower will promptly notify, and will cause the Subsidiaries to
promptly notify, the Agent of the return, rejection or repossession of any goods
sold or delivered in respect of any Receivables, and of any claims made in
regard thereto to the extent that the aggregate purchase price of any such goods
in any given calendar month exceeds in the aggregate $350,000 for such month.
6.1.19 Inventory.
With respect to the Inventory, the Borrower will: (a) as soon as
possible upon demand by the Agent from time to time, prepare and deliver to the
Agent designations of Inventory specifying the Borrower's cost of Inventory and
such other matters and information relating to the Inventory as the Agent may
reasonably request; (b) keep correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, the Borrower's
cost therefor and the selling price thereof, all of which records shall be
available to the officers, employees and agents of the Agent upon demand in
accordance with the terms hereof for inspection and copying thereof; and (c) not
store Inventory having an aggregate value (determined at the lesser of cost or
market value) of any greater than Two Hundred Fifty Thousand Dollars ($250,000)
at any one time with a bailee, warehouseman or similar Person without the
Agent's prior written consent (unless such bailee, warehouseman or Person has
executed and delivered a Bailee Waiver in favor of the Agent and/or such other
instruments or documents as Agent may reasonably request), which consent shall
not be unreasonably withheld and may be conditioned on prior to storage (i) the
filing of appropriate financing statements in the jurisdiction in which such
warehouse or other facility is located, (ii) delivery by the bailee,
warehouseman or similar Person to the Agent of (A) warehouse receipts, in form
acceptable to the Agent, in the name of the Agent evidencing the storage of
Inventory and the interests of the Agent and the Lenders therein and (B) an
acknowledgment of receipt of notice of the Liens of the Agent and/or the Lenders
in the Borrower's Inventory, and (iii) other reasonable conditions.
6.1.20 Defense of Title and Further Assurances.
At its expense, the Borrower will defend the title to the Collateral
(and any part thereof), and will promptly execute, acknowledge and deliver any
financing statement, renewal, affidavit, deed, assignment, continuation
statement, security agreement, certificate or other document which the Agent may
require in order to perfect, preserve, maintain, continue, protect and/or extend
the Lien or security interest granted to the Agent, for the benefit of the
Lenders and the Agent, under this Agreement, under any of the other Financing
Documents and the first priority of that Lien, subject only to the Permitted
Liens. The Borrower will from time to time do whatever the Agent may reasonably
require by way of obtaining, executing, delivering, and/or filing financing
statements, landlords' or mortgagees' waivers, notices of assignment and other
notices and amendments and renewals thereof and the Borrower will take any and
all steps and observe such formalities as the Agent may require, in order to
create and maintain a valid Lien upon, pledge of, or paramount security interest
in, the Collateral, subject to the Permitted Liens. The Borrower shall pay to
the Agent on demand all taxes, reasonable costs and expenses incurred by the
Agent in connection with the preparation, execution, recording and filing of any
such document or instrument. To the extent that the proceeds of any of the
Accounts or Receivables of the Borrower are expected to become subject to the
control of, or in the possession of, a party other than the Borrower or the
Agent, the Borrower shall cause all such parties to execute and deliver on the
Closing Date security documents, financing statements or other documents as
requested by the Agent and as may be necessary to evidence and/or perfect
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the security interest of the Agent, for the benefit of the Lenders and the
Agent, in those proceeds. The Borrower agrees that a copy of a fully executed
security agreement and/or financing statement shall be sufficient to satisfy for
all purposes the requirements of a financing statement as set forth in Article 9
of the applicable Uniform Commercial Code. The Borrower hereby irrevocably
appoints the Agent as the Borrower's attorney-in-fact, with power of
substitution, in the name of the Agent or in the name of the Borrower or
otherwise, for the use and benefit of the Agent for itself and the Lenders, but
at the cost and expense of the Borrower and without notice to the Borrower, to
execute and deliver any and all of the instruments and other documents and take
any action which the Agent may require to perfect, preserve, maintain, continue,
protect and/or extend the Lien or security interest granted to the Agent, for
the benefit of the Lenders and the Agent, under this Agreement, under any of the
other Financing Documents and the first priority of that Lien, subject only to
the Permitted Liens.
6.1.21 Equipment.
The Borrower shall hold no Equipment on a sale on approval basis. The
Borrower hereby declares its intent that, notwithstanding the means of
attachment, no goods of the Borrower hereafter attached to any realty shall be
deemed a fixture, which declaration shall be irrevocable, until all of the
Obligations have been paid in full and all of the Commitments and Letters of
Credit have been terminated or have expired.
6.1.22 Business Names; Locations.
The Borrower will notify and cause each of its Domestic Subsidiaries
(other than Inactive Subsidiaries) to notify the Agent (a) not less than thirty
(30) days prior to (i) any change in the name under which the Borrower or the
applicable Domestic Subsidiary (other than Inactive Subsidiaries) conducts its
business, or (ii) any change of the location of the chief executive office of
the Borrower or any Domestic Subsidiary (other than Inactive Subsidiaries), and
(b) within ten (10) days after the opening of any new place of business or the
closing of any existing place of business, and any change in the location of the
places where the Collateral, or any part thereof, or the books and records, or
any part thereof, are kept.
6.1.23 Subsequent Opinion of Counsel as to Recording Requirements.
In the event that the Borrower shall transfer its chief executive
office or the office where it keeps its records pertaining to the Collateral,
upon the Agent's reasonable request, the Borrower will provide to the Agent a
subsequent opinion of counsel as to the filing, recording and other requirements
with which the Borrower has complied to maintain the Lien and security interest
in favor of the Agent, for the benefit of the Lenders and the Agent, in the
Collateral.
6.1.24 Use of Premises and Equipment.
The Borrower agrees that until the Obligations are fully paid and all
of the Commitments and the Letters of Credit have been terminated or have
expired, the Agent (or its agents) (a) after the occurrence and during the
continuance of an Event of Default, may use the Borrower's owned or leased
lifts, hoists, trucks and other facilities or equipment for handling or removing
the Collateral; and (b) in connection with the Agent's right to inspect the
Collateral and exercise rights and remedies during an Event of Default, shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through the Borrower's owned
or leased property.
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6.1.25 Protection of Collateral.
The Borrower agrees that the Agent may at any time following the
occurrence and during the continuance of an Event of Default take such steps as
the Agent deems necessary to protect the interest of the Agent and the Lenders
in, and to preserve the Collateral, including, the hiring of such security
guards or the placing of other security protection measures as the Agent deems
appropriate, may employ and maintain at the Borrower's premises a custodian who
shall have full authority to do all acts necessary to protect the interests of
the Agent and the Lenders in the Collateral and may lease warehouse facilities
to which the Agent may move all or any part of the Collateral to the extent
commercially reasonable. At any time following the occurrence and during the
continuance of an Event of Default, the Borrower agrees to cooperate fully with
the Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as the Agent may direct. All of the Agent's expenses of
preserving the Collateral as contemplated under this Section 6.1.25, including
any expenses relating to the compensation and bonding of a custodian, shall part
of the Enforcement Costs.
6.1.26 Retention of Investment Banking Firm.
If the Borrower has not effected each of the Permitted Asset
Dispositions (other than the disposition by the Borrower of the ▇▇▇▇▇ Real
Property) by December 31, 2000, and any portion of the Term Loan B remains
outstanding on such date, the Borrower shall, upon the Agent's written request,
engage an investment banking firm acceptable to the Agent, in its reasonable
discretion, by no later than January 31, 2001, to assist the Borrower in
exploring strategies for effecting such Permitted Asset Dispositions.
Section 6.2 Negative Covenants.
So long as any of the Obligations or the Commitments or Letter of
Credit therefor shall be outstanding hereunder, the Borrower agrees with the
Agent and the Lenders that without the prior written consent of the Requisite
Lenders:
6.2.1 Merger, Acquisition or Sale of Assets.
Neither the Borrower nor any of its Domestic Subsidiaries (other than
Inactive Subsidiaries) will (a) alter or amend its capital structure, (b)
authorize any additional class of equity shares, (c) issue any stock or equity
of any class (except that the Borrower may issue common stock to holders of its
preferred stock in exchange for such preferred stock), (d) enter into any merger
or consolidation or amalgamation (other than (i) mergers of Subsidiaries with or
into other Subsidiaries and (ii) the Mergers), (e) windup or dissolve itself (or
suffer any liquidation or dissolution), (f) acquire all or substantially all of
the assets or any Person (other than (i) the acquisition by the Borrower or a
Subsidiary of the assets (but not the liabilities) of a Subsidiary, and (ii) in
connection with the Mergers), or (g) make any Asset Disposition (other than (i)
Asset Dispositions by Subsidiaries to the Borrower or to another Subsidiary, and
(ii) sales permitted by Section 6.2.8. Any consent of the Requisite Lenders to
the disposition of any assets not specifically permitted hereby may be
conditioned on a specified use of the proceeds of disposition.
6.2.2 Subsidiaries.
Neither the Borrower nor any of its Domestic Subsidiaries (other than
Inactive Subsidiaries) will create or, except as permitted by Section 6.2.1,
acquire any Subsidiaries other than the Subsidiaries identified on the
Collateral Disclosure List on the Closing Date (if any).
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6.2.3 Purchase or Redemption of Securities, Dividend Restrictions.
(a) The Borrower will not purchase, redeem or otherwise acquire any
shares of its capital stock, warrants or other securities now or hereafter
outstanding, declare or pay any dividends thereon, apply any of its property or
assets to the purchase, redemption or other retirement of, set apart any sum for
the payment of any dividends on, or for the purchase, redemption, or other
retirement of, make any distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock of the Borrower, or any
warrants, permit any Subsidiary to purchase or acquire any shares of any class
of capital stock of, or warrants issued by, the Borrower, make any distribution
to stockholders or set aside any funds for any such purpose, provided, however,
that notwithstanding the foregoing, the Borrower may redeem shares of its
preferred stock by issuing shares of common stock therefor.
(b) The Borrower will not prepay, purchase or redeem any Indebtedness
for Borrowed Money other than:
(i) the Obligations,
(ii) subject to the terms of the Stanwich Subordination
Agreement, a principal payment in an amount not to exceed $325,000, on
or before June 30, 2000, to Stanwich Financial Services Corp. under
the promissory note that is the subject of the Stanwich Subordination
Agreement, but only so long as (A) the ▇▇▇▇▇▇▇ Vineyards Permitted
Asset Disposition has not, at the time of such payment, been effected,
(B) Stanwich Financial Services Corp. commits in writing to transfer,
and does in fact transfer, to the Borrower's ▇▇▇▇▇▇▇ Vineyards
Subsidiary, in satisfaction of certain obligations owed by Stanwich
Financial Services Corp. to ▇▇▇▇▇▇▇ Vineyards, an amount at least
equal to the amount of such payment to enable ▇▇▇▇▇▇▇ Vineyards to
obtain a crop loan, (C) no Event of Default exists or would, upon the
making of such payment, occur, and (D) after giving effect to such
payment, the Borrower has at least $1,000,000 of Revolving Credit
Availability,
(iii) so long as, in each case, (A) Term Loan B is paid in
full, (B) an Amortization Reduction Event has occurred, (C) no Event
of Default exists or would upon the making of any such payment occur,
(D) after giving effect to each such payment, the Borrower has at
least $3,500,000 of Revolving Credit Availability, and (E) the
aggregate amount of such payments under all of the instruments
described in clauses (w), (x), (y) and (z) below, during any fiscal
year of the Borrower, does not exceed an amount equal to fifty percent
(50%) of the Borrower's Excess Cash Flow for the immediately preceding
fiscal year of the Borrower, the Borrower may make payments or
prepayments of principal under any of (w) subject to the terms of the
Stanwich Subordination Agreement, the promissory note that is the
subject of the Stanwich Subordination Agreement, (x) subject to the
terms of the ▇▇▇▇▇▇▇ Subordination Agreement, the promissory note that
is the subject of the ▇▇▇▇▇▇▇ Subordination Agreement, (y) that
certain Replacement Subordinated Promissory Note in the original
principal amount of $1,017,112.50, executed by the Borrower in favor
of ▇▇▇▇▇ ▇. Bir, dated as of February 2, 1996 (as in effect on the
date hereof, and without giving effect to any amendments thereto), and
(z) that certain Installment Promissory Note in the original principal
amount of $1,774,544, executed by DPL Acquisition Corp. in favor of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, dated as of November 18, 1996 and amended as of
January 15, 1996, September 16, 1999, and March 7, 2000 (each as in
effect on the date hereof, and without giving effect to any amendments
thereto);
(iv) mandatory redemptions under the Indenture resulting from
Asset Sale Offers (as defined in the Indenture) required to be made
under the Indenture,
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but only so long as, at the time of such redemption, (A) Term Loan B
is paid in full and an Amortization Reduction Event has occurred, and
(B) no Event of Default exists or would, upon the making of any such
redemption, occur;
(v) either of the following: (A) the payment on May 1, 2001, of
up to $2,525,000 in principal amount of Senior Notes, but only so long
as, at the time of such payment, no Event of Default exists or would
thereupon occur, or (B) the purchase, prior to May 1, 2001, in the
open market of up to $2,525,000 in principal amount of Senior Notes,
but only if, at the time of such open market purchase, (I) Term Loan B
is paid in full, (II) an Amortization Reduction Event has occurred,
(III) no Event of Default exists or would upon the making of any such
purchase occur, and (IV) after giving effect to such purchase, the
Borrower has at least $3,500,000 of Revolving Credit Availability;
(vi) so long as, after giving effect to any such payment, no
Event of Default then exists or would thereupon (or, with respect to
financial covenants set forth in Section 6.1.14, upon the end of the
next Testing Period) occur, as determined by the Agent, in its sole
discretion, (a) on May 1, 2002, the sinking fund payment then due in
an amount of up to $12,500,000, and (b) on May 1, 2003, the sinking
fund payment then due in an amount of up to $12,500,000 minus any
amount actually paid in respect of the Senior Notes pursuant to clause
(v) above;
(vii) so long as no Event of Default then exists or would
thereupon occur, regularly scheduled payments of principal and
interest under those certain Orem City Utah Industrial Development
Bond Series A Bonds due May, 2001 in the principal amount of $680,000;
and
(viii) the Permitted Indenture Refinancing.
(c) The Borrower will not pay any interest on any of the Indebtedness
described in clauses (w), (x), (y) or (z) of Section 6.2.3(b)(iii) unless at the
time of making such interest payment, (i) no Event of Default exists or would
upon the making of such payment occur, and (ii) with respect to the Indebtedness
described in clauses (w) and (x) of such section, the payment is not prohibited
by the Stanwich Subordination Agreement or the ▇▇▇▇▇▇▇ Subordination Agreement,
as the case may be.
6.2.4 Indebtedness.
The Borrower will not create, incur, assume or suffer to exist any
Indebtedness for Borrowed Money or permit any Domestic Subsidiary to do so,
except:
(a) the Obligations;
(b) Indebtedness for Borrowed Money secured by Permitted Liens;
(c) Indebtedness of the Borrower existing on the date hereof
and either reflected on the financial statements furnished pursuant to
Section 4.1.11 (Financial Condition of the Borrower) or set forth in
Schedule 6.2.4 attached hereto and made a part hereof and extensions
or renewals thereof, so long as the principal amount thereof is not
increased;
(d) Subordinated Indebtedness;
(e) Secured Interest Rate/Currency Protection Agreements
between the Borrower and the Agent or an Affiliate of the Agent,
and/or (ii) unsecured Interest
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Rate/Currency Protection Agreements between the Borrower and any other
financial institution reasonably acceptable to the Agent, providing
for the transfer or mitigation of foreign exchange risks or interest
rate risks either generally or under specific contingencies, provided,
however, that the aggregate notional amount of Interest Rate/Currency
Protections shall not at any time exceed $20,000,000;
(f) additional unsecured Indebtedness for Borrowed Money in the
aggregate principal amount not to exceed at any time Two Hundred
Thousand Dollars ($200,000);
(g) Indebtedness for Borrowed Money outstanding under the
Indenture and the Senior Notes issued thereunder, and the Permitted
Indenture Refinancing; and
(h) Indebtedness of any Subsidiary of the Borrower to any other
Subsidiary of the Borrower.
6.2.5 Investments, Loans and Other Transactions.
The Borrower will not, and will not permit any of its Domestic
Subsidiaries to, (a) make, assume, acquire or continue to hold any investment in
any property or any Person, whether by stock purchase, capital contribution,
acquisition of indebtedness of such Person, acquisition of all or substantially
all the assets of any Person, or otherwise (including, without limitation,
investments in any joint venture or partnership), (b) guaranty or otherwise
become contingently liable for the Liabilities or obligations of any Person, or
(c) make any loans or advances, or otherwise extend credit to any Person,
except:
(i) any loan or advance to an officer or employee of the
Borrower or any Subsidiary in the ordinary course of business,
provided that the aggregate amount of all such advances by all of the
Borrower and its Subsidiaries (taken as a whole) outstanding at any
time shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate;
(ii) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(iii) any investment in Cash Equivalents, which are pledged to
the Agent for the benefit of itself and the Lenders as collateral and
security for the Obligations;
(iv) trade credit extended to customers in the ordinary course
of business;
(v) investments made after the Closing Date in Subsidiaries
existing on the Closing Date consisting of loans or capital
contributions to such Subsidiaries in an aggregate amount not to
exceed Five Hundred Thousand Dollars $500,000;
(vi) to the extent permitted by the Indenture, other
investments in an aggregate amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000); and
(vii) those investments more particularly set forth on Schedule
6.2.5 attached hereto and made a part hereof.
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6.2.6 Stock of Subsidiaries
The Borrower will not sell or otherwise dispose of any shares of
capital stock of any Domestic Subsidiary (other than Inactive Subsidiaries) or
permit any Domestic Subsidiary to issue any additional shares of its capital
stock (other than Permitted Asset Dispositions) except to another Domestic
Subsidiary or pro rata to its stockholders.
6.2.7 Liens.
The Borrower agrees that it (a) will not create, incur, assume or
suffer to exist any Lien upon any of its properties or assets, whether now owned
or hereafter acquired, or permit any Domestic Subsidiary (other than Inactive
Subsidiaries) so to do, except for Liens securing the Obligations and Permitted
Liens, (b) will not agree to, assume or suffer to exist any provision in any
instrument or other document (other than the Financing Documents) for confession
of judgment, cognovit or other similar right or remedy, (c) will not allow or
suffer to exist any Liens, except permitted purchase money Liens, to be superior
to Liens securing the Obligations, (d) will not enter into any contracts for the
consignment of goods, will not execute or suffer the filing of any financing
statements (other than in favor of the Agent) or the posting of any signs giving
notice of consignments, and will not engage in the sale of goods belonging to
others, and (e) will not allow or suffer to exist the failure of any Lien
described in the Security Documents to attach to, and/or remain at all times
perfected on, any of the property described in the Security Documents.
6.2.8 Disposition of Assets.
The Borrower will not sell, discount, allow credits or allowances,
transfer, assign, extend the time for payment on, convey, lease, assign,
transfer or otherwise dispose of its Assets (including without limitation the
Collateral) other than the sale of past due accounts receivable in accordance
with its credit collection policies as in effect on the date hereof, except, (a)
prior to an Event of Default which is continuing, dispositions that are not
Asset Dispositions, provided that after the occurrence and during the
continuance of an Event of Default, the Borrower may continue to make
dispositions that are not Asset Dispositions until the Agent has notified the
Borrower otherwise (any such notice may be limited to certain assets or
categories of assets), (b) the sale of unnecessary or obsolete Equipment, (c)
sales of assets under the Services Agreement between the CP Industries division
of the Borrower and NPS Acquisition Corp. as in effect on the Closing Date or as
extended or renewed (with any amendments thereto that are approved by the
Requisite Lenders), and (d) Permitted Asset Dispositions, provided that the Net
Proceeds of any such Permitted Asset Dispositions shall be applied to the Loans
in accordance with Section 2.7.10(b).
6.2.9 Transactions with Affiliates
Except as disclosed on Schedule 6.2.9 attached hereto and made a part
hereof, and except as permitted by Section 6.2.14 (Compensation.), neither the
Borrower nor any of its Subsidiaries will enter into or participate in any
transaction with any Affiliate or, except in the ordinary course of business,
with the officers, directors, partners, employees and other representatives of
the Borrower and/or any Subsidiary and except for transactions in the ordinary
course of business and upon fair and reasonable terms which are no less
favorable than would be obtained in a comparable arms-length transaction with a
Person who is not an Affiliate.
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6.2.10 Other Business.
Neither the Borrower nor any of its Subsidiaries will engage directly
or indirectly in any business other than its line of business as of the Closing
Date and those permitted under Section 6.1.7.
6.2.11 ERISA Compliance.
Neither the Borrower nor any Commonly Controlled Entity shall: (a)
engage in or permit any non-exempt "prohibited transaction" (as defined in
Section 406 of ERISA); (b) cause any "accumulated funding deficiency" as defined
in ERISA and/or the Internal Revenue Code; (c) terminate any pension plan in a
manner which could result in the imposition of a lien on the property of the
Borrower pursuant to ERISA; (d) terminate or consent to the termination of any
Multiemployer Plan; or (e) incur a complete or partial withdrawal with respect
to any Multiemployer Plan, which with respect to any of the events set forth in
clauses (a) through (e) could reasonably be expected to cause a Material Adverse
Effect.
6.2.12 Prohibition on Hazardous Materials.
Neither the Borrower nor any of its Subsidiaries shall place,
manufacture or store or permit to be placed, manufactured or stored any
Hazardous Materials on any property owned, operated or controlled by the
Borrower or any of its Subsidiaries or for which the Borrower or any of its
Subsidiaries is responsible other than Hazardous Materials placed or stored on
such property in compliance with applicable Laws in the ordinary course of the
Borrower's or any of its Subsidiaries business.
6.2.13 Method of Accounting; Fiscal Year.
The Borrower agrees that:
(a) it shall not change the method of accounting employed in the
preparation of any financial statements furnished to the Agent and Lenders under
the provisions of Section 6.1.1 (Financial Statements) of this Agreement, unless
required to conform to GAAP and on the condition that the Borrower's accountants
shall furnish such information as the Agent and the Lenders may request to
reconcile the changes with the Borrower's prior financial statements.
(b) it will not change its fiscal year from a year ending on
December 31.
6.2.14 Compensation.
Except as disclosed on Schedule 6.2.14 and as permitted by Section
6.2.9, neither the Borrower nor any Subsidiary will pay any bonuses, fees,
compensation, commissions, salaries, drawing accounts, or other payments (cash
and non-cash), whether direct or indirect, to any stockholders or partners of
the Borrower or any Subsidiary, or any Affiliate of the Borrower or any
Subsidiary, other than reasonable compensation for actual services rendered by
stockholders or partners in their capacity as officers or employees, and except
for, (i) reasonable director's fees, (ii) reasonable and customary
indemnifications of officers, directors, partners, employees and consultants,
(iii) the reimbursement of reasonable travel and other out-of-pocket expenses
reasonably incurred by the Borrower's directors in the performance of their
duties, and (iv) a management fee payable by the Borrower to Stanwich Partners,
Inc. in the amount of up to $300,000 during any fiscal year of the Borrower, but
only if, at the time of making such payment and after giving effect thereto, no
Event of Default has occurred or is continuing.
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6.2.15 Transfer of Collateral.
Neither the Borrower nor any of its Subsidiaries will transfer, or
permit the transfer, to another location of any of the Collateral or the books
and records related to any of the Collateral unless the notice required by
Section 6.1.22 has been given and the Liens of the Agent have been perfected by
filing in that location.
6.2.16 Sale and Leaseback.
Neither the Borrower nor any of its Domestic Subsidiaries (other than
Inactive Subsidiaries) will directly or indirectly enter into any arrangement to
sell or transfer all or any substantial part of its fixed assets and thereupon
or within one (1) year thereafter rent or lease the assets so sold or
transferred, except in connection with the disposition by the Borrower of the
▇▇▇▇▇ Real Property.
6.2.17 Capital Expenditures.
The Borrower will not make, directly or indirectly, Capital
Expenditures which in the aggregate exceed (a) during the fiscal year of the
Borrower ending December 31, 2000, Three Million Five Hundred Thousand Dollars
($3,500,000), (b) during the fiscal year of the Borrower ending December 31,
2001, (i) Four Million Five Hundred Thousand Dollars ($4,500,000), plus (ii)
Three Million Five Hundred Thousand Dollars ($3,500,000), minus (iii) the lesser
of (A) Three Million Five Hundred Thousand Dollars ($3,500,000) and (B) the
amount of Capital Expenditures actually incurred in the immediately preceding
fiscal year by the Borrower, and (c) during any fiscal year of the Borrower
thereafter, an amount equal to (i) Four Million Five Hundred Thousand Dollars
($4,500,000) plus (ii) Four Million Five Hundred Thousand Dollars ($4,500,000),
minus (iii) the lesser of (A) Four Million Five Hundred Thousand Dollars
($4,500,000) and (B) the amount of Capital Expenditures actually incurred in the
immediately preceding fiscal year by the Borrower.
6.2.18 Amendments to Indenture.
The Borrower shall not amend, supplement or otherwise modify the
Indenture or the Refinanced Indenture to do any of the following: (a) secure the
obligations thereunder, (b) accelerate the dates for any principal or interest
payments or redemptions or repurchases or mandatory offers to repurchase or
redeem, (c) increase the rate of interest payable thereunder, or (d) amend or
add any covenants or provisions the result of which is to make the Indenture
more restrictive or adverse to Borrower or its Subsidiaries or the rights of the
Agent and Lenders under this Agreement and other Financing Documents than those
in the Indenture on the Closing Date (after giving effect to the amendments and
waivers described in Section 5.1.22) and, with respect to the Refinanced
Indenture, the date it was issued (including in either case, without limitation,
the ability to incur indebtedness and grant Liens to secure indebtedness,
financial performance, and events of default).
ARTICLE 7 DEFAULT AND RIGHTS AND REMEDIES
Section 7.1 Events of Default.
The occurrence of any one or more of the following events shall constitute an
"Event of Default" under the provisions of this Agreement:
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7.1.1 Failure to Pay.
The failure of the Borrower to pay any of the Obligations as and when
due and payable in accordance with the provisions of this Agreement, the Notes
and/or any of the other Financing Documents.
7.1.2 Breach of Representations and Warranties.
Any representation or warranty made by the Borrower or any of its
Subsidiaries in this Agreement or in any report, statement, schedule,
certificate, financial statement or other document furnished in connection with
this Agreement, any of the other Financing Documents or the Merger Documents, or
the Obligations, shall prove to have been false or misleading when made or
deemed made.
7.1.3 Failure to Comply with Certain Covenants.
The failure of the Borrower to perform, observe or comply with any
covenant, condition or agreement contained in Sections 6.1.1 (Financial
Statements), 6.1.3 (Recordkeeping, Rights of Inspection, Field Examination,
Etc.), 6.1.8 (Insurance), 6.1.14 (Financial Covenants), 6.1.16 (Assignment of
Receivables), 6.1.19 (Inventory) (other than clause (c) thereof), 6.1.20
(Defense of Title and Further Assurances), 6.1.22 (Business Names; Locations),
6.1.24 (Use of Premises and Equipment), 6.1.25 (Protection of Collateral), or
Section 6.2 (Negative Covenants).
7.1.4 Failure to Comply with Other Covenants.
The failure of the Borrower to perform, observe or comply with any
covenant, condition or agreement contained in this Agreement other than those
referred to in Sections 7.1.1, 7.1.2 or 7.1.3 above, which failure shall remain
unremedied for a period of thirty (30) days after the Borrower discovers or
should have discovered such failure.
7.1.5 Default Under Other Financing Documents or Obligations.
A default shall occur under any of the other Financing Documents or
under any other Obligations, and such default is not cured within any applicable
grace period provided therein.
7.1.6 Receiver; Bankruptcy.
The Borrower or any Domestic Subsidiary (other than Inactive
Subsidiaries) of the Borrower shall (a) apply for or consent to the appointment
of a receiver, trustee or liquidator of itself or any of its property, (b) admit
in writing its inability to pay its debts as they mature, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or
insolvent, (e) file a voluntary petition in bankruptcy or a petition or an
answer seeking or consenting to reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, or take corporate action for the purposes of effecting any of the
foregoing, or (f) by any act indicates its consent to, approval of or
acquiescence in any such proceeding or the appointment of any receiver of or
trustee for any material portion of its property, or suffer any such
receivership, trusteeship or proceeding to exist, or (g) by any act indicates
its consent to, approval of or acquiescence in any order, judgment or decree by
any court of competent jurisdiction or any Governmental Authority or any agency
thereof enjoining or otherwise prohibiting the operation of a material portion
of the
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Borrower's or any of its Domestic Subsidiary's (other than Inactive
Subsidiaries) business or the use or disposition of a material portion of the
Borrower's or any of its Domestic Subsidiary's assets.
7.1.7 Involuntary Bankruptcy, etc.
(a) An order for relief shall be entered in any involuntary case
brought against the Borrower or any Domestic Subsidiary (other than Inactive
Subsidiaries) of the Borrower under the Bankruptcy Code, or (b) any such case
shall be commenced against the Borrower or any Domestic Subsidiary (other than
Inactive Subsidiaries) of the Borrower and shall not be dismissed with sixty
(60) days after the commencement thereof, or (c) an order, judgment or decree
under any other Law is entered by any court of competent jurisdiction or by any
other Governmental Authority on the application of a Governmental Authority or
of a Person other than the Borrower or any Domestic Subsidiary (other than
Inactive Subsidiaries) of the Borrower (i) adjudicating the Borrower or any
Domestic Subsidiary (other than Inactive Subsidiaries) of the Borrower bankrupt
or insolvent, or (ii) appointing a receiver, trustee or liquidator of the
Borrower or any Domestic Subsidiary (other than Inactive Subsidiaries) of the
Borrower, or of a material portion of such Borrower's, Domestic Subsidiary's
assets, or (iii) enjoining, prohibiting or otherwise limiting the operation of a
material portion of the Borrower's or any Domestic Subsidiary's business (other
than Inactive Subsidiaries) or the use or disposition of a material portion of
the Borrower's or any Domestic Subsidiary's assets (other than Inactive
Subsidiaries).
7.1.8 Judgment.
Unless adequately insured in the reasonable opinion of the Agent, the
entry of a final judgment for the payment of money involving in the aggregate
more than Five Hundred Thousand Dollars ($500,000) against the Borrower or any
Domestic Subsidiary of the Borrower (other than an Inactive Subsidiary), and the
failure by the Borrower or such Domestic Subsidiary (other than an Inactive
Subsidiary) to discharge the same, or cause it to be discharged, within thirty
(30) days from the date of the order, decree or process under which or pursuant
to which such judgment was entered, or to secure a stay of execution pending
appeal of such judgment.
7.1.9 Execution; Attachment.
Any execution or attachment shall be levied against the Collateral,
or any part thereof, and such execution or attachment shall not be set aside,
discharged or stayed within thirty (30) days after the same shall have been
levied.
7.1.10 Default Under Indenture.
Any Event of Default (as defined in the Indenture or the Refinanced
Indenture) under the Indenture or the Senior Notes issued pursuant thereto, or,
in the event of a Permitted Indenture Refinancing, the Refinanced Indenture
shall have occurred and shall not have been waived or otherwise cured in
accordance with the requirements of the Indenture or the Refinanced Indenture,
as the case may be.
7.1.11 Default Under Other Borrowings.
Default shall be made with respect to any Indebtedness for Borrowed
Money of the Borrower or any Domestic Subsidiary of the Borrower (other than the
Loans and the Indebtedness for Borrowed Money under the Indenture) in excess of
One Million Dollars ($1,000,000) in the aggregate if the effect of such default
is to accelerate the maturity of such
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Indebtedness for Borrowed Money or to permit the holder or obligee thereof or
other party thereto to cause such Indebtedness for Borrowed Money to become due
prior to its stated maturity.
7.1.12 Challenge to Agreements.
The Borrower or any Subsidiary of the Borrower shall challenge the
validity and binding effect of any provision of any of the Financing Documents
or shall state its intention to make such a challenge of any of the Financing
Documents or any of the Financing Documents shall for any reason (except to the
extent permitted by its express terms) cease to be effective or to create a
valid and perfected first priority Lien (except for Permitted Liens) on, or
security interest in, any of the Collateral purported to be covered thereby.
7.1.13 Material Adverse Change.
An event which has a Material Adverse Effect has occurred.
7.1.14 Change in Control.
Any Change of Control shall occur.
7.1.15 Liquidation, Termination, Dissolution, etc..
The Borrower shall liquidate, dissolve or terminate its existence
without the prior written consent of the Requisite Lenders.
7.1.16 Criminal Proceedings.
There shall have been instituted against the Borrower any criminal
proceedings for which forfeiture of any asset is a potential penalty.
Section 7.2 Remedies.
Upon the occurrence and, thereafter, at any time during the
continuance of any Event of Default, the Agent may, in the exercise of its sole
and absolute discretion from time to time, and shall, at the direction of the
Requisite Lenders, at any time thereafter, exercise any one or more of the
following rights, powers or remedies:
7.2.1 Acceleration.
The Agent may, and shall, at the direction of the Requisite Lenders,
declare any or all of the Obligations to be immediately due and payable,
notwithstanding anything contained in this Agreement or in any of the other
Financing Documents to the contrary, without presentment, demand, protest,
notice of protest or of dishonor, or other notice of any kind, all of which the
Borrower hereby waives.
7.2.2 Further Advances.
The Agent may, and shall, at the direction of the Requisite Lenders,
from time to time without notice to the Borrower suspend, terminate or limit any
further advances, loans or other extensions of credit under the Commitment,
under this Agreement and/or under any of the other Financing Documents. Further,
upon the occurrence of an Event of Default specified in Sections 7.1.6
(Receiver; Bankruptcy) or 7.1.7 (Involuntary Bankruptcy, etc.) above, the
Revolving Credit Commitments, the Letter of Credit Commitments and any agreement
in any
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of the Financing Documents to provide additional credit and/or to issue Letters
of Credit shall immediately and automatically terminate and the unpaid principal
amount of the Notes (with accrued interest thereon) and all other Obligations
then outstanding, shall immediately become due and payable without further
action of any kind and without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower.
7.2.3 Uniform Commercial Code.
The Agent shall have all of the rights and remedies of a secured
party under the applicable Uniform Commercial Code and other applicable Laws.
Upon demand by the Agent, the Borrower shall assemble the Collateral and make it
available to the Agent, at a place designated by the Agent. The Agent or its
agents may without notice from time to time enter upon the Borrower's premises
to take possession of the Collateral, to remove it, to render it unusable, to
process it or otherwise prepare it for sale, or to sell or otherwise dispose of
it. At the Agent's direction, the Borrower shall cease to process, prepare for
sale, sell or otherwise dispose of the Collateral.
Any written notice of the sale, disposition or other intended action
by the Agent with respect to the Collateral which is sent by regular mail,
postage prepaid, to the Borrower at its respective address set forth in Section
9.1 of this Agreement, or such other address of the Borrower which may from time
to time be shown on the Agent's records, at least ten (10) days prior to such
sale, disposition or other action, shall constitute commercially reasonable
notice to the Borrower. The Agent may alternatively or additionally give such
notice in any other commercially reasonable manner. Nothing in this Agreement
shall require the Agent to give any notice not required by applicable Laws or
not required by the specific terms of this Agreement.
If any consent, approval, or authorization of any state, municipal or
other Governmental Authority or of any other Person or of any Person having any
interest therein, should be necessary to effectuate any sale or other
disposition of the Collateral, the Borrower agrees to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.
The Borrower recognizes that the Agent may be unable to effect a
public sale of all or a part of the Collateral consisting of Securities by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and other applicable federal and state Laws. The Agent may, therefore,
take such steps as it may deem appropriate to comply with such Laws and may, for
example, at any sale of the Collateral consisting of Securities restrict the
prospective bidders or purchasers as to their number, nature of business and
investment intention, including, without limitation, a requirement that the
Persons making such purchases represent and agree to the satisfaction of the
Agent that they are purchasing such Securities for their account, for
investment, and not with a view to the distribution or resale of any thereof.
The Borrower covenants and agrees to do or cause to be done promptly all such
acts and things as the Agent may request from time to time and as may be
necessary to offer and/or sell the Securities or any part thereof in a manner
which is valid and binding and in conformance with all applicable Laws. Upon any
such sale or disposition, the Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral consisting of Securities so
sold.
7.2.4 Specific Rights With Regard to Collateral.
In addition to all other rights and remedies provided hereunder or as
shall exist at law or in equity from time to time, the Agent may (but shall be
under no obligation to), without notice to the Borrower, and Borrower hereby
irrevocably appoints the Agent as its attorney-in-fact, with power of
substitution, in the name of the Agent and/or any or all of the
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Lenders and/or in the name of the Borrower or otherwise, for the use and benefit
of the Agent and the Lenders, but at the cost and expense of the Borrower and
without notice to the Borrower:
(a) request any Account Debtor obligated on any of the Accounts to
make payments thereon directly to the Agent, with the Agent taking control
of the cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the Collateral or deal with
the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all or any part of
the Collateral;
(d) copy, transcribe, or remove from any place of business of the
Borrower or any of its Subsidiaries all books, records, ledger sheets,
correspondence, invoices and documents, relating to or evidencing any of
the Collateral or without cost or expense to the Agent or the Lenders, make
such use of the Borrower's or any Subsidiary's place(s) of business as may
be necessary to administer, control and collect the Collateral;
(e) repair, alter or supply goods if necessary to fulfill in whole or
in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals, extensions,
discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to
enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or adjust
claims in respect of any of the Collateral or any legal proceedings brought
in respect thereof;
(i) endorse or sign the name of the Borrower upon any items of
payment, certificates of title, instruments, securities, stock powers,
documents, documents of title, financing statements, assignments, notices
or other writing relating to or part of the Collateral and on any proof of
claim in bankruptcy against an Account Debtor;
(j) notify the Post Office authorities to change the address for the
delivery of mail to the Borrower to such address or Post Office Box as the
Agent may designate and receive and open all mail addressed to the
Borrower; and
(k) take any other action necessary or beneficial to realize upon or
dispose of the Collateral or to carry out the terms of this Agreement.
7.2.5 Application of Proceeds; Certain Intercreditor Provisions.
(a) Any proceeds of sale or other disposition of the Collateral under
any Financing Document and any distribution or payment in respect of any assets
of the Borrower and its Subsidiaries in connection with any proceeding described
in Section 7.1.6 or Section 7.1.7 of this Agreement will be applied by the Agent
as follows: (a) first, to the payment of any and all Obligations owing to the
Agent (other than Interest Rate/Currency Protection Agreements between the
Borrower and the Agent or an Affiliate of the Agent), (b) second, to any
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and all Administrative Costs and Enforcement Costs, (c) third, any balance of
such proceeds (up to the aggregate amount of Obligations owing to the Formula
Lenders) will be remitted to the Formula Lenders in like currency and funds
received ratably in accordance with the Formula Lenders' respective Pro Rata
Shares of such balance, for application by each Formula Lender to its
Obligations in such order and manner as such Formula Lender shall determine, in
its sole and absolute discretion, (d) fourth, any balance of such proceeds
remaining after such remission to the Formula Lenders will be remitted to the
Agent in like currency and funds received for application to the payment of
Interest Rate/Currency Protection Agreements between the Borrower and the Agent
or an Affiliate of the Agent, and (e) fifth, any balance of such proceeds
remaining after such remission to the Formula Lenders will be remitted to the
Term Loan B Lenders in like currency and funds received ratably in accordance
with the Term Loan B Lenders' respective Pro Rata Shares of such balance. Each
Term Loan B Lender shall apply any such proceeds received from the Agent to its
Obligations in such order and manner as such Term Loan B Lender shall determine
in its sole and absolute discretion. If the sale or other disposition of the
Collateral fails to fully satisfy the Obligations, the Borrower shall remain
liable to the Agent and the Lenders for any deficiency.
(b) Notwithstanding any other provision of this Agreement or any of
the Financing Documents, in the event of either (i) the failure of the Borrower
to pay the principal of and interest, fees and premium, if any, on any of the
Obligations owing to the Agent or any of the Formula Lenders when due or upon
the maturity thereof (including the maturity of individual installment principal
payments and mandatory prepayments due under this Agreement or the other
Financing Documents) or (ii) an acceleration of the maturity of the principal of
any of the Obligations owing to the Agent or any of the Formula Lenders in
accordance with the terms thereof (which acceleration has not been rescinded or
annulled), such Obligations owing to the Agent and the Formula Lenders shall
first be paid in full in cash or cash equivalents (or provision for such payment
in cash or cash equivalents shall be made in a manner satisfactory to the Agent
and the Formula Lenders) before any payment or distribution (in cash, properties
or securities, by set-off or otherwise) is made on account of or applied to the
Obligations owing to the Term Loan B Lenders. If any payment or distribution of
any kind or character, whether in cash, property or securities, shall be
received by any Term Loan B Lender in contravention of Section 7.2.5(a) or the
foregoing sentence, such payment or distribution shall be held in trust for the
benefit of, and shall be paid over or delivered and transferred to, the Agent
for application to the payment of the Obligations owing to the Agent and the
Formula Lenders, to the extent necessary to pay all such Obligations in full in
cash or cash equivalents. In the event of the failure of any Term Loan B Lender
to endorse or assign any such payment or distribution, the Agent is hereby
irrevocably authorized to endorse or assign the same.
7.2.6 Performance by Agent.
If the Borrower shall fail to pay the Obligations or otherwise fail
to perform, observe or comply with any of the conditions, covenants, terms,
stipulations or agreements contained in this Agreement or any of the other
Financing Documents, the Agent without notice to or demand upon the Borrower and
without waiving or releasing any of the Obligations or any Default or Event of
Default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of the
Borrower, and may enter upon the premises of the Borrower for that purpose and
take all such action thereon as the Agent may consider necessary or appropriate
for such purpose and the Borrower hereby irrevocably appoints the Agent as its
attorney-in-fact to do so, with power of substitution, in the name of the Agent,
in the name of any or all of the Lenders, or in the name of the Borrower or
otherwise, for the use and benefit of the Agent and the Lenders, but at the cost
and expense of the Borrower and without notice to the Borrower. All sums so paid
or advanced by the Agent together with interest thereon from the date of
payment, advance or incurring until paid in full at the Post-Default Rate and
all costs and expenses, shall be deemed part of the
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Enforcement Costs, shall be paid by the Borrower to the Agent on demand, and
shall constitute and become a part of the Agent's Obligations.
7.2.7 Other Remedies.
The Agent may from time to time proceed to protect or enforce the
rights of the Agent and/or any of the Lenders by an action or actions at law or
in equity or by any other appropriate proceeding, whether for the specific
performance of any of the covenants contained in this Agreement or in any of the
other Financing Documents, or for an injunction against the violation of any of
the terms of this Agreement or any of the other Financing Documents, or in aid
of the exercise or execution of any right, remedy or power granted in this
Agreement, the Financing Documents, and/or applicable Laws. The Agent and each
of the Lenders severally are authorized to offset and apply to all or any part
of the Obligations all moneys, credits and other property of any nature
whatsoever of the Borrower now or at any time hereafter in the possession of, in
transit to or from, under the control or custody of, or on deposit with, the
Agent, any of the Lenders or any Affiliate of the Agent or any of the Lenders.
ARTICLE 8 THE AGENT
Section 8.1 Appointment.
Each Lender hereby designates and appoints BANA as its agent under
this Agreement and the Financing Documents, and each Lender hereby irrevocably
authorizes the Agent to take such action or to refrain from taking such action
on its behalf under the provisions of this Agreement and the Financing Documents
and to exercise such powers as are set forth herein or therein, together with
such other powers as are reasonably incidental thereto. The Agent agrees to act
as such on the express conditions contained in this ARTICLE 8. The provisions of
this ARTICLE 8 are solely for the benefit of the Agent and the Lenders and
neither the Borrower nor any 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, the Agent shall act solely as an administrative
representative of the 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 the Lenders, the Borrower or any Person. The Agent may perform any of its
duties hereunder, or under the Financing Documents, by or through its agents or
employees.
Section 8.2 Nature of Duties.
8.2.1 In General.
The Agent shall have no duties, obligations or responsibilities
except those expressly set forth in this Agreement or in the Financing
Documents. The duties of the Agent shall be mechanical and administrative in
nature. The Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of the Borrower
in connection with the extension of credit hereunder and shall make its own
appraisal of the credit worthiness of the Borrower, and, except as expressly
provided herein, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter. If the Agent seeks
the consent or approval of any of the Lenders to the taking or refraining from
taking of any action hereunder, then the Agent shall send notice thereof to each
Lender. The Agent shall promptly notify each Lender any time that the applicable
percentage of the Lenders have instructed the Agent to act or refrain from
acting pursuant hereto.
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8.2.2 Express Authorization.
The Agent is hereby expressly and irrevocably authorized by each of
the Lenders, as agent on behalf of itself and the other Lenders:
(a) to receive on behalf of each of the Lenders any payment or
collection on account of the Obligations and to distribute to each Lender its
Pro Rata Share of all such payments and collections so received as provided in
this Agreement;
(b) to receive all documents and items to be furnished to the Lenders
under the Financing Documents (nothing contained herein shall relieve the
Borrower of any obligation to deliver any item directly to the Lenders to the
extent expressly required by the provisions of this Agreement);
(c) to act or refrain from acting in this Agreement and in the other
Financing Documents with respect to those matters so designated for the Agent;
(d) to act as nominee for and on behalf of the Lenders in and under
this Agreement and the other Financing Documents;
(e) to arrange for the means whereby the funds of the Lenders are to
be made available to the Borrower;
(f) to distribute promptly to the Lenders, if required by the terms
of this Agreement, all written information, requests, notices, Loan Notices,
payments, Prepayments, documents and other items received from the Borrower or
other Person;
(g) to amend, modify, or waive any provisions of this Agreement or
the other Financing Documents on behalf of the Lenders subject to the
requirement that certain of the Lenders' consent be obtained in certain
instances as provided in Section 9.2 (Amendments; Waivers.);
(h) to deliver to the Borrower and other Persons, all requests,
demands, approvals, notices, and consents received from any of the Lenders;
(i) to exercise on behalf of each Lender all rights and remedies of
the Lenders upon the occurrence of any Event of Default and/or Default specified
in this Agreement and/or in any of the other Financing Documents or applicable
Laws;
(j) to execute any of the Security Documents and any other documents
on behalf of the Lenders as the secured party for the benefit of the Agent and
the Lenders; and
(k) to take such other actions as may be requested by the Lenders,
the Requisite Lenders or any Lender, as provided in this Agreement.
Section 8.3 Rights, Exculpation, Etc.
Neither the Agent nor any of its officers, directors, employees or
agents shall be liable to any Lender for any action taken or omitted by them
hereunder or under any of the Financing Documents, or in connection herewith or
therewith, except that the Agent shall be obligated on the terms set forth
herein for performance of its express obligations hereunder, and except that the
Agent shall be liable with respect to its own gross negligence or willful
misconduct. In the absence of gross negligence, the Agent shall not be liable
for any apportionment or distribution of payments made by it in good faith and
if any such apportionment or distribution is
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subsequently determined to have been made in error the sole recourse of any
Lender to whom payment was due but not made, shall be to recover from the other
Lenders any payment in excess of the amount to which they are determined to be
entitled (and such other Lenders hereby agree to return to such Lender any such
erroneous payments received by them). The Agent shall not be responsible to any
Lender for any recitals, statements, representations or warranties herein or for
the execution, effectiveness, genuineness, validity, enforceability,
collectible, or sufficiency of this Agreement or any of the Financing Documents
or the transactions contemplated thereby, or for the financial condition of any
Person. The Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Financing Documents or the financial condition of
any Person, or the existence or possible existence of any Default or Event of
Default. The Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Financing Documents the Agent is permitted or required to take or to
grant, and the Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Financing Documents until it shall have received such
instructions from the applicable percentage of the Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting under this Agreement
or any of the other Financing Documents in accordance with the instructions of
the applicable percentage of the Lenders and notwithstanding the instructions of
the Lenders, the Agent shall have no obligation to take any action if it, in
good faith believes that such action exposes the Agent to any liability, unless
the Agent (in its sole determination) has been adequately indemnified by the
Lenders with respect thereto.
Section 8.4 Reliance.
The Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, telex, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Financing Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it. The Agent may deem and treat
the original Lenders as the owners of the respective Notes for all purposes
until receipt by the Agent of a written notice of assignment, negotiation or
transfer of any interest therein by the Lenders in accordance with the terms of
this Agreement. Any interest, authority or consent of any holder of any of the
Notes shall be conclusive and binding on any subsequent holder, transferee, or
assignee of such Notes. The Agent shall be entitled to rely upon the advice of
legal counsel, independent accountants, and other experts selected by the Agent
in its sole discretion.
Section 8.5 Indemnification.
To the extent the Agent is not reimbursed and indemnified by the
Borrower, each Lender, severally, agrees to reimburse and indemnify the Agent
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
including, without limitation, Enforcement Costs, of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent
in any way relating to or arising out of this Agreement or any of the Financing
Documents or any action taken or omitted by the Agent under this Agreement or
any of the Financing Documents, in proportion to each Lender's Pro Rata Share,
all of the foregoing as they may arise, be asserted or be imposed from time to
time; provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from the Agent's gross
negligence or willful
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misconduct. The obligations of the Lenders under this Section 8.5 shall survive
the payment in full of the Obligations and the termination of this Agreement.
Section 8.6 BANA Individually.
With respect to its Commitments and the Loans made by it, and the
Notes issued to it, BANA shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "the Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include BANA in its individual capacity as a Lender or one
of the Requisite Lenders. BANA and its Affiliates may lend money to, accept
deposits from and generally engage in any kind of banking, trust or other
business with the Borrower, any Affiliate of any Borrower, or any other Person
or any of their officers, directors and employees as if BANA were not acting as
the Agent pursuant hereto, and the Agent may each accept fees and other
consideration from the Borrower, any Affiliate of the Borrower or any of their
officers, directors and employees (in addition to arrangements fees heretofore
agreed to between the Borrower and the Agent as applicable) for services in
connection with this Agreement or otherwise without having to account for or
share the same with the Lenders.
Section 8.7 Successor Agent.
8.7.1 Affiliate Successor.
Notwithstanding any other provision of this Agreement, if BANA
assigns all of its Loans to an Affiliate of BANA, such Affiliate shall
automatically become the successor Agent hereunder upon the effective date of
such assignment.
8.7.2 Resignation.
The Agent may resign from the performance of all its functions and
duties hereunder at any time by giving at least thirty (30) Business Days' prior
written notice to the Borrower and the Lenders. Such resignation shall take
effect upon the acceptance by a successor Agent of appointment pursuant to
Section 8.7.3 (Appointment of Successor) or as otherwise provided below.
8.7.3 Appointment of Successor.
Upon any such notice of resignation pursuant to Section 8.7.2
(Resignation), the Requisite Lenders shall appoint a successor to the Agent,
which successor shall be, so long as no Default or Event of Default shall have
occurred and be continuing, subject to the consent of the Borrower, which
consent shall not be unreasonably withheld or delayed. If a successor to the
Agent shall not have been so appointed within said thirty (30) Business Day
period, the Agent retiring, with the consent of the Borrower (not to be
unreasonably withheld or delayed, and in any event not required if a Default or
Event of Default shall have occurred and is continuing), shall then appoint a
successor Agent who shall serve as the Agent until such time, as the Requisite
Lenders appoint a successor to the Agent as provided above.
8.7.4 Successor Agent.
Upon the acceptance of any appointment as the Agent under the
Financing Documents by a successor Agent, such successor to the Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the Agent retiring, and the Agent retiring shall be discharged
from its duties and obligations under the Financing Documents. After any Agent's
resignation as the Agent under the Financing Documents, the
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provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under the Financing
Documents.
Section 8.8 Collateral Matters.
8.8.1 Release of Collateral.
The Lenders hereby irrevocably authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent upon any
property covered by this Agreement or the Financing Documents:
(a) upon termination of the Commitments and payment and satisfaction
of all Obligations;
(b) constituting property being sold or disposed of if the Borrower
certifies to the Agent that the sale or disposition is made in compliance with
the provisions of this Agreement (and the Agent may rely in good faith
conclusively on any such certificate, without further inquiry);
(c) constituting property leased to the Borrower under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by the
Borrower to be, renewed or extended; or
(d) constituting property covered by Permitted Liens with lien
priority superior to those Liens in favor or for the benefit of the Lenders.
Additionally, the Agent shall upon Borrower's written request release
each of the Pledge Agreements--CPS Stock and the Pledge Agreement--CPS Debt
Securities if, at the time of such request, (i) Term Loan B is paid in full,
(ii) an Amortization Reduction Event has occurred, (iii) no Event of Default
then exists, and (iv) the Borrower has Revolving Credit Availability of at least
$3,500,000.
In addition to the foregoing, during any fiscal year of the Borrower,
so long as no Event of Default has occurred and is continuing, (x) the Agent may
release Collateral having a book value of not more than $1,000,000, (y) the
Agent, with the consent of Requisite Lenders, may release Collateral having a
book value of not more than 10% of the book value of all Collateral and (z) the
Agent, with the consent of all of the Lenders, may release any or all of the
Collateral.
8.8.2 Confirmation of Authority; Execution of Releases.
Without in any manner limiting the Agent's authority to act without
any specific or further authorization or consent by the Lenders as set forth in
Section 8.8.1 (Release of Collateral), each Lender agrees to confirm in writing,
upon request by the Borrower, the authority to release any property covered by
this Agreement or the Financing Documents conferred upon the Agent under Section
8.8.1 (Release of Collateral). So long as no Event of Default is then
continuing, upon receipt by the Agent of confirmation from the requisite
percentage of the Lenders, of its authority to release any particular item or
types of property covered by this Agreement or the Financing Documents, and upon
at least five (5) Business Days prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Agent for the benefit of the Lenders herein or pursuant hereto upon such
Collateral; provided, however, that (a) the Agent shall not be required to
-------- -------
execute any such
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document on terms which, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (b) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of any Person, in respect of), all interests retained by any
Person, including, without limitation, the proceeds of any sale, all of which
shall continue to constitute part of the property covered by this Agreement or
the Financing Documents.
8.8.3 Absence of Duty.
The Agent shall have no obligation whatsoever to any Lender, the
Borrower or any other Person to assure that the property covered by this
Agreement or the Financing Documents exists or is owned by the Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to the Agent for the benefit of the Lenders and the Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent in this Section 8.8.3 or in any of the
Financing Documents, it being understood and agreed that in respect of the
property covered by this Agreement or the Financing Documents or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its discretion, given the Agent's own interest in property
covered by this Agreement or the Financing Documents as one of the Lenders and
that the Agent shall have no duty or liability whatsoever to any of the other
the Lenders.
Section 8.9 Agency for Perfection.
Each Lender hereby appoints the Agent and each other Lender as agent
for the purpose of perfecting the Lenders' Liens in Collateral which, in
accordance with Article 9 of the Uniform Commercial Code in any applicable
jurisdiction or otherwise, can be perfected only by possession. Should any
Lender (other than the Agent) obtain possession of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent's request
therefor, shall deliver such Collateral to the Agent or in accordance with the
Agent's instructions.
Section 8.10 Exercise of Remedies.
Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Financing Document or to
realize upon any collateral security for the Loans, it being understood and
agreed that such rights and remedies may be exercised only by the Agent.
Section 8.11 Consents.
8.11.1 When Deemed to Have Been Given.
In the event the Agent requests the consent of a Lender and does
not receive a written denial thereof, or a written notice from a Lender that due
course consideration of the request requires additional time, in each case,
within ten (10) Business Days after such Lender's receipt of such request, then
such Lender will be deemed to have given such consent.
8.11.2 Denial of Consent.
In the event the Agent requests the consent of a Lender, such
consent is necessary to approve the action in question and such consent is
denied, then BANA may, at its option, require such Lender to assign its interest
in the Loans and the Commitments to BANA
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for a price equal to the then outstanding principal amount thereof plus accrued
and unpaid interest, fees and costs and expenses due such Lender under the
Financing Documents, which principal, interest, fees and costs and expenses will
be paid on the date of such assignment. In the event that BANA elects to require
any Lender to assign its interest to BANA, BANA will so notify such Lender in
writing within thirty (30) days following such Lender's denial, and such Lender
will assign its interest to BANA no later than five (5) days following receipt
of such notice.
Section 8.12 Dissemination of Information.
The Agent will provide the Lenders with any information received by
the Agent from the Borrower which is required to be provided to the Agent or to
the Lenders hereunder; provided, however, that the Agent shall not be liable to
any one or more the Lenders for any failure to do so, except to the extent that
such failure is attributable to the Agent's gross negligence or willful
misconduct.
Section 8.13 Discretionary Advances.
The Agent may, in its sole discretion, make, for the account of the
Formula Lenders on a pro rata basis, advances under the Revolving Loan of up to
Two Million Five Hundred Thousand Dollars ($2,500,000) in excess of the
Borrowing Base (but not in excess of the limitation set forth in aggregate
Revolving Credit Commitments) for an aggregate period of not more than 30 days
in any twelve (12) month period without the prior written consent of the
Requisite Lenders.
ARTICLE 9 MISCELLANEOUS
Section 9.1 Notices.
All notices, requests and demands to or upon the parties to this
Agreement shall be in writing and shall be deemed to have been given or made
when delivered by hand on a Business Day, or three (3) days after the date when
deposited in the mail, postage prepaid by registered or certified mail, return
receipt requested, or when sent by overnight courier, on the Business Day next
following the day on which the notice is delivered to such overnight courier,
addressed as follows:
the Borrower: Reunion Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇▇▇ & ▇'▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇, Esq.
Agent: Bank of America, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Manager
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Copy to: ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP
1400 ▇▇▇▇▇▇▇▇ Investment Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Phone No. 216/▇▇▇-▇▇▇▇
FAX No. 216/▇▇▇-▇▇▇▇
Copy to: Bank of America, National Association
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Phone No. 619/▇▇▇-▇▇▇▇
FAX No. 619/▇▇▇-▇▇▇▇
Lenders: To each Lender at the address
specified on the signature pages hereto
or as otherwise specified in writing
by parties becoming Lenders after
the date hereof.
By written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course on any Business Day.
Section 9.2 Amendments; Waivers.
9.2.1 In General.
Except as otherwise set forth in any Section of this Agreement, this
Agreement and the other Financing Documents may not be amended, modified, or
changed in any respect except by an agreement in writing signed by the Agent,
the Requisite Lenders and the Borrower, and, to the extent provided in Section
9.2.2 (Circumstances Where Consent of Certain Lenders is Required), by an
agreement in writing signed by the Agent, all of the Lenders and the Borrower.
Except as otherwise set forth in any Section of this Agreement, no waiver of any
provision of this Agreement or of any of the other Financing Documents, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing signed by the Requisite Lenders.
No course of dealing between the Borrower and the Agent and/or any of the
Lenders and no act or failure to act from time to time on the part of the Agent
and/or any of the Lenders shall constitute a waiver, amendment or modification
of any provision of this Agreement or any of the other Financing Documents or
any right or remedy under this Agreement, under any of the other Financing
Documents or under applicable Laws. Without implying any limitation on the
foregoing, and subject to the provisions of Section 9.2.2 (Circumstances Where
Consent of Certain Lenders is Required):
(a) Any waiver or consent shall be effective only in the specific
instance, for the terms and purpose for which given, subject to such conditions
as the Agent and Lenders may specify in any such instrument;
(b) No waiver of any Default or Event of Default shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereto;
(c) No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in the same, similar or
other circumstance;
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(d) No failure or delay by the Lenders to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement or
of any of the other Financing Documents, or to exercise any right, power or
remedy consequent upon a breach thereof, shall constitute a waiver, amendment or
modification of any such term, condition, covenant or agreement or of any such
breach or preclude the Lenders from exercising any such right, power or remedy
at any time or times; and
(e) By accepting payment after the due date of any amount payable
under this Agreement or under any of the other Financing Documents, the Lenders
shall not be deemed to waive the right either to require prompt payment when due
of all other amounts payable under this Agreement or under any of the other
Financing Documents, or to declare a default for failure to effect such prompt
payment of any such other amount.
9.2.2 Circumstances Where Consent of Certain Lenders is Required.
(a) Notwithstanding anything to the contrary contained herein, no
amendment, modification, change or waiver shall be effective without the consent
of all of the Formula Lenders to:
(i) extend the maturity (or otherwise modify the amortization
schedule, or the schedule for mandatory prepayments) of the principal of,
or interest on, any Note or of any of the other Obligations;
(ii) reduce the principal amount of any Note (other than a Term
Loan B Note) or of any of the other Obligations (other than those
Obligations owing to a Term Loan B Lender), the rate of interest thereon or
the Fees due to the Formula Lenders, except as expressly permitted therein;
(iii) modify the definition of "Requisite Lenders" or "Majority
Lenders";
(iv) modify Section 7.2.5 (Application of Proceeds; Certain
Intercreditor Provisions.) or the terms of any Subordination Agreement; or
(v) modify the definition of "Borrowing Base," "Eligible
Inventory" or "Eligible Receivables."
(b) Notwithstanding anything to the contrary contained herein, no
amendment, modification, change or waiver shall be effective without the consent
of all of the Term Loan B Lenders to:
(i) extend the maturity of the principal of, or interest on,
any Term Loan B Note or of any of the other Obligations owing to Term
Loan B Lenders; or
(ii) reduce the principal amount of any Term Loan B Note or of
any of the other Obligations owing to a Term Loan B Lender, the rate
of interest thereon or the Fees due to the Term Loan B Lenders,
except as expressly permitted therein.
(c) Notwithstanding anything to the contrary contained herein, no
amendment, modification, change or waiver shall be effective without the consent
of all of the Lenders to:
(i) change the method of calculation utilized in connection
with the computation of interest and Fees;
111
(ii) change the manner of application by the Agent of payments
made by the Borrower, or any other payments required hereunder or
under the other Financing Documents;
(iii) modify this Section, Section 8.8.1 (Release of
Collateral), or Section 8.12 (Dissemination of Information);
(iv) release or agree to subordinate any material portion of
any Collateral or Obligations under the Financing Documents (except
to the extent provided herein or therein); or
(v) modify any provision of this Agreement that specifies the
percentage of a Lender's Commitments required to amend, modify,
change or waive such provision.
Additionally, no change may be made to the amount of a Lender's
Commitment or to the Lender's percentage of all Commitments without the prior
written consent of that Lender.
Section 9.3 Cumulative Remedies.
The rights, powers and remedies provided in this Agreement and in the
other Financing Documents are cumulative, may be exercised concurrently or
separately, may be exercised from time to time and in such order as the Agent
and the Requisite Lenders shall determine, subject to the provisions of this
Agreement, and are in addition to, and not exclusive of, rights, powers and
remedies provided by existing or future applicable Laws. In order to entitle
the Agent to exercise any remedy reserved to it in this Agreement, it shall not
be necessary to give any notice, other than such notice as may be expressly
required in this Agreement. Without limiting the generality of the foregoing
and subject to the terms of this Agreement, the Agent may:
(a) proceed against the Borrower with or without proceeding against
any other Person (including, without limitation, any guarantor) who may be
liable (by endorsement, guaranty, indemnity or otherwise) for all or any part of
the Obligations;
(b) proceed against the Borrower with or without proceeding under any
of the other Financing Documents or against any Collateral or other collateral
and security for all or any part of the Obligations;
(c) without reducing or impairing the obligation of the Borrower and
without notice, release or compromise with any guarantor or other Person liable
(by endorsement, guaranty, indemnity or otherwise) for all or any part of the
Obligations under the Financing Documents or otherwise; and
(d) without reducing or impairing the obligations of the Borrower and
without notice thereof: (i) fail to perfect the Lien in any or all Collateral or
to release any or all the Collateral or to accept substitute Collateral, (ii)
approve the making of advances under the Revolving Loan under this Agreement,
(iii) waive any provision of this Agreement or the other Financing Documents,
(iv) exercise or fail to exercise rights of setoff or other rights, or (v)
accept partial payments or extend from time to time the maturity of all or any
part of the Obligations.
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Section 9.4 Severability.
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
(a) the validity, legality and enforceability of the remaining
provisions shall remain effective and binding on the parties thereto and shall
not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to the limit of
such validity;
(c) if such provision or part thereof pertains to repayment of the
Obligations, then, at the sole and absolute discretion of the Agent, all of the
Obligations of the Borrower to the Agent and the Lenders shall become
immediately due and payable; and
(d) if the affected provision or part thereof operates or would
prospectively operate to invalidate this Agreement in whole or in part, then
such provision or part thereof only shall be void, and the remainder of this
Agreement shall remain operative and in full force and effect.
Section 9.5 Assignments by Lenders.
Any Lender may, with the prior written consent of the Agent (which
consent shall not be unreasonably withheld), but without notice to or consent of
the Borrower, assign to any Person (each an "Assignee" and collectively, the
"Assignees") all or a portion of such Lender's Commitments; provided that, (i)
any Lender may, without the consent of the Agent, assign to any Affiliate of
such Lender all or a portion of such Lender's Commitments, and (ii) after giving
effect to any assignment, unless the assigning Lender has assigned all of its
Commitments, such Lender must continue to hold a Pro Rata Share of the
Commitments at least equal to (a) in the case of Formula Lenders, Five Million
Dollars ($5,000,000), and (b) in the case of Term Loan B Lenders, One Million
Dollars ($1,000,000). Any Lender which elects to make such an assignment shall
pay to the Agent, for the exclusive benefit of the Agent, an administrative fee
for processing each such assignment in the amount of Five Thousand Dollars
($5,000.00). Such Lender and its Assignee shall notify the Agent and the
Borrower in writing of the date on which the assignment is to be effective (the
"Adjustment Date"). On or before the Adjustment Date, the assigning Lender, the
Agent and the respective Assignee shall execute and deliver a written assignment
agreement in a form acceptable to the Agent, which shall constitute an amendment
to this Agreement to the extent necessary to reflect such assignment. Upon the
request of any assigning Lender following an assignment made in accordance with
this Section 9.5, the Borrower shall issue new Notes to the assigning Lender and
its Assignee reflecting such assignment, in exchange for the existing Notes held
by the assigning Lender.
In addition, notwithstanding the foregoing, any Lender may at any time
pledge all or any portion of such Lender's rights under this Agreement, any of
the Commitments or any of the Obligations to a Federal Reserve Bank.
Any Assignee or participant which is not incorporated under the Laws
of the United States of America or a state thereof shall deliver to the Borrower
and the Agent the form of certificate described in Section 2.8.8 (Tax
Withholding Clause) relating to Federal income tax withholding.
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Section 9.6 Participations by Lenders
Any Lender may at any time sell to one or more financial institutions
participating interests in any of such Lender's Obligations or Commitments;
provided, however, that (a) no such participation shall relieve such Lender from
its obligations under this Agreement or under any of the other Financing
Documents to which it is a party, (b) such Lender shall remain solely
responsible for the performance of its obligations under this Agreement and
under all of the other Financing Documents to which it is a party, and (c) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing Documents.
Section 9.7 Successors and Assigns.
This Agreement and all other Financing Documents shall be binding
upon and inure to the benefit of the Borrower, the Agent and the Lenders and
their respective heirs, personal representatives, successors and permitted
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the Agent
and the Lenders.
Section 9.8 Continuing Agreements.
All covenants, agreements, representations and warranties made by the
Borrower in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lenders of the Loans, the issuance of Letters of Credit and the execution and
delivery of the Notes, shall be binding upon the Borrower regardless of how long
before or after the date hereof any of the Obligations were or are incurred, and
shall continue in full force and effect so long as any of the Obligations are
outstanding and unpaid. From time to time upon the Agent's reasonable request as
a condition of the release of any one or more of the Security Documents, the
Borrower and other Persons obligated with respect to the Obligations shall
provide the Agent with such acknowledgments and agreements as the Agent may
reasonably require to the effect that there exist no defenses, rights of setoff
or recoupment, claims, counterclaims, actions or causes of action of any kind or
nature whatsoever against the Agent, any or all of the Lenders, and/or any of
its or their agents and others, or to the extent there are, the same are waived
and released.
Section 9.9 Enforcement Costs.
The Borrower agrees to pay to the Agent, for the accounts of the Agent
and the Lenders (if applicable), on demand all Enforcement Costs, together with
interest thereon from the date of demand until paid in full at a per annum rate
of interest equal at all times to the Post-Default Rate. Enforcement Costs
shall be immediately due and payable on demand. Without implying any limitation
on the foregoing, the Borrower agrees, as part of the Enforcement Costs, to pay
upon demand any and all stamp and other Taxes and fees payable or determined to
be payable in connection with the execution and delivery of this Agreement and
the other Financing Documents and to save the Agent and the Lenders harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay any Taxes or fees referred to in this
Section. The provisions of this Section shall survive the execution and
delivery of this Agreement, the repayment of the other Obligations and shall
survive the termination of this Agreement.
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Section 9.10 Applicable Law; Jurisdiction.
9.10.1 Applicable Law.
As a material inducement to the Agent and the Lenders to enter into
this Agreement, the Borrower, the Agent, and the Lenders acknowledge and agree
that the Financing Documents, including, this Agreement, shall be governed by
the Laws of the State, as if each of the Financing Documents and this Agreement
had each been executed, delivered, administered and performed solely within the
State even though for the convenience and at the request of the Borrower, one or
more of the Financing Documents may be executed elsewhere. The parties
acknowledge, however, that remedies under certain of the Financing Documents
which relate to property outside the State may be subject to the laws of the
state in which the property is located.
9.10.2 Jurisdiction.
THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER FINANCING DOCUMENTS. THE BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. FINAL JUDGMENT IN ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND
BINDING UPON THE BORROWER AND MAY BE ENFORCED IN ANY COURT IN WHICH THE BORROWER
IS SUBJECT TO JURISDICTION, BY A SUIT UPON SUCH JUDGMENT, PROVIDED THAT SERVICE
OF PROCESS IS EFFECTED UPON THE BORROWER IN ONE OF THE MANNERS SPECIFIED IN THIS
SECTION OR AS OTHERWISE PERMITTED BY APPLICABLE LAWS.
9.10.3 Consent to Service of Process
The Borrower hereby consents to process being served in any suit,
action or proceeding of the nature referred to in this Section by (i) the
mailing of a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to the Borrower at the Borrower's address designated
in or pursuant to Section 9.1 hereof. The Borrower irrevocably agrees that such
service (i) shall be deemed in every respect effective service of process upon
the Borrower in any such suit, action or proceeding, and (ii) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon the Borrower. Nothing in this Section shall affect the right of the Agent
to serve process in any manner otherwise permitted by law or limit the right of
the Agent otherwise to bring proceedings against the Borrower in the courts of
any jurisdiction or jurisdictions.
Section 9.11 Duplicate Originals and Counterparts.
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
115
Section 9.12 Headings.
The headings in this Agreement are included herein for convenience
only, shall not constitute a part of this Agreement for any other purpose, and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
Section 9.13 No Agency.
Nothing herein contained shall be construed to constitute the Borrower
as the agent of the Agent or any of the Lenders for any purpose whatsoever or to
permit the Borrower to pledge any of the credit of the Agent or any of the
Lenders. Neither the Agent nor any of the Lenders shall be responsible or
liable for any shortage, discrepancy, damage, loss or destruction of any part of
the Collateral wherever the same may be located and regardless of the cause
thereof other than through the Agent's or any Lender's gross negligence or
willful misconduct (as determined by a court of competent jurisdiction after
exhaustion of all appeals). Neither the Agent nor any of the Lenders shall, by
anything herein or in any of the Financing Documents or otherwise, assume the
Borrower's obligations under any contract or agreement assigned to the Agent
and/or the Lenders, and neither the Agent nor any of the Lenders shall be
responsible in any way for the performance by the Borrower of any of the terms
and conditions thereof.
Section 9.14 Date of Payment.
Should the principal of or interest on the Notes become due and
payable on other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day and in the case of principal, interest shall be
payable thereon at the rate per annum specified in the Notes during such
extension.
Section 9.15 Entire Agreement.
This Agreement and the other Financing Documents are intended by the
Agent, the Lenders and the Borrower to be a complete, exclusive and final
expression of the agreements contained herein. Neither the Agent, the Lenders
nor the Borrower shall hereafter have any rights under any prior agreements
pertaining to the matters addressed by this Agreement but shall look solely to
this Agreement for definition and determination of all of their respective
rights, liabilities and responsibilities under this Agreement.
Section 9.16 Waiver of Trial by Jury.
THE BORROWER, THE AGENT AND THE LENDERS HEREBY JOINTLY AND SEVERALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE
AGENT AND/OR ANY OR ALL OF THE LENDERS MAY BE PARTIES, ARISING OUT OF OR IN ANY
WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING DOCUMENTS, OR (C)
THE COLLATERAL.
This waiver is knowingly, willingly and voluntarily made by the
Borrower, the Agent and the Lenders, and the Borrower, the Agent and the
Lenders hereby represent that no representations of fact or opinion have been
made by any individual to induce this waiver of trial by jury or to in any way
modify or nullify its effect. The Borrower, the Agent and the Lenders further
represent that they have been represented in the signing of this Agreement and
in the making of this waiver by independent legal counsel, selected of their own
free will, and that they have had the opportunity to discuss this waiver with
counsel.
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Section 9.17 Liability of the Agent and the Lenders.
The Borrower hereby agrees that neither the Agent nor any of the
Lenders shall be chargeable for any negligence, mistake, act or omission of any
accountant, examiner, agency or attorney employed by the Agent and/or any of the
Lenders in making examinations, or investigations, or otherwise in perfecting,
maintaining, or protecting or realizing upon any lien or security interest or
any other interest in the Collateral or other security for the Obligations.
By inspecting the Collateral or any other properties of the Borrower
or by accepting or approving anything required to be observed, performed or
fulfilled by the Borrower or to be given to the Agent and/or any of the Lenders
pursuant to this Agreement or any of the other Financing Documents, neither the
Agent nor any of the Lenders shall be deemed to have warranted or represented
the condition, sufficiency, legality, effectiveness or legal effect of the same,
and such acceptance or approval shall not constitute any warranty or
representation with respect thereto by the Agent and/or the Lenders.
Section 9.18 Indemnification.
The Borrower agrees to reimburse and indemnify the Agent, each issuer
of a Letter of Credit and each Lender, and each of their respective Affiliates,
directors, officers, employees, agents and advisors for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements including, without limitation,
Enforcement Costs, of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against any such Person (each such Person being called
an "Indemnitee") in any way relating to or arising out of this Agreement or any
of the Financing Documents or any action taken or omitted by any Indemnitee
under this Agreement or any of the Financing Documents, all of the foregoing as
they may arise, be asserted or be imposed from time to time; provided, however,
that the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements resulting from any such Indemnitee's gross
negligence or willful misconduct. The obligations of the Borrower under this
Section 9.18 shall survive the payment in full of the Obligations and the
termination of this Agreement.
Section 9.19 Waiver of Consequential Damages.
To the extent permitted by applicable law, neither the Borrower nor
any of its Subsidiaries may assert, and each of them hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
Financing Document or the use of the proceeds of any Loan or Letter of Credit.
Section 9.20 Syndication.
In the event that the Credit Facilities (other than the Term Loan B
Facility) cannot be successfully syndicated under the terms set forth in this
Agreement and in the other Financing Documents (a successful syndication being
one in which Bank of America, National Association is able to achieve its
targeted hold of $35,000,000 and hold not more than 48% of the dollar amount of
the Total Formula Loan Commitments), the Borrower agrees that the Agent and the
Formula Lenders shall be entitled, subject to Section 9.2 and in consultation
with the Borrower, to change the pricing, structure and other terms of the
Credit Facilities (but not the total amount thereof) if the Agent determines
such changes are necessary to ensure a successful syndication, provided that (a)
the total amount of the Credit Facilities remains unchanged and (b) that such
changes will not cause the Borrower to violate the Indenture and any amendments,
waivers or consents thereunder.
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WITNESS: REUNION INDUSTRIES, INC.
----------------------
----------------------
By:
------------------------------------
Its:
-----------------------------------
S-1
STATE OF OHIO )
) ss:
COUNTY OF CUYAHOGA )
The foregoing instrument was acknowledged before me this ____ day of March,
2000, by ____________________ of Reunion Industries, Inc., a Delaware
corporation, on behalf of the company.
_____________________________
Notary Public
THE SIGNATURES OF THE AGENT AND THE LENDERS FOLLOW
--------------------------------------------------
S-2
WITNESS: BANK OF AMERICA, NATIONAL ASSOCIATION,
as Agent
------------------------
------------------------ By:
-----------------------------------
Its:
----------------------------------
S-3
WITNESS: BANK OF AMERICA, NATIONAL ASSOCIATION,
as a Lender
-------------------------
------------------------- By:
-----------------------------------
Its:
----------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION
-------------------------------------------------------------------
Credit Facility Committed Amount Pro Rata Share
-------------------------------------------------------------------
Revolving Credit Facility $24,570,000 63%
-------------------------------------------------------------------
Term Loan A $16,254,000 63%
-------------------------------------------------------------------
Term Loan B $ 2,500,000 50%
-------------------------------------------------------------------
Capital Expenditure Line $ 1,701,000 63%
-------------------------------------------------------------------
Address: Bank of America, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Manager
S-4
WITNESS: CONGRESS FINANCIAL CORPORATION,
as a Lender
-------------------------
------------------------- By:
-------------------------------
Its:
------------------------------
--------------------------------------------------------------------
Credit Facility Committed Amount Pro Rata Share
--------------------------------------------------------------------
Revolving Credit Facility $14,430,000 37%
--------------------------------------------------------------------
Term Loan A $ 9,546,000 37%
--------------------------------------------------------------------
Capital Expenditure Line $ 999,000 37%
--------------------------------------------------------------------
Address: Congress Financial Corporation
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
S-5
WITNESS: CONTRARIAN FUNDS, LLC,
as a Lender
--------------------------
-------------------------- By: CONTRARIAN CAPITAL ADVISORS,
LLC, as manager
By:
---------------------------------
Its:
--------------------------------
---------------------------------------------------------------
Credit Facility Committed Amount Pro Rata Share
---------------------------------------------------------------
Term Loan B $1,778,500 35.57%
---------------------------------------------------------------
Address: Contrarian Funds, LLC
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Member
S-6
WITNESS: CONTRARIAN CAPITAL ADVISORS, LLC,
as agent for certain entities, as a Lender
-----------------------
----------------------- By:
----------------------------------
Its:
---------------------------------
----------------------------------------------------------------
Credit Facility Committed Amount Pro Rata Share
----------------------------------------------------------------
Term Loan B $721,500 14.43%
----------------------------------------------------------------
Address: Contrarian Capital Advisors, LLC
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Member
S-7
